Suresh Chandrabhan Akolkar, Ahmednagar V. Income-tax Officer,

ITA 822/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0582 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Rejection of books of accounts; Unexplained investment; Salary income
• Section: 144

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE ! ' , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM ITA NO.822/PN/2014 ASSESSMENT YEAR : 2008-09 SURESH CHANDRABHAN AKOLKAR, A P KARANJI, TAL. PATHARDI, DIST. AHMEDNAGAR. PAN: AGKPA1520H .. APPELLANT VS. INCOME TAX OFFICER, WARD 4, AHMEDNAGAR. ... RESPONDENT / APPELLANT BY : NONE / DEPARTMENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 28.12.2015 / DATE OF PRONOUNCEMENT: 30.12.2015 % / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 14.02.2014 OF THE CIT(A)-IT/TP, PUNE RELATING TO AS SESSMENT YEAR 2008-09. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE NAME OF THE ASSESSEE WAS CALLED. THERE WAS NO ADJOURNMENT APPLICATION F ILED BY THE ASSESSEE. THEREFORE, THE APPEAL IS BEING DECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATI VE. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF RUNNING A LIQUOR PERMIT ROOM WITH THE RESTAURANT. HE FILED HIS RETURN OF INCOME ON 31.03.2009 DECLARING TOTAL LOSS OF RS.1,00,168/-. DESPITE ISSUE OF NOTICE UNDER SECTION 143(2) OF THE I.T. ACT, THERE WAS NO 2 ITA NO.822/PN/2014 COMPLIANCE BY THE ASSESSEE. THE STATUTORY NOTICES ISSUED BY THE ASSESSING OFFICER FROM TIME TO TIME WERE NOT ATTENDED TO BY THE ASSES SEE, FOR WHICH THE ASSESSING OFFICER SEPARATELY INITIATED PENALTY PROCEEDINGS UN DER SECTION 271(1)(B) OF THE I.T. ACT. IN ABSENCE OF ANY COMPLIANCE FROM THE SIDE OF THE ASSESSEE, THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT UNDER SECTION 144 OF THE I.T. ACT. SINCE THE PROFIT FROM THE LIQUOR PERMIT ROOM WAS SH OWN AT A LOSS OF RS.1,00,168/-, THE ASSESSING OFFICER, APPLYING THE PROVISIONS OF S ECTION 44AF DETERMINED THE PROFIT FROM LIQUOR BUSINESS AT RS.38,638/- BEING PROFIT @ 5%ON TURNOVER OF RS.7,72,763/-. FURTHER, HE ALSO MADE ADDITION OF RS.19,422/- ON AC COUNT OF SALE OF EMPTY BOTTLES. THUS, HE DETERMINED THE INCOME FROM LIQUOR BUSINESS AT RS.58,060/-. 4. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASS ESSEE HAS SHOWN SALE OF FOOD AT RS.1,31,501/- AND PURCHASES AT RS.62,770/-. AS SUCH GP ON FOOD IS AT 52.26%. ACCORDING TO THE ASSESSING OFFICER, WHEN T HE SALE OF LIQUOR IS RS.7,72,763/- THE MINIMUM SALE OF FOOD SHOULD BE OF IT I.E. RS.3,86,381/-. APPLYING THE GP RATE OF 52.26%, ON THE ESTIMATED TU RNOVER, THE GP COMES TO RS.2,01,923/-. AFTER CONSIDERING THE EXPENSES OF P URCHASES, WAGES, FUEL, ETC. INCURRED AS HOTEL EXPENSES, VAT OF RS.17,292/-, THE ASSESSING OFFICER DETERMINED THE INCOME FROM RESTAURANT AT RS.1,15,914/- BEING 3 0% OF RS.3,86,381/-. 5. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE ST ARTED HIS BUSINESS WITH CAPITAL OF RS.3,44,515/-. THE ASSESSEE WAS NOT ASS ESSED TO TAX PREVIOUSLY. IT WAS STATED BY THE ASSESSEE THAT THE CAPITAL INTRODUCED WAS OUT OF AGRICULTURAL INCOME OF HUF. DISREGARDING THE ASSESSEES CLAIM THAT HE HAS INTRODUCED CAPITAL OUT OF HUFS AGRICULTURAL INCOME AND HOLDING THAT THE ASSE SSEE FAILED TO SUBSTANTIATE THE SOURCE OF INTRODUCTION OF CAPITAL, THE ASSESSING OF FICER MADE ADDITION OF RS.3,44,515/- AS UNEXPLAINED INVESTMENT UNDER SECTI ON 69B OF THE OF THE I.T. ACT. 3 ITA NO.822/PN/2014 6. SO FAR AS THE ADDITION OF RS.58,060/- MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF INCOME FROM SALE OF LIQUOR AND SALE OF E MPTY BOTTLES IS CONCERNED, THE CIT(A) UPHELD THE ADDITION MADE BY THE ASSESSING OF FICER BY OBSERVING AS UNDER :- 2.1.4 I HAVE CONSIDERED THE FACTS AND THE ARG UMENTS OF THE LEARNED AO AS WELL AS OF THE APPELLANT. I FIND THAT DURING THE ASSESS MENT PROCEEDINGS, THE APPELLANT DID NOT ATTEND HEARINGS BEFORE THE LEARNED AO. THE LEARNED AO HAS PASSED THE ASSESSMENT ORDER U/S 144. THE LEARNED AO HAS STATE D IN PARA 4 OF THE ASSESSMENT ORDER THAT THE APPELLANT DID NOT PRODUCE DOCUMENTAR Y PROOF WITH RESPECT TO INCOME AND EXPENDITURE SHOWN IN THE PROFIT & LOSS ACCOUNT. FURTHER, IN PARA 5.1 ALSO, THE LEARNED AO HAS OBSERVED THAT THE APPELLANT DID NOT FURNISH SALE BILLS BEFORE HER. THEREFORE, IT CAN BE SEEN THAT THE APPELLANT DID NO T ESTABLISH HIS BOOK RESULTS BEFORE THE LEARNED AO. 2.1.5 THE APPELLANT HAS RELIED ON THE APPELLAT E ORDER DELETING THE PENALTY LEVIED U/S 271B ON THE GROUND THAT THE PROVISIONS O F SECTION 44AF ARE NOT APPLICABLE TO THE RESTAURANT, WHICH IS ENGAGED IN M ANUFACTURE OF GOODS. I HAVE GONE THROUGH THIS DECISION. THIS DECISION IS NOT A PPLICABLE TO THE FACTS OF THE CASE. AS STATED, THE APPELLANT HAS NOT ESTABLISHED ITS FI NANCIAL RESULTS BEFORE THE LEARNED AO. THIS IS ALSO NOT THE CASE OF DETERMINATION OF INCOME U/S 44AF. THE PRESENT CASE IS OF DETERMINATION OF FAIR INCOME ON THE BASI S OF THE TURNOVER. THIS IS THE CASE WHERE INCOME IS ESTIMATED BY NOT U/S 44AF BUT BY TA KING BASIS OF % PROVIDED IN SECTION 44AF, WHICH ESTIMATES INCOME ON TURNOVER UP TO RS.40,00,000. THEREFORE, I DO NOT FIND ANY ERROR IN THE APPROACH OF THE LEARNE D AO IN DETERMINATION OF INCOME. 2.1.6 SECONDLY, I FIND THAT THE LEARNED AO HAS NOT EXPRESSLY REJECTED THE BOOKS OF ACCOUNTS BEFORE ESTIMATING INCOME. HOWEVER, THE LEARNED AO HAS ELABORATELY DISCUSSED THE APPELLANTS ACCOUNTING IN PARA 5.1 OF THE ASSESSMENT ORDER AND HAS HELD THAT THE APPELLANTS METHOD OF ACCOUNTING IS N OT RELIABLE AND THE APPELLANT ALSO DID NOT PRODUCE SALE BILLS BEFORE THE LEARNED AO. IN THIS BACKGROUND, IT IS SETTLED THAT THE AO NEED NOT GIVE EXPLICIT FINDING ON REJEC TION OF BOOKS OF ACCOUNTS, IF THE SAME CAN BE GATHERED FROM THE ASSESSMENT ORDER AS H ELD BY THE BOMBAY HIGH COURT IN THE CASE OF DHONDIRAM DALICHAND V CIT (197 1) 81 ITR 609 (BOM). THE COURT HAS HELD AS UNDER : IT IS CLEAR ON A READING OF THE ORDERS OF THE IT A UTHORITIES THAT WHILST EXERCISING THE POWERS AVAILABLE TO THEM UNDER THE P ROVISO TO S.13 THEY HAVE WITHOUT STATING IN SO MANY WORDS EXERCISED THE POWE RS UPON THE FOOTING THAT THEY HAD MADE A FINDING IN THEIR ORDERS THAT THE ME THOD OF ACCOUNTING EMPLOYED BY THE ASSESSEE WAS SUCH THAT THE PROFITS MADE BY THE ASSESSEE COULD NOT BE PROPERLY DEDUCED THERE FROM. THE CONT ENTION MADE ON BEHALF OF ASSESSEE THAT THESE ORDERS HAVE NOT THE EFFECT O F IMPLIEDLY RECORDING A FINDING THAT THESE AUTHORITIES IN FACT FOUND THAT T HE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE WAS SUCH THAT THERE FROM PR OFITS MADE BY THE ASSESSEE COULD NOT PROPERLY BE DEDUCED CANNOT BE AC CEPTED. 2.1.7 IN VIEW OF THE ABOVE DECISION, I CONFIRM THE ADDITION RS.58,060/-. 7. SO FAR AS THE ADDITION OF RS.3,44,515/- ON ACCOU NT OF CAPITAL INTRODUCTION IS CONCERNED, THE CIT(A) RESTRICTED THE SAME TO RS.2,4 4,515/- BY OBSERVING AS UNDER :- 4 ITA NO.822/PN/2014 2.3.5 I HAVE CONSIDERED THE FACTS AND ARGUMEN TS OF THE APPELLANT. I FIND THAT THE LEARNED AO HAS STATED THAT HUFS AGRICULTURAL I NCOME WAS LESS THAN RS.1,00,000 PER YEAR, WHICH CONSISTED OF 3 MALE MEM BERS AND FIVE FEMALE MEMBERS. THEREFORE, I AGREE WITH THE LEARNED AO TH AT THE HUF COULD NOT HAVE SAVED THE AMOUNT OF RS.3,00,000 FOR CONTRIBUTING TO WARDS THE APPELLANTS OPENING CAPITAL. THE APPELLANT HAS STATED THAT THE OTHER M EMBERS ALSO HAVE SALARY INCOME IN ADDITION TO AGRICULTURAL INCOME. I FIND THAT DU RING THE YEAR, SHRI BALASAHEB AKOLKAR AND SHRI RAMESH AKOLKAR HAVE EARNED ANNUAL SALARY OF RS.4,28,000 AND OF RS.3,74,000 RESPECTIVELY. THEREFORE, THEIR CONTRIB UTION ALSO CANNOT BE SUBSTANTIAL, IT IS BESIDES THE POINT THAT THE APPELLANT HAS NOT FIL ED THEIR CONFIRMATION LETTERS. HOWEVER, ANY PERSON IS BOUND TO HAVE CERTAIN AMOUNT OF FUNDS WITH HIM TO GET BENEFIT OF INTRODUCTION OF EXPLAINED FUNDS IN OPENI NG CAPITAL. THEREFORE, CONSIDERING THE FACTS OF THE CASE, I ESTIMATE APPELLANTS EXPLA INED FUNDS FOR OPENING CAPITAL OF RS.1,00,000 ON AD-HOC BASIS. WITH THE RESULT, THE ADDITION MADE ON THIS ACCOUNT IS RESTRICTED TO RS.2,44,515/-. 8. AGGRIEVED BY SUCH ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL :- 1) HON. COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE ADDITIONS AT RS.244515 ON ACCOUNT OF CAPITAL INTRODUCTION. IT M AY BE DELETED. 2) APPELLANT PRAYS FOR DELETION OF INTEREST CHARGED U/S 234, SAME MAY BE DELETED. 3) HON. COMMISSIONER ERRED IN CONFORMING THE ADDITI ONS OF RS.58060/- WHICH MAY BE DELETED AS PROVISIONS U/S 44AF ARE NOT APPLI CABLE TO ASSESSEE DOING MIX BUSINESS I.E. RUNNING PERMIT ROOM & SERVING FOOD. 4) APPELLANT PRAYS TO ADD, ALTER, AMEND, RATIFY, EX PLAIN, AND/OR WITHDRAW THE GROUND/S AS THE OCCASION MAY DEMAND. 9. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE L D. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL AVAILABLE O N RECORD. WE DO NOT FIND ANY INFIRMITY IN THE FINDING OF THE CIT(A), WHO HAS GIV EN VALID REASONS WHILE SUSTAINING THE ADDITION OF RS.58,060/- FROM SALE OF LIQUOR AND EMPTY BOTTLES. SIMILARLY, WHILE SUSTAINING THE ADDITION OF RS.2,44,515/- OUT OF RS. 3,44,515/- ON ACCOUNT OF UNEXPLAINED INVESTMENT, THE LD. CIT(A) HAS ALSO GIV EN VALID REASONS WHILE SUSTAINING THE ADDITION. HE HAS CONSIDERED THE LAN D HOLDING OF THE HUF, THE NUMBER OF MALE MEMBERS AND FEMALE MEMBERS OF THE HU F AND ALSO CONSIDERED THE SALARY RECEIVED BY SHRI BALASAHEB AKOLKAR AND S HRI RAMESH AKOLKAR. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ORDER PASSED BY THE CIT(A) IS UNREASONABLE OR CONTRARY TO THE FACTS. IN VIEW OF THE DETAILED REASONING GIVEN BY THE CIT(A) FOR 5 ITA NO.822/PN/2014 BOTH THE ISSUES, WE DO NOT FIND ANY INFIRMITY AND A CCORDINGLY, UPHOLD THE ORDER OF THE CIT(A). SO FAR AS CHARGING OF INTEREST UNDER SECTI ON 234A/234B/234C IS CONCERNED, THE SAME IS MANDATORY AND CONSEQUENTIAL IN NATURE. IN VIEW OF THE ABOVE DISCUSSION, THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF DECEMBER, 2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) # / JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE ; DATED : 30 TH DECEMBER, 2015. %&'#()!*!+( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-IT/TP, PUNE; 4) THE CIT-IT/TP, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE