MUNAF A.K. VADGAMA, MUMBAI V. ITO 17(1)(3), MUMBAI

ITA 6844/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0196 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 10-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Onus to prove
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI PAWAN SINGH (JM) I.T.A. NO. 6844 /MUM/20 14 (ASSESSMENT YEAR 20 05 - 06 ) MR. MUNAF A.K. VADGAMA 307, JASMINE APARTMENT DOCKYARD ROAD, MAZGAON MUMBAI - 400 010. PAN : ACBPV0411B V S . ITO 17(1)(3) MUMBAI ( APPELLANT ) ( RESPONDENT ) A SSESSEE BY SHRI SATISH R. MODY DEPARTMENT BY S HRI SUMAN KUMAR DATE OF HEARING 8 . 0 2 . 201 8 DATE OF PRONOUNCEMENT 21 . 0 2 . 201 8 O R D E R PER B.R. BASKARAN (AM) : - THE APPEA L FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 23.9.2014 PASSED BY THE LEARNED CIT(A) - 29, MUMBAI AND IT RELATES TO A.Y. 2005 - 06. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITION OF RS. 48.73 LAKHS RELA TING TO DEPOSITS MADE TO THE BANK ACCOUNT OF THE ASSESSEE. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE HAS FILED RETURN OF INCOME FOR A.Y. 2005 - 6 DECLARING TOTAL INCOME OF RS. 1,27,220/ - . SUBSEQUENTLY, IT WAS NOTICED THAT THE ASSESSEE HA S MADE CASH DEPOSIT OF RS. 35,23,200/ - AND CHEQUE DEPOSIT (EXCLUDING CHEQUES RETURNED/BOUNCED) OF RS. 13,50,000/ - IN THE SAVINGS BANK ACCOUNT MAINTAINED WITH STATE BANK OF INDIA DURING THE FINANCIAL YEAR RELEVANT TO A.Y. 2005 - 06. WHEN QUESTIONED, THE ASSES SEE DID NOT FURNISH REQUIRED DETAILS . THE ASSESSEE HAD CLAIMED TO B E CARRYING ON BUSINESS OF TRADING IN SAND AND STONES. HOWEVER, THE ASSESSEE DID NOT FURNISH ANY DETAILS RELATING TO PURCHASE AND SALES . H ENCE THE ASSESSING OFFICER TREATED THE ABOVE CITED D EPOSIT S AS UNEXPLAINED AND ASSESSED THE AGGREGATE AMOUNT OF RS. 48.73 LAKHS IN THE HANDS OF THE ASSESSEE. THE LEARNED MR. MUNAF A.K. VADGAMA 2 CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 3. L EARNED AR SUBMITTED THAT THE ASSESSEE HAS BEEN CARRYING ON BUSINESS OF TRADING IN SAND AND STONES IN THE EARLIER YEARS ALSO AND HAS FILED RETURN OF INCOME FOR TH OS E YEARS. HE SUBMITTED THAT THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT AND THE IMPUGNED BANK ACCOUNT HAS BEEN DULY DISCLOSED THEREIN. ACCO RDINGLY, HE SUBMITTED THAT THE TAX AUTHORITIES ARE NOT JUSTIFIED IN TREATING THE DEPOSITS AS UNEXPLAINED WHEN DEPOSITS AND WITHDRAWALS ARE DULY REFLECTED IN THE BOOKS OF ACCOUNT. 4. ON THE CONTRARY, LEARNED DR SUBMITTED THAT THE ASSESSEE HAS TAKEN D IFFERENT STAND BEFORE THE LEARNED CIT(A) . H E HAS SUBMITTED BEFORE LD CIT(A) THAT HE WAS DOING CIVIL CONTRACT WORK AND ACCORDINGLY CLAIMED THAT HIS INCOME SHOULD BE COMPUTED AS PER THE PROVISIONS OF SECTION 44AD OF THE ACT. HOWEVER , BEFORE THE ASSESSING O FFICER, THE ASSESSEE HAS CLAIM ED TO BE CARRYING ON BUSINESS OF TRADING IN SAND AND STONES. THE LEARNED DR SUBMITTED THAT THE PROVISIONS OF SECTION 44AD WILL NOT APPLY IN RESPECT OF TRADING BUSINESS. LEARNED DR FURTHER SUBMITTED THAT THE ASSESSEE DID NOT FU RNISH ANY DETAILS BEFORE THE ASSESSING OFFICER AND HENCE HIS CLAIM OF MAINTAINING BOOKS OF ACCOUNT SHOULD NOT BE ACCEPTED. 5. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICED THAT THE ASSESSEE HAS BEEN FILING RETURN OF INCOME FOR EARLIER YEARS ALSO . IN SUPPORT OF THE SAME, THE LEARNED AR FURNISHED COPIES OF RETURN OF INCOME FILED FOR A.Y. 2004 - 05 AND 2006 - 07. A PERUSAL OF THE ACKNOWLEDGMENT SHOWS THAT THE ASSESSEE DECLARED HIS BANK ACCOUNT AS UNION BANK OF INDIA, NULL BAZAR WITH ACCOUNT NO. 3139 4. THE ASSESSEE HAS FURNISHED A PAPER BOOK, WHEREIN LEDGER ACCOUNT COPIES OF PURCHASE S, SALES AND BANK ACCOUNT S ARE PLACED. THE LEDGER COPY OF BANK ACCOUNT IS AVAILABLE AT PAGE NO. 5 TO 12 OF THE PAPER BOOK AND ACCOUNT NUMBER OF THE BANK IS SHOWN AS 31394. ACCORDING TO LEARNED AR, IMPUGNED DEPOSITS OF CASH AND CHEQUES HAVE BEEN COLLATED BY THE ASSESSING MR. MUNAF A.K. VADGAMA 3 OFFICER FROM THE VERY SAME BANK ACCOUNT. THE S E FACT S SHOW THAT THE ASSESSEE HAS DECLARED IMPUGNED BANK ACCOUNT BEFORE THE TAX AUTHORITIES THROUGH HIS RETURN OF INCOME. 6. HOWEVER, WE NOTICED THAT THE ASSESSEE HAS NOT FURNISHED ANY SUPPORTING MATERIAL OR DETAILS RELATING TO PURCHASE S AND SALE OF SAND AND STONES. IT IS WELL SETTLED PROPOSITION THAT THE INITIAL ONUS TO PROVE THE PURCHASE AND SALES LIE UPON THE ASSESSEE. BEFORE US ALSO, NO SUPPORTING MATERIALS WAS PLACED. BEFORE THE AO, T HE ASSESSEE HAS ALSO NOT FURNISHED THE BOOKS OF ACCOUNTS BEFORE THE AO AND HENCE AT THIS STAGE, WE DO NOT WANT TO RECOGNIZE THEM. HOWEVER, WE NOTICE FROM THE I.T RETURN ACKNOW LEDGEMENT THAT THE ASSESSEE HAS BEEN SUBMITT ING PROFIT AND LOSS ACCOUNT AND B ALANCE - SHEET ALONG WITH THE RETURN OF INCOME , MEANING THEREBY, HIS CLAIM OF CARRYING ON TRADING BUSIN ESS IN STAND AND STONES CAN NOT BE DISMISSED ALTOGETHER. HOWEVER, DURING THE YE AR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN SALES OF ONLY RS. 22.26 LAKHS AS AGAINST DEPOSIT OF RS. 48.73 LAKHS. IN OUR VIEW, THE DEPOSITS TO THE EXTENT OF SALES FIGURE OF RS.22.26 LAKHS MAY BE ACCEPTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE REMAINING AMOUNT OF DEPOSIT S WORKS OUT TO RS.26.47 LAKHS AND THE ASSESSEE IS REQUIRED TO EXPLAIN THE SOURCES OF THE SAME. THE ASSESSEE HAS TAKEN A GROUND THAT THE CHEQUE DEPOSITS OF RS.13.50 LAKHS REPRESENT CANCELLED PAY ORDER CHEQUE S . IF THAT BE THE CAS E, THEN THE AMOUNT OF RS.13.50 LAKHS ALSO NEEDS TO BE EXCLUDED. HOWEVER, THIS FACT REQUIRES VERIFICATION. THIS LEAVES A BALANCE OF RS.12.97 LAKHS. 7. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE VIEW THAT THE REMAINING AMOUNT OF DEPOSI TS MAY ALSO BE TAKEN AS THE TURNOVER OF THE ASSESSEE, ON WHICH PROFIT MAY BE ESTIMATED . WE NOTICE THAT THE ASSESSEE HAS DECLARED GROSS PROFIT AT AROUND 5%. ACCORDINGLY WE ARE OF THE VIEW THAT THE PROFIT MAY BE ESTIMATED ON THE BALANCE AMOUNT OF RS.12.97 LAKHS @ 5%. THE AO MAY VERIFY THE CLAIM OF THE ASSESSEE WITH REGARD TO THE CHEQUE DEPOSITS OF RS.13.50 LAKHS AND IF HE IS SATISFIED WITH THE SAME, THEN NO ADDITION IS CALLED FOR. OTHERWISE, THE AO MAY ESTIMATE THE PROFIT ON THOSE DEPOSITS ALSO @ 5%. IN MR. MUNAF A.K. VADGAMA 4 O UR VIEW , THE ABOVE SAID DIRECTION WOULD PUT THIS ISSUE AT REST. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO COMPUTE DISALLOWANCE IN THE MANNER STATED ABOVE. 8 . IN THE RESULT, APPEAL FILED BY THE AS SESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 21 . 0 2 .201 8 . SD/ - SD/ - (PAWAN SINGH ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 21 / 0 2 / 20 1 8 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// SENIOR P RIVATE S ECRETARY PS ITAT, MUMBAI