ITO, BASTAR(CG) V. SHRI BALZINDER SINGH, BASTAR(CG)

ITA 94/BIL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0203 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 02-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Assessee Lawyers: S R RAO
• Keywords: Depreciation; Principle of natural justice; Onus to prove
• Section: 43B; 148; 6; 28; 139

Judgement Text

1 ITA NO. 94/ RPR /2013. IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO.94/RPR/2013 ASSESSMENT YEAR : 2007 - 08. THE INCOME - TAX OFFICER, SHRI BALZINDER SINGH, JAGDALPUR. VS. JAGDALPUR. PAN AJNPS4081P. APPELLANT. RESPONDENT. APPELLANT BY : SHRI D.K. JAIN. RESPONDENT BY : SHRI S.R. RAO. DATE OF HEARING : 17 - 10 - 2016 DATE OF PRONOUNCEMENT : 01 - 11 - 2016 O R D E R. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS), RAIPUR DATED 06 - 06 - 2013 AND PERTAINS TO ASSESSMENT YEAR 2007 - 08. THE GROUNDS OF APPEAL READ AS UNDER : 1. WHETHER IN LAW AND ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO COMSPUCT INCOME FROM TRUCK PLYING UNDER SECTION 44AE OF THE I.T. ACT, 1961, WHEREAS THE ASSESSEE HAS FILED ITS RETURN OF INCOME SHOWING INCOME FROM TRUCK PLYING UNDER SECTION 28 TO 43B OF THE INCOME - TAX ACT, 1961. 2. WHETHER IN LAW AND ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.9,33,386/ - MADE OUT OF THE DIFFERENCE OF INCOME SHOWN IN ITR AND AMOUNT CAPITALISED IN THE CAPITAL A/C ENCLOSED WITH ITR . 3. WHETHER IN LAW AND ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.24,43,947/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH IN HAND AND AT BANK. 2 ITA NO. 94/ RPR /2013. 2. IN THIS CASE THE ASSESSEE FILED HIS INCOME - TAX RETURN ON 31 - 0302008 DECLARING INCOME OF RS.1,34,565/ - . THE RETURN WAS PROCESSED UNDER THE PROVISIONS OF SEC TION 143(1) OF THE ACT ON 23 - 06 - 2008. HE HAS SHOWN INCOME OF RS.1,34,565/ - FROM TRUCK PLYING AND CREDITED PROFIT TO THE TUNE OF RS.10,67,951/ - IN THE CAPITAL ACCOUNT FURNISHED WITH THE ITRS. IT WAS NOTICED THAT THERE IS DIFFERENCE OF RS.9,33,386/ - IN INCOM E FILED AND CAPITALIZED IN BALANCE SHEET. THE AO OPINED THAT THERE IS DIFFERENCE IN THE INCOME SHOWN IN THE ITR AND INCOME CAPITALIZED IN THE CAPITAL ACCOUNT. THE INCOME CAPITALIZED WAS HIGHER THAN THE INCOME SHOWN IN ITR. THE AO PROCEEDED TO MAKE THE ASSE SSMENT AS UNDER : ON THE BASIS OF FACT ON RECORDS, CONSIDERING PARA AS DISCUSSED ABOVE, IT IS INFERRED THAT THE RETURN FILED BY THE ASSESSEE IS A VALID RETURN. THE ASSESSING OFFICER HAS SUFFICIENT EVIDENCES AND MATERIAL FACT ON RECORD TO MAKE BELIEVING THAT THE DIFFERENCE OF INCOME SHOWN IN ITR AND AS CAPITALIZED IN CAPITAL ACCOUNT ENCLOSED WITH ITR HAVE BEEN CONCEALED AND RS. 9,33,386 / - WAS ESCAPED FROM THE ASSESSMENT . THE CASH IN HAND WAS FOUND UNEXPLAINED TO THE TUNE OF RS . 24,43,947 . 00 THE NOTICE I SSUED AND SERVED UNDER SECTION 148 QUALIFIES ALL THE CONDITION LAID DOWN IN THE ACT, PROPER PROCEDURES ARE FOLLOWED WHILE ISSUING AND SERVING VALID NOTICES TO THE ASSESEE . PROPER OPPORTUNITIES AND SUFFICIENT TIME WAS GIVEN TO THE ASSESEE TO EXPLAIN AND SUBMIT EVIDENCE. THUS THE PRINCIPLE OF NATURAL JUSTICE WAS FOLLOWED . IN TERMS OF PROVISIONS UNDER SECTION 142( 1) OF THE ACT . THE ONUS LIES WITH THE ASSESEE TO EXPLAIN THE CLAIM MADE IN THE ITR AND ITS ENCLOSURE. THE ASSESSEE FAILED TO ATTEND AND DISCHA RGE BURDEN OF PROOF . THE ASSESSEE HAS NOT CHALLENGE THE NOTICES AND PROCEDURES FOLLOWED FOR REASSESSMENT AT AN Y STAGE OF PROCEEDINGS, HENCE , THEY ARE LAWFUL AND VALID. HE HAS DELIBERATEL Y AVOIDED THE SEVERAL O PPORTUNITIES OF BEING HEARD, HENCE HAVE NO EVIDENCE IN SUPPORT OF HIS CLAIM IN ITR, AN D H AVE NO EXPLANATION TO OFFER IN CONTEXT WITH OMISSION MADE IN THE ITRS OF HIS INCOME. . ' ' . CONSIDERING THE ABOVE THE INCOME IS ASSESSED AS UNDER : - 1. TAXABLE INCOME RS.1,02,670 - 00 2. CONCEALED INCOME AS DISCUSSED ABOVE. RS. 9,33,386 - 00 3. UNEXPLAINED CASH 4. CASH IN HAND AND BANK. RS.33,77,333 - 00 5. LESS CONCEALED INCOME RS.9,33,386 - 0 0 6. UNEXPLAINED CASH AS DISCUSSED IN PARA (10) (4 - 5). RS.24,43,947 - 00 7. TOTAL OF ADDITION (2+6) RS.33,77,333 - 00 8. ASSESSED INCOME (1+7_ RS.34,80,003 - 00 3 . UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) NOTED THE ASSESSEES EXPLANATION AS UNDER : 3 ITA NO. 94/ RPR /2013. IN THE COURSE OF APPEAL PROCEEDINGS, THE ID. COUNSEL FOR THE APPELLANT HAS EXPLAINED THAT THE ADDITION MADE BY THE AO IS NOT CORRECT . THE APPELLANT DERIVES FROM TRUCK PLYING BUSINESS AND THE RETURN OF INCOME WAS PREPARED ON SOFTWARE NAMED ZENIT - AKDK AND TH E SOFTWARE AUTOMATICALLY GENERATES COMPUTATION OF INCOME, . CAPITAL ACCOUNT AND BALANCE SHEET ON THE BASIS OF DATA FED INTO IT . DUE TO INCORRECT FEEDING OF DATA, THE SOFTWARE HAS GENERATED INCORRECT AND INCOMPLETE FINANCIAL STATEMENTS I . E. COMPUTATION O F INCOME, CAPITAL ACCOUNT, BALANCE SHEET . THEREFORE, IT IS NOT JUSTIFIED ON THE PART OF THE AO TO MAKE ASSESSMENT ON THE BASIS OF SUCH INCORRECT STATEMENTS, WHICH WERE WRONGLY FILED WITH THE RETURN, THOUGH NO SUCH ENCLOSURES WERE REQUIRED U/S.139C OF TH E ACT . IT WAS ALSO CONTENDED THAT THE APPELLANT DID NOT FILE PROFIT AND LOSS ACCOUNT SHOWING CLAIM OF DEPRECIATION AND THE ENTRIES MADE IN THE STATEMENT REFERRED BY THE AO ARE NOT CORRECT AND INCOMPLETE. THE AO HAS NEITHER CONSIDERED THIS FACT OF NON - AV AILABILITY OF PROFIT AND LOSS ACCOUNT NOR CONSIDERED THE OPENING BALANCE. HE HAS TAKEN THE AMOUNT OF 'CASH & BANK BALANCE' AS 'CASH - IN - HAND' AND WORKED OUT THE ADDITION. IT WAS FURTHER CONTENDED THAT RETURN OF INCOME WAS FILED ON ESTIMATE BASIS AS ENDOR SED BY THE A.O. REGULAR BOOKS OF ACCOUNT WERE NOT MAINTAINED. AS PER DECISION OF HON'BLE SUPREME COURT IN THE CASE OF KE DARNATH JUTE MFG . CO. VS. CIT (1971) 82 ITR 363 (SC), EVEN ACCOUNTING ENTRIES MADE IN T HE REGULAR BOOKS OF ACCOUNT ARE NOT CONC LUSIVE FOR ~ HE PURPOSE OF ASSESSMENT O F I NCOME A ND THE ASSESSMENT H AS TO BE MADE ONLY AS P E R PROVISIONS OF THE AC T . IN THIS CASE, AD M I T TE DL Y, T HE P ROFI T & LOSS ACCOUN T WAS NO T FILED AND THE OTHER PAPERS FILED WERE INCORRE C T A ND I N CO M P L ETE. U N DE R THESE CIRCUMSTANCES, THE ADDITION MADE BY THE AO ON T H E BAS IS OF INCOMP L ETE AN D I N CORRECT PAPE R S, WHICH CAN AT BEST BE TREATED AS ROUGH P A P ERS, F OR TH E P U R PO SE O F INC OME TAX ASSESS M E N T IS FA U LTY AND CONTRADICTORY TO T H E A .O 'S OW N O B SERVATIO N TH A T T H E I N CO M E OFFE R E D FROM T R UCK PLYING BUSINESS IS ESTIMATED. T H E LD. CO U N S EL - H A S RELI ED O N THE - D ECISIO N - OF THE HO N BLE ITAT AH M E D A B A D , B - B E NCH IN THE CAS E OF K ES H ARB H A I BH GAMARB H A I C H AUDHARY VS. IT O (20 11 ) 141 TTJ (AHD) (UO)94 AND CONT E N DE D TH A T IF I N COM E FR O M TRUCK P L YING WAS REQ UI RED TO B E ES TI M A T E D , I T SH O ULD H AVE B EE N MADE AS P E R PROVIS I O NS OF SEC. 44AE AND N OT OTHE R W I SE. T H E R E F O R E, THE ID. COUN SE L F O R T H E AP P E L LAN T VE H EME N T L Y ARG U ED THAT THE A D D ITI ON M A D E B Y THE A O IS UNJU ST IFI E D AN D ARB ITR ARY . 4. LEARNED CIT(APPEALS) OBSERVED AS UNDER : I H A VE GO NE THROU G H THE O BSE R VATION S O F THE A O AN D SUBMISSIONS OF THE A P PEL L AN T . T HE UNDI S PUT E D FACTS O F THE C AS E A R E T H A T R E TU R N OF I NCOME WAS FILE D BY T HE APPE LL ANT THROUG H TH E OFF IC E OF S H R I A NIL K U MA R S H A R MA, ADVOCATE OF JAGADALPUR . IT WAS PREPAR ED W ITH T H E H E LP O F SOME COMP U TE R SOFTWA RE N AME D ZENIT - AKDK AND THE F IN A N C I A L STA T EME NTS GE N E R A T E D B Y TH A T SOFTWA R E WERE FILE D WIT H THE RETUR N , THOUGH F ILIN G O F SUCH DOCUMENTS WA S NOT R E QUI RE D U J S . 1 39 C OF THE AC T . I N AS MANY AS 26 CASES S U C H RE T URNS W E RE FILED F ROM THE OFF IC E OF T H E SA M E C O U NSE L AND I N A LL THE CASES THE - S OURC E OF IN COME W A S TRUCK PL Y IN G . T HE S A M E M I STA K E H A S OC CURR E D IN A LL THE CASES W H I LE F ILING THE R E TURN . TH E A.O. HAS I SSUE D N OTI CE U /S .1 48 AFTE R N O TI CING THE DI SC R E P A NCIES . NO PR O PE R COMPLI A NC E S WE RE M A D E F R O M TH E A P PELLAN T 'S SIDE. I N SUCH CI RC UM S T A N CE S , T HE AO H A S M A DE THE ADDITI O N SO L E L Y O N T HE B ASIS O F PAPER S FOUND AT T AC H E D W ITH RE T URN , THOU G H H E H A S OB SERVE D IN P A RA - 3 O F T HE ASSESSME NT ORDER T H AT T H E A PP E LL A NT H A S O F F E RED TH E IN CO ME FRO M TR U CK PL Y IN G BU SI N ESS ESTI M ATE D B AS I S. SI NC E THE A PP E LL A NT D ER I VE S IN C OME FRO M T R UC K PL Y I NG ACT I V I T I ES, T H E PROV I SIONS OF SEC TION 4 4AE A RE M A ND A TORIL Y AP PLI CAB LE . LEARNED CIT(APPEALS) FURTHER REFERRED TO PROVISIONS OF SECTION 44AE AND FURTHER OBSERVED AS UNDER : 4 ITA NO. 94/ RPR /2013. THUS, WHILE PROVI S IONS O F SECTION 44 AE S UB - S ECTIONS 1 TO 5 R EL A T E TO C OM PUT A TI ON O F INC O ME ON PRESUMPTIVE B AS IS, SUB - SE CTIONS 6 A ND 7 DE A L W ITH T H E M A NN E R O F ASSE S S MENTS, WHERE THE INCOME IS NOT OFFERED UNDER THE D E EMIN G PROVI SIO N S. IN THIS CAS E NEITHER THE A PPELLANT HAS . MADE THE R E QUISITE COMPLI A NCES A S P E R TH ESE P R O V I S I ON S . NOR THE A.O. INVOKED THE SAME. AS PER SUB SECTION (6), THE AS S E S S M E NT H AS TO B E COMPLETED U/S.143(3) AND THE TOTAL INCOME NEE D TO BE DET E RMINED ACCORDIN G LY , A ND IF THE A S SE SSE E CLAIMS TH A T HIS INCOME IS LOWER TH A N THE S UM S P E CI F I E D IN T H E D EE MIN G PROVI S IONS , HE HAS TO KEEP AND MAINT A IN BOOKS OF A CC O UNT U L S . 44AA (2) AN D GE T HI S ACCO UNTS A UDITED AND FURNI S H AUDIT REPORT U /S . 44AB, WHICH WAS N O T D O N E . U ND E R S U C H CIRCUM S TANCES , CONSID E RING THE SPIRIT OF PROVI S IONS OF S EC TION 44 AE A ND T H E F AC TS OF THE C A SE THAT THE APPELL A NT OWNS L E SS THAN 10 NUMB E R OF G OODS C ARRYI N G VE HI C L ES AT A N Y T I ME DURING PREVIOUS Y EA R, THE AO WAS R E QUI RE D TO A S S E SSE E TH E I NCO M E O N TH E B AS IS OF SA ID PROVI S I O N S. 5. LEARNED CIT(APPEALS) FURTHER RELIED UPON THE DECISION OF ITAT, AHMEDABAD B - BENCH IN THE CASE OF KESHARBHAI BHAMARBHAI CHAUDHARY VS. ITO (2011) 141 TTJ (AHD) (UO) 94 AND CONCLUDED AS UNDER : SINCE THE APPELLANT HAS ADMITTED THAT THE BALANCE SHEET, CAPITAL ACCO UNT FURNISHED WITH THE RETURN OF INCOME ARE INCOMPLETE AND INCORRECT, THE APPELLANT CAN NOT GET ANY BENEFIT ABOUT THE QUANTUM OF CAPITAL REFLECTED IN THE CAPITAL ACCOUNT FURNISHED WITH THE RETURN OF INCOME. ALL THE ADDITIONS MADE BY THE AO ARE ACCORDINGLY, DELETED AND THE ASSESSED INCOME WOULD BE SUBSTITUTED BY THE INCOME DERIVED AFTER APPLYING PROVISIONS OF SECTION 44AE OF THE ACT. 6. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT TH E ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS ITAT IN ITA NO. 103 & 104/RPR/2013 VIDE ORDER DATED 21 ST JUNE, 2016. 8. PER CONTRA LEARNED D.R. RELIED UPON THE ORDER OF THE AO. 9. UPON CAREFUL CONSIDERATION I FIND THAT ON IDENTICAL CIRCUMSTANCES THIS TRIBUNAL IN THE APPEAL REFERRED ABOVE HAS HELD AS UNDER : I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. I HAVE NOTICED THAT THE ONLY PLEA OF THE LEARNED DEPARTMENTAL REPRESENTATIVE IS THAT THE METHOD OF COMPUTATION OF INCOME CANNOT BE CHANGED OR VARIED BY THE LEARNED CIT(A) BUT THEN THE LEARNED CIT(A) 5 ITA NO. 94/ RPR /2013. OVERLOOKS THAT THE ASSESSEE WAS INDEED AND UNDISPUTEDLY ENTITLED TO APPLICATION OF SE CTION 44AE AND IT WAS APPARENTLY AN INADVERTENT ERROR IN ELECTRONIC FILING OF THE RETURNS THAT THE OPTION WAS NOTED AS NOT HAVING BEEN EXERCISED. I HAVE ALSO NOTED THAT AS HELD BY THE DIVISION BENCH OF THIS TRIBUNAL IN THE CASE OF KESHAVBHAI KAMALBHAI CHAN DANI VS. ITO 149 TTJ 94, IF INCOME FROM TRUCK PLYING IS REQUIRED TO BE ESTIMATED, IT SHOULD BE ESTIMATED ON THE BASIS OF SECTION 44AE AND NOT OTHERWISE. WHEN LAW HAS PRESCRIBED A FORMULA FOR ESTIMATING INCOME AND ASSESSEE IS NOT COVERED BY ANY OF THE EXCEP TIONS SET OUT IN THE FORMULA, THERE IS NO REASON FOR NOT ESTIMATING THE INCOME ON THE BASIS OF SUCH A FORMULA. THE HYPER TECHNICAL ARGUMENT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE DOES NOT IN MY CONSIDERED VIEW MERITS ACCEPTANCE. I AM, THEREFORE, OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) WAS QUITE JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO RECOMPUTE THE INCOME ON THE BASIS OF PROVISIONS OF SECTION 44AE OF THE ACT. I UPHOLD HIS ACTION AND DECLINE TO INTERFERE IN THE MATTER. 10. FROM THE ABO VE IT IS EVIDENT THAT ON IDENTICAL ISSUE THE TRIBUNAL HAD HELD THAT THE CIT(APPEALS) WAS CORRECT IN DIRECTING THE AO TO COMPUTE THE INCOME ON THE BASIS OF THE PROVISIONS OF SECTION 44AE OF THE I.T. ACT. ACCORDINGLY RESPECTFULLY FOLLOWING THE PRECEDENT ABOV E, I UPHOLD THE ORDER OF LEARNED CIT(APPEALS). 11. IN THE RESULT THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNC ED IN THE OPEN COURT ON THIS 1 ST DAY OF NOV. , 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. DATED: 01 - 11 - 2016. 6 ITA NO. 94/ RPR /2013. COPY FORWARDED TO : 1. SHRI BALZINDER SINGH SBI COLONY, DHARAMPURA - 1, JAGDALPUR, DIST. BASTAR (CG). 2. I.T.O. , JAGDALPUR. 3. C.I.T., RAIPUR. 4. CIT(APPEALS), RAIPUR. 5. D.R., ITAT, RAIPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.