RAJESH KUMAR GUPTA, Alwar V. ITO, Alwar

ITA 734/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5415 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 16-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJ MEHRA J DHK
• Section: 40A(3); 143(3); 147; 148; 28; 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 734/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 SHRI RAJESH KUMAR GUPTA PROP.: M/S. HUNDIWALA JEWELLERS GOL MARKET, RAJGARH CUKE VS. THE ITO WARD- 1 (4) ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABTPG 9506 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY :SHRI MANISH AGARWAL FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJ MEHRA, JCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16/02/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 12/04/2016 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), ALWAR DATED 10-09-2015 FOR THE ASSESSMENT YEAR 2006-07 WHEREIN THE ASSESSEE IS AGGRIEVED THAT THE LD. CIT( A) HAS ERRED IN:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE ADDI TION OF RS. 1,92,599/- MADE U/S 40A(3) OF THE I.T. ACT, 1961 WI THOUT APPRECIATING THE FACT THAT RETURN OF INCOME WAS FIL ED BY THE ASSESSEE ON PRESUMPTIVE BASIS U/S 44AF OF THE I.T. ACT, 1961 AND THEREFORE, NO FURTHER DISALLOWANCE U/S 40A(3) C OULD HAVE ITA NO.734/JP/2015 SHRI RAJESH KUMAR GUPTA VS. ITO, WARD- 1(4), ALWAR . 2 BEEN MADE. THEREFORE, THE ADDITION OF RS. 1,92,599/ - DESERVES TO BE DELETED. WITHOUT PREJUDICE TO THE GROUND OF APPEAL NO. 01 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE DISA LLOWANCE MADE U/S 40A(3) BY IGNORING THE EXCEPTIONAL CIRCUMS TANCES AS ENUMERATED UNDER RULE 6DD AND THE NECESSARY EVID ENCES SUBMITTED IN SUPPORT OF THE CLAIM. THUS THE DISALLO WANCE SO MADE DESERVES TO BE DELETED. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A SMALL BUSINESSMAN HAVING PROPRIETORSHIP KNOWN IN THE NAME OF M/S. HUN DIWALA JEWELLERS IN THE SMALL TOWN OF RAJGARH, DISTT. ALWAR . THE RETUR N OF INCOME WAS FILED BY THE ASSESSEE AT AN INCOME OF RS. 1,17,667/- U/S 44AF OF THE ACT WHICH WAS INITIAL PROCESSED. CONSEQUENT TO SURVEY, THE AS SESSMENT WAS REOPENED BY ISSUANCE OF NOTICE U/S 148 DATED 22-03-2013 ON T HE GROUND THAT THE ASSESSEE HAS MADE CASH PURCHASES IN EXCESS OF RS. 2 0,000/- IN VIOLATION TO PROVISIONS OF SECTION 147 R.W.S. SECTION 143(3) OF THE ACT IN WHICH RETURNED INCOME U/S 44AF WAS ACCEPTED AND THUS ADD ITION WAS MADE. 2.2 IN FIRST APPEAL, THE ADDITION WAS REDUCED. HOWE VER, THE LD. CIT(A) CONFIRMED THE ADDITION U/S 40A(3) OF THE ACT BY FOL LOWING OBSERVATIONS. 5.7 HOWEVER, I FIND FORE IN THE CONTENTIONS OF THE APPELLANT THAT PROVISIONS OF SECTION 40A(3) OF THE I.T. ACT APPLICABLE FOR THIS YEAR DO PROVIDE FOR MAKING A DI SALLOWANCE OF ONLY 20% OF THE AMOUNT OF CASH PURCHASES MADE EXCEE DING RS. ITA NO.734/JP/2015 SHRI RAJESH KUMAR GUPTA VS. ITO, WARD- 1(4), ALWAR . 3 20,000/-. THE APPELLANT HAS PLACED ON RECORD A COPY OF THE ORDER PASSED BY THE AO U/S 154 OF THE I.T. ACT WHEREIN A RELIEF TO THE EXTENT OF RS. 7,70,396/- HAS ALREADY BEEN GIVEN ON ACCOUNT OF DISALLOWANCE OF RS. 9,62,995/- MADE BY THE AO. THER EFORE, I CONFIRM A DISALLOWANCE OF 20% OF THE TOTAL PURCHASE S OF RS. 9,62,995/- WHICH COMES TO RS. 1,92,599/- U/S 40A(3) OF THE I.T. ACT. 2.3 AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 2.4 THE LD. COUNSEL FOR THE ASSESSEE ASSAILS THE AD DITION AND THE LD. COUNSEL FOR THE ASSESSEE FILED THE WRITTEN SUBMISSI ON IN WHICH THE SUMS AND SUBSTANCES RAISES FOLLOWING PLEAS. (I) ACCORDING TO SECTION 44AF, THE ASSESSEE WAS TO BE ASSESSED ON PRESUMPTIVE BASIS I.E. @ 5% NET PROFIT AND NO FURTHER ADDITION CAN BE MADE. IN THIS REGARD NOTHIN G IS WRONG IN THE TRADING ACTIVITIES AND THERE HAS BEEN FOUND A TECHNICAL ISSUE OF SECTION 40A(3) OF THE ACT. (II) SECTION 44AF BEGINS WITH A NON-OBSTANTE CLAUSE AND SPECIFICALLY BARS THE APPLICATION OF PROVISIONS OF SECTION 28 TO 43C WHICH INCLUDES SECTION 40A(3) AS WELL. THERE FORE, IT IS CLEAR THAT WHEN THE HAS DECLARED HIS INCOME U/S 40A(3) OF THE ACT, NO FURTHER DISALLOWANCE U/S 40A(3) CAN BE MADE, (III) THE LD. AR RELIED ON THE CASE OF ITAT AHEMDAB AD BENCH IN THE CASE OF GOPALSINGH R RAJPUROHIT VS. AC IT, 94 TTJ 865 WHEREIN IT HAS BEEN HELD THAT ONCE THE RETU RN IS FILED U/S 44AF NO FURTHER DISALLOWANCE COULD BE MADE U/S 40A(3) OF THE I.T. ACT ITA NO.734/JP/2015 SHRI RAJESH KUMAR GUPTA VS. ITO, WARD- 1(4), ALWAR . 4 2.5 ADVERTING TO ALTERNATIVE GROUND, THE LD. COUNSE L FOR THE ASSESSEE CONTENDS THAT SINCE ALL THE PARTIES FROM WHOM THE P URCHASES WERE MADE WERE RESIDING IN VILLAGES AND HAVING NO BANKING FAC ILITIES BECAUSE OF WHICH THEY HAD INSISTED THE ASSESSEE FOR MAKING PAY MENT IN CASH TOWARDS THE SALE OF THEIR PERSONAL ORNAMENTS TO THE ASSESSE E AND THUS IT IS CLEAR THE CASE OF THE ASSESSEE IS CLEARLY COVERED BY RULE 6DD (G) OF THE INCOME-TAX RULES, 1962 INASMUCH AS THE EXCEPTIONAL CIRCUMSTANC ES SPECIFIED THEREUNDER EXISTED IN THE CASE OF ASSESSEE AND THAT BEING SO, NO ADDITION U/S 40A(3) OF THE ACT COULD HAVE BEEN MADE. RELIANC E IS PLACED BY THE LD. AR OF THE ASSESSEE AS UNDER:- (I) PACL INDIA LTD. VS. ACIT , 38 DTR 1 (JAIPUR ) (II) CIT VS. INTERSEAS, 40 DTR 143 (KER.) (III) SHREE SALASAR OVERSEAS V DCIT 107 DTR 225 (JA IPUR) 2.6 THE LD. DR IS HEARD. 2.7 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. RESPECTFULLY FOLLOWING THE DEC ISION OF ITAT AHEMDABAD BENCH IN THE CASE OF GOPALSINGH R RAJPURO HIT VS. ACIT, (SUPRA), I HOLD THAT ONCE THE ASSESSEE HAS FILED HI S RETURN U/S 44AF, NO FURTHER DISALLOWANCE CAN BE MADE U/S 40A(3) OF THE ACT. IT IS NOTEWORTHY THAT IN THIS CASE NO TRADING IRREGULARITY WAS FOUND AND ADDITION HAS BEEN SUSTAINED ONLY ON TECHNICAL ISSUE OF SECTION 40A(3) OF THE ACT. THE ITA NO.734/JP/2015 SHRI RAJESH KUMAR GUPTA VS. ITO, WARD- 1(4), ALWAR . 5 PRESUMPTIVE SYSTEM OF TAX U/S 44AF STARTS WITH NON- OBSTANTE CLAUSE AND OVERRIDES OTHER PROVISIONS. IN VIEW THEREOF, THERE IS NO JUSTIFICATION IN MAKING THE ADDITION WHICH IS DELETED. SINCE THE ADD ITION IS DELETED ON MERITS, THERE IS NO NEED TO GO INTO ALTERNATIVE GRO UND. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED. 3.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/04/20 16. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 12 /04/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO:- 1. VIHYKFKHZ@ THE APPELLANT- SHRI RAJESH KUMAR GUPTA, RAJGARH 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 1(4), ALWAR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 734/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR