Shri Lavkush Gadiya,, Indore v. The I.T.O., Indore

ITA 258/IND/2010 | 2006-2007
Pronouncement Date: 16-09-2011 | Result: Allowed

Appeal Details

RSA Number 25822714 RSA 2010
Assessee PAN ABQPG0090D
Bench Indore
Appeal Number ITA 258/IND/2010
Duration Of Justice 1 year(s) 4 month(s) 13 day(s)
Appellant Shri Lavkush Gadiya,, Indore
Respondent The I.T.O., Indore
Appeal Type Income Tax Appeal
Pronouncement Date 16-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 16-09-2011
Assessment Year 2006-2007
Appeal Filed On 03-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JM AND SHRI R.C. SHARMA AM ITA NO.258/IND/2010 AY 2006 - 07 LAVKUSH GADIYA INDORE PAN ABQPG 0090 D APPELLANT VS. ITO WARD - 2(2) INDORE RESPONDENT APPELLANT BY SHRI C.P. RAWKA FCA RESPONDENT BY SHRI L.L. CHOUBEY SR. DR DATE OF HEARING : 26.07.2011 DATE OF PRONOUNCEMENT : 16.09.2011 ORDER PER R.C. SHARMA ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY T HE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - I INDORE DATED 5.2.2010 FOR THE AY 2006 - 07 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE I.T. ACT 1961 ON THE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) ERRED IN LAW AND FACTS OF THE CASE AND CONFIRMED THE ADDITION MADE BY AO ON ACCOUNT OF CASH DEPOSITED IN IDBI BANK AT RS.11 48 800/ - TREATED AS INCOME FROM 2 2 UNDISCLOSED SOURCE WITHOUT CONSIDERING FULL FACTS AND LEGAL POSITION. THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) IS TOTALLY WRONG AND ILLEG AL ON THE FACTS OF THE CASE. 2. THAT THE LD. CIT(A) ERRED IN LAW AND FACTS OF THE CASE AND CONFIRMED THE ADDITION MADE BY THE AO ON ACCOUNT OF PROFIT ON SALES AT RS.1 94 110/ - WITHOUT CONSIDERING FULL FACTS AND LEGAL POSITION. THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) IS TOTALLY WRONG AND ILLEGAL ON THE FACTS OF THE CASE. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FACTS OF THE FIRST ISSUE ARE THAT THE ASSESSEE DEALS IN TRADING OF A GRICULTURAL ITEMS SUCH AS PIPES AND SPARE PARTS ETC. UNDER THE NAME AND STYLE OF SHREE NATH ENTERPRISES BESIDES HAVING COMMISSION INCOME FROM INSURANCE. RETURN OF INCOME FOR THE AY 2006 - 07 WAS FILED ON 30.3.2007 DECLARING TOTAL INCOME AT RS.1 12 229/ - WHIC H WAS TAKEN IN SCRUTINY AS PER NOTICE ISSUED U/S 143(2) OF THE I.T. ACT ON 23.10.2007. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED BY THE AO TO FURNISH 3 3 DETAILS AND BASIS OF WORKING OF INCOME FROM BUSINESS SHREENATH ENTERPRISES AND ALSO TO PRO DUCE BOOKS OF ACCOUNTS. THE ASSESSEE FILED SALES - TAX DETAILS SHOWING GROSS TURNOVER OF RS.5 58 920/ - . IN THE SALES TAX ASSESSMENT ORDER DETAILS OF BOOKS MAINTAINED WERE SHOWN AS CASH BOOK LEDGER PURCHASES AND SALE BILLS. BOOKS OF ACCOUNTS WERE HOWEVER NOT PRODUCED BEFORE THE AO. AS PER ANNUAL INFORMATION REPORT THE AO CAME TO KNOW THAT THE ASSESSEE HAD AN ACCOUNT HAVING CASH DEPOSIT OF RS.11 48 800/ - WITH IDBI CHITTORGARH BRANCH (RAJASTHAN). THE AO ASKED THE ASSESSEE TO PRODUCE A COPY OF THAT ACCOU NT ALONG WITH SOURCE OF DEPOSIT THEREIN. THE AO SIMULTANEOUSLY REQUESTED THE BRANCH MANAGER OF THE IDBI CHITTORGARH BRANCH FOR PROVIDING A COPY OF BANK STATEMENT OF THE ACCOUNT OF THE ASSESSEE WHICH WAS PROVIDED BY THE BANK. THE AO NOTED THAT WHEN FACT OF MAINTAINING THE BANK ACCOUNT AT CHITTORGARH BRANCH WAS CONFRONTED TO THE ASSESSEE THEN THE ASSESSEE CLAIMED THAT THE 4 4 ACCOUNT WAS MAINTAINED FOR DEPOSIT OF SALE MADE AT RAJASTHAN. IT HAS EXERCISED THE OPTION U/S 44AF FOR TAX PURPOSES UNDER THE ACT AND ITS MAJOR SALES ARE AT RAJASTHAN AND WHATEVER CASH RECEIVED DEPOSITED AT RAJASTHAN AND WITHDRAWN AT INDORE EITHER ON THE SAME DATE OR SUBSEQUENTLY THIS FACT IS EVIDENTLY CLEAR FROM THE BANK STATEMENT PREPARED BY AO FROM BILLS ALSO REVEALS THAT SALES AT RAJASTH AN ONLY AND THE SALES AS WORKED OUT BY AO IS 24.20 LACS AND ESTIMATED AT 25 LACS THEREFORE THE CASH DEPOSITS IN BANK TO THE TUNE OF RS.11 48 800/ - IS LESS THAN 50% OF TOTAL SALES. THE SUBMISSION OF THE APPELLANT WAS NOT FOUND TENABLE BY THE AO. THE AO F URTHER NOTED THAT IN THE SUBMISSIONS MADE DURING ASSESSMENT PROCEEDINGS THE ASSESSEE HAD GIVEN ONLY ONE BANK ACCOUNT I.E. AXIS BANK INDORE AND AS SUCH THE ASSESSEE CONCEALED THE PARTICULARS OF CASH DEPOSITS MADE IN THE IDBI BANK CHITTORGARH BRANCH . IT W AS ONLY DUE TO THE INFORMATION RECEIVED THROUGH ANNUAL INFORMATION 5 5 REPORT THE MAINTENANCE OF THIS ACCOUNT AND DEPOSIT OF CASH OF RS. 11 48 800/ - THEREIN IN THE YEAR UNDER CONSIDERATION CAME TO THE NOTICE OF THE DEPARTMENT . THE AO THEREFORE HELD THAT CA SH DEPOSITED IN THIS ACCOUNT IS UNEXPLAINED INVESTMENT OF THE ASSESSEE AND ADDED THE SAME TO ITS INCOME. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AGAINST THE ACTION OF THE AO. THE LD. CIT(A) AFTER CONSIDERING THE FACTS & CIRCUMSTANCES OF THE CASE AND HAVING GONE THROUGH THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ADDITION. FINDINGS OF THE LD. CIT(A) ARE REPRODUCED AS UNDER: 2.12 AS DISCUSSED ABOVE INITIALLY THE APPELLANT CLAIMED TURNOVER AT RS. 5 58 920/ - . HAD THE APPELLANT DECLARED I NCOME U/S 44AF OF THE ACT THE INCOME WOULD HAVE BEEN WORKED OUT AT RS. 27 946/ - ONLY (5 58 920 X 5%) AS AGAINST RS. 2 08 000/ - DECLARED BY THE APPELLANT. IT IS ALSO DIFFICULT TO APPRECIATE THAT WHEN BOOKS OF 6 6 ACCOUNTS COULD BE PRODUCED BEFORE THE SALES TAX AUTHORITIES THERE SHOULD NOT BE ANY PROBLEM IN PRODUCING THE SAME BEFORE THE AO ALSO IN SUPPORT OF ITS CLAIM. THE APPELLANT AS SUCH HAS NOT BEEN ABLE TO GET THE CASH DEPOSITS MADE IN IDBI BANK VERIFIED WITH THE SALES MADE. THE CLAIM OF THE APPELLANT THAT SOURCE OF CASH DEPOSIT IN THE IDBI BANK WAS OUT OF SALES MADE IS THEREFORE NOT VERIFIABLE. IT IS THEREFORE HELD THAT THE CASH DEPOSITED IN THIS BANK ACCOUNT IS UNEXPLAINED AND HENCE ADDITION MADE BY THE AO ON THIS ACCOUNT IS HEREBY CONFIRMED AND GRO UNDS OF APPEAL NO. 2 IS REJECTED. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT CASH WAS DEPOSITED AT CHITTORGARH AND WAS WITHDRAWN ON SAME DATE OR NEXT DAY AT INDORE ( MP) AS ACCOUNT WAS UNDER CORE BANKING SYSTEM. THE LD. CIT(A) DID NOT CONSIDER THIS FACT IN A RIGHT PERSPECTIVE AND MAINLY RELIED TO THE TURNOVER DECLARED TO SALES - TAX AUTHORITIES 7 7 INSPITE OF THE FACT THAT ASSESSEE EXERCISED THE OPTION U/S 44AF OF THE I.T. A CT AND PROFIT ON TURNOVER IS 5% OR MORE THEN IT SHALL BE THE INCOME OF BUSINESS OR PROFESSION U/S 44AF OF THE I.T. ACT. LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE AO MADE THE ADDITION OF TOTAL CASH DEPOSIT IGNORING THE FACT THAT AGAINST DEPOSIT THERE WERE WITHDRAWALS ON REGULAR BASIS AS SUCH AT THE BEST ADDITION ON PEAK BASIS COULD BE MADE OTHERWISE. ON THE OTHER HAND LD. SR. DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE SIDES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE RECORD WE FOUND THAT THE ASSESSEE WAS DOING BUSINESS OF AGRICULTURAL ITEMS PIPES ETC. UNDER THE NAME AND STYLE OF SHREE NATH ENTERPRISES. DURING THE COURSE OF ASSESSMENT THE AO FOUND THAT THE ASSE SSEE HAS MADE DEPOSIT OF RS. 11 48 800/ - IN THE BANK ACCOUNT OF IDBI CHITTORGARH BRANCH. THE AO ASKED THE SOURCE OF DEPOSIT WHICH WAS EXPLAINED BY THE ASSESSEE IN RESPECT OF ITS BUSINESS OF SHREE NATH ENTERPRISES . THE ASSESSEE ALSO FURNISHED DETAILS OF SALES MADE DURING THE YEAR IN M/S. SHREE NATH ENTERPRISES AMOUNTS TO RS. 20 79 256/ - . IT WAS 8 8 EXPLAINED THAT THE ASSESSEE WAS PURCHASING GOODS FROM INDORE AND MAKING SALES AT CHITTORGARH. A BANK ACCOUNT WAS OPENED AT IDBI CHITTORGARH WHERE THE ASSESSEE US ED TO DEPOSIT CASH OUT OF THE SALE PROCEEDS AND THIS CASH WAS WITHDRAWN FROM IDBI INDORE. HOWEVER THE AO DID NOT ACCEPT THE ASSESSEE S CONTENTION AND ADDED THE ENTIRE AMOUNT DEPOSITED IN THE BANK. WE DO NOT FIND ANY MERIT IN THE ACTION OF THE AO IN SO F AR AS NOTHING WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SUBSTANTIATE THIS STAND THAT AMOUNT SO DEPOSITED IN THE BANK ACCOUNT WAS NOT PERTAINING TO THE TRANSACTION OTHER THAN TRANSACTIONS OF SALES. THE ASSESSEE HAS OFFERED INCOME OF RS. 2 08 000/ - I N ITS RETURN OF INCOME. AS PER PROVISIONS OF SECTION 44AF A SMALL TRADER HAVING TURNOVER OF LESS THAN RS. 40 LAKHS IS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNT AND ITS INCOME IS TO BE COMPUTED AT 5 % OF THE TOTAL SALES. ON THE SALES OF RS. 20 79 256/ - 5 % PROFIT WORKS OUT TO BE RS. 1 03 963/ - WHEREAS THE ASSESSEE HAS ALREADY OFFERED INCOME OF RS. 2 08 000/ - . NOTHING WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO DISLODGE ASSESSEE S SUBMISSION THAT AMOUNT SO DEPOSITED IN IDBI BANK ACCOUNT AT CHITTORGAR H W AS NOT OUT 9 9 OF SALE PROCEEDS BUT OTHERWISE . M ERELY ON THE PLEA THAT THE ASSESSEE HAS SHOWN TURNOVER OF RS. 5 58 920/ - BEFORE THE SALES TAX AUTHORITIES IT CANNOT BE PRESUMED THAT SALES OF RS. 20 79 256/ - DISCLOSED BEFORE THE INCOME TAX DEPARTMENT WAS NO T CORRECT. EVEN IF SALES OF ASSESSEE IS ESTIMATED AT RS. 30 LAKHS 5% PROFIT ON IT WORKS OUT TO BE RS. 1 50 000/ - WHEREAS ASSESSEE HAD DISCLOSED PROFIT OF RS. 2 08 000/ - 6. IN VIEW OF THE ABOVE DISCUSSION WHICH IS DULY SUPPORTED BY MATERIAL ON RECORD WE DO NOT FIND ANY JUSTIFICATION ON THE PART OF LOWER AUTHORITIES FOR MAKING ADDITION OF RS. 11 48 800/ - BEING AMOUNT DEPOSITED IN THE BANK ACCOUNT. WE ALSO FOUND THAT BEFORE THE AO THE ASSESSEE HAS SUBMITTED DETAILS OF TOTAL SALES EFFECTED DURING THE YEAR GIVING DATE OF SALE BILL NUMBER AND THE PARTIES TO WHOM SALES HAVE BEEN EFFECTED AND THE AMOUNT OF SALES. NO FAULT WAS FOUND BY THE ASSESSING OFFICER IN THE DETAILS OF SALES EFFECTED BY THE ASSESSEE. EVEN THE PEAK OF DEPOSIT IN BANK DID NOT EXCEED THE AMO UNT OF SALES SHOWN BY THE ASSESSEE. 10 10 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER 2011. SD/ - SD/ - (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED: 16 TH SEPTEMBER 2011. CPU* 121 6 - : 7 : -