Shri Nayanbhai G. Gondaliya, Ahmedabad V. The Deputy Commissioner of Income Tax, Central Circle-2(1), Ahmedabad

ITSSA 172/AHD/2017

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6498 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 09-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Corroborative evidences; Set aside
• Section: 144; 153A

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ B’’ BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT And SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./IT(SS)A No. 172/AHD/2017 िनधाᭅरण वषᭅ/Asstt. Year: 2007-08 Nayanbhai G. Gondaliya, D-104, green City, Opp. Science City,, Sola, Ahmedabad-382210. PAN: AGHPP0190P Vs. D.C.I.T., Central Circle-2(1), Ahmedabad. (Applicant) (Respondent) Assessee by : None Revenue by : Shri Aarsi Prasad, Sr.D.R सुनवाई कᳱ तारीख/Date of Hearing : 11/11/2021 घोषणा कᳱ तारीख /Date of Pronouncement: 14/12/2021 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-6, Ahmedabad, dated 30/11/2016 arising in the matter of assessment order passed under s. 144 r.w.s. 153A of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2007-08. IT(SS)A no.172/AHD/2017 A.Y. 2007-08 2 2. When the matter was called for hearing it was noticed that there was none appeared on behalf of the assessee despite the fact that case has been listed for hearing for more than 3 times. On the previous occasion the notice intimating the date of hearing was sent to the address of the assessee which was duly served. It is the trite law that assessee after filing the appeal should be vigilant enough to prosecute the same. But, it appears that the assessee is not serious in pursuing the appeal filed by it. In the absence of any co-operation from the side of the assessee, we don’t find any reason to keep the matter pending before us. Accordingly, we decide to proceed to adjudicate the appeal after hearing the learner DR appearing on behalf of the Revenue. 3. The assessee has raised the following grounds of appeal: 1. That the Ld.CIT(A) erred in confirming the order of the AO in disallowing expenses of Rs.78,763/-. 2. THAT THE Ld.CIT(A) erred in confirming the order of the AO in making addition of Rs.1,55,400/- towards closing balance of capital account. 3. That the Ld.CIT(A) erred in confirming the order of the AO in charging interest u/s.234A/B/C of the act. 4. The 1 st issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO by disallowing the expenses of ₹ 78,763/- on account of non-availability of supporting documents. 5. The facts in brief are that the assessee in the present case is an individual and who claimed to be engaged in the activity of property dealing. The assessee in the year under consideration has shown taxable profit at ₹ 1,44,260/- after claiming the expenses of ₹ 78,763/- against the total sales of Rs. 2,23,023/- only. The assessee failed to file any supporting evidence with respect to the expenses of ₹ 78,763/-. Therefore, the same was disallowed by the AO and added to the total income of the assessee. IT(SS)A no.172/AHD/2017 A.Y. 2007-08 3 6. Aggrieved assessee preferred an appeal to the learned CIT (A) who confirmed the order of the AO by observing as under: I have carefully considered the assessment order the submission of the appellant During the appellate proceedings the appellant merely submitted a ledger copy of the petrol, travelling, salary expenses, telephony/ expenses etc. However no evidence in respect of expenses incurred were filed either before the AO or in the appellate proceedings. Thus the contention of the appellant that expenses were incurred for business purpose is not tenable and disallowance made by the AO is confirmed. The ground is dismissed. 7. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. 8. The learned DR before us vehemently supported the order of the authorities below. 9. We have heard the learned DR and perused the materials available on record. In the present case, the disallowance was made by the AO of the expenses claimed by the assessee on the reasoning that there was no supporting document filed by the assessee at the time of assessment. The view taken by the AO was subsequently confirmed by the learned CIT (A). From the preceding discussion, we note that the assessee has filed only the copy of the ledger in support of the expenses before the learned CIT (A) which was not was backed by the documentary evidence such as bills of the patrol, travelling, telephone and the employee working with the assessee. Admittedly, the primary onus lies upon the assessee to furnish the details with respect to the particulars of income furnished in the income tax return, failing which the additions are warranted under the provisions of income tax Act. Nevertheless, these additions even in the absence of supporting documents can be made in scientific manner, meaning thereby, the additions can only be made with reasoning and considering the prevailing market practices/conditions. In other words the additions cannot be made by the revenue authorities in abrupt manner. There is no iota of doubt raised by the authorities below on the contention of the assessee raised before the learned CIT (A) that he was engaged in the activity of land brokerage which is not possible to run without incurring any expense. Thus, in our IT(SS)A no.172/AHD/2017 A.Y. 2007-08 4 understanding the gross amount of sale shown by the assessee in the income tax return cannot be treated as income without allowing the corresponding expenses. Furthermore, we find that the assessee has shown an expense of Rs. 78,763.00 only which constitute 35% of the total gross income. In other words, the assessee has shown 65% income of his of gross income which seems very reasonable. Accordingly, we are of the view that no further addition is warranted in the given facts and circumstances, despite the fact that the assessee failed to furnish the supporting evidences for the expenses incurred by him. Hence we set aside the order of the learned CIT (A) and direct the AO delete the addition made by him. 10. The 2 nd issue raised by the assessee is that learned CIT (A) erred in confirming the order of the AO by the addition of Rs. 1,55,400/- on account of closing balance of capital. 11. The assessee has filed his return of income 1 st time i.e. the year under consideration along with the balance sheet wherein he has shown capital of ₹ 1,55,400/- only, the source of which was not explained during the assessment proceedings. Therefore, the AO added the same to the total income of the assessee. 12. Aggrieved assessee preferred an appeal to the learned CIT (A) who has confirmed the order of the AO by observing as under: 12. I have carefully considered the assessment order and the submission of the appellant. The appellant submitted that the income declared was included in the capital of the appellant. It is seen that the appellant filed return of income first time and merely shown the opening capital account balance and profit from the business. The contention of the appellant is not supported with the evidence of income earned in previous year hence not tenable. Therefore the AO is justified in treating the addition in capital as unexplained. The addition made by the AO is confirmed. The ground is dismissed. 13. Being aggrieved by order of the learned CIT (A), the assessee is in appeal before us. IT(SS)A no.172/AHD/2017 A.Y. 2007-08 5 14. The learned DR before us vehemently supported the order of the authorities below. 15. We have heard the learned DR and perused the materials available on record. It is the onus upon the assessee to provide the necessary details with respect to the particulars furnished in the income tax return. In the absence of supporting evidences, the addition are liable to be made to the total income of the assessee. But the additions has to be made based on scientific approach and after considering the materials available on record. For example, something has been furnished by the assessee during the proceedings which was not based on the documentary evidence, it is incumbent upon the authorities to reject the same by way of passing the speaking order. Otherwise, in our understanding, additions made by the authorities are uncalled for. In the given case the assessee has clearly submitted before the learned CIT (A) that the addition has been made by the AO towards closing balance of capital account of ₹ 1,55,400/- shown by him as on 31 st March 2007 which was inclusive of the income declared by him for the year under consideration at ₹ 1,44,260/- only. The relevant submission of the assessee reads as under: “Addition towards closing balance of capital account of Rs. 1,55,400/- The appellant has filled his return of income and declared the income of Rs. 1,44.260/- for the year under consideration. The income declared by your appellant is included in the capital of your I appellant. The Id. AO has not considered the said fact and added the closing capital balance as | income of your appellant which include the profit of the current year which has already been 1 offered to the tax.The Id AO has therefore without appreciating the above facts added the capital balance to the income of the assessee which resulted into double taxation. In view of the above addition made by the AO of the capital balance may kindly be deleted." 15.1 Similarly, the assessee in the statement of facts furnished along with form 35, in the appeal to the learned CIT (A), has submitted as under: The assessee has shown Balance of capital of Rs. 1,55,400/- as at 31/03/2007 in balance sheet, which includes current year profit, Opening capital balance etc. The appellant could not be able to produce the ledger of capital account as the notices were not received due to change of the address. The Ld. A.O. has added the said capital closing balance without appreciating the fact of the case. IT(SS)A no.172/AHD/2017 A.Y. 2007-08 6 15.2 From the above submission of the assessee, it is transpired that the addition was made by the authorities below of the closing balance. Indeed, the amount of closing balance can be derived in the manner as detailed below: Opening capital balance Addition: Fresh introduction of capital Profit for the year under consideration Subtraction: Withdrawals for the year under consideration Closing capital balance 15.3 There is no ambiguity to the fact that the closing balance of the capital is always arrived at the end of the particular financial year after considering the profit of the year under consideration. The profit of Rs. 1,44,260/- has been disclosed in the income tax return which was also not disputed by the authorities below. Accordingly, we not convinced with the order of the authorities below as far as addition of closing balance of capital is concerned. The situation would have been different, had there been addition by the authorities below with respect to the capital introduced during the year. But, there is no whisper or any other information available on record with respect to fresh capital introduced in the year under consideration. Hence, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Thus the ground of appeal of the assessee is allowed. 16. In the result the appeal filed by the assessee is allowed. Order pronounced in the Court on 14/12/2021 at Ahmedabad. Sd/- Sd/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 14/12/2021 Manish