ITO, Trichy v. M.Maruthamuthu, Perambalur

ITA 1175/CHNY/2014 | 2009-2010
Pronouncement Date: 13-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 117521714 RSA 2014
Assessee PAN AAAPM8622J
Bench Chennai
Appeal Number ITA 1175/CHNY/2014
Duration Of Justice 6 month(s) 8 day(s)
Appellant ITO, Trichy
Respondent M.Maruthamuthu, Perambalur
Appeal Type Income Tax Appeal
Pronouncement Date 13-11-2014
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 13-11-2014
Date Of Final Hearing 07-10-2014
Next Hearing Date 07-10-2014
Assessment Year 2009-2010
Appeal Filed On 05-05-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A B ENCH CHENNAI . ! # $ % & BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD JUDICIAL MEMBER ./I.T.A.NO. 1175/MDS/2014 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER WARD-I(3) 44 WILLIAMS ROAD CANTONMENT TRICHY-620 001. VS MR. M.MARUTHAMUTHU PERUMAL KOVIL STREET EASANAI POST PERAMBALUR TALUK PERAMBALUR-621 219. PAN: AAAPM8622J ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. GURU BHASHYAM JCIT /RESPONDENT BY : MR. VENKATESH.R C.A. / DATE OF HEARING : 7 TH OCTOBER 2014 /DATE OF PRONOUNCEMENT : 13 TH NOVEMBER 2014 / O R D E R PER CHALLA NAGENDRA PRASAD JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS) TIRUCHIRA PPALLI DATED 29.01.2014 FOR THE ASSESSMENT YEAR 2009-10. 2. THE ONLY ISSUE IN THE GROUNDS OF APPEAL OF THE R EVENUE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING ADDITION OF ` 74 57 200/- MADE UNDER SECTION 69A REPRESENTING CASH DEPOSITS IN THE ASSESSEES BANK A CCOUNT. 2 ITA NO.1175/MDS/2014 3. BRIEF FACTS ARE THAT ASSESSEE IS A RETAIL RICE T RADER FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-1 0 ON 24.9.2009 DECLARING INCOME FROM BUSINESS AT ` 53 950/- AND AGRICULTURAL INCOME AT ` 48 000/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 30.12. 2011 DETERMINING THE INCOME OF THE ASSESSEE AT ` 75 11 150/-. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT M ADE ADDITION OF ` 74 57 200/- AS UNEXPLAINED MONEY UNDER SECTION 69A OF THE ACT. THE ASSESSEE SUBMITTED BEFORE THE A SSESSING OFFICER THAT OUT OF ` 74 57 200/- ` 45 34 500/- ARE CASH DEPOSITS MADE BY M/S. PRIYA TRANSPORTS. THE ASSESSE E SUBMITTED THAT M/S. PRIYA TRANSPORTS USED ASSESSEE S BANK ACCOUNT TO REMIT TRANSPORT CHARGES AND TRANSFER IT TO CHENNAI BY RTGS TO THEIR BANK ACCOUNT. A CONFIRMATION LETTE R WAS ALSO FILED BEFORE THE ASSESSING OFFICER BY M/S. PRIYA TR ANSPORTS STATING THAT THEY USED TO REMIT TRANSPORTATION HIRE CHARGES IN ASSESSEES BANK ACCOUNT AND LATER THE SAME WAS TRAN SFERRED TO THEIR BANK ACCOUNT IN CHENNAI. HOWEVER THE ASSE SSING OFFICER TREATED THE CASH DEPOSITS OF ` 45 34 500/- AS UNEXPLAINED MONEY IN THE HANDS OF THE ASSESSEE STA TING THAT NO EVIDENCE WAS FURNISHED TO SHOW THAT THESE AMOUNT S WERE 3 ITA NO.1175/MDS/2014 OUT OF TRANSPORT CHARGES COLLECTED BY M/S. PRIYA T RANSPORTS AND NO RETURN OF INCOME WAS FILED BY PRIYA TRANSPOR TS ON VERIFICATION FROM ITO WARD-II(1) TRICHY AND THE R EGISTERED OFFICE MENTIONED IN THE LETTER PAD I.E. CONFIRMATIO N LETTER SUBMITTED BY M/S. PRIYA TRANSPORTS THE ASSESSING O FFICER CAME TO KNOW THAT REGISTERED OFFICE IS NOT FUNCTION ING IN THAT ADDRESS AND THEREFORE HE ADDED THE SAID AMOUNT AS UNEXPLAINED MONEY. 4. WITH REGARD TO BALANCE CASH DEPOSITS OF ` 29 22 700/- ASSESSEE SUBMITTED THAT THE SAID DEPOSITS WERE MADE OUT OF BUSINESS OF RICE TRADE. ASSESSEE SUBMITTED THAT TRA NSACTIONS TO THE TUNE OF ` 24 00 000/- IN THE BANK ACCOUNT WAS ON ACCOUNT OF HIS WIFES BUSINESS AND ` 9 00 000/- WAS RELATING TO HIS BUSINESS. HOWEVER THE ASSESSING OFFICER DIS BELIEVED THE VERSION OF THE ASSESSEE AND MADE ADDITION OF ` 29 22 700/- AS UNEXPLAINED MONEY OF THE ASSESSEE. ON APPEAL THE COMMISSIONER OF INCOME TAX (APPEALS) IN SOFAR AS THE CASH DEPOSITS AMOUNTING TO ` 45 37 500/- HE DELETED THE ADDITION HOLDING THAT SOURCE FOR SUCH DEPOSITS IS HIRE CHARGES OF M/S. PRIYA TRANSPORTS. IN RESPECT OF TH E BALANCE 4 ITA NO.1175/MDS/2014 CASH DEPOSITS OF ` 29 22 700/- ARE CONCERNED THE COMMISSIONER OF INCOME TAX (APPEALS) TREATED THE SA ID DEPOSITS AS INCOME FROM ASSESSEES RICE BUSINESS AN D DIRECTED THE ASSESSING OFFICER TO ASSESS THE INCOME @ 5% ON THE SAID DEPOSITS. THE REVENUE IS IN APPEAL BEFO RE US. 5. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE BEFORE THE ASSESSING OFFICER TO SHOW THAT TRANSPORTATION CHARG ES SAID TO HAVE BEEN DEPOSITED BY M/S. PRIYA TRANSPORTS BELON GS TO THEM. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THOU GH M/S. PRIYA TRANSPORTS SUBMITTED CONFIRMATION LETTER ON I TS LETTER PAD ON ENQUIRY BY THE ASSESSING OFFICER IT CAME TO KNOW THAT THERE IS NO REGISTERED OFFICE FUNCTIONING IN THE AD DRESS MENTIONED ON THE LETTER PAID AND NO RETURNS OF INCO ME WERE FILED BY M/S. PRIYA TRANSPORTS. DEPARTMENTAL REPRE SENTATIVE THEREFORE SUBMITS THAT IN THE ABSENCE OF ANY EVIDEN CE OR INFORMATION FURNISHED BY THE ASSESSEE AND SINCE NO INCOME- TAX RETURN WAS FILED BY M/S. PRIYA TRANSPORTS THE ASSESSING OFFICER COULD NOT ASCERTAIN THE TRANSACTION WHETHER IT IS 5 ITA NO.1175/MDS/2014 GENUINE OR NOT AND WHETHER CASH TRANSACTIONS WERE R EALLY ROOTED TO M/S. PRIYA TRANSPORTS OR NOT? 6. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMI TS THAT TRANSACTIONS ARE ALL BELONGED TO M/S. PRIYA TR ANSPORTS AND THEY HAVE IN FACT FILED CONFIRMATION STATING TH AT DEPOSITS BELONGED TO THEM AND THEY USED ASSESSEES BANK ACCO UNT TO TRANSFER ITS FUNDS TO ADMINISTRATIVE OFFICE IN CHEN NAI. AUTHORIZED REPRESENTATIVE FURNISHED A COPY OF ACKNOWLEDGEMENT OF RETURN FILED BY M/S. PRIYA TRANS PORTS FOR THE ASSESSMENT YEAR 2009-10. HE FURTHER SUBMITS THA T ALL THESE CASH DEPOSITS WERE TRANSFERRED TO M/S. PRIYA TRANSPORTS BANK ACCOUNT AND THEREFORE THERE IS NO JUSTIFICATIO N IN TREATING THE SAID AMOUNTS AS UNEXPLAINED MONEY OF THE ASSESS EE. 7. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NT MADE ENQUIRY THROUGH INSPECTOR OF INCOME-TAX ATTACH ED TO HIS OFFICE TO VISIT REGISTERED OFFICE OF M/S. PRIYA TRA NSPORTS WHICH IS SITUATED AT 25C JALAL KUDRI STREET TRICHY-8 AS MENTIONED IN THE LETTERHEAD I.E. CONFIRMATION FILED BY THE AS SESSEE IN 6 ITA NO.1175/MDS/2014 SUPPORT OF HIS SUBMISSION THAT CASH DEPOSITS BELONG ED TO M/S. PRIYA TRANSPORTS AND THE BANK ACCOUNT OF THE ASSESS EE WAS USED BY THEM TO TRANSFER THEIR FUNDS TO ADMINISTRAT IVE OFFICE SITUATED AT CHENNAI. THE INSPECTOR OF INCOME-TAX REPORTED THAT REGISTERED OFFICE WAS NOT FUNCTIONING IN THAT ADDRESS AT THAT POINT OF TIME WHEN ENQUIRY WAS MADE. IT WAS FU RTHER STATED THAT REGISTERED OFFICE WAS FUNCTIONING IN TH AT ADDRESS ONLY UP TO THE YEAR 2000. SO IN THE ABSENCE OF ANY EVIDENCE PRODUCED BY THE ASSESSEE EXCEPT THE CONFIRMATION LE TTER FROM M/S. PRIYA TRANSPORTS THE ASSESSING OFFICER MADE A DDITION OF ` 45 34 500/- AS UNEXPLAINED MONEY. THE ASSESSING OFF ICER ALSO NOTICED THAT M/S. PRIYA TRANSPORTS HAS NOT FIL ED ANY RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10. THE COMMISSIONER OF INCOME TAX (APPEALS) BASED ON THE CONFIRMATION LETTER FURNISHED BY THE ASSESSEE DELET ED THE ADDITION HOLDING THAT SOURCE FOR DEPOSITS WAS EXPLA INED. THE COMMISSIONER OF INCOME TAX (APPEALS) DID NOT ENQUIR E ABOUT THE GENUINENESS OF THE TRANSACTION. THE COMMISSIONE R OF INCOME TAX (APPEALS) MERELY RELIED ON THE CONFIRMAT ION LETTER ISSUED BY M/S. PRIYA TRANSPORTS AND HAS NOT CALLED FOR ANY REMAND REPORT AS TO WHETHER M/S. PRIYA TRANSPORTS I S IN 7 ITA NO.1175/MDS/2014 EXISTENCE OR NOT ESPECIALLY WHEN THE ASSESSING OFFI CER SUBMITS THAT NO REGISTERED OFFICE IS FUNCTIONING FR OM THE ADDRESS GIVEN BY M/S. PRIYA TRANSPORTS IN ITS LETTE RHEAD AND NO RETURN OF INCOME WAS FILED FOR THE ASSESSMENT YE AR 2009- 10. AUTHORIZED REPRESENTATIVE APPEARING BEFORE US SUBMITS A COPY OF ACKNOWLEDGEMENT IN PROOF OF FILING OF RET URN OF INCOME BY M/S. PRIYA TRANSPORTS FOR THE ASSESSMENT YEAR 2009-10. HOWEVER ON A PERUSAL OF THIS DOCUMENT WE FIND THAT THIS RETURN HAS BEEN FILED ON 15.2.2012 IN TH E OFFICE OF THE ADDITIONAL COMMISSIONER OF INCOME TAX RANGE II ITO WARD-II(1) TRICHY. THIS RETURN HAS BEEN FILED MUCH LATER TO THE COMPLETION OF THE ASSESSMENT UNDER SECTION 143( 3) OF THE ACT IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFI CER COULD NOT FIND OUT GENUINENESS OF THE TRANSACTION IN THE ABSENCE OF ANY INFORMATION AND ENQUIRY MADE BY HIM. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THIS MATTER HAS TO BE EXAMINED AFRESH IN DETAIL ONCE AGAIN BY THE ASSESS ING OFFICER AS THE ASSESSEE PRODUCED A COPY OF ACKNOWLEDGEMENT OF RETURN FILED FOR THE ASSESSMENT YEAR 2009-10 BY M/S. PRIYA TRANSPORTS. THE ASSESSEE SHA LL FILE NECESSARY DETAILS TO ESTABLISH THAT TRANSACTION IS GENUINE. 8 ITA NO.1175/MDS/2014 THUS WE REMIT THIS ISSUE BACK TO THE FILE OF THE A SSESSING OFFICER WITH A DIRECTION TO EXAMINE THE ISSUE AFRES H AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. 8. INSOFAR AS CASH DEPOSITS OF ` 29 22 700/- ARE CONCERNED WE FIND THAT ASSESSEE IS INTO RETAIL RIC E TRADE BUSINESS AND THIS FACT IS NOT IN DISPUTE. IT WAS TH E SUBMISSION OF THE ASSESSEE THAT ENTIRE AMOUNT OF ` 29 22 700/- IN VARIOUS SUMS OF DEPOSITS REPRESENTED SALE PROCEEDS DEPOSITED IN SAVINGS BANK ACCOUNT AND WITHDRAWALS W ERE UTILIZED FOR MAKING PURCHASES. IT WAS SUBMITTED TH AT SALE PROCEEDS WERE INITIALLY RECYCLED IN RICE BUSINESS. THEREFORE IT WAS THE SUBMISSION OF THE ASSESSEE THAT THE SAID D EPOSITS REPRESENT SALE PROCEEDS ONLY. THE COMMISSIONER OF I NCOME TAX (APPEALS) CONSIDERING THE FACTS AND CIRCUMSTANC ES OF THE ASSESSEES CASE DIRECTED THE ASSESSING OFFICER TO ASSESS 5% OF THESE SALE PROCEEDS AS INCOME OF THE ASSESSEE APPLYING PROVISIONS OF SECTION 44AE OF THE ACT OBSE RVING AS UNDER:- 18. REGARDING THE REMAINDER OF THE BANK DEPOSIT O F ` 29 22 700/- THE EXPLANATION OF THE APPELLANT IS THE 9 ITA NO.1175/MDS/2014 DEPOSIT CAME OUT OF THE SALE OF RICE BY THE APPELLA NT AND HIS WIFE. THEY ARE DEALERS IN RICE AS PER CERTIFICATE OF REGISTRATION ISSUED BY COMMERCIAL TAX O F FI C E ARIYALUR. 19. THE APPELLANT HAS FILED SOME COPIES OF SOME BILLS FO R PURCHASES OF RICE EFFECTED DURING THE PERIOD 01 . 04.2008 TO 31 . 03.2009 . IT I S ALSO FOUND THAT THE APPELLANT HAS ADMITTED A SALES TURNOVER OF RS. 5 80 000 / - IN HIS RETURN OF INCOME. SMT . INDIRANI HAS REPORTED A SALES TAX AUTHORITIES VIDE HER ANNUAL RETURN 01 . 09.2009 FILED BEFORE ACTO ARIYALUR . SO THE CONCLUSION OF THE ASSESSING OFFICER THAT THERE IS NO E V IDENCE FOR THE RICE TRADE CARRIED ON BY THE APPELLANT AND HIS WIFE IS F OUND TO BE FACTUALLY NOT CORRECT . 20. THE E X PLANATION OF THE APPELLANT THAT THE ENTIRE AMOUNT OF RS . 29 22 700 / - IN VARIOUS SUMS OF DEPOSIT REPRESENTED SALES PROCESSED DEPO S ITED IN SB A/C AND THE WITHDRAWALS WERE UTILIZED FOR MAKING PURCHASES AND THE SALE PROCEEDS OF INITIAL PURCHASES WERE RECYCLED IN THE RI C E BUSINESS. THERE IS NO MATERIAL ON RECORD TO CONTRADICT THE ABOVE E X PLANATION. 2 1. IT IS F URTHER FOUND THAT THERE IS NO MATERIAL ON RECORD TO LINK TH E WITHDRAWALS TO ANY INVESTMENTS EITHER . IN VIEW OF THESE C IRCUMSTANCE S HA V E TO AGREE THE E X PLANATION OF THE APPELLANT THAT THE A GGREGATE DEPOSIT OF RS. 29 22 700 1 - CAME OUT OF SALE PROCEEDS OF RICE. 22 . NO W THE NE X T QUESTION FOR CONSIDERATION IS ASSESSING THE PRO F IT FROM THE RICE BUSINESS. AS I HAVE HELD THAT THE DEPOSITS OF RS. 2 9 22 700 1 - REPRESENTED S ALES TURNO V ER ONL Y THE PROFIT EL E MENT EMBEDD E D IN S ALES TURNOVER IS ASSESSABLE TO TA X AS PER THE GUJARAT HIGH COURT D EC I SI ON IN CIT VS PRE S ID E NT INDU S TRIE S (2 00 2) (2 58 ITR 654 G U J) . 23. AS THE APPELLANT BUSINESS TURNOVER IS LESS THAN RS. 40 LAKHS THE PROVISIONS OF SEE 44AE OF THE IT ACT 1961 BECOME APPLICABLE. THE ASSESSEE HAS ALSO RELIE D ON THE DECISION OF HONOURABLE MADRAS HIGH COURT IN THE CASE OF CIT VS P.ROJES 356 ITR 703 (HC) DATED - 05/02/2013 IN SUPPORT OF THE ABOVE . 24. FOR THE REA SON S D ISC U SSE D ABOVE I H O L D T HAT T H E ASSESSING OFFICER SHALL ASSESS T H E PROFIT RELATABLE TO THE SA L ES T U RNOVER OF RS.29 22 700/ - APPLYING THE 10 ITA NO.1175/MDS/2014 PROVISIONS OF SEE 44AE OF THE ACT 1961 AN D TO ASSESS A SUM OF R S . 1 46 1 35 / - AS INCOME C O MP U TE D @ 5% ON RS . 29 22 7 00/ - . 9. ON GOING THROUGH THE ABOVE FINDINGS WE DO NOT F IND ANY INFIRMITY IN THE ORDER PASSED BY THE COMMISSION ER OF INCOME TAX (APPEALS). THE REVENUE HAS NOT REBUTTED THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS ). THUS WE UPHOLD THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS) INSOFAR AS THE DIRECTION TO ASSESS ` 29 22 700/- AS INCOME OF THE ASSESSEE UNDER SECTION 44AE OF THE ACT. THUS THIS GROUND OF APPEAL OF THE REVENUE IS DISMI SSED. 10. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY THE 13 TH DAY OF NOVEMBER 2014 AT CHENNAI. SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDR A PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI / /DATED 13 TH NOVEMBER 2014 SOMU 12 32 /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .