SHRI RAM KARAN YADAV, AJMER V. INCOME TAX OFFICER, WARD-2-3, AJMER

ITA 819/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0545 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 14-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAI SINGH JCIT DHK
• Assessee Lawyers: SUBHASH PORWAL
• Keywords: Unexplained cash credit; Gift; Depreciation
• Section: 44AD; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 816, 819 & 820/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11, 11-12 & 12-13. SHRI RAM KARAN YADAV, 679, JATIYA, VILLAGE SHRI NAGAR, TEHSIL NASIRABAD, AJMER. CUKE VS. THE INCOME TAX OFFICER, WARD 2(3), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABIPY 7191 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SUBHASH PORWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI JAI SINGH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 11.09.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 14/09/2018. VKNS'K@ ORDER PER BENCH : THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THREE SEPARATE ORDERS OF LD. CIT (APPEALS), AJMER ALL DATED 1 ST MAY, 2018 FOR THE ASSESSMENT YEARS 2010-11 TO 12-13. FOR THE ASSESSMENT YEAR 2010-11, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- UNDER THE FACTS & CIRCUMSTANCES OF CASE THE LD. C IT (A) HAS ERRED IN :- (1) ADDITION OF RS. 288492/- BEING AMOUNT OF KCC. (2) ADDITION OF RS. 103226/- FOR DISALLOWANCE OF DEPREC IATION ON SUMO CAR. (3) ADDITION OF RS. 44370/- FOR VARIOUS GIFTS RECEIVED U/SEC. 68. (4) ANY OTHER MATTER WITH THE PRIOR PERMISSION OF CHAIR . 2 ITA NO. 816, 819 & 820/JP/2018 SHRI RAM KARAN YADAV, AJMER. GROUND NO. 1 IS REGARDING ADDITION ON ACCOUNT OF KC C. 2. AT THE TIME OF HEARING, THE LD. A/R OF THE ASSES SEE HAS STATED AT BAR THAT THE ASSESSEE DOES NOT PRESS GROUND NO. 1 AND THE SAME M AY BE DISMISSED AS NOT PRESSED. THE LD. D/R HAS RAISED NO OBJECTION IF THE GROUND NO. 1 OF THE ASSESSEE IS DISMISSED BEING NOT PRESSED. ACCORDINGLY, GROUND N O. 1 OF THE ASSESSEE IS DISMISSED BEING NOT PRESSED. GROUND NO. 2 IS REGARDING DISALLOWANCE OF DEPRECIAT ION ON SUMO CAR. 3. THE ASSESSEE HAS FILED THE RETURN OF INCOME DECL ARING INCOME OF RS. 1,48,880/- UNDER SECTION 44AD OF THE IT ACT AS THE ASSESSEE HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUNT. IN THE ASSESSMENT PROCEE DINGS, THE AO NOTED THAT THE ASSESSEE HAS PURCHASED A SUMO CAR ON 31 ST MARCH, 2010 AT 4.53 PM AND, THEREFORE, WHEN THE SAID VEHICLE WAS NOT PUT TO USE FOR HIS BU SINESS PURPOSES DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE CLAIM OF DEPRECIATION IS NOT ALLOWABLE. HENCE THE AO MADE A N ADDITION OF RS.1,03,226/-. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED. 4. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT WHEN THE ASSESSEE HAS DECLARED HIS INCOME UNDER SECTION 44AD AND THE AO HAS NOT FOUND THE INCOME OF THE ASSESSEE AS LESS THAN AS REQUIRED UNDER THE PROVISIONS OF SECTION 44AD, THEN NO FURTHER ADDITION IS REQUIRED ON ACCOUNT OF DISAL LOWANCE OF DEPRECIATION. HE HAS FURTHER CONTENDED THAT WHEN THE FACT OF PURCHASE OF CAR ON 31 ST MARCH, 2010 IS NOT IN DISPUTE THEN EVEN IF THE ASSESSEE HAS USED THE S AID CAR ONLY FOR ONE HOUR, THE DEPRECIATION AS PER THE PROVISIONS OF THE ACT IS AL LOWABLE. 3 ITA NO. 816, 819 & 820/JP/2018 SHRI RAM KARAN YADAV, AJMER. 5. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ASSESSEE FILE D RETURN OF INCOME AND DECLARED THE INCOME UNDER SECTION 44AD OF THE ACT. IN THE CO MPUTATION OF TOTAL INCOME, THE ASSESSEE HAS NOT CLAIMED THE DEPRECIATION ON THE CA R. HOWEVER, IN THE BALANCE SHEET AS ON 31 ST MARCH, 2010 THE ASSESSEE HAS SHOWN THE DEPRECIATIO N ON THE CAR AT RS. 1,03,226/-. THUS THE AO HAS MADE THE ADDITION OF THE SAID AMOUNT BY TAKING THE SAID AMOUNT OF RS. 1,03,226/- WHICH IS CONSIDER ED BY THE ASSESSEE ONLY FOR THE PURPOSE OF WORKING OUT THE WRITTEN DOWN VALUE OF TH E MOTOR CAR. THE ASSESSEE HAS DECLARED THE PROFIT @ 17.46% AND THE AO HAS NOT FOU ND FAULT IN THE PROFIT DECLARED BY THE ASSESSEE UNDER SECTION 44AD. WE FURTHER NOT E THAT THE PROFIT DECLARED BY THE ASSESSEE IS MUCH MORE THAN THE MINIMUM INCOME TO BE ASSESSED UNDER THE PROVISIONS OF SECTION 44AD AT 8%. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSEE HAS FILED RETURN OF INCOME D ECLARING INCOME UNDER SECTION 44AD OF THE ACT, THEN THE AO COULD HAVE ESTIMATED T HE INCOME OF THE ASSESSEE IF IT WAS FOUND TO BE LESS THAN AS OUGHT TO HAVE BEEN UND ER THE PROVISIONS OF SECTION 44AD OF THE ACT. HENCE THE ADDITION MADE BY THE AO IN THE INCOME DECLARED UNDER SECTION 44AD IS NOT JUSTIFIED AND THE SAME IS DELET ED. GROUND NO. 3 IS REGARDING THE ADDITION OF RS. 44,37 0/- UNDER SECTION 68 OF THE ACT ON ACCOUNT OF CLAIM OF GIFTS. 7. THE ASSESSEE CLAIMED AN AMOUNT OF RS. 44,370/- A S GIFT RECEIVED IN CASH FROM VARIOUS PERSONS. HOWEVER, NEITHER ANY DETAILS OF TH E GIFT OR PERSONS WERE FURNISHED BY THE ASSESSEE. ACCORDINGLY, THE AO REJECTED THE SAID CLAIM AND MADE THE ADDITION 4 ITA NO. 816, 819 & 820/JP/2018 SHRI RAM KARAN YADAV, AJMER. OF THE SAID AMOUNT UNDER SECTION 68 OF THE ACT. ON APPEAL, THE LD. CIT (A) HAS CONFIRMED THE ACTION OF THE AO REGARDING ADDITION O F RS.44,370/- UNDER SECTION 68 OF THE ACT. 8. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE ASSESSEE HAS RECEIVED TOTAL AMOUNT OF GIFT OF RS. 44,370/- FROM VARIOUS PERSONS IN THE VILLAGE AT DIFFERENT OCCASIONS. SINCE THE AMOUNT OF GIFT WAS VERY PETTY, THEREFORE, THE ASSESSEE DID NOT MAINTAIN ANY RECORD OF THE GIFTS AND PARTIC ULARS OF THE PERSONS FROM WHOM THE GIFTS WERE RECEIVED. THE LD. A/R HAS RELIED UP ON THE PROVISIONS OF SECTION 56(2)(VII) OF THE ACT AND SUBMITTED THAT GIFTS RECE IVED NOT EXCEEDING RS. 50,000/- CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE. HEN CE HE HAS CONTENDED THAT WHEN NO ADDITION CAN BE MADE OF THE GIFTS RECEIVED LESS THAN RS. 50,000/- UNDER SECTION 56(2)(VII), THEN THE SAID ADDITION MADE BY THE AO I S UNJUSTIFIED. 9. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE PROVISIONS OF SECTION 56(2)(VII) ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS THE ASSESSEE HAS FAILED TO ESTABLISH THE CLAIM OF GIFT. HENCE WHEN THE AMOUNT WAS INTRODUCED IN THE BOOKS B Y THE ASSESSEE DURING THE YEAR THEN THE AO IS JUSTIFIED IN MAKING THE ADDITIO N UNDER SECTION 68 OF THE ACT. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY DETAIL OR EVIDENCE IN SUPPORT OF THE CLAIM OF GIFT OF RS. 44, 370/- RECEIVED IN CASH DURING THE YEAR UNDER CONSIDERATION. THE CONTENTION OF THE ASS ESSEE IS THAT AS PER PROVISIONS OF SECTION 56(2)(VII) NO ADDITION CAN BE MADE IF THE A GGREGATE AMOUNT IS LESS THAN RS. 50,000/-. WE DO NOT AGREE WITH THIS CONTENTION OF THE LD. A/R OF THE ASSESSEE BECAUSE OF THE REASON THAT THE PROVISIONS OF SECTIO N 56(2)(VII) ARE APPLICABLE ONLY IN 5 ITA NO. 816, 819 & 820/JP/2018 SHRI RAM KARAN YADAV, AJMER. A CASE WHERE THE CLAIM OF GIFT IS NOT DISPUTED. IN A CASE WHERE THE AO HAS ACCEPTED THE CLAIM OF GIFT THEN IN SUCH A SITUATION THE GIFT RECEIVED TO THE EXTENT OF RS. 50,000/- CANNOT BE ADDED TO THE INCOME OF THE ASSES SEE AS PER THE PROVISIONS OF SECTION 56(2)(VII) OF THE ACT. IN THE CASE IN HAN D THE CLAIM OF THE ASSESSEE THAT THE SAID AMOUNT OF RS. 44,370/- IS THE GIFT RECEIVED BY THE ASSESSEE FROM VARIOUS PERSONS/RELATIVES HAS NOT BEEN ESTABLISHED EITHER B Y FURNISHING ANY EVIDENCE OR ANY DETAILS OR EXPLANATION, THEREFORE, A MERE CLAIM OF GIFT WOULD NOT FALL IN THE AMBIT OF PROVISIONS OF SECTION 56(2)(VII) OF THE ACT. THER EFORE, WHEN THE ASSESSEE HAS FAILED TO ESTABLISH THE CLAIM OF GIFT THEN THE SAID AMOUNT HAS TO BE ADDED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. ACCORDINGL Y, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE AUTHORITIES BELOW, QUA THIS ISSUE. A.Y. 2011-12 : 11. FOR THE ASSESSMENT YEAR 2011-12, THE ASSESSEE H AS RAISED THE FOLLOWING GROUNDS :- UNDER THE FACTS & CIRCUMSTANCES OF CASE THE LD. C IT (A) HAS ERRED IN :- (1) ADDITION OF RS. 297961/- FOR KCC ACCOUNT. (2) ADDITION OF RS. 40314/- FOR VARIOUS GIFTS RECEIVED U/SEC. 68. (3) ANY OTHER MATTER WITH THE PRIOR PERMISSION OF CHAIR . GROUND NO. 1 IS REGARDING ADDITION ON ACCOUNT OF KC C. 12. AT THE TIME OF HEARING, THE LD. A/R OF THE ASSE SSEE HAS STATED AT BAR THAT THE ASSESSEE DOES NOT PRESS GROUND NO. 1 AND THE SAME M AY BE DISMISSED AS NOT 6 ITA NO. 816, 819 & 820/JP/2018 SHRI RAM KARAN YADAV, AJMER. PRESSED. THE LD. D/R HAS RAISED NO OBJECTION IF THE GROUND NO. 1 OF THE ASSESSEE IS DISMISSED BEING NOT PRESSED. ACCORDINGLY, GROUND N O. 1 OF THE ASSESSEE IS DISMISSED BEING NOT PRESSED. GROUND NO. 2 IS REGARDING THE ADDITION OF RS. 40,31 4/- UNDER SECTION 68 OF THE ACT ON ACCOUNT OF GIFTS RECEIVED. 13. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/ R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THIS ISSUE IS COMMON AND IDENT ICAL TO THE ISSUE RAISED IN GROUND NO. 3 FOR THE ASSESSMENT YEAR 2010-11. ACCORDINGLY , IN VIEW OF OUR FINDING ON THIS ISSUE FOR THE ASSESSMENT YEAR 2010-11, THIS GROUND OF THE ASSESSEE STANDS DISMISSED. A.Y. 2012-13 : 14. FOR THE ASSESSMENT YEAR 2012-13, THE ASSESSEE H AS RAISED THE FOLLOWING GROUNDS :- UNDER THE FACTS & CIRCUMSTANCES OF CASE THE LD. C IT (A) HAS ERRED IN :- (1) ADDITION OF RS. 289881/- FOR KCC ACCOUNT. (2) ADDITION OF RS. 339635/- FOR DISALLOWANCE OF DEPREC IATION ON JCB. (3) ADDITION OF RS. 43,215/- FOR VARIOUS GIFTS RECEIVED . (4) ANY OTHER MATTER WITH THE PRIOR PERMISSION OF CHAIR . GROUND NO. 1 IS REGARDING ADDITION ON ACCOUNT OF KC C. 15. AT THE TIME OF HEARING, THE LD. A/R OF THE ASSE SSEE HAS STATED AT BAR THAT THE ASSESSEE DOES NOT PRESS GROUND NO. 1 AND THE SAME M AY BE DISMISSED AS NOT 7 ITA NO. 816, 819 & 820/JP/2018 SHRI RAM KARAN YADAV, AJMER. PRESSED. THE LD. D/R HAS RAISED NO OBJECTION IF THE GROUND NO. 1 OF THE ASSESSEE IS DISMISSED BEING NOT PRESSED. ACCORDINGLY, GROUND N O. 1 OF THE ASSESSEE IS DISMISSED BEING NOT PRESSED. GROUND NO. 2 IS REGARDING DISALLOWANCE OF DEPRECIAT ION ON JCB. 16. THE ASSESSEE HAS PURCHASED JCB ON 3 RD JUNE, 2011 AND CLAIMED DEPRECIATION ON THE SAME. THE AO NOTED THAT THE REGISTRATION OF JCB WAS DONE WITH THE RTO ONLY ON 29.08.2011, THEREFORE, THE AO HAS ALLOWED DEPREC IATION FOR 180 DAYS AS AGAINST THE CLAIM OF DEPRECIATION FOR FULL YEAR. THUS THE A O HAS DISALLOWED 50% CLAIM OF DEPRECIATION. THE ASSESSEE CHALLENGED THE ACTION O F THE AO BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED. 17. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBM ITTED THAT THE AO HAS NOT DISPUTED THAT THE ASSESSEE HAS PURCHASED THE JCB ON 3 RD JUNE, 2011 THOUGH THERE WAS A DELAY IN REGISTRATION OF THE SAID VEHICLE/JCB WITH THE RTO. HOWEVER, THE ASSESSEE HAS BEEN USING THIS JCB FOR HIS BUSINESS P URPOSES AND EARNING THE INCOME DURING THE YEAR UNDER CONSIDERATION. THE LD. A/R H AS FURTHER POINTED OUT THAT THE RTO HAS LEVIED A PENALTY OF RS. 5,708/- ON ACCOUNT OF DELAY IN REGISTRATION AND, THEREFORE, THE REGISTRATION WAS GRANTED BY THE RTO WITH EFFECT FROM 11 TH JUNE, 2011. HENCE THE LD. A/R HAS SUBMITTED THAT THE ASSESSEE I S ELIGIBLE FOR DEPRECIATION ON THE JCB FOR FULL YEAR INSTEAD OF 50% RESTRICTED BY THE AUTHORITIES BELOW. 18. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED TH AT NO VEHICLE CAN BE USED PRIOR TO THE REGISTRATION AND, THEREFORE, THE ASSES SEES CLAIM IS NOT ALLOWABLE WHEN THE REGISTRATION OF THE JCB WAS DONE ON 29.08.2011. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8 ITA NO. 816, 819 & 820/JP/2018 SHRI RAM KARAN YADAV, AJMER. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ASSESSEE HAS P URCHASED THE JCB MACHINE VIDE INVOICE DATED 3 RD JUNE, 2011 AND DELIVERY WAS TAKEN ON 6 TH JUNE, 2011. HOWEVER, THE REGISTRATION OF JCB WITH THE RTO WAS DONE ON 29 .08.2011. WE FURTHER NOTE THAT IN THE REGISTRATION CHARGES, THE RTO HAS RECOVERED A PENALTY OF RS. 5708/- ON ACCOUNT OF DELAY IN REGISTRATION AND, THEREFORE, TH E DELAY IN REGISTRATION WAS REGULARIZED BY THE OFFICE OF THE RTO BY LEVYING THE PENALTY. IT IS NOT THE CASE OF THE A.O. THAT THE ASSESSEE HAS NOT USED THE JCB FOR THE BUSINESS PURPOSES AND FURTHER WHEN THE ASSESSEE HAS RECEIVED THE HIRE CHARGES FRO M USE OF JCB DURING THE YEAR UNDER CONSIDERATION, THEN THE MERE DELAY IN REGISTR ATION WOULD NOT NEGATE THE FACT OF USE OF JCB BY THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE JCB IS NOT A TRANSPORTATION VEHICLE BUT A MACHINE USED IN DIGGIN G AND OTHER EXCAVATION OF WORK AND, THEREFORE, PRACTICALLY IT IS POSSIBLE TO USE T HE JCB WITHOUT GETTING THE REGISTRATION. FURTHER, WHEN THE REGISTRATION WAS GR ANTED WITH A PENALTY ON ACCOUNT OF DELAY IN REGISTRATION, THE SAID DEFECT WAS REMOVED BY PAYING THE PENALTY AND ACCORDINGLY THE CLAIM OF DEPRECIATION ON THE JCB CA NNOT BE DISALLOWED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE A LLOW THE CLAIM OF DEPRECIATION ON JCB. GROUND NO. 3 IS REGARDING ADDITION OF RS. 43,215/- UNDER SECTION 68 ON ACCOUNT OF GIFT. 20. THE ISSUE RAISED IN GROUND NO. 3 IS IDENTICAL T O ISSUE RAISED IN GROUND NO. 3 FOR THE ASSESSMENT YEAR 2010-11. IN VIEW OF OUR FINDIN G ON THIS ISSUE FOR THE ASSESSMENT YEAR 2010-11, THIS GROUND OF THE ASSESSE E STANDS DISMISSED. 9 ITA NO. 816, 819 & 820/JP/2018 SHRI RAM KARAN YADAV, AJMER. 21. IN THE RESULT, APPEAL OF THE ASSESSEE FOR THE A .Y. 2010-11 IS PARTLY ALLOWED, APPEAL FOR A.Y. 2011-12 IS DISMISSED AND APPEAL FOR THE A.Y. 2012-13 IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 14/09/ 2018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 14/09/2018. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI RAM KARAN YADAV, AJMER. 2. THE RESPONDENT THE ITO, WARD 2(3), AJMER. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 816, 819 & 820/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 10 ITA NO. 816, 819 & 820/JP/2018 SHRI RAM KARAN YADAV, AJMER.