ITO-3(4), Kanpur V. Shri Shiv Sagar Lal Katiyar,

ITA 697/LKW/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83257 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-07-2014
• Assessment Year: misc
• Appeal Filed On: 23-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: SOURABH GUPTA
• Keywords: Unexplained expenditure; Business income
• Section: 69C; 69; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 697/LKW/2011 ASSESSMENT YEAR: 2005 - 06 INCOME TAX OFFICER 3(4) KANPUR V. SHRI. SHIV SAG AR LAL KATIYAR MAIN ROAD, RAJPUR KANPUR DEHAT PAN: BAJPS8750D (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. ALOK MITRA, D.R. RESPONDENT BY: SHRI. SOURABH GUPTA, C.A. DATE OF HEARING: 17 0 7 2014 DATE OF PRONOUNCEMENT: 07 0 8 2014 O R D E R PER SU NIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS: - 1 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE GROSS SALE S OF THE ASSESSEE ARE BELOW RS. 40 LAKHS, WITHOUT CONSIDERING THE FACT THAT THE TOTAL PURCHASES OF THE ASSESSEE ARE RS.37,96,890 / - AND LICENSE FEES PAID BY THE ASSESSEE IS RS.4,36,900/ - AND HENCE THE TOTAL TURNOVER IS RS.42,33,790/ - , I.E. MORE THAN 40 LAKH S. 2 . THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT ASSESSEE IS TAXABLE U/S 44AF AND HENCE THE OTHER ADDITIONS MADE BY THE ASSESSING OFFICER HAVE NO RELEVANCE. 3 . THAT THE LD. COMMISSIONER OF INCOME TA X (APPEALS) - II, KANPUR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDI TION OF RS.9,91,154/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF 'UNEXPLAINED EXPENDITURE' UNDER SECTION 69C OF THE INCOME TAX ACT 1961, WITHOUT APPRECIATING THE FACTS BROUGHT ON REC ORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4 . THAT THE ORDER OF THE LD. CIT (A) - II, KANPUR DATED 04.08.2011 NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE ASSESSING OFFICER DATED 24.09.2007 TO BE RESTORED. 2 . THOUGH VARIOUS GROUN DS ARE RAISED, BUT THEY ALL RELATE TO ESTIMATION OF PROFIT AND THE REQUIREMENT OF MAINTENANCE OF BOOKS OF ACCOUNT. 3 . THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE IS A LIQUOR MERCHANT AND HAS OFFERED ITS INCOME AT RS.1,38,390/ - UNDER S ECTION 44AF OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT'), AS ITS TURNOVER DOES NOT EXCEED RS.40 LAKHS, HAVING ESTIMATED THE INCOME @ 5% OF THE TOTAL TURNOVER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NO TED THAT THE ASSESSEE HAS PAID LICENSE FEE DEPOSITS OF RS.4,36,900/ - AND ALSO PURCHASED FIXED ASSETS AND ACCORDINGLY COMPUTED THE TOTAL EXPENSES INCURRED AT RS.48,46,790/ - . HE ACCORDINGLY FORMED AN OPINION THAT THE ASSESSEE HAS MADE UNEXPLAINED EXPENDITUR E UNDER SECTION 69C OF THE ACT AT RS.9,91,154/ - . THE ASSESSING OFFICER WAS ALSO OF THE VIEW THAT THE TOTAL TURNOVER OF THE ASSESSEE EXCEEDS RS.40 LAKHS, THEREFORE, THE ASSESSEE WAS REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNT AND CANNOT AVAIL THE BENEFIT OF SECTION 44AF OF THE ACT FOR ESTIMATING THE INCOME @ 5% OF THE TOTAL TURNOVER. 4 . ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND FURNISHED EVIDENCE FOR TOTAL PURCHASE OF RS.37,96,890/ - . OUT OF THIS PURCHASE, STOCK OF DESI SHARAB OF RS.3,99,000/ - WAS D E STROYED DUE TO FIRE AND ACCORDINGLY PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : CLOSING STOCK AS ON 31.3.2005 WAS SHOWN AS NIL. THEREFORE, ONLY STOCK AT RS.33,97,890/ - WAS AVAILABLE FOR SALE DURING 2004 - 05 AND THIS STOCK WAS SOLD FOR RS.38,05,636.80. SINCE THE TOTAL SALE WAS LESS THAN RS.40 LAKHS , THE ASSESSING OFFICER HAS ESTIMATED THE PROFIT @ 5% HAVING INVOKED THE PROVISIONS OF SECTION 44A F OF THE ACT. SINCE THE TOTAL SALE WAS LESS THAN RS.40 LAKHS, SECTION 44AA AND 44AB OF THE ACT WAS NOT APPLICABLE. SO FAR AS OTHER EXPENDITURES ARE CONCERNE D, IT WAS EXPLAINED THAT THE ASSESSEE IS LIVING IN A JOINT FAMILY WITH HIS FATHER AND THEY WERE HAVING AGRICULTURAL LAND OF 15 ACRE WHEREFROM THEY EARNED AGRICULTURAL INCOME AND THE EXPENDITURES ARE MET OUT OF AGRICULTURAL INCOME EARNED BY THE ASSESSEE. 5 . THE LD. CIT(A) RE - EXAMINED THE ISSUE IN THE LIGHT OF ASSESSEES CONTENTIONS. BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE, THE LD. CIT(A) HELD THAT SINCE THE TOTAL TURNOVER WAS LESS THAN RS.40 LAKHS, THE ASSESSEE IS ENTITLED FOR BENEFIT OF SECTIO N 44AF OF THE ACT. THEREFORE, HE HA S RIGHTLY ESTIMATED ITS INCOME @ 5% OF THE TOTAL RECEIPTS. SINCE THE SALE IS LESS THAN RS.40 LAKHS, ASSESSEE IS ALSO NOT REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNT. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EXTRAC TED HEREUNDER: - ON PERUSAL OF THE CASE, IT SEEN THAT THE ASSESSEE HAS FILED RETURN OF INCOME DECLARING INCOME @ 5% OF TOTAL RECEIPTS ACCORDING TO THE PROVISIONS OF SECTION 44AF. SALE & PURCHASES HAVE NOT DOUBTED. THEREFORE, CASH FLOW STATEMENT PREPARED BY THE ASSESSEE IS CONSIDERED. THERE HAS NOT BEEN ANY UNEXPLAINED EXPENDITURE U/S 69 C. NOW THE ASSESSEE HAS CLOSING CASH & BANK BALANCES OF RS. 75,246.00. AND THE ASSESSEE HAS ALSO VERIFIED THE LOANS TAKEN DURING CURRENT ASSESSMENT YEAR D THEIR REPAYMENTS DURING THE NEXT ASSESSMENT YEAR, (FROM DIFFERENT RELATIVES & FRIENDS WITH DOCUMENTARY EVIDENCES, AFFIDAVIT & ALL PERSONS FROM WHOM LOANS TAKEN & REPAID WERE PRESENTED BEFORE THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : ASSESSING OFFICER). THE CONTENTS OF VERIFICATION IS AVAILABLE ON THE RECORD M AINTAINED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS MAINTAINED THE SUNDRY CREDITORS AT RS.38,05,636.00 ON PAGE NO - 3 (POINT NO - 7) OF THE ASSESSMENT ORDER, WHICH IS BASICALLY THE SALES FIGURE OF THE ASSESSEE. VERIFICATION OF THE RECORDS MAINT AI N THE SUNDRY CREDITORS AT RS. 37,96,890.00. THE ASSESSING OFFICER HAS CARELESSLY TAKEN THE FIGURE OF SALES ( I.E 38,05,636.00). IN PLACE OF SUNDRY CREDITORS (I.E 38,05,636.00) FROM THE ABOVE FACTS, IT IS OBVIOUS THAT THE ASSESSING OFFICER HAS TAKEN THE WRON G FIGURE IN ORDER, AND THE ORDER AS SUCH IS NOT TENABLE. AS THE INCOME OF THE ASSESSEE IS TAXABLE U/S 44 AF, THE OTHER ADDITIONS MADE BY A.O. HAVE NO RELEVANCE. THEREFORE, ADDITIONS MADE BY A.O. ARE DELETED. 6 . AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND HAS PLA CE D RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER, WHEREAS THE LD. COUNSEL FOR THE ASSESSEE, BESIDES PLACING RELIANCE UPON THE ORDER OF THE LD. CIT(A), HAS CONTENDED THAT THE ASSESSING OFFICER HAS WRONGLY OPINED THAT THE TURNOVER OF THE ASSESSEE WAS MORE THAN RS.40 LAKHS WITHOUT ANY BASIS, WHEREAS THE LD. CIT(A) HAS APPRECIATED THE EVIDENCE FURNISHED BY THE ASSESSEE WITH REGARD TO THE SALE OF LIQUOR. SINCE THE SALES WERE ACCOUNTED FOR, THE SAME CANNOT BE DOUBTED WITHOUT B RINGING ANY COGENT MATERIAL ON RECORD. 7 . HAVING CAREFULLY EXAMINED THE ORDER OF THE LD. CIT(A), WE FIND THAT UNDISPUTEDLY THE TOTAL SALES DECLARED BY THE ASSESSEE WAS RS.38,05,636/ - . THE ASSESSING OFFICER HAS ENHANCED THE SALES HAVING PRESUMED THAT THE LICE NSE FEE WAS DEPOSITED OUT OF THE SALE PROCEEDS. ACCORDINGLY HE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : COMPUTED THE SALES MORE THAN RS.40 LAKHS, BUT TH IS ASSUMPTION IS NOT PROPER, AS THEY ARE NOT SUPPORTED BY ANY EVIDENCE. HOWEVER, THE LD. CIT(A) HAS APPRECIATED THE EVIDENCE PLACED BEFORE HIM IN THE LIGHT OF RIVAL SUBMISSIONS AND HE PROPERLY ADJUDICATED THE ISSUE IN DISPUTE. THE LD. CIT(A) HAS RIGHTLY HELD THAT SINCE THE TOTAL RECEIPT IS LESS THAN RS.40 LAKHS, THE ASSESSEE IS NOT REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNT AND HE HAS RIGHTLY TRE ATED THE INCOME @ 5% OF THE TOTAL RECEIPTS. SINCE NO SPECIFIC INFIRMITY HAS BEEN POINTED OUT IN THE ORDER OF THE LD. CIT(A), WE FIND NO ERROR THEREIN AND ACCORDINGLY WE CONFIRM THE SAME. 8 . IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRON OUNCED IN THE OPEN COURT ON 7.8.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH AUGUST , 2014 JJ: 3007 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )