Shri Robin Rana, Kurukshetra V. Income Tax Officer, Ward 3, Kurukshetra

ITA 86/CHANDI/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1591 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 30-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Unexplained investment
• Section: 44AD; 147; 69; 148; 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH SMC , CHANDIGARH . . , BEFORE SHRI N.K. SAINI, VICE PRESIDENT ./ ITA NO.86/CHD/2019 / ASSESSMENT YEAR : 2010-11 SHRI ROBIN RANA, S/O AVINASH RANA, # 1078, SECTOR 7, URBAN ESTATE, KURUKSHETRA. THE INCOME TAX OFFICER, WARD 3, KURUKSHETRA. ./PAN NO: AHQPR9121A /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI TEJ MOHAN SINGH, ADV. ! / REVENUE BY : SHRI MANJIT SINGH,CIT(DR) ' # $ /DATE OF HEARING : 13.06.2019 %&'( $ /DATE OF PRONOUNCEMENT: 13.06.2019 /ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 26.11.2018 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), KARNAL (IN SHORT CIT(A). 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L: ITA NO.86/CHD/2019 A.Y.2010-11 2 1. THAT THE LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE ADDITION OF RS.73,650/- MADE THE AO INCREASING THE NET PROFIT RATE FROM 5% AS DECLARED TO 8% WHICH IS ILLEGAL, ARBITRARY AND UNJUSTIFIED INCOME. 2. THAT THE LD.CIT(A) HAS FURTHER ERRED IN UPHOLDING THE ADDITION OF RS.7,18,800/- TREATING THE CASH DEPOSITED IN BANK ACCOUNT TO BE INCOME FROM UNEXPLAINED SOURCES WHICH IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 3. THAT THE ORDER OF THE LD.CIT(A) IS ERRONEOUS, ARBITRARY, OPPOSED TO THE FACTS OF THE CASE AND THUS UNTENABLE. 3. VIDE GROUND NO.1, THE GRIEVANCE OF THE ASSESSEE RELATES TO SUSTENANCE OF ADDITION OF RS.73,650/- MADE BY TH E A.O. BY INCREASING NET PROFIT RATE. 4. THE FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE A.O. ON THE BASIS OF AIR/CIB INFORMATION THAT THE A SSESSEE HAD DEPOSITED CASH AGGREGATING TO RS.31,74,000/- IN HIS SAVING BANK ACCOUNT MAINTAINED WITH UNION BANK OF I NDIA, KURUKSHETRA, REOPENED THE ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). IN RESPO NSE, THE ASSESSEE SUBMITTED THAT THE INCOME TAX RETURN ALREA DY FILED ON 16.10.2010 MAY BE TREATED IN RESPONSE TO THE NOT ICE U/S 148 OF THE ACT. THE A.O. DURING THE COURSE OF ASSES SMENT PROCEEDINGS REQUIRED THE ASSESSEE TO EXPLAIN THE SO URCE OF CASH DEPOSITS OF RS.31,74,000/-. IN RESPONSE, THE A SSESSEE SUBMITTED THAT A SUM OF RS.10,54,063/- WAS RECEIVED AS A ITA NO.86/CHD/2019 A.Y.2010-11 3 CIVIL CONTRACTOR U/S 44AD OF THE ACT AND GROSS RECE IPTS FROM TRADING OF BUILDING MATERIAL WAS AT RS.24,55,200/- U/S 44AF OF THE ACT. THE A.O. APPLIED NET PROFIT RATE OF 8% ON THE TOTAL TURNOVER OF RS.24,55,200/- INSTEAD OF 5% AS APPLIE D BY THE ASSESSEE. ACCORDINGLY, AN ADDITION OF RS.73,650/- W AS MADE. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT(A), WHO SUSTAINED THE ADDITION MADE BY THE A .O. BY OBSERVING THAT THE VOUCHERS RELATING TO THE TURNOVE R REMAINED INCOMPLETE. 6. NOW THE ASSESSEE IS IN APPEAL. THE LD.COUNSEL FO R THE ASSSESSEE SUBMITTED THAT THE A.O. HAD ACCEPTED THE TURNOVER SHOWN BY THE ASSESSEE FROM TRADING OF BUILDING MATE RIAL AND CIVIL CONTRACT BUT APPLIED THE NET PROFIT RATE OF 8 % ON THE TURNOVER FROM TRADING OF BUILDING MATERIAL, ON WHIC H THE ASSESSEE RIGHTLY APPLIED NET PROFIT RATE OF 5% U/S 44AF OF THE ACT. 7. IN HIS RIVAL SUBMISSIONS, THE LD. CIT DR STRONGL Y SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN TH E PRESENT CASE, THE TURNOVER SHOWN BY THE ASSESSEE FROM TRADI NG OF ITA NO.86/CHD/2019 A.Y.2010-11 4 BUILDING MATERIAL HAS NOT BEEN DISPUTED SINCE NO ENHANCEMENT WAS MADE EITHER BY THE A.O. OR BY THE LD.CIT(A) IN THE SAID TURNOVER. AS PER THE PROVISIO N CONTAINED IN SECTION 44AF OF THE ACT, IF AN ASSESSE E IS ENGAGED IN RETAIL TRADE OF ANY GOODS OR MERCHANDISE , A SUM EQUAL TO FIVE PERCENT OF THE TOTAL TURNOVER SHALL B E DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABL E TO TAX. THE AFORESAID PROVISION READ AS UNDER: 44AF . (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTIONS 28 TO 43C, IN THE CASE OF AN ASSESSEE ENGAGED IN RETAIL TRADE IN ANY GOODS OR MERCHANDISE, A SUM EQUAL TO FIVE PER CENT OF THE TOTAL TURNOVER IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BUSINESS OR, AS THE CASE MAY BE, A SUM HIGHER THAN THE AFORESAID SUM AS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. 9. IN THE PRESENT CASE, THE TURNOVER OF THE ASSESSE E WAS LESS THAN RS.40 LACS AND HE WAS ENGAGED IN THE BUSI NESS OF TRADING OF BUILDING MATERIAL. THEREFORE, THE A.O. W AS NOT JUSTIFIED IN INCREASING THE NET PROFIT RATE OF 5% U /S 44AF DECLARED BY THE ASSESSEE TO 8%. THE LD.CIT(A) WITHO UT APPRECIATING THE FACTS OF THE PRESENT CASE IN RIGHT PERSPECTIVE, WRONGLY SUSTAINED THE ADDITION MADE BY THE A.O. ACCORDINGLY, THE SAME IS DELETED. ITA NO.86/CHD/2019 A.Y.2010-11 5 10. THE NEXT ISSUE VIDE GROUND NO.2 RELATES TO THE SUSTENANCE OF ADDITION OF RS.7,18,800/- BY TREATING THE CASH DEPOSITED IN BANK ACCOUNT AS INCOME FROM UNEXPLAINE D SOURCES. 11. THE FACTS RELATING TO THE ISSUE, IN BRIEF, ARE THAT THE A.O. MADE THE IMPUGNED ADDITION BY OBSERVING THAT T HE ASSESSEE FAILED TO RECONCILE THE CASH DEPOSITS OF RS.31,74,000/- WITH REFERENCE TO THE TURNOVER OF RS.24,55,200/-. HE, THEREFORE, MADE ADDITION OF RS.7,18,800/- (RS.31,74,000 RS.24,55,200). 12. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE CIT(A) AND SUBMITTED AS UNDER: 1. 'THAT THE ASSESSEE HAS SHOWN TOTAL TURNOVER OF R S. 35,09,263 FROM THE BUSINESS OF CIVIL CONTRACTOR AND TRADING OF BUILDING MATERIAL. THIS FACT CAN BE VERI FIED FROM THE ASSESSMENT ORDER WHEREIN LD. A.O. IN PARA 2 OF HIS ORDER HAS CATEGORICALLY MENTIONED THE GROSS RECEIPT S AS CM-CONTRACTOR AT RS. 10,54,063 AND GROSS RECEIPTS F ROM TRADING OF BUILDING MATERIAL AT RS. 24,55,200. 2. THAT DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS EXPLAINED THAT THE CASH DEPOSIT OF RS.31,74,000 IN THE BANK ACCOUNT WAS ORIGINATED FROM THE RECEIPTS FROM THE BUSINESS OF CIVIL CONSTRUCTION AND TRADING OF BUILDING MATERIAL BY THE ASSESSEE. BUT, WHILE RECONCILING THE CASH DEPOSIT IN BANK ACCOUNT OF ASSESSEE, THE LD. A.O HAS CONSIDERED HAS CONSIDERED TURNOVER OF RS. 24,55,200 ON ACCOUNT OF TRADING OF BUILDING MATERIAL AND TURNOVER OF RS.10,54,063 FROM CIVIL CONSTRUCTION HAS BEEN COMPLETELY IGNORED, HENCE DIFFERENCE OF RS. 7,18,80 0 ITA NO.86/CHD/2019 A.Y.2010-11 6 (31,74,000 - 24,55,200) HAS BEEN ADDED TO THE INCOME OF ASSESSEE AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT.' 13. THE LD.CIT(A) SUSTAINED THE ADDITION BY OBSERVI NG IN PARA 3.2 IN THE IMPUGNED ORDER AS UNDER: 1 HAVE EXAMINED THE FACTS OF THE CASE AND FIND THA T THE A.O. HAS DULY EXPLAINED THAT THE CASH DEPOSITS IN THE BANK ACCOUNT BEEN RECONCILED WITH THE TURNOVER OF R S. 24,55,200/-. THE ASSESSEE WAS ASKED TO EXPLAIN VIDE ORDER SHEET ENTRY DATED 30.10.2017 WHY THE DIFFERENCE (RS. 31,74,000 - RS. 24,55,200) SHOULD N OT BE ADDED. NO EXPLANATION WAS GIVEN THEN. TAKING THE PLEA THAT THE SUM OF RS. 10,54,063/- WHICH ARE RECEIPTS AS A CIVIL CONTRACTOR AND HAS NOT BEEN CONSIDERED BY T HE A.O. IS NOT ACCEPTABLE AS THIS ISSUE WAS NOT RAISED AT THE TIME OF ASSESSMENT. THERE WAS NO ATTEMPT THEN TO CORRELATE THIS FIGURE WHICH HAS BEEN DECLARED AS RECEIPTS U/S 44AD OF THE IT ACT, 1961. HENCE, THE PLEA OF THE ASSESSEE CANNOT BE ACCEPTED AND I DISMI SS THE SAME. 14. NOW THE ASSESSEE IS IN APPEAL. THE LD.COUNSEL F OR THE ASSSESSEE SUBMITTED THAT THE ASSESSEE WAS HAVING TU RNOVER FROM CIVIL CONSTRUCTION AS WELL AS FROM TRADING OF BUILDING MATERIAL AMOUNTING TO RS.10,54,063/- AND RS.24,55,2 00/- RESPECTIVELY. HOWEVER, THE A.O. CONSIDERED THE TURN OVER FROM TRADING OF BUILDING MATERIAL ONLY AS THE SOURCE OF DEPOSITS IN THE BANK ACCOUNT AND THE ANOTHER TURNOVER FROM CIVI L CONTRACT WAS ALTHOUGH ACCEPTED BUT WAS NOT CONSIDER ED AS THE SOURCE OF THE CASH DEPOSITS. ITA NO.86/CHD/2019 A.Y.2010-11 7 15. IN HIS RIVAL SUBMISSIONS, THE LD. CIT DR SUPPOR TED THE ORDERS OF AUTHORITIES BELOW. 16. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN TH E PRESENT CASE, IT IS AN ADMITTED FACT THAT THE A.O. ACCEPTED THE TURNOVER OF THE ASSESSEE FROM CIVIL CONTRACT AT RS.10,54,063/- U/S 44AD AND ACCEPTED THE PROFITS DE CLARED BY THE ASSESSEE ON THE SAID TURNOVER. HE ALSO ACCE PTED THE TURNOVER DECLARED BY THE ASSESSEE U/S 44AF OF THE A CT AT RS.24,55,200/-. THEREFORE, THE TOTAL SOURCE FOR MAK ING THE DEPOSITS OF RS.31,74,000/- IN THE BANK ACCOUNT WAS OF RS.35,09,263/- (RS.10,54,063 + RS.24,55,200). THERE FORE, CONSIDERING THE TOTALITY OF THE FACTS, I AM OF THE VIEW THAT THE ADDITION MADE BY THE A.O. AND SUSTAINED BY THE LD.CIT(A) WAS NOT JUSTIFIED. ACCORDINGLY, THE SAME IS DELETED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 13.06.2019.) SD/- (N.K.SAINI) VICE PRESIDENT '# /DATED: 13 TH JUNE, 2019 * * ITA NO.86/CHD/2019 A.Y.2010-11 8 &) *+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $ 0 , 123/4 / DR, ITAT, CHANDIGARH 6. /3 5# / GUARD FILE &) ' / BY ORDER, ! / ASSISTANT REGISTRAR