C.J.Dominic, Trichur v. ITO, Thrissur

ITA 577/COCH/2011 | 2008-2009
Pronouncement Date: 17-02-2012

Appeal Details

RSA Number 57721914 RSA 2011
Bench Cochin
Appeal Number ITA 577/COCH/2011
Duration Of Justice 3 month(s) 27 day(s)
Appellant C.J.Dominic, Trichur
Respondent ITO, Thrissur
Appeal Type Income Tax Appeal
Pronouncement Date 17-02-2012
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 17-02-2012
Date Of Final Hearing 15-02-2012
Next Hearing Date 15-02-2012
Assessment Year 2008-2009
Appeal Filed On 21-10-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE: SHRI N.R.S.GANESAN JUDICIAL MEMBER AND SHRI B.R. BASKARAN ACCOUNTANT MEMBER ITA NO. 577/COCH/2011 ASSESSMENT YEAR : 2008-09 SHRI C.J. DOMINIC PROP: C.I. VAREED & COMPANY CHITTATTUKARA THRISSUR-680 511. [PAN: THE INCOME TAX OFFICER WARD- 1 GURUVAYUR THRISSUR. (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI M.RAMDAS CA RESPONDENT BY: SMT. VIJAYAPRABHA JR. DR DATE OF HEARING: 15/02/2012 DATE OF PRONOUNCEMENT: 17/02/2012 ORDER PER SHRI B.R.BASKARAN ACCOUNTANT MEMBER:- THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21-09-2011 PASSED BY THE LD. CIT(A)-V KOCHI AND THE RELATED A SSESSMENT YEAR IS 2008-09. 2. THE SOLITARY ISSUE RAISED IN THIS APPEAL IS WHET HER THE LD. CIT(A) IS JUSTIFIED IN SUSTAINING THE ADDITION OF RS. 1 92 000/- MADE BY T HE ASSESSING OFFICER U/S. 68 OF THE ACT. 3. THE FACTS RELATING TO THE SAME ARE STATED IN BRI EF. THE ASSESSEE APART FROM DOING BUSINESS IN RICE AND GROCERY ITEMS IS ALSO E NGAGED IN PLYING OF LORRIES ON HIRE. HE DECLARED INCOME FROM PLYING OF LORRIES IN ACCORDANC E WITH THE DEEMING PROVISIONS OF S. 44AE OF THE ACT AT THE RATE OF RS. 3500/- PER MONTH PER LORRY. THE ASSESSEE WAS PLYING FOUR LORRIES AND ACCORDINGLY A SUM OF RS. 1 68 000 /- WAS OFFERED AS INCOME FROM THAT I.T.A. NO.577 /COCH/2011 2 SOURCE. DURING THE YEAR UNDER CONSIDERATION THE A SSESSEE INTRODUCED A SUM OF RS. 3 60 000/- IN HIS CURRENT ACCOUNT IN THE BOOKS OF GROCERY BUSINESS. THE SOURCE THERE OF WAS EXPLAINED TO BE AMOUNT REALIZED FROM T HE BUSINESS OF PLYING OF LORRIES. SINCE THE INCOME RETURNED FROM THE BUSINESS OF PLYI NG OF LORRIES WAS ONLY RS.1 68 000/- THE AO TREATED THE DIFFERENCE AMOUNT OF RS.1 92 000 /- (RS.3 60 000 RS.1 68 000/-) AS UNEXPLAINED CASH CREDIT AND ADDED THE SAME U/S. 68 OF THE ACT. THE SAID ADDITION WAS ALSO CONFIRMED BY THE LD. CIT(A) AND HENCE THE ASS ESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INCOME U/S. 44AE OF THE ACT ARE DETERMINED AT A NET FIGURE AS STATED IN THE SEC TION AND FURTHER ALL EXPENSES INCLUDING DEPRECIATION ARE DEEMED TO HAVE BEEN ALLO WED. HE FURTHER SUBMITTED THAT DEPRECIATION IS A NON CASH EXPENDITURE AND THE FUND S REPRESENTED BY THE DEPRECIATION ARE VERY MUCH AVAILABLE WITH THE ASSESSEE. DURING T HE YEAR UNDER CONSIDERATION THE DEPRECIATION OF ABOUT RS.1 97 000/- HAS BEEN DEEMED TO HAVE BEEN ALLOWED U/S 44AE OF THE ACT AND THE FUND REPRESENTED BY THE SAME IS MORE THAN THE SHORT FALL AMOUNT OF RS.1 92 000/- REFERRED SUPRA. ACCORDINGLY HE PLE ADED THAT THE IMPUGNED ADDITION SHOULD BE DELETED. 5. ON THE CONTRARY THE LD. DR SUBMITTED THAT THE A SSESSEE DID NOT MAINTAIN REGULAR BOOKS OF ACCOUNTS FOR BUSINESS OF PLYING OF LORRIES AND HE HAS OFFERED THE INCOME THERE FROM U/S. 44AE OF THE ACT. SHE SUBMITTED THAT IN T HE ABSENCE OF ANY SPECIFIC CLAIM OF DEPRECIATION THE CONTENTION OF THE ASSESSEE SHOULD NOT BE ACCEPTED. 6. IN REJOINDER THE LD. AR SUBMITTED THAT THE AHME DABAD BENCH OF THE TRIBUNAL IN THE CASE OF SHRI RAKESH ARVINDBHAI PATEL VS. ITO IN I.T.A. NO. 608/AHD/2010 VIDE ITS ORDER DATED 23 RD JULY 2010 HAS DEALT WITH AN IDENTICAL ISSUE AND H AS HELD THAT THE CASH REPRESENTED BY THE AMOUNT OF DEPRECIATION SHOULD BE TREATED AS AVAILABLE WITH THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. IN THE CASE OF SHRI RAKESH ARVINDBHAI PATEL VS. ITO REFER RED SUPRA WE NOTICE THAT THE SMC I.T.A. NO.577 /COCH/2011 3 BENCH OF ITAT AHMEDABAD HAS DEALT WITH AN IDENTICA L ISSUE AND HAS RENDERED ITS DECISION IN ACCORDANCE WITH THE CONTENTION RAISED B Y THE LD A.R FOR THE SAKE OF CONVENIENCE WE EXTRACT BELOW THE OPERATIVE PORTION OF THE SAID DECISION. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN PLYING OF LIGHT COMMERCIAL VEHICLES AND THE ASSESSEE HAS DECLARED I TS INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 44AE OF THE ACT AT ` 2 12 695/-. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS MADE PERSONA L INVESTMENTS AND PERSONAL EXPENDITURE OF ` 4 24 659/- DURING THE YEAR UNDER CONSIDERATION. TH US ACCORDING TO THE LEARNED ASSESSING OFFICER THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF REMAINING AMOUNT OF INVESTMENT AND PERSONAL EXPENSE S OF ` 2 11 963/- ( ` 4 24 659 ` 2 12 696/-). THE EXPLANATION OF THE ASSESSEE THAT DEPRECIATION OF ` 2 09 654/- WAS AVAILABLE WITH THE ASSESSEE FOR MAKI NG INVESTMENTS AND PERSONAL EXPENSES WAS NOT ACCEPTED BY THE LEARNED A SSESSING OFFICER. ON APPEAL LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALSO DID NOT ACCEPT THE ABOVE EXPLANATION OF THE ASSESSEE AND CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFICER OF MAKING ADDITION OF ` 2 11 963/- TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF INVESTMENTS AND PERSONAL EXP ENSES FROM UNDISCLOSED SOURCES. IT IS OBSERVED THAT IT IS NOT IN DISPUTE THAT THE DEPRECIATION ALLOWABLE U/S. 32 OF THE ACT COMES TO ` 2 09 654/- DURING THE YEAR UNDER CONSIDERATION IN THE INSTANT CASE WHICH WAS DEEMED TO HAVE BEEN ALLO WED TO THE ASSESSEE IN ESTIMATING HIS INCOME U/S. 44AE OF THE ACT. I FIND THAT THE LOWER AUTHORITIES HAS FAILED TO APPRECIATE THE FACT THAT DEPRECIATION WAS A NON CASH EXPENDITURE OR ALLOWANCE TO THE ASSESSEE IN DETERMINING NET INCOME OF ` 2 12 696/-. THUS THE INCOME OF THE ASSESSEE BEFORE DEPRECIATION WAS ` 4 22 350 ( ` 2 12 695 + ` 2 09 654/-) AND AFTER DEPRECIATION ALLOWANCE OF ` 2 09 654/- THE NET INCOME OF THE ASSESSEE WAS ` 2 12 696/-. IN OTHER WORDS THE ASSESSEE BY HAVING INCOME OF ` ` ` ` 2 12 696/- HAD CASH EARNING OF ` ` ` ` 4 22 350/-. THUS IN MY CONSIDERED OPINION THE MAXIMUM AMOUNT WHICH COULD BE ADDED IN THE INSTANT CASE COMES TO ` 2 309/- ( ` 4 24 659 ` 4 22 350/- ONLY. I THEREFORE MODIFY THE ORDERS OF THE LOWER AUTHORITIES AND SUST AIN ADDITION OF ` 2 309/- AND DELETE THE ADDITION TO THE EXTENT OF ` 2 09 654/-. 8. IT CAN BE NOTICED THAT THE DIFFERENCE BETWEEN TH E INCOME AND CASH EARNING WAS CLEARLY BROUGHT OUT IN THE ABOVE CITED CASE. FO R THE PURPOSE OF EXPLAINING THE SOURCE OF CASH CREDIT THE CASH EARNING SHALL HAV E MORE RELEVANCE THAT THE NET INCOME. THE CONTENTION OF THE ASSESSEE IS IN ACC ORDANCE WITH THE DECISION BY THE SMC BENCH OF THE AHMEDABAD TRIBUNAL REFERRED SUPRA AC CORDINGLY WE FIND MERIT IN THE SAID CONTENTIONS OF THE ASSESSEE AND HOLD THAT THE ADDIT ION OF RS.1.92 000/- IS NOT WARRANTED I.T.A. NO.577 /COCH/2011 4 IN THE INSTANT CASE AS THE ADDITIONAL FUNDS EQUIVA LENT TO THE AMOUNT OF DEPRECIATION AMOUNT OF ABOUT RS.1 97 000/- WAS ALSO AVAILABLE WI TH THE ASSESSEE. ACCORDINGLY WE SET ASIDE THE ORDER OF LD CIT((A) AND DIRECT THE AO TO DELETE THE IMPUGNED ADDITION OF RS.1 92 000/- DISCUSSED ABOVE. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE ST ANDS ALLOWED. PRONOUNCED ON 17-02-2012 SD/- SD/- (N.R.S.GANESAN) (BR BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER ERNAKULAM DATED: 17TH FEBRUARY 2012 GJ COPY TO 1 SHRI C.J. DOMINIC PROP: C.I. VAREED & COMPANY C HITTATTUKARA THRISSUR-680 511. 2 THE INCOME-TAX OFFICER WARD-1 GURUVAYUR THRISS UR. 3 THE COMMISSIONER OF INCOME-TAX(APPEALS)-V KOCHI 4 THE COMMISSIONER OF INCOME-TAX TRICHUR. 5. THE DR ITAT COCHIN BENCH. 6 GUARD FILE. BY ORDER A SSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH