SHRI SUNIL JOSHI, Bhopal V. The ACIT 1(1), Bhopal

ITA 704/IND/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4440 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-08-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 10-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: M K SHARMA
• Keywords: Unexplained cash credit; Business income; Peak credit
• Section: 68

Judgement Text

ITA NO. 704/IND/2014 SUNIL JOSHI 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., ..!', #$ # !% BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 704/IND/2014 ASSESSMENT YEAR: 2006-07 SUNIL JOSHI BHOPAL PAN AAUPJ 0778J :: APPELLANT VS ACIT 1(1) BHOPAL :: RESPONDENT /APPELLANT BY SHRI M.K. SHARMA RESPONDENT BY SHRI MOHD. JAVED ! DATE OF HEARING 21.9.2016 '#$% ! DATE OF PRONOUNCEMENT 21.10.2016 ' O R D E R PER SHRI D.T. GARASIA, JM THE PRESENT APPEAL HAS BEEN DIRECTED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A), BILASPUR,CAMP BHOPAL, DATED 31.3.2014. ITA NO. 704/IND/2014 SUNIL JOSHI 2 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM EXECUTION OF CIVIL CONSTRUCTION WORK AND CONSULTANCY SERVICES THROUGH IT S PROPRIETARY CONCERN JOSHI CONSTRUCTION. DURING THE C OURSE OF HEARING, THE ASSESSING OFFICER VERIFIED TIJORI ACC OUNT, IN WHICH THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE COULD NOT PROVE THE DAY TO DAY TRANSACTION APPEARING IN THIS TIJORI ACCOUNT. THEREFORE, THE ASSES SING OFFICER HAS MADE THE ADDITION OF RS. 15,08,000/- AS UNEXPLAINED INCOME OF THE ASSESSEE FROM NON-GENUINE CREDIT. SIMILARLY, HE HAS ALSO MADE THE ADDITION OF RS.75,000/- AND RS.1,80,774/-. THEREFORE, THE ASSES SING OFFICER HAS MADE THE ADDITION OF RS.17,63,774/-. THE ASSESSING OFFICER WAS OF THE VIEW THAT IT IS UNEXPLAIN ED CASH CREDIT IN THE HANDS OF THE ASSESSEE. THEREFORE, HE HAS MADE THE ADDITION U/S 68 OF THE ACT.THE MATTER WAS CARRI ED IN APPEAL TO THE LEARNED CIT(A) AND THE LEARNED CIT(A) ITA NO. 704/IND/2014 SUNIL JOSHI 3 DISMISSED THE APPEAL OF THE ASSESSEE. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ACCOUNTANT OF THE ASSESSEE BY MISTAKE CARRIED A SET OF PRINT OUT OF BOOKS OF ACCOUNTS WHICH WAS UNFINALISED COPY OF COMPUTER FILE AND THAT WAS AN ABANDONED FILE IN THE COMPUTER. THE BOOKS OF ACCOUNTS WERE IMPOUNDED BY THE ASSESSING OFFICER. THE ASSESS EE REALISED THAT THIS SET OF ACCOUNTS ARE NOT AUDITED BOOKS OF ACCOUNTS, THEREFORE, HE REQUESTED TO MAKE THE AUDIT OF THE BOOKS OF ACCOUNTS BUT THE ASSESSING OFFICER DID NOT ALLOW. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE BOOKS OF ACCOUNTS IMPOUNDED BY THE ASSESSING OFFICER COULD NOT BE EXPLAINED IN ANY MANNER BECAUSE THEY ARE INCORRECT ENTRIES PASSED BY A NOVICE DATA ENTRY OPERATOR , WHO DID NOT HAVE GOOD KNOWLEDGE OF ACCOUNTING ENTRIES . THE DATA TIJORI ACCOUNT IS NOTHING BUT CASH IN HAND IN ITA NO. 704/IND/2014 SUNIL JOSHI 4 NORMAL CASH BOOK AND THIS AMOUNT IS TRANSFERRED TO TIJO RI SAFE ACCOUNT AND WHENEVER IT IS NEEDED, IT WAS TAKEN FR OM TIJORI AND TRANSFERRED TO CASH BOX AND THIS TIJORI ACCOU NT IS NOTHING, BUT A CONTRACT RECEIPT AND SECTION 68 IS NOT APPLICABLE. THEREFORE, NO ADDITION CAN BE MADE. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DEC ISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF JATIA INVESTM ENT CO.; 119 CTR (CAL) 372 WHEREIN IT WAS HELD THAT IF THE RE IS AN ENTRY IN THE CASH BOOK, SECTION 68 WILL NOT BE APPL ICABLE. THEREFORE, 8% OF THE TURNOVER SHOULD BE APPLIED. 4. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND CONSULTANCY SERVICES. DURING THE C OURSE OF HEARING BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS ITA NO. 704/IND/2014 SUNIL JOSHI 5 SUBMITTED BANK DETAILS, BILLS AND VOUCHERS AND DURING T HE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS CREDITED THE AMOUNT OF RS. 15,08,000/- ON ACCOUNT OF TIJORI ACCOUN T AND RS.75,000/- ON ACCOUNT OF UNSECURED LOAN AND PERSONAL ACCOUNT IN CASH BOOK AND THE ASSESSING OFFICER FOUND THAT THE AMOUNT WAS CREDITED IN TIJORI ACCOUNT AND THE SAME AMOUNT WAS CREDITED IN THE CASH BOOK AND SUBSEQUENTLY WHOLE THE ACCOUNT WAS SQURED UP FROM CASH BOOK BY DEBITING THE TIJORI ACCOUNT. THE AMOUNT WAS DEBITED TO TIJORI ACCOUNT AND WAS DEBITED FROM CASH BOO K. THE ASSESSEE HAS INTRODUCED UNEXPLAINED CASH CREDIT TO TIJORI ACCOUNT BELOW RS.20,000/-. THUS, THE ASSESSIN G OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS INTRODUCE D UNEXPLAINED PEAK CREDIT IN CASH BOOK BY CREDITED TIJOR I ACCOUNT, THEREFORE, HE HAS MADE THE ADDITION U/S 68 OF THE ACT. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. FOR MAKING ADDITION U/S 68 THERE MUST BE THRE E ITA NO. 704/IND/2014 SUNIL JOSHI 6 INGREDIENTS I.E. TO SAY THERE SHOULD BE CREDITWORTH INESS, CAPACITY AND GENUINENESS OF THE PARTIES, WHICH IS NOT PROVED IN THIS CASE. IN THIS CASE, THE ASSESSEE HAS INTRODUCED CASH CREDIT IN THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER HIMSELF HAS MADE PEAK ADDITION OF RS.15,08,000/-, THEREFORE, WE ARE OF THE VIEW THAT T HAT IF THE ADDITION HAS TO BE MADE U/S 68 OF THE ACT, PEAK TH EORY WILL NOT BE APPLICABLE. THEREFORE, THE PLEA OF THE ASS ESSING OFFICER IS NOT MAINTAINABLE. 6. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS AMOUNT OF TIJORI ACCOU NT AND PERSONAL AMOUNT IN TIJORI ACCOUNT RS.16,22,000/- IS THERE AND IN PERSONAL ACCOUNT RS.1,80,774/- IS FOUND. THEREFORE, OF THIS AMOUNT TOTALING TO RS.18,38,774/- IS BUSINESS RECEIPT AND NP SHOULD BE APPLIED TO THIS BUS INESS RECEIPT. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE DIRECT THE ASSESSING OFFICER TO APPLY 8% ON TOTAL TUR NOVER OF ITA NO. 704/IND/2014 SUNIL JOSHI 7 RS.18,02,774/-. AS WE HAVE ESTIMATED THE NP, THE ASSES SEE IS NOT ENTITLED FOR ANY DEDUCTION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PAR TLY ALLOWED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 21 OCTOBER, 2016 . SD/- SD/- ( ..!') (..) #$ ( (O.P.MEENA) (D.T.GARASIA) ACCOUNTANT MEMBER J UDICIAL MEMBER (') / DATED : 21 OCTOBERR, 2016. DN/ ITA NO. 704/IND/2014 SUNIL JOSHI 8