Sh. Naveen Kapoor, Rajpura Town V. ITO, Rajpura

ITA 74/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80859 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-08-2014
• Assessment Year: misc
• Appeal Filed On: 13-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 74/CHD/2014 ASSESSMENT YEAR : 2008-09 SHRI NAVEEN KAPOOR, VS THE INCOME TAX OFFIC ER, PROP. M/S SWASTIK JEWELLERS, WARD, # 2412, RAJPURA TOWN. RAJPURA. PAN : AHCPK3734E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI MAHAVIR SINGH DATE OF HEARING : 11.08.2014 DATE OF PRONOUNCEMENT : 10.09.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), PATIAL A DATED 29.10.2013 RELATING TO ASSESSMENT YEAR 2008-09 AGAI NST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING AN ESTIMATED ADHOC AD DITION OF RS. 13,61,038/- BEING ALLEGED PROFIT EARNED IN FOREIGN EXCHANGE BUSINESS WHICH IS ARBITRARY AND UNJUSTIFIED. 2. THAT NO ALLEGED 'SECRET ENQUIRIES' WERE MADE AT T HE PREMISES OF THE ASSESSEE AND RELIANCE ON SUCH REPORTS IS ILLEGAL, A RBITRARY AND UNJUSTIFIED. 3. THAT ALL THE DETAILS IN RESPECT OF THE FOREIGN EXCH ANGE BUSINESS INCLUDING ALL THE BILLS, ETC. PLACED BEFORE THE ASS ESSING OFFICER AND COMMISSIONER OF INCOME TAX(APPEALS) HAVE BEEN BRUSH ED ASIDE AND AS SUCH THE ADDITION UPHELD IS ILLEGAL, ARBITRARY A ND UNJUSTIFIED. 2 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS FURTHER ERRED IN UPHOLDING THE CHARGING OF THE INTEREST UND ER SECTION 234-D OF THE ACT WHICH IS NOT CHARGEABLE IN THE INSTANT CASE . 5. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TA X (APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF T HE CASE AND IS, THUS, UNTENABLE. 3. THE PRESENT APPEAL IS FILED AFTER A DELAY OF TWO DAYS. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE SMALL DEFE CT WAS ON ACCOUNT OF THE FACT THAT THERE WAS A SATURDAY AND S UNDAY AND APPEAL WAS FILED ON THE NEXT WORKING DAY. SO, IN FACT THER E IS NO DELAY. 4. IN THE ENTIRETY OF THE ABOVESAID FACTS AND CIRCU MSTANCES, WE CONDONE THE SAID DELAY AND PROCEED TO DECIDE THE AP PEAL. 5. THE ISSUE RAISED VIDE GROUNDS OF APPEAL NOS. 1 T O 3 IS AGAINST AN ADHOC ADDITION OF RS. 13,61,038/-. 6. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD FILED THE RETURN OF INCOME DECLARING GROSS RECEIPTS OF RS. 3, 36,489/- ON ESTIMATE BASIS AND NET INCOME OF RS. 1,70,000/- WAS DECLARED OUT OF WHICH RS. 1,00,000/- WAS DECLARED ON ACCOUNT OF LAB OUR JOB OF GOLD ORNAMENTS AND RS. 70,000/- ON ESTIMATE BASIS AS COM MISSION INCOME FROM BUSINESS OF MONEY CHANGERS. THE CASE OF THE A SSESSEE WAS PICKED UP FOR SCRUTINY AND IT WAS NOTED THAT ASSESS EE HAD MADE DEPOSITS OF RS. 6,99,94,106/- IN HIS BANK ACCOUNT W ITH CENTURIAN BANK OF PUNJAB LTD., RAJPURA. ON VARIOUS ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER, IT WAS FUND THAT THE ENTRIES PERTAIN TO FOREIGN CURRENCY SOLD BY THE ASSESSEE TO THE BANK. THE ASS ESSEE PRODUCED THE BILL BOOKS AND JUSTIFIED ITS CASE OF SALE OF FO REIGN CURRENCY. THE ASSESSING OFFICER, ON THE OTHER HAND, NOTED THA T THE ASSESSEE HAD NOT DECLARED ANY INCOME ON ACCOUNT OF MONEY EXC HANGE 3 BUSINESS. THEREAFTER, ENQUIRIES WERE MADE THROUGH THE INSPECTOR OF THE WARD TO DETERMINE THE RATE OF DOLLAR PREVALENT AT THE RELEVANT TIME AND THE ASSESSING OFFICER CONCLUDED THAT THE A SSESSEE HAD HIGHER MARGIN OF PROFIT IN SOME CASES OF PURCHASE O F CURRENCY, WHERE SELLING WAS THROUGH BANKS. THE ASSESSING OFF ICER, THUS CONCLUDED THAT THE MARGIN WOULD BE MUCH MORE IN CASE OF SELF UNAUTHORIZED TRANSACTIONS. THE ASSESSING OFFICER IN VIEW THEREOF, APPLIED GP RATE OF 3% TO THE TOTAL TURNOVE R AND ESTIMATED THE GROSS PROFIT AT RS. 20,31,400/- OUT OF WHICH 1/ 3 RD WAS ALLOWED ON ACCOUNT OF EXPENDITURE AND THE BALANCE WAS ADDED AS INCOME FROM BUSINESS IN THE HANDS OF THE ASSESSEE AT RS. 1 3,61,038/-. 7. THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE FINDINGS OF THE ASSESSING OFFICER THAT THE MARGIN I N THE BUSINESS WAS SUBSTANTIAL AND AS THE ASSESSEE WAS NOT MAINTAI NING BOOKS OF ACCOUNT, THE ESTIMATION MADE BY THE ASSESSING OFFIC ER WAS UPHELD. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 8. IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSE E THAT THOUGH ENQUIRIES WERE MADE BY THE ASSESSING OFFICER BUT TH E RESULTS OF THE SAID ENQUIRIES HAVE NOT BEEN CORRECTLY INTERPRETED TO THE EXTENT THAT IN THE YEAR UNDER CONSIDERATION THE DOLLAR RATE WAS AROUND RS. 40/- WHEREAS THE ASSESSING OFFICER AT PAGE 4 HAS GIVEN A NOTING THAT 9600 US DOLLARS WERE PURCHASED ON 17.03.2008 VIDE P URCHASE BILL NO. 3755 AT RS. 62.50 PER USD. THE LD. AR FOR THE ASSESSEE FAIRLY ADMITTED THAT IN THE ABSENCE OF BOOKS OF ACCOUNT, A N ESTIMATION HAD TO BE MADE IN THE HANDS OF THE ASSESSEE. HOWEVER, THE ADHOC ADDITION MADE BY THE ASSESSING OFFICER WAS OF THE H IGHER SIDE. 4 9. THE LD. DR FOR THE REVENUE PLACED STRONG RELIANC E ON THE ORDERS OF THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE ADMITTEDLY WAS ENGAGED IN THE BUSINESS OF MONEY CHANGER AND DURING THE YEAR UNDER CONSIDERATION, HA D ENTERED INTO TRANSACTIONS THROUGH ITS BANK ACCOUNT TOTALING RS. 6.77 CR. THE CASE OF THE ASSESSEE IS THAT THE ESTIMATION OF GP R ATE MADE BY THE ASSESSING OFFICER AT 3% IS ON VERY HIGHER SIDE AS I N THE NATURE OF BUSINESS CONDUCTED BY THE ASSESSEE, THE MARGINS OF PROFITS WERE ON LOWER SIDE. OUR ATTENTION WAS DRAWN TO THE MISTAKE S COMMITTED BY THE ASSESSING OFFICER AND IT WAS POINTED OUT THAT T HE ASSESSING OFFICER HIMSELF HAS NOTED THAT IN SOME OF THE CASES , THE MARGIN WAS 3.1%, 3.13% AND 7.4%. THE LD. AR FOR THE ASSESSEE STRESSED THAT IT IS INCORRECT TO SAY THAT THE ASSESSEE WAS EARNING S UCH HIGH MARGINS OF PROFIT WHEREAS THE DEALINGS AS REPORTED BY THE I NSPECTOR REFLECT THAT MARGIN OF PROFITS IN MOST OF THE CASES WERE ON MUCH LOWER SIDE. IN THE ENTIRETY OF THE ABOVESAID FACTS AND C IRCUMSTANCES, WE FIND NO MERIT IN THE ORDERS OF THE AUTHORITIES BELO W AND IN VIEW OF THE ADMISSION OF THE LD. AR FOR THE ASSESSEE, COMPU TE THE ADDITIONAL INCOME IN THE HANDS OF THE ASSESSEE AT RS. 5,00,000 /- WHICH SHALL BE ASSESSED IN THE HANDS OF THE ASSESSEE OVER AND ABOV E THE INCOME DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITI ON TO RS. 5 LACS OVER AND ABOVE THE RETURNED INCOME. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 11. THE ASSESSEE VIDE GROUND OF APPEAL NO. 4 HAS RA ISED THE ISSUE OF CHARGING OF INTEREST UNDER SECTION 234D OF THE A CT. HOWEVER, 5 DURING THE COURSE OF HEARING, NO ARGUMENTS WERE RAI SED IN RESPECT THEREOF AND HENCE, THE SAID GROUND OF APPEAL IS DIS MISSED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH SEPTEMBER,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10 TH SEPTEMBER,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR/ITAT/CHD