ITO, New Delhi v. Sh. Love Deep Manuja, New Delhi

ITA 1329/DEL/2009 | 2005-2006
Pronouncement Date: 03-02-2010 | Result: Allowed

Appeal Details

RSA Number 132920114 RSA 2009
Bench Delhi
Appeal Number ITA 1329/DEL/2009
Duration Of Justice 9 month(s) 25 day(s)
Appellant ITO, New Delhi
Respondent Sh. Love Deep Manuja, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 03-02-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 03-02-2010
Date Of Final Hearing 03-02-2010
Next Hearing Date 03-02-2010
Assessment Year 2005-2006
Appeal Filed On 08-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: D NEW DELHI BEFORE SHRI C.L.SETHI JM AND SHRI SHAMIM YAHYA AM ITA NO. 1329/DEL/2009 A.Y. 2005-06 THE I.T.O. WARD 25(1) VS. SH. LOVE DEEP MANUJA NEW DELHI ED 54B PITAMPURA DELHI (APPELLANT) (RESPONDE NT) APPELLANT BY : SH.BK GUPTA SR.D.R. RESPONDENT BY : NONE O R D E R PER SHAMIM YAHYA ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORDE RS OF LDCIT(A) DATED 30.1.2008 PERTAINING TO A.Y. 2005-06. 2. THE ISSUE RAISED THAT THE LDCIT(A) ERRED IN DEL ETING THE ADDITION OF RS. 17 55 267/- MADE BY THE A.O. ON ACCOUNT OF UNEX PLAINED CASH DEPOSITS IN HIS S.B. ACCOUNT U/S 68 OF THE INCOME T AX ACT. 3. IN THIS CASE THE ASSESSEE HAD FILED RETURN OF IN COME ON 28.10.2005 DECLARING INCOME OF RS. 91 436/-. AS PER INFORMATI ON RECEIVED IN THE AIR THE AO NOTICED THAT THE ASSESSEE HAD DEPOSITED CASH OF RS. 21 37 100/- IN HIS S.B.ACCOUNT WITH STANDARD CHARTERED BANK DUR ING THE YEAR UNDER CONSIDERATION. THE ASSESSEE IN RESPONSE ENCLOSED C OPIES OF REVISED BALANCE SHEET AND PROFIT AND LOSS A/C. THE ASSESSE E CLAIMED THAT THE 2 CASH DEPOSITED IN BANK REPRESENTED THE CASH GENERAT ED FROM CASH SALES AND HENCE THE REVISED PROFIT AND LOSS A/C SHOWING S ALES OF RS. 24 39 877/- AS AGAINST RS. 5 85 653/- SHOWED IN PRO FIT AND LOSS A/C FILED WITH RETURN OF INCOME. THE ASSESSEE HAD ALSO REVIS ED THE PURCHASE FIGURE FROM RS. 4 38 948/- TO RS. 22 93 681/-. HOWEVER NE T PROFIT IN THE BUSINESS REMAINED THE SAME. THE A.O. HAD REJECTED THE REVISED PROFIT AD LOSS A/C AND BALANCE SHEET AND TREATED THE CASH DEP OSIT OF RS. 21 37 100/- AS UNDISCLOSED INCOME OF THE ASSESSEE B Y INVOKING PROVISIONS OF S.68 OF THE INCOME TAX ACT. 4. UPON ASSESSEES APPEAL THE LDCIT(A) NOTED THAT T HE A.O. HAS NOT ELABORATED THE EVIDENCE IN HIS POSSESSION. HE NOTE D THAT THE A.O. HAS FAILED TO BRING ON RECORD ANY MATERIAL TO SUPPORT H IS CONTENTION THAT THE CASH DEPOSITED IN THE BANK ACCOUNT WAS NOT OUT OF C ASH SALE PROCEEDS OF CLOTH AS CLAIMED BY THE ASSESEE. THE LDCIT(A) NOTED THAT ASSESSEE HAS PRODUCED BANK ACCOUNT OF PARTIES FROM WHOM PURCHASE S HAS BEEN MADE. HOWEVER THE LDCIT(A) DID NOT ACCEPT THE NET PROFIT FIGURE SHOWN BY THE ASSESEE. HE HELD AS UNDER. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD SHOWN NET PROFIT OF 15.65% ON SALES OF RS. 4 40 600/-. LATER ON THE FIGURES OF PURCHASES AND SALES WERE REVISED BUT THE FIGURE OF NET PROFIT REMAINED THE SAME AS SHOWN IN THE P&L ACCOUNT ORIGI NALLY FILED WITH THE RETURN OF INCOME. THE REVISED P&L ACCOUNT SHOWS NET PROFIT OF 3.75%. IT IS SEEN FROM THE SUBMISSIONS M ADE BY THE 3 ASSESSEE THAT THE NET PROFIT SHOWN BY THE ASSESSEE IN EARLIER YEARS IS 13% TO 13.5%. NO DOCUMENTARY EVIDENCE HAS BEEN S UBMITTED TO EXPLAIN THE LOGIC BEHIND DRASTIC FALL IN THE NET P ROFIT. THE EXPLANATION OF THE COUNSEL VIDE LETTER DT. 14.11.20 08 IS GENERAL IN NATURE WHERE IT IS CLAIMED THAT WHEN THE SALES ARE HIGHER THE NET PROFIT GOES DOWN. IT IS A FACT BORNE OUT FROM THE SUBMISSIONS OF THE ASSESSEE THAT NET PROFIT DURING THE YEAR IS SHO WN AT 15.65% ON SALES OF RS. 4 40 600/-. THERE CANNOT BE DIFFERENT RATE OF PROFIT ON THE SALES WHICH THE ASSESSEE OMITTED TO INCLUDE IN THE P&L ACCOUNT. THERE IS NO MERIT IN THE ARGUMENT OF THE COUNSEL THAT THE NET PROFIT DURING THE YEAR IS 3.75%. THE NET PROFI T OF 15.65% IS APPLIED TO THE ENTIRE SALES OF RS. 24 39 827/- RESU LTING IN NET PROFIT OF RS. 3 81 833/-. THE ADDITION MADE BY THE A.O. IS RESTRICTED TO RS. 3 81 833/- ON ACCOUNT OF TRADING RESULTS. THE AO IS DIRECTED TO DELETE THE ADDITION MADE BY HIM U/S 68 OF THE ACT A ND ASSESS THE INCOME AT RS. 3 81 833/- UNDER THE HEAD BUSINESS. THEREFORE THE ASSESEE GETS A RELIEF OF RS. 17 55 267/-. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. THE LD.D.R. APPEARED ON BEHALF OF THE ASSESSEE. ON THE OTHER H AND NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE OF NOTICE. WE FIN D THAT LDCIT(A) HAS NOTED THAT THERE ARE CASH SALES WHICH HAVE BEEN DEP OSITED IN BANK. HE HAS ALSO NOTED THAT THERE ARE PURCHASES THE PAYMEN T OF WHICH HAS BEEN DONE BY CHEQUES. WE FIND OURSELVES IN AGREEMENT W ITH THE CONCLUSION 4 DRAWN BY THE LD.CIT(A) THAT CASH THAT HAS BEEN DEP OSITED IN THE BANK SHOULD BE TREATED AS CASH ON ACCOUNT OF UNDISCLOSED SALES OF CLOTH. TO THAT EXTENT WE ARE IN AGREEMENT WITH THE ADDITION O F RS. 3 81 833/- MADE BY HIM ON ACCOUNT OF THE PROFIT DISCLOSED. HOWEVE R WE ALSO NOTE THAT THE ASSESSEE HAS OBVIOUSLY USED UNDISCLOSED MONEY TO F INANCE THE SAID UNDISCLOSED PURCHASE AND SALE. AS SUCH WE REMIT TH E ISSUE OF ADDITION ON ACCOUNT OF PEAK CREDIT IN THE BANK ACCOUNT TO TH E FILES OF THE A.O. THE A.O. SHALL EXAMINE THE BANK ACCOUNT OF THE ASSESEE AND ADD THE PEAK CREDIT IN THE SAID BANK ACCOUNT ALSO AS THE UNDISCL OSED INCOME OF THE ASSESEE. 6. IN THE RESULT THIS APPEAL BY THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3RD FEB. 2010 UPON CONCLUSION OF HEARING. (C.L.SETHI) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTA NT MEMBER DATED: 3RD FEB. 2010 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CI T(A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR