Income Tax Appellate Tribunal - Bilaspur
Ito,, Bastar(Cg) vs Balzinder Singh, , Bastar(Cg) on 1 November, 2016
1 ITA No. 94/RPR/2013.
IN THE INCOME TAX APPELLATE TRIBUNAL,
RAIPUR BENCH, RAIPUR
BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER.
(S.M.C.)
I.T.A. No.94/RPR/2013
Assessment Year : 2007-08.
The Income-tax Officer, Shri Balzinder Singh,
Jagdalpur. Vs. Jagdalpur.
PAN AJNPS4081P.
Appellant. Respondent.
Appellant by : Shri D.K. Jain.
Respondent by : Shri S.R. Rao.
Date of Hearing : 17-10-2016
Date of Pronouncement :01-11- 2016
O R D E R.
This appeal by the Revenue is directed against the order of learned CIT(Appeals), Raipur dated 06-06-2013 and pertains to assessment year 2007-
08. The grounds of appeal read as under :
1. Whether in law and on the facts & circumstances of the case, the CIT(A) has erred in directing the Assessing Officer to comspuct Income from Truck Plying under section 44AE of the I.T. Act, 1961, whereas the assessee has filed its return of income showing income from Truck plying under section 28 to 43B of the Income-tax Act, 1961.
2. Whether in law and on the facts & circumstances of the case, the CIT(A) has erred in deleting the addition of Rs.9,33,386/- made out of the difference of income shown in ITR and amount capitalised in the Capital a/c enclosed with ITR.
3. Whether in law and on the facts & circumstances of the case, the CIT(A) has erred in deleting the addition of Rs.24,43,947/- made by the AO on account of unexplained cash in hand and at Bank.2 ITA No. 94/RPR/2013.
2. In this case the assessee filed his Income-tax Return on 31-0302008 declaring income of Rs.1,34,565/-. The return was processed under the provisions of section 143(1) of the Act on 23-06-2008. He has shown income of Rs.1,34,565/- from truck plying and credited profit to the tune of Rs.10,67,951/-
in the capital account furnished with the ITRs. It was noticed that there is difference of Rs.9,33,386/- in income filed and capitalized in balance sheet. The AO opined that there is difference in the income shown in the ITR and income capitalized in the capital account. The income capitalized was higher than the income shown in ITR. The AO proceeded to make the assessment as under :
"On the basis of fact on records, considering Para as discussed above, it is inferred that the return filed by the assessee is a valid return. The assessing officer has sufficient evidences and material fact on record to make believing that the difference of income shown in ITR and as capitalized in capital account enclosed with ITR have been concealed and Rs. 9,33,386/- was escaped from the assessment. The cash in hand was found unexplained to the tune of Rs.24,43,947.00 The notice issued and served under section 148 qualifies all the condition laid down in the Act, proper procedures are followed while issuing and serving valid notices to the assesee. Proper opportunities and sufficient time was given to the assesee to explain and submit evidence. Thus the principle of natural justice was followed. In terms of provisions under section 142( 1) of the Act. the onus lies with the assesee to explain the claim made in the ITR and its enclosure. The assessee failed to attend and discharge burden of proof. The assessee has not challenge the notices and procedures followed for reassessment at any stage of proceedings, hence, they are lawful and valid. He has deliberately avoided the several opportunities of being heard, hence have no evidence in support of his claim in ITR, and have no explanation to offer in context with omission made in the ITRs of his income. •. "'.
Considering the above the income is assessed as under :-
1. Taxable Income Rs.1,02,670-00
2. Concealed income as Rs.9,33,386-00 discussed above.
3. Unexplained Cash
4. Cash in hand and bank. Rs.33,77,333-00
5. Less concealed income Rs.9,33,386-00
6. Unexplained cash as Rs.24,43,947-00 discussed in para (10) (4-
5).
7. Total of addition (2+6) Rs.33,77,333-00
8. Assessed income (1+7_ Rs.34,80,003-00
3. Upon assessee's appeal, learned CIT(Appeals) noted the assessee's explanation as under :3 ITA No. 94/RPR/2013.
"In the course of appeal proceedings, the Id. Counsel for the appellant has explained that the addition made by the AO is not correct. The appellant derives from truck plying business and the return of income was prepared on software named ZENIT-AKDK and the software automatically generates Computation of Income, . Capital Account and Balance Sheet on the basis of data fed into it. Due to incorrect feeding of data, the software has generated incorrect and incomplete financial statements i.e. Computation of Income, Capital Account, Balance Sheet. Therefore, it is not justified on the part of the AO to make assessment on the basis of such incorrect statements, which were wrongly filed with the return, though no such enclosures were required u/s.139C of the Act. It was also contended that the appellant did not file Profit and Loss Account showing claim of depreciation and the entries made in the statement referred by the AO are not correct and incomplete. The AO has neither considered this fact of non-availability of Profit and Loss Account nor considered the opening balance. He has taken the amount of 'cash & bank balance' as 'cash-in-hand' and worked out the addition. It was further contended that return of income was filed on estimate basis as endorsed by the A.O. Regular books of account were not maintained. As per decision of Hon'ble Supreme Court in the case of Kedarnath Jute Mfg. Co. vs. CIT (1971) 82 ITR 363 (SC), even accounting entries made in the regular books of account are not conclusive for ~he purpose of assessment of income and the assessment has to be made only as per provisions of the Act. In this case, admittedly, the Profit & Loss Account was not filed and the other papers filed were incorrect and incomplete. Under these circumstances, the addition made by the AO on the basis of incomplete and incorrect papers, which can at best be treated as rough papers, for the purpose of income tax assessment is faulty and contradictory to the A.O's own observation that the income offered from truck plying business is estimated. The ld. Counsel- has relied on the-decision -of the - Hon'ble ITAT Ahmedabad, B-Bench in the case of Kesharbhai Bhgamarbhai Chaudhary vs. ITO (2011)141 TTJ (Ahd) (UO)94 and contended that if income from truck plying was required to be estimated, it should have been made as per provisions of sec. 44AE and not otherwise. Therefore, the Id. Counsel for the appellant vehemently argued that the addition made by the AO is unjustified and arbitrary."
4. Learned CIT(Appeals) observed as under :
" I have gone through the observations of the AO and submissions of the appellant. The undisputed facts of the case are that return of income was filed by the appellant through the office of Shri Anil Kumar Sharma, Advocate of Jagadalpur. It was prepared with the help of some computer software named ZENIT-AKDK and the financial statements generated by that software were filed with the return, though filing of such documents was not required uJs.139C of the Act. In as many as 26 cases such returns were filed from the office of the same counsel and in all the cases the - source of income was truck plying. The same mistake has occurred in all the cases while filing the return. The A.O. has issued notice u/s.148 after noticing the discrepancies. No proper compliances were made from the appellant's side. In such circumstances, the AO has made the addition solely on the basis of papers found attached with return, though he has observed in para-3 of the assessment order that the appellant has offered the income from truck plying business estimated basis. Since the appellant derives income from truck plying activities, the provisions of Section 44AE are mandatorily applicable. "
Learned CIT(Appeals) further referred to provisions of section 44AE and further observed as under :
4 ITA No. 94/RPR/2013."Thus, while provisions of Section 44AE sub- sections 1 to 5 relate to computation of income on presumptive basis, sub-sections 6 and 7 deal with the manner of assessments, where the income is not offered under the deeming provisions. In this case neither the appellant has. made the requisite compliances as per these provisions. nor the A.O. invoked the same. As per sub section (6), the assessment has to be completed u/s.143(3) and the total income need to be determined accordingly, and if the assessee claims that his income is lower than the sum specified in the deeming provisions, he has to keep and maintain books of account uls.44AA (2) and get his accounts audited and furnish audit report u/s.44AB, which was not done. Under such circumstances, considering the spirit of provisions of Section 44AE and the facts of the case that the appellant owns less than 10 number of goods carrying vehicles at any time during previous year, the AO was required to assessee the income on the basis of said provisions. "
5. Learned CIT(Appeals) further relied upon the decision of ITAT, Ahmedabad B-Bench in the case of Kesharbhai Bhamarbhai Chaudhary vs. ITO (2011) 141 TTJ (Ahd) (UO) 94 and concluded as under :
" Since the appellant has admitted that the balance sheet, capital account furnished with the return of income are incomplete and incorrect, the appellant can not get any benefit about the quantum of capital reflected in the capital account furnished with the return of income. All the additions made by the AO are accordingly, deleted and the assessed income would be substituted by the income derived after applying provisions of Section 44AE of the Act."
6. Against the above order, the assessee is in appeal before the ITAT.
7. Learned counsel of the assessee submitted that the issue is covered in favour of the assessee by the decision of this ITAT in ITA No. 103 & 104/RPR/2013 vide order dated 21st June, 2016.
8. Per contra learned D.R. relied upon the order of the AO.
9. Upon careful consideration I find that on identical circumstances this Tribunal in the appeal referred above has held as under :
" I have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position. I have noticed that the only plea of the learned Departmental Representative is that the method of computation of income cannot be changed or varied by the learned CIT(A) but then the learned CIT(A) 5 ITA No. 94/RPR/2013. overlooks that the assessee was indeed and undisputedly entitled to application of section 44AE and it was apparently an inadvertent error in electronic filing of the returns that the option was noted as not having been exercised. I have also noted that as held by the Division Bench of this Tribunal in the case of Keshavbhai Kamalbhai Chandani vs. ITO 149 TTJ 94, if income from truck plying is required to be estimated, it should be estimated on the basis of section 44AE and not otherwise. When law has prescribed a formula for estimating income and assessee is not covered by any of the exceptions set out in the formula, there is no reason for not estimating the income on the basis of such a formula. The hyper technical argument by the learned Departmental Representative does not in my considered view merits acceptance. I am, therefore, of the considered opinion that the learned CIT(A) was quite justified in directing the Assessing Officer to recompute the income on the basis of provisions of section 44AE of the Act. I uphold his action and decline to interfere in the matter."
10. From the above it is evident that on identical issue the Tribunal had held that the CIT(Appeals) was correct in directing the AO to compute the income on the basis of the provisions of section 44AE of the I.T. Act. Accordingly respectfully following the precedent above, I uphold the order of learned CIT(Appeals).
11. In the result this appeal filed by the Revenue stands dismissed.
Order pronounced in the Open Court on this 1st day of Nov., 2016.
Sd/-
( SHAMIM YAHYA) ACCOUNTANT MEMBER.
Dated: 01-11-2016.
6 ITA No. 94/RPR/2013.Copy forwarded to :
1. Shri Balzinder Singh SBI Colony, Dharampura-1, Jagdalpur, Dist. Bastar (CG).
2. I.T.O., Jagdalpur.
3. C.I.T., Raipur.
4. CIT(Appeals), Raipur.
5. D.R., ITAT, Raipur.
6. Guard File True Copy By Order Assistant Registrar, Income Tax Appellate Tribunal, Nagpur Bench, Nagpur.
Wakode.