Income-tax Officer, V. Smt. Savita Dnyaneshwar Gaundar, Ahmednagar

ITA 739/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1014 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B; M K KULKARNI HEERAJ JAIN

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.739/PN/2014 '% % / ASSESSMENT YEAR : 2008-09 ITO, WARD-4. AHMEDNAGAR . / APPELLANT V/S SMT. SAVITA DNYANESHWAR GAUNDAR, L/H OF LATE DNYANESHWAR N. GAUNDAR, BALAMTAKALI, TALUKA : SHEVGAON, DIST AHMEDNAGAR 414 504 PAN NO.AJOPG2503P . / RESPONDENT / APPELLANT BY : SHRI SUDHENDU DAS, JCIT / RESPONDENT BY : SHRI M.K. KULKARNI HEERAJ JAIN & B / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE OR DER DATED 28-01-2014 OF THE CIT(A)-IT/TP, PUNE RELATING TO A SSESSMENT YEAR 2008-09. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 24-03-2009 DECLAR ING TOTAL INCOME OF RS.1,10,950/-. THE CASE WAS SELECTED FOR SC RUTINY / DATE OF HEARING :07.10.2015 / DATE OF PRONOUNCEMENT:09.10.2015 2 ITA NO.739/PN/2014 AND STATUTORY NOTICES WERE ISSUED FROM TIME TO TIME. SINC E THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE TO THE STATUTORY NOTICES ISSUED BY THE AO, THEREFORE, THE AO COMPLETED THE ASSESSMENT EXPARTE U/S.144A OF THE I.T. ACT ON THE BAS IS OF INFORMATION AVAILABLE ON RECORD. SINCE THE ASSESSEE HAD FILE D THE RETURN ELECTRONICALLY AND IN THE RETURN HAS NOT FURNISHED ANY INFORMATION WHATSOEVER IN PARTS A-BS AND PROFIT AND LOSS A CCOUNT AND HAS OMITTED TO FURNISH THE PRELIMINARY INFORMATION AS RE GARDS THE NATURE OF BUSINESS ETC., THE AO DETERMINED THE INCOM E OF THE ASSESSEE AT RS.25,47,600/- WHICH IS THE AGGREGATE OF CASH DEPOSITS MADE IN THE SAVINGS BANK ACCOUNT MAINTAINED WITH NAGAR U RBAN COOPERATIVE BANK LTD., BALAMTAKLI BRANCH. THE ABOVE FIGURE WAS ARRIVED AT BY THE AO FROM THE BANK STATEMENT OBTAINED FROM THE BANK BY ISSUING A LETTER TO THE BANK. 3. BEFORE CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE WAS SERIOUSLY ILL DURING THE TIME OF ASSESSMENT PROCEEDINGS AS HE HAD LO ST CONTROL OVER HIS BRAIN AND WAS IN SEMI-COMA STAGE. HE WAS NOT ABLE TO RECOGNIZE ANYONE NOR HE WAS IN A POSITION TO PERFORM HIS NATURAL DUTIES. THEREFORE, THE ASSESSEE COULD NOT RESPOND TO THE STATUTORY NOTICES SERVED DURING ASSESSMENT PROCEEDINGS. FURTHER , IN THE MEANTIME, THE ASSESSEE HAS EXPIRED. IT WAS EXPLAINED THA T THE CASH DEPOSITS ARE OUT OF SALE OF TEA AND WITHDRAWALS ARE FOR M AKING THE DEMAND DRAFTS OR CHEQUES FOR PURCHASES EFFECTED FROM GUR AJAT TRADERS, JALNA. IT WAS EXPLAINED THAT ALL DEPOSITS ARE OUT OF SALE PROCEEDS AND WITHDRAWALS ARE FOR MAKING PURCHASES. THER EFORE, THE ENTIRE DEPOSITS COULD NOT HAVE BEEN TAXED AND ONLY THE PROFIT ELEMENT ON THE SALE PROCEEDS AT THE BEST CAN BE BROUG HT TO TAX. FOR THE ABOVE PROPOSITION THE ASSESSEE ALSO RELIED ON VARIOUS DECISIONS. 3 ITA NO.739/PN/2014 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DIRECTED THE AO TO APPLY THE PROVISIONS OF SECTIO N 44AF AND DETERMINE PROFIT @5% OF ITS TURNOVER. HE ACCORDINGLY RESTRICTED THE ADDITION AT RS.1,27,380/- BEING 5% OF TOTAL CASH DEPOS ITS OF RS.25,47,600/-. WHILE DOING SO, HE ALSO CONSIDERED THE FACT T HAT THE ASSESSEE IS NO MORE AND THERE ARE NO RECORDS OF THE B USINESS CARRIED ON BY HIM. THE RELEVANT OBSERVATION OF THE CIT(A) AT PARA 2.5 TO 2.7 OF THE ORDER READS AS UNDER : 2.5 I HAVE CAREFULLY CONSIDERED THE FACTS. THE APP ELLANT IS NO MORE. THERE ARE NO RECORDS OF THE BUSINESS CARRIED ON B Y HIM. DURING THE TIME OF ASSESSMENT PROCEEDINGS, THE APPELLANT WAS CR ITICALLY ILL TO EXPLAIN HIS BUSINESS DEALINGS. HENCE, THE APPELLATE OR DER HAS TO BE FRAMED WITHIN THESE CONSTRAINTS. 2.6 IT IS SUBMITTED BEFORE ME, THAT ALL CASH RECEIPTS REPRESENT SALE CONSIDERATION RECEIVED ON SALE OF TEA AND CASH WIT HDRAWALS ARE MADE TOWARDS PURCHASE OF TEA. IT IS STATED THAT PURCHA SES ARE MADE BY GETTING DEMAND DRAFTS PREPARED IN THE NAME OF GU JARAT TRADERS, JALNA. THIS STATEMENT IS A VERIFIABLE STATEMENT, WHICH CAN BE VERIFIED BY CONDUCTING ENQUIRIES WITH THE BANK. I FIND THAT I F THE TRADER PURCHASES GOODS THEN THERE ARE BOUND TO BE SALES AGAINST THE PURCHASES. THEREFORE, I AGREE WITH THE APPELLANT THAT HIS BANK ACCOUNT IN A WAY REPRESENTS HIS TRADING ACCOUNT. 2.7 THE APPELLANT HAS RELIED ON THE DECISION OF DR M SOMASHEKAR VS ACIT (2010) 5 ITR (TRIB) 129 (BANGALORE TRIBUNAL), WHICH HELD THAT THE DEPOSITS IN THE BANK ACCOUNT CANN OT BE TAXED AS INCOME IGNORING THE WITHDRAWALS AGAINST IT. THEREFORE , FOLLOWING HIS DECISION OF THE BANGALORETRIBUNAL, I HOLD THAT THE APPELLANT'S INCOME MAY BE TAXED U/S 44AF @ 5% OF ITS TURNOVER. ACCORDING LY, I RESTRICT THE ADDITION AT RS.1,27,380 BEING 5% OF TOTAL CASH DE POSITS OF RS25,47,600. THE APPELLANT GETS RELIEF OF RS.23,09,279 0/-. 5. AGGRIEVED WITH SUCH ORDER OF THE LD.CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ACCEPTING THE PRODUCTION OF NEW EVIDENCE I N CONTRAVENTION OF RULE 46A OF THE INCOME TAX RULES, 1962. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION OF RS.1,27,380/- BE ING 5% OF TOTAL CASH DEPOSITS OF RS.25,47,600/- IN SAVING BANK ACCOUNT HOLDI NG THAT CASH DEPOSITS REPRESENTED SALES CONSIDERATION. 4 ITA NO.739/PN/2014 3. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND LD.CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IT IS AN ADMITTED FAC T THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS AND IS ALSO NO MORE. FURTHER, THE AO HAS ADDED THE ENTIRE DEPOSITS IN THE BANK ACCOUNTS INSTEAD OF APPLYING THE PROFIT PERCENTAGE ON T HE TURNOVER ESPECIALLY WHEN ALL SALE PROCEEDS OF THE ASSESSEE WERE DE POSITED INTO THE SAME BANK ACCOUNT AND THE WITHDRAWALS WERE UTILIZED FOR PURCHASE OF TEA. THE ASSESSEE BEING A SMALL TRADER AND S INCE THE ASSESSE IS NO MORE, THEREFORE, CONSIDERING THE TOTALITY OF T HE FACTS OF THE CASE, THE ORDER OF THE CIT(A) DIRECTING THE AO TO ADO PT PROFIT RATE OF 5% ON THE TOTAL DEPOSITS IN THE BANK ACCOUNT UNDER T HE FACTS AND CIRCUMSTANCES OF THE CASE IN OUR OPINION IS A REASONED ON E. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE SAME. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A). 7. SO FAR AS THE GROUND OF THE REVENUE RELATING TO CON TRAVENTION OF RULE 46A OF THE INCOME TAX ACT IS CONCERNED, WE FIND AD MITTEDLY THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT A ND THE ONLY DOCUMENT THAT IS AVAILABLE IS THE BANK STATEMENT WHICH IS THE BASIS FOR ADDITION. THE SAID BANK ACCOUNT WAS VERY MUCH AVAILAB LE BEFORE THE AO. THEREFORE, NO PURPOSE WOULD HAVE BEEN SERVED B Y RESTORING THE MATTER TO THE FILE OF THE AO OR CALLING FOR A REMAND RE PORT ON THAT BASIS. IN THIS VIEW OF THE MATTER WE DISMISS THE GROUND RAISED BY THE REVENUE ON THIS ISSUE BEING DEVOID OF ANY MERIT 5 ITA NO.739/PN/2014 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09-10-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 09 TH OCTOBER, 2015. ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. & ( ) , / THE CIT(A)-IP/TP, PUNE 4. & / THE CIT-IT/TP, PUNE 5. 6. ) ,,-, -, / DR, ITAT, A PUNE; 1 / GUARD FILE. / BY ORDER , ) , //TRUE C ) , //TRUE COPY// 34 , - / SR. PRIVATE SECRETARY -, / ITAT, PUNE