ITO WD 22(3)3, NAVI MUMBAI v. NITYANANDAN BALAGOPALAN, NAVI MUMBAI

ITA 4192/MUM/2011 | 2007-2008
Pronouncement Date: 23-04-2014 | Result: Partly Allowed

Appeal Details

RSA Number 419219914 RSA 2011
Assessee PAN AJGPB8770R
Bench Mumbai
Appeal Number ITA 4192/MUM/2011
Duration Of Justice 2 year(s) 11 month(s)
Appellant ITO WD 22(3)3, NAVI MUMBAI
Respondent NITYANANDAN BALAGOPALAN, NAVI MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-04-2014
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 23-04-2014
Date Of Final Hearing 14-05-2013
Next Hearing Date 14-05-2013
Assessment Year 2007-2008
Appeal Filed On 23-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI . . BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI SANJAY ARORA ACCOUNTANT MEMBER . / ITA NO.4192/MUM/2011 / ASSESSMENT YEAR 2008-09. THE ITO WARD 22(3)-4 3 RD FLOOR TOWER NO.6 VASHI RLY. STATION COMPLEX VASHI NAVI MUMBAI / VS. SHRI NITYANANDAN BALAGOPALAN RH-B-81 GROUND FLOOR SECTOR:12 NEAR SHIVAJI CHOWK KHARGHAR NAVI MUMBAI. ! ./ ' ./ PAN/GIR NO. : AJGPB 8770R ( !# / APPELLANT ) .. ( $%!# / RESPONDENT ) !# & / APPELLANT BY: SHRI ARVIND KUMAR $%!# ' & / RESPONDENT BY : SHRI NARESH KUMAR ' () / DATE OF HEARING : 15/04/2014 * ' () / DATE OF PRONOUNCEMENT : 23/04/2014 + / O R D E R PER I.P.BANSAL J.M: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS D IRECTED AGAINST ORDER PASSED BY LD. CIT(A)-33 MUMBAI DATED 18/3/2011 FO R THE ASSESSMENT YEAR 2008-09. GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) ERRED IN GRANTING RELIEF TO THE EXTENT OF RS. 20 80 870/- OU T OF ADDITION OF RS. 29 22 657/- MADE ON ACCOUNT OF CREDITS IN UNDISCLOSED BANK ACCO UNT AFTER DRAWING PEAK OF CREDIT BALANCE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO DISCHARGE THE PRIMARY ONUS OF PROVING GENUINENESS THEREOF. . / ITA NO.4192/MUM/2011 / ASSESSMENT YEAR 2008-09. 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.8 41 787/- COMPRISING OF PEAK SURPLUS AND UNEXPLAINED LOANS OF RS. 6 00 000/- AS AGAINST ADD ITION OF RS. 29 22 657/- MADE BY THE A.O. AFTER TAKING INTO ACCOUNT THE CRED ITS IN UNDISCLOSED BANK ACCOUNTS WITHOUT APPRECIATING THE FACT THAT THE WI THDRAWALS ALSO CONSISTED OF HOUSEHOLD EXPENSES WHICH WAS STATED ON OATH TO BE R S. 15 000/- P.M. AND OTHER WITHDRAWALS WERE NOT EXPLAINED BY THE ASSESSEE. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTO RED. 2. THE IMPUGNED ASSESSMENT ORDER IS DATED 23/12/2 009 PASSED UNDER SECTION 144 OF THE INCOME TAX ACT 1961(THE ACT). FINDING THAT ASSESSEE DID NOT ATTEND ON THE DATES FOR WHICH NOTICES WERE ISS UED TO THE ASSESSEE THE AO FRAMED AN EX-PARTE ASSESSMENT ADDING THE ENTIRE CR EDITS IN TWO BANK ACCOUNTS OF THE ASSESSEE WHICH WAS AN AGGREGATE OF RS.29 22 657/-. 2.1 AN APPEAL WAS PREFERRED BEFORE LD. CIT(A). IT WAS SUBMITTED THAT ENTIRE AMOUNT OF RS.29 22 657/- COULD NOT BE ASSESSED AS I NCOME. IT WAS SUBMITTED THAT AFTER CLAIMING VARIOUS DEDUCTIONS NET AMOUNT W HICH REMAINED WAS A BALANCE OF RS.1 34 612/-. THE DEDUCTIONS WHICH WER E REQUIRED TO BE CLAIMED AND ALLOWED ARE AS UNDER: S.NO. PARTICULARS AMOUNT.(RS.) 1. CONTRA ENTRY 3 97 000 2. SALARY EXPENSE 6 39 707 3. REFUNDS TO CLIENTS 6 97 259 4. LOANS FROM FRIENDS 6 00 000 5. OTHER EXPENSES 4 54 079 2.2 ON THESE SUBMISSIONS OF THE ASSESSEE LD. CIT(A ) REMANDED THE MATTER BACK TO THE FILE OF A.O. THE AO VIDE HIS LETTER DA TED 7/2/2011 HAS SUBMITTED THE REMAND REPORT WHICH IS REPRODUCED IN THE ORDER OF LD. CIT(A). ON EACH OF THE CLAIM OF THE ASSESSEE THE FINDINGS OF A.O ARE A S UNDER: (I) ON RS.3 97 000/- CLAIMED AS CONTRA ENTRY THE A O FOUND THAT ON VERIFICATION THE CLAIM OF THE ASSESSEE WAS CORRECT. . / ITA NO.4192/MUM/2011 / ASSESSMENT YEAR 2008-09. 3 (II) ON SALARY EXPENSES OF RS.6 39 707/- THE AO H AS OBSERVED THAT THE SAID CLAIM OF THE ASSESSEE IS NOT CORRECT AS THE SAME A LSO INCLUDE ADVANCES. IN ABSENCE OF NECESSARY EVIDENCE/PROOF HE SUBMITTED TH AT THE SAID CLAIM CANNOT BE FULLY ALLOWED. (III) AS REGARDS REFUND OF RS.6 97 259/- THE AO OB SERVED THAT IN P&L ACCOUNT THE ASSESSEE CLAIMED REFUNDS TO CLIENTS AT A SUM O F RS. 7 07 719/- FOR WHICH THE ASSESSEE FILED PARTY WISE DETAILS WITH DATE AND MODE OF REFUND OF PAYMENT AMOUNTING TO RS.6 97 259/-. THE AO ALSO OBSERVED T HAT THIS CLAIM OF THE ASSESSEE WAS ALSO NOT ALLOWABLE AS ASSESSEE FAILED TO SUBMIT SUPPORTING EVIDENCE/PROOF REGARDING THE CLAIM OF REFUND FOR C LIENTS. (IV) REGARDING LOAN FROM FRIENDS OF RS.6 00 000/- THE AO OBSERVED THAT A SUM OF RS.4 25 000/- WHICH WERE RECEIVED AS CASH FOR LE GAL CONSULTANCY THE ASSESSEE HAS ADMITTED THAT THE SAME IS HIS INCOME. FOR THE REST OF THE AMOUNT OF RS.1 75 000/- THE ASSESSEE COULD NOT SUBSTANTIA TE HIS CLAIM THAT THE SAME WAS TAKEN AS LOAN FROM ONE MR. HANIF SOHRAB. THUS AO OBSERVED THAT THE SAID AMOUNT IS ALSO LIABLE TO BE ADDED TO THE INCOME OF THE ASSESSEE. (V) WITH REGARD TO AMOUNT OF RS.4 54 079/- IT WAS CLAIMED THAT THE SAME REPRESENT FOLLOWING EXPENSES: 1. RENT/BROKERAGE RS. 1 39 0 00/- 2. ADVERTISEMENTS RS. 1 15 431/- 3. VARIOUS OTHER ITEMS OF EXP. RS. 2 20 261/- TOTAL RS . 4 74 692/- =========== THE ASSESEE ALSO SUBMITTED VARIOUS VOUCHERS/BILLS COPIES OF CHEQUE ISSUED ETC. ON THESE SUBMISSIONS OF THE ASSESSEE THE AO P OINTED OUT VARIOUS DISCREPANCIES AND OBSERVED THAT THE SAME CANNOT BE ALLOWED. . / ITA NO.4192/MUM/2011 / ASSESSMENT YEAR 2008-09. 4 2.3 CONSIDERING ALL THESE SUBMISSIONS OF THE AO IN THE REMAND REPORT AND THE SUBMISSIONS OF THE ASSESSEE LD. CIT(A) HAS ARRI VED AT A CONCLUSION THAT TO THE EXTENT OF RS.6.00 LACS SHOWN TO BE TAKEN AS LOA N FROM FRIEND THE ASSESSEES CASE WAS NOT ACCEPTABLE HENCE THE SAME WAS REQUIR ED TO BE ADDED. SO FAR AS IT RELATES TO OTHER ITEMS LD. CIT(A) OBSERVED THAT THE SAME RELATE TO BUSINESS OF THE ASSESSEE THEREFORE THE MAXIMUM AMOUNT OUTS TANDING DURING ANY DATE OF THE RELEVANT YEAR CAN BE TAKEN AS INCOME OF THE ASSESSEE. HE FOUND THAT ON 17/10/2007 THERE WAS MAXIMUM BALANCE AVAILABLE IN THE HANDS OF THE ASSESSEE WAS A SUM OF RS.2 41 787/- WHICH WAS HE LD TO BE ADDED TO THE INCOME OF THE ASSESSEE. IN THIS MANNER LD. CIT(A) HAS UPHELD THE ADDITION TO THE EXTENT OF RS.8 41 787/- AND BALANCE ADDITION IS DELETED. THE DEPARTMENT IS AGGRIEVED HENCE HAS FILED AFOREMENTIONED GROU NDS. 3. AT THE OUTSET IT MAY BE MENTIONED THAT AS PER S TATEMENT MADE BY LD. AR ASSESSEE DID NOT FILE ANY APPEAL AGAINST THE IM PUGNED ORDER PASSED BY LD. CIT(A). 4. AFTER NARRATING THE FACTS IT WAS SUBMITTED BY L D. DR THAT LD. CIT(A) HAS COMMITTED AN ERROR IN COMPLETELY IGNORING THE REMAN D REPORT SUBMITTED BY THE AO. HE SUBMITTED THAT AO AFTER EXAMINATION OF THE CLAIM OF THE ASSESSEE HAS SUBMITTED A REPORT THAT ADDITION MADE IN THE ASSES SMENT ORDER WAS LIABLE TO BE UPHELD. LD. DR FURTHER SUBMITTED THAT THE ASSE SSEE DID NOT CARRY ON ANY TRADE THEREFORE LD. CIT(A) WAS WRONG IN TAKING PE AK AMOUNT ONLY FOR THE PURPOSE OF MAKING ADDITION. HE SUBMITTED THAT IN T HE PROCESS LD. CIT(A) HAS TOTALLY IGNORED THE ASPECT REGARDING HOUSE HOLD WIT HDRAWALS WHICH WAS ADMITTED BY THE ASSESSEE TO THE TUNE OF RS.15 000/- PER MONTH. THUS IT WAS PLEADED BY LD. DR THAT ORDER PASSED BY LD. CIT(A) S HOULD BE SET ASIDE AND THAT OF AO BE RESTORED. 5. ON THE OTHER HAND IT WAS SUBMITTED BY LD. AR T HAT LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION AND HIS ORDER SHOULD BE UPHELD. LD. AR FURTHER . / ITA NO.4192/MUM/2011 / ASSESSMENT YEAR 2008-09. 5 SUBMITTED THAT NET PROFIT OF THE ASSESSEE AS PER A DDITION UPHELD BY LD. CIT(A) WILL BE AS UNDER: COMPUTATION OF G.P.: (A) EXCLUDING LOAN TOTAL RECEIPTS LESS CONTRA ENTRIES RS. 3 97 000 REFUNDS RS. 6 97 259 LOAN RS. 6 00 000 NET RECEIPTS INCOME ASSESSED BY CIT(A) N.P RS.29 22 657 RS. 16 94 259 RS. 12 28 398 RS. 2 41 787 19.68% (B) INCLUDING LOAN TOTAL RECEIPTS LESS CONTRA ENTRIES RS. 3 97 000 REFUNDS RS. 6 97 259 NET RECEIPTS INCOME ASSESSED BY CIT(A) N.P. RS. 29 22 657 RS. 10 94 259 RS. 18 28 398 RS. 8 41 787 46.03% 5.1 HE FURTHER SUBMITTED THAT FOR ASSESSMENT YEAR 2 007-08 AS PER ORDER GIVING EFFECT TO THE ORDER OF LD. CIT(A) THE NET P ROFIT OF THE ASSESSEE COME TO 42% FOR WHICH THE FOLLOWING CALCULATION HAS BEEN SU BMITTED: COMPUTATION OF N.P. FOR A.Y 2007-08 AFTER GIVING E FFECT TO THE ORDER OF CIT(A) GROSS RECEIPTS RS.7 57 647/- LESS : REFUNDS RS.1 45 000/- NET RECEIPTS RS.6 12 647/- LESS: (1) SALARY RS. 1 29 588 (2) EXPENSES RS. 2 25 170 RS.3 54 758/- NET PROFIT RS.2 57 889/- NP % (257889/612647)* 100 42% REFERRING TO ABOVE CALCULATION IT WAS PLEADED BY LD . AR THAT ORDER PASSED BY LD. CIT(A) SHOULD BE UPHELD. 6. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. WE ARE OF THE OPINION THAT LD. CIT(A) HAS COMMITTED AN ERROR IN TAKING ONLY THE PEAK AMOUNT AS BASIS OF ADDITION IN ADDITION TO A SUM OF . / ITA NO.4192/MUM/2011 / ASSESSMENT YEAR 2008-09. 6 RS.6 00 000/-. THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF SALE AND PURCHASE OF ANY ARTICLE OR IN THE ACTIVITY OF TAKI NG LOANS OR REPAYING THE SAME. IF IT IS SO THEN ACCORDING TO FACTS OF THE CASE P EAK THEORY CANNOT BE APPLIED TO THE CASE OF THE ASSESSEE. HOWEVER AT THE SAME TIM E THE DETAILS WERE FILED BY THE ASSESSEE DURING THE COURSE OF FIRST APPELLATE P ROCEEDINGS WHICH WERE FORWARDED TO AO AND AO HAS EXAMINED THE SAME. A S UM OF RS.3 97 000/- HAS BEEN CLEARLY ADMITTED AS CONTRA ENTRIES WHICH COUL D NOT BE CONSIDERED AS RECEIPT OF THE ASSESSEE. DISPUTE IF ANY CAN BE IN RESPECT OF OTHER ITEMS FOR WHICH THE ASSESSEE COULD NOT SUBMIT AMPLE AND SUFFI CIENT PROOF. THEREFORE THE ACCOUNT MAINTAINED BY THE ASSESSEE CANNOT BE ACCEPT ED AND A REASONABLE COMPUTATION OF INCOME HAS TO BE MADE ACCORDING TO B EST JUDGMENT. SO FAR AS IT RELATES TO CALCULATION SUBMITTED BY LD. AR VIDE WHI CH VARIOUS EXCLUSIONS ARE MADE AND NET PROFIT HAS BEEN COMPUTED AT 19.68% AN D 46.30% ALSO CANNOT BE ACCEPTED IN THEIR ENTIRETY AS THE ASSESSEE HAS NOT MADE OUT ANY CASE FOR EXCLUSION OF ANY ITEM OTHER THAN CONTRA ENTRIES. A N AMOUNT OF RS.6 00 000/- HAS BEEN ADMITTED TO BE INCOME BY THE ASSESSEE I.E. RS.4 75 000/- IN THE SHAPE OF RECEIPTS AND FOR RS.1 75 000/- THE ASSESSEE CO ULD NOT SUBMIT ANY EVIDENCE. THEREFORE THE SAID AMOUNT IS REQUIRED TO BE TAKEN AS INCOME INDEPENDENT OF OTHER RECEIPTS. THEREAFTER WHAT IS REQUIRED TO BE EXCLUDED FROM THE RECEIPTS IS A TOTAL SUM OF RS.9 97 000/- BEING AGGREGATE OF TWO ENTRIES NAMELY RS.3 97 000/- REPRESENTING CONTRA ENTRIES AND RS.6 00 000/- REPRESENTING LOANS FROM FRIENDS. AFTER EXCLUDING THE SAID AMOUN T FROM AGGREGATE DEPOSITS OF RS.29 22 657/- THE REMAINING AMOUNT WILL BE RS.19 2 5 657/- OF WHICH NET PROFIT IS REQUIRED TO BE APPLIED. TAKING CLUE FRO M THE INCOME DETERMINED IN A.Y 2007-08 AFTER GIVING EFFECT TO THE ORDER OF LD. CIT(A) THE NET PROFIT RATE IS 42% THE NET PROFIT RATE FOR THE YEAR UNDER CONSIDE RATION WILL BE WORKED OUT AT A SUM OF RS.8 08 775/- BEING 42% OF THE REMAINING AM OUNT OF RS.19 25 657/-. WHICH IS REQUIRED TO BE ADDED TO THE INCOME OF THE ASSESSEE IN ADDITION TO A SUM OF RS.6 00 000/-. THUS THE TOTAL INCOME REQUI RED TO BE DETERMINED IN THE HANDS OF THE ASSESSEE IS A SUM OF RS.14 08 775/- I N PLACE OF RS.8 41 787/- AS . / ITA NO.4192/MUM/2011 / ASSESSMENT YEAR 2008-09. 7 DETERMINED BY LD. CIT(A). WE ORDER ACCORDINGLY AND PART RELIEF IS GRANTED TO THE REVENUE. 7. IN THE RESULT APPEAL FILED BY THE REVENUE IS PA RTLY ALLOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 23 /04/2014 + ' * - ./ 23 /04/2014 ' 0 1 SD/- SD/- ( / SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; . DATED 23 /04/2014 + + + + ' '' ' $(2 $(2 $(2 $(2 32 ( 32 ( 32 ( 32 ( / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT. 3. 4 ( ) / THE CIT(A)- 4. 4 / CIT 5. 250 $( / DR ITAT MUMBAI 6. 06 7 / GUARD FILE. + + + + / BY ORDER %2( $( //TRUE COPY// 8 88 8 / 9 9 9 9 (DY./ASSTT. REGISTRAR) / ITAT MUMBAI . . ./ VM SR. PS . / ITA NO.4192/MUM/2011 / ASSESSMENT YEAR 2008-09. 8 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 26/3/2014 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 26/03/2014 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER