NIZAR NOORALI GOVANI, MUMBAI V. ITO 19(3)(3), MUMBAI

ITA 7127/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1089 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-11-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 05-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMARDR
• Assessee Lawyers: DEEPAK THARASHWALA
• Section: 143(3); 131; 69

Judgement Text

ITA NO. 712 7/M/2013 NIZAR NOORA LI GOVANI 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, MU MBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.7127/MUM/2013 (ASSESSMENT YEAR- 2005-06) NIZAR NOORALI GOVANI , FLAT NO.1, HILL VIEW CHS, 241, HILL ROAD, BANDRA (WEST), MUMBAI-400050 PAN:AGBPG9175H VS. INCOME TAX OFFICER, WARD NO. 19(3) (3), MUMBAI-400007. (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. DEEPAK THARASHWALA -AR REVENUE BY : SH. SUMAN KUMAR-DR DATE OF HEARING : 11.04.2017 DATE OF PRONOUNCEMENT : 28.04.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. CIT (A)-5, MUMBAI DATED 23.01.2013 FOR AY- 2005-06. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUND OF APPEAL: (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDING THE D ISALLOWANCE OF A SUM OF RS.29,09,586/- DEPOSITED IN HIS BANK ACCOUNT AS UNE XPLAINED MONEY UNDER SECTION 69A WITHOUT CONSIDERING THE FACTS OF THE CASE AND I N ITS CORRECT PERSPECTIVE AND IGNORING THE EXPLANATION AND PROOF AS TO THE SOURCE OF DEPOSIT IN THE BANK ACCOUNT, AS SUBMITTED BY THE APPELLANT, AT THE TIME OF THE ASSE SSMENT AS WELL AS AT THE TIME OF APPEAL. (II) HENCE, THE TOTAL INCOME AS REDUCED BY RS.29,09,586/ -BY DELETING THE ADDITION MADE UNDER SECTION 69A OF THE INCOME TAX ACT AND THE INC OME OF THE ASSESSEE BE ASSESSED UNDER SECTION 44AF AT RS. 145479/-BEING 5% OF THE T OTAL SALE PROCEED OF RS. 2909586/-. 3. BRIEF FACTS OF THE CASE ARE THAT FOR THE RELEVANT A SSESSMENT YEAR THE ASSESSEE FILED RETURN OF INCOME ON 31 OCTOBER 2006 DECLARING INCOME OF RS.49,744/-. THE ASSESSMENT WAS COMPLETED ON 27 DECEMBER 2007 UN DER SECTION 143(3) OF ITA NO. 712 7/M/2013 NIZAR NOORA LI GOVANI 2 THE ACT. THE ASSESSING OFFICER WHILE PASSING THE AS SESSMENT ORDER MADE THE ADDITION UNDER SECTION 69A OF RS.29,09,586/-. ON AP PEAL BEFORE COMMISSIONER (APPEALS) THE ADDITION WAS SUSTAINED. FURTHER, AGGR IEVED BY THE ORDER OF COMMISSIONER (APPEALS) THE ASSESSEE HAS FILED PRESE NT APPEAL BEFORE US. 4. WE HAVE HEARD THE LEARNED AR OF THE ASSESSEE AND TH E LEARNED DR FOR REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L EARNED AR OF THE ASSESSEE ARGUED THAT ASSESSEE IS THE SELF-EMPLOYED, MARKETIN G THE PRODUCTS OF M/S. HINDUSTAN COCA-COLA MARKETING COMPANY PRIVATE LIMIT ED ON BEHALF OF ITS DISTRIBUTOR M/S SILVER LINE MARKETING AND EARNED CO MMISSION OF SALES AFFECTED ON THEIR BEHALF. THE ASSESSEE ALSO SELLS ON HIS OWN ACCOUNT ON PURCHASES MADE BY HIM AND SUPPLY TO THE PARTIES . IT WAS FURTHER ARGUED THAT DURING THE RELEVANT ASSESSMENT YEAR UNDER THE APPEAL THE ASSESSEE HAD R EFLECTED THE SALES OF RS.7,96,600/- WHICH WAS FROM THE PURCHASES MADE BY HIM ON HIS OWN FOR SUPPLY TO THE PARTIES. THE GROSS PROFIT ON SUCH SAL E IS REFLECTED AT RS. 1,61,537/- WHICH IS NEARLY 20% OF SUCH SALES. THE GROSS PROFI T IN THESE SELLS IS HIGHER AS THE APPELLANT HAS TO PROCURED AND STORE THE MATERIA L WHICH IS SUPPLIED ON DEMAND TO THE CUSTOMERS. HOWEVER, THE MARGIN EARNED BY THE ASSESSEE ON THE SALES ON BEHALF OF SILVER LINE MARKETING IS A MAXIM UM OF 5% OF SUPPLY BASED ON THE INCENTIVE AND THE SCHEME OFFERED BY THE COMP ANY. THE ASSESSEE EFFECTED THE SALES OF RS. 21,14,148/-ON BEHALF OF SILVER LIN E MARKETING. THE ASSESSEE COLLECTED THE MONEY FROM THE PARTIES TO WHOM THE MA TERIAL WAS SUPPLIED ON BEHALF OF M/S SILVER LINE MARKETING AND WAS DEPOSIT ED IN HIS SAVING ACCOUNT WITH DEVELOPMENT AND CREDIT BANK AND TRANSFERS THE AMOUNT DUE TO M/S SILVER LINE MARKETING BY DIRECT TRANSFER/ACCOUNT PAYEE CHE QUES. THE ENTIRE SALE TRANSACTION INCLUDING THE PERSONAL TRADING IS RS.29 ,10,748/- OUT OF WHICH THE ASSESSEE HAS PAID A SUM OF RS. 25,74,960/- TO M/S S ILVER LINE MARKETING FOR THE SALES AFFECTED ON THEIR BEHALF. THE ASSESSING OFFIC ER OBTAINED THE ADDRESSES OF SH. HUSSIAN CHARANIA PROPRIETOR OF M/S SILVER LINE MARKETING FROM DEVELOPMENT CREDIT BANK AND ISSUED SUMMONS UNDER SE CTION 131 TO VERIFY THE TRANSACTION. THE ASSESSEE WAS INFORMED BY THE ASSES SING OFFICER THAT NONE HAD ATTENDED FORM SILVER LINE MARKETING IN RESPONSE TO THE SUMMONS ISSUED TO ITA NO. 712 7/M/2013 NIZAR NOORA LI GOVANI 3 THEM. NO FURTHER ACTION WAS TAKEN AGAINST THE SAID FORM BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WRONGLY PRESUMED TH AT IF THE PRODUCT WAS PROCURED THROUGH SILVER LINE MARKETING AND SOLD ON CASH BASIS THAN AS TO WHY THE SALE PROCEED WERE DEPOSITED IN ASSESSEES ACCOU NT. THE SAID AMOUNT AS PER THE ASSESSING OFFICER SHOULD HAVE BEEN DEPOSITED IN THE SILVER LINE MARKETING ACCOUNT. THE ASSESSING OFFICER FURTHER OBSERVED THA T SILVER LINE MARKETING HAS NOT FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2005 - 06. THE ASSESSING OFFICER ADDED THE ENTIRE TRANSACTION AS UNEXPLAINED MONEY U NDER SECTION 69A OF THE ACT IN THE INCOME OF ASSESSEE. IT WAS FURTHER ARGUED B Y LEARNED AR OF THE ASSESSEE THAT IS THE TAX PRACTITIONERS WHO REPRESENTED THE A SSESSEE DURING THE ASSESSMENT PROCEEDINGS WRONGLY PRESENTED THE FACTS BEFORE THE ASSESSING OFFICER THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF GARMENTS AND CLOTH AND ALSO DERIVED INCOME FROM OTHER SOURCES. THE ASSESSEE NEVER ENGAG ED IN THE BUSINESS OF GARMENT OR CLOTHES THE FACTS WERE WRONGLY PRESENTED BEFORE ASSESSING OFFICER. THE LEARNED AR FOR THE ASSESSEE FURTHER ARGUED THAT DURING THE FIRST APPELLATE STAGE THE ASSESSEE FILED WRITTEN SUBMISSION BEFORE LD CIT(A) VIDE LETTER DATED 08.03.2010, THE SUBMISSION OF THE ASSESSEE WERE REM ANDED TO THE ASSESSING OFFICER. ON THE OTHER HAND, LD. DR FOR THE REVENUE ARGUED THAT THE ASSESSEE IS TAKING INCONSISTENT STAND BEFORE THE AO AND THE LD. CIT(A). BEFORE THE AO, THE ASSESSEE CONTENDED THAT HE IS ENGAGED IN THE BUSINE SS OF GARMENTS AND CLOTHES, HOWEVER, BEFORE THE LD. CIT(A), THE ASSESSEE CONTEN DED THAT HE IS DOING THE BUSINESS OF SUPPLY OF PRODUCTS OF HINDUSTAN COCA-C OLA MARKETING COMPANY PVT. LTD. UNDER THE DISTRIBUTORSHIP OF SILVER LINE MARKETING. THE ASSESSEE FAILED TO SUBSTANTIATE HIS CONTENTION BEFORE THE AO AS WEL L AS BEFORE THE LD. CIT(A). THE AO HIMSELF FIND OUT THE ADDRESS OF PROPRIETOR O F SILVER LINE MARKETING. THE PROPRIETOR OF SILVER LINE MARKETING IS CLOSE RE LATIVE OF ASSESSEE. THE ASSESSEE HAS NOT PROVED THE FACTS, AS TO HOW THE AM OUNT WAS DEPOSITED IN ASSESSEES ACCOUNT. THE COPY OF SUBMISSION DATED 21 .08.2013 ALLEGEDLY FILED BY ASSESSEE BEFORE THE LD. CIT(A) DOES NOT BEAR THE SI GNATURE OF ASSESSEE OR HIS REPRESENTATIVE. THE COPIES OF THE CONFIRMATION FILE D BY ASSESSEE ARE STEREO TYPE CONFIRMATION CONTAINING THE SIMILAR LANGUAGE WHICH IS NOT HELPFUL TO THE ITA NO. 712 7/M/2013 NIZAR NOORA LI GOVANI 4 ASSESSEE. AS NO QUANTITY OF MATERIAL IS MENTIONED I N ALL THOSE CONFIRMATIONS. IN THE REJOINDER ARGUMENT, THE LD. AR OF THE ASSESSEE ARGUED THAT FOR VERIFICATION OF THE CONFIRMATION AND THE STATEMENT OF ACCOUNT, T HE MATTER MAY BE SET-ASIDE TO THE FILE OF LOWER AUTHORITIES. IT WAS FURTHER ARGUE D THAT IN GROUP CASE THE TRIBUNAL HAS SET-ASIDE THE CASE TO THE FILE OF AO F OR DECIDING THE CASE AFRESH. THE LD AR FURTHER PRAYED THAT THE INCOME OF ASSESSE E MAY BE ASSESSED UNDER SECTION44AF. THE ASSESSEE MADE SUBMISSION TO THE L D CIT(A) BUT THE SAME WAS NOT CONSIDERED WHILE PASSING THE IMPUGNED ORDER . 5. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE AO DUR ING THE ASSESSMENT NOTICED THAT THE ASSESSEE IS CHANGING HIS STAND REGARDING T HE NATURE OF BUSINESS. THE ASSESSEE INITIALLY STATED THAT HE IS ENGAGED IN THE BUSINESS OF GARMENTS AND THEREAFTER STARTED CLAIMING THAT HE IS A COMMISSION AGENT AND DISTRIBUTING THE PRODUCTS OF M/S HINDUSTAN COCA COLA AFTER PROCURING FROM ITS DISTRIBUTOR M/S SILVER LINE MARKETING AND SOLD THE SAME ON CASH BAS IS AND THOSE SALE PROCEEDS WERE DEPOSITED IN HIS ACCOUNT. THE ASSESSEE RETAINS THE AMOUNT OF 5% OF SERVICE CHARGE OUT OF THE SALE PROCEED. THE CONTENTION OF A SSESSEE WAS NOT ACCEPTED BY AO AND THE ENTIRE DEPOSIT OF RS. 29,09,586/- WAS AD DED IN THE INCOME OF ASSESSEE U/S 69 ON ACCOUNT OF UNEXPLAINED MONEY. BE FORE THE LD. CIT(A), THE ASSESSEE FILED DOCUMENTS ALONG WITH WRITTEN SUBMISS ION. THE DOCUMENTS OF ASSESSEE WERE REFERRED TO THE AO FOR HIS REMAND REP ORT. THE AO FURNISHED HIS REMAND REPORT ALONG WITH LETTER DATED 04.09.2013. I N THE REMAND REPORT, THE AO OBJECTED THAT NO SUPPORTING SALES BILLS OR CASH MEM O WERE PRODUCED FOR VERIFICATION. THE AO ALSO MENTIONED IN HIS REPORT THAT THESE DOCUMENT WERE NOT FILED DURING THE COURSE OF ASSESSMENT PROCEEDIN G. M/S SILVER LINE MARKETING IS FAMILY CONCERN OF THE ASSESSEE. THE CO NFIRMATION AND THE CASH MEMO DO NOT CONTAIN THE COMPLETE ADDRESS OF PURCHAS ERS, VAT NUMBER AND PHONE NUMBER ETC. THE REMAND REPORT WAS SUPPLIED TO THE ASSESSEE FOR HIS COMMENT. THE ASSESSEE FILED HIS COMMENT VIDE REPLY DATED 28.09.2013. THE ASSESSEE OBJECTED ABOUT THE REMAND REPORT OF THE AO . IN OBJECTION THE ASSESSEE CONTENDED THAT THE ASSESSEE FILED COPY OF FINANCIAL STATEMENT BEFORE ITA NO. 712 7/M/2013 NIZAR NOORA LI GOVANI 5 THE AO ALONG WITH CASH BOOK, BANK BOOK AND THE AO W RONGLY HOLD THAT ENTIRE DOCUMENTS PRODUCED BY THE ASSESSEE ARE NOT AUTHENTI C. AFTER CONSIDERING THE REMAND REPORT AND THE CONTENTION OF THE ASSESSEE, T HE LD. CIT(A) CONCLUDE THAT THE ASSESSEE HAS NOT ESTABLISH THE SOURCE OF AMOUNT OF RS. 29,09,586/- DEPOSITED IN THE ACCOUNT OF ASSESSEE FROM THE SALE OF COCA-CO LA BEVERAGE. THE OTHER SUBMISSION OF ASSESSEE IS THAT PURCHASES FROM SILVE R LINE MARKETING HAVE NOT BEEN PROVED BEYOND REASONABLE DOUBT. THE ASSESSEE H AS NOT PRODUCED THE EVIDENCE TO ESTABLISH THE TRANSACTION WITH SILVER L INE MARKETING AS SILVER LINE MARKETING HAS NOT FIELD RETURN OF INCOME. 6. WE HAVE SEEN THAT THE ASSESSEE HAS PLACED ON RECORD THE STATEMENT OF BANK ACCOUNT IN DEVELOPMENT CREDIT BANK SHOWING BANKING TRANSACTION WITH M/S SILVER LINE MARKETING (PB 10-15). SIMILARLY, THE AS SESSEE HAS FILED STATEMENT OF ACCOUNT OF SILVER LINE MARKETING IN DEVELOPMENT CREDIT BANK SHOWING THE BANKING TRANSACTION WITH M/S HINDUSTAN COCA-COLA MA RKETING CO. PVT. LTD. (PAGE 16 TO 40 OF PB). THE ASSESSEE HAS ALSO PLACED ON RECORD THE CASH MEMO OF VARIOUS PRODUCTS OF HINDUSTAN COCA-COLA MARKETIN G CO. LTD. (PAGE 41 TO 45 OF PB) AND THE CASH MEMO ISSUED BY SILVER LINE MARK ETING IN FAVOUR OF ASSESSEE (PAGE 46 TO 48 OF PB) AND VARIOUS CONFIRMA TION FROM THE PURCHASER (PAGE 61 TO 91 OF PB). THESE DOCUMENTARY EVIDENCE A RE PRIMA-FACIE CORROBORATIVE EVIDENCE IN FAVOUR OF ASSESSEE. AS TH E LOWER AUTHORITY HAVE NOT GIVEN ANY FINDING ON THESE DOCUMENTS. MOREOVER, SOM E OF THE DOCUMENTS WERE FILED DURING THE FIRST APPELLATE PROCEEDING. CONSI DERING THE CORROBORATIVE VALUE OF THE EVIDENCE, WE DEEM IT APPROPRIATE TO RE STORE THE CASE TO THE FILE OF AO TO CONSIDER THE CASE AFRESH AND TO PASS THE ORDE R IN ACCORDANCE WITH LAW. WE MAY ALSO OBSERVED THAT THE ASSESSEE MADE A PRAYE R DURING THE ASSESSMENT PROCEEDINGS AS WELL AS BEFORE LD CIT(A) TO HIS INCO ME UNDER SECION44AF ON THE SALE OF DISTRIBUTION ACTIVITY, HOWEVER, THE LOW ER AUTHORITIES HAVE NOT GIVEN ANY FINDING ON SUCH PRAYER. HENCE, WE DIRECT THAT I N ALTERNATIVE THE AO MAY ALSO CONSIDER THE ALTERNATIVE CONTENTION OF THE ASS ESSEE FOR ASSESSING HIS INCOME UNDER SECION44AF OF THE ACT. NEEDLESS TO SAY THAT AO SHALL GRANT SUFFICIENT ITA NO. 712 7/M/2013 NIZAR NOORA LI GOVANI 6 AND ADEQUATE OPPORTUNITY BEFORE PASSING THE ORDER. WITH THESE, OBSERVATIONS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTIC AL PURPOSE. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF APRIL 2017. SD/- SD/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 28/04/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/