Income Tax Appellate Tribunal - Jaipur
Acit, Ajmer vs Ganesh Goyal, Kishangarh on 27 December, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM
vk;dj vihy la-@ITA No. 946 & 947/JP/2015
fu/kZkj.k o"kZ@Assessment Years : 2010-11 & 2011-12
Assistant Commissioner cuke Ganesh Goyal,
of Income Tax, Vs. S/o- Shri Ghanshyam Goyal,
Central Circle, Mahaveer Colony, Madanganj,
Ajmer. Kishangarh.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AFZPG 9689 P
vihykFkhZ@Appellant izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Shri Ajay Malik.
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Nilesh Karatia.
lquokbZ dh rkjh[k@ Date of Hearing : 21/12/2016
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 27/12/2016
vkns'k@ ORDER
PER: KUL BHARAT, J.M. These are the appeals filed by the revenue arise against the order dated 05/10/2015 passed by the ld. CIT(A)-2, Udaipur for the A.Y. 2010-11 and 2011-12. The grounds taken by the revenue in the appeal for A.Y. 2010-11 are as under:-
"1. Whether on the facts and in the circumstances of the case the CIT(A) was right in modifying the G.P. addition, made by the A.O. on transaction facilitated by the assessee, by holding that only net commission 2 ITA 946 & 947/JP/2015_ ACIT Vs Ganesh Goyal income of Rs. 225/- Rs. 1 per lac could be taxed on the bank deposits taken by the A.O as turnover without giving any specific findings on the owner of the deposits made in the bank accounts.
2. Whether on the facts and in the circumstances of the case the CIT(A) was right not appreciating the facts that the assessee has been unable to produce the depositors and beneficiaries and in absence of basic details, it was not proved by the assessee that he was providing facility of bringing unrecorded sales proceeds of any sellers through his bank accounts and therefore in this situation, there was no other option except to hold that the deposits in bank accounts are nothing but assessee's own trading receipts/sale proceeds and withdrawals were for the corresponding purchases and expenses.
3. (i) Whether on the facts and in the circumstances of the case, the CIT(A) was right in not appreciating the facts that in this case it was established by the A.O. that assessee was engaged in the business of marble trading and the deposits in bank accounts represents the sale proceeds.
(ii) The A.O. has rightly applied the rate on gross profit of trading business of marble considering the amount of deposits in his bank accounts as trading receipts being unrecorded sales in his hands.
4. Whether on the facts and in the circumstances of the case, the CIT(A) was right in deleting the disallowances of wages expenses of Rs. 34,876/- and expenses on machinery parts of Rs. 70,700/- made by the AO without giving an opportunity to the AO for examining the evidence produced before him which is 3 ITA 946 & 947/JP/2015_ ACIT Vs Ganesh Goyal as per provisions of section 250(2) (b) of Income-tax Act, 1961.
5. Whether on the facts and in the circumstances of the case, the CIT(A) was right in directing the AO to verify the return of income and make sure that the assessee has claimed deduction u/s. 80C while computing the total income without appreciating the facts that the assessee has failed to produce the documentary evidence in support of claim of deduction of Rs. 20,937/- on account of investment in LIP despite having been granted opportunities of being heard by the AO and in this case there is no question of making claim of deduction u/s. 80C while computing the total income."
Similar identical grounds have also been taken by the revenue for the appeal of A.Y. 2011-12.
2. Both the appeals of the revenue are being heard together and for the sake of convenience and brevity, common order is being passed.
3. Firstly we take revenue's appeal for A.Y. 2010-11 i.e. ITA No. 946/JP/2015. Briefly stated facts of the case are that the case of the assessee was reopened for assessment and the assessment U/s 143(3) read with Section 147 of the Income Tax Act, 1961 (hereinafter referred as the Act) was framed vide order dated 27/03/2014. The Assessing Officer during the course of assessment proceedings has observed that as per FIU-IND information, it was noticed that there was suspicious 4 ITA 946 & 947/JP/2015_ ACIT Vs Ganesh Goyal transactions in the form of cash deposit below the threshold limit were taking place in the bank account maintained by the assessee in different branches of Kishangarh. It was stated by the assessee that his bank accounts. It was stated by the assessee that his bank accounts are being used by the marble traders to bring cash against unrecorded sales in their books of account. The cash deposited by other parties based in different parts of the country was withdrawn and handed over to the marble traders and for this activity they used to pay commission of Rs. 100/- per Rs. 1 lac.
3.1 The Assessing Officer treated the deposits as the turnover of the business of the assessee and estimated gross profit @ 20.24%. the Assessing Officer also found that the investment made in life insurance premium of Rs. 20,937/- was not supported with the proof. Accordingly, he made addition of this amount also. Apart from other disallowances of expenditure in the form of expenses claimed on account of machinery parts and the wages, which was not supported with evidence.
Similar identical facts has also been mentioned by the Assessing Officer in the assessment order for the A.Y. 2011-12.
5 ITA 946 & 947/JP/2015_ ACIT Vs Ganesh Goyal
4. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A), who after considering the submissions, partly allowed the appeal. The ld. CIT(A) accepted the contention of the assessee that the amounts deposited into the bank account was treated as commission income and modified the finding of the Assessing Officer by holding that the net commission of Rs. 225/- per Rs. 1 lac of transaction facilitated could be taxed on the bank deposits taken by A.O. as turnover. The other disallowances were also deleted by the ld. CIT(A).
Similar identical findings have also been given by the ld. CIT(A) for the case of A.Y. 2011-12.
5. Now the revenue are in appeals before us. Grounds No. 1 to 3 of both the appeals for the A.Y. 2010-11 and 2011-12 relate to the treatment of the bank deposits as commission receipts. The ld DR has vehemently supported the order of the Assessing Officer. On the contrary, the ld AR of the assessee has supported the order of the ld. CIT(A). During the course of the hearing, it was submitted by the ld. DR that under the similar identical facts, the issue related to the bank deposits has been restored to the file of the Assessing Officer by the 6 ITA 946 & 947/JP/2015_ ACIT Vs Ganesh Goyal Hon'ble ITAT, Jaipur Bench in the case of ACIT Vs. Kusumdevi Vijayvargiya in ITA No. 942 to 945/JP/2015 order dated 20/10/2016.
6. We have heard the rival contentions of both the parties, perused the material available on the record and also gone through the orders of the lower authorities. We find that the facts are identical as were made in the case of ACIT Vs. Kusumdevi Vijayvargiya in ITA No. 942 to 945/JP/2015 order dated 20/10/2016, wherein the Coordinate Bench has decided the issue by observing as under:-
"2.12 In our view, the matter requires a deeper and a coordinated examination by the authorities at the higher level to bring the correct facts on record which should conclusively establish that either the assessee is the owner of the money found deposited in her bank accounts as claimed by the AO or the assessee is merely a facilitator and earns commission income as claimed by the assessee. Accordingly, we set-aside the matter to the file of the ld CIT(A) to examine the matter afresh with the following directions:
(1) the assessee shall provide all the requisite details in terms of names and address and other requisite particulars of the depositors as well as of the beneficiaries;
7 ITA 946 & 947/JP/2015_ ACIT Vs Ganesh Goyal (2) the assessee has to explain the nature and source of the transactions in terms of deposits and establish the necessary linkage between the deposits and the subsequent withdrawals to various individual beneficiaries;
(3) The ld CIT(A) shall call for the records maintained by the Investigation Wing in respect of the survey proceedings and confront the same to the assessee to provide her a suitable opportunity;
(4) The beneficiaries to be confronted with the details submitted by the assessee and call for their confirmation and/or personal appearances and/or coordinate with their respective CITs/Assessing officers; and (5) Needles to say, both the parties shall be provided suitable opportunity and they shall equally cooperate and shall submit necessary explanation/information/ documents as available and required by the ld CIT(A). With the above directions, we set-aside the matter to the file of the ld CIT(A) for a fresh examination and the appeal of the Revenue is allowed for statistical purposes." There is no change in the facts and circumstances of the case, by taking a consistent view, we are hereby set aside the order of the ld.CIT(A) and restore the issue to the file of the Assessing Officer to decide the 8 ITA 946 & 947/JP/2015_ ACIT Vs Ganesh Goyal issue afresh in the light of the direction given in ITA No. 942 to 945/JP/2015. Accordingly, the issues are allowed for statistical purposes only.
Similar finding is also given in the case of revenue for the A.Y. 2011-12.
7. Ground No. 4 of the revenue's appeal for the A.Y. 2010-11 is with regard to deletion of disallowance in respect of wage expenses and machinery parts. The ld. DR has argued that the ld. CIT(A) was not justified in deleting the disallowances. On the contrary, the ld AR of the assessee has vehemently supported the order of the ld. CIT(A).
8. We have heard the rival contentions of both the parties, perused the material available on the record and also gone through the orders of the lower authorities. We find that the ld. CIT(A) has given a finding on fact at paragraph Nos. 8.3 and 10 of his order, which is as under:-
"8.3 I have given careful consideration to the point of issue.
Admittedly, the appellant is running 6 power looms for making cotton cloth. The appellant has filed before me copies of monthly sheets for payment of wages. The same shows that the appellant has engaged 8 workers / employees and the monthly payments range from 9 ITA 946 & 947/JP/2015_ ACIT Vs Ganesh Goyal about Rs. 27,000/- to 31,000/- and odd. The payments are acknowledged by the workers in revenue stamps. I do not think that the claim of wages is not genuine. The AO has not given any cogent reason for disallowance of 10% of the claim nor there are any reasons to say that the expenses claimed excessive or exaggerated. The AO did not even discuss the trading results disclosed by the appellant. After considering the facts and circumstances of the case I am of the view that the impugned addition made by the AO is not justified and the same is deleted for both years. Ground No. 5 is allowed.
10. I have considered the facts of the case as well as the finding of the AO and AR's submissions. As mentioned above, the appellant is running power looms and has declared income there from. If income is generated from such power looms, then the machinery also requires repairs and maintenance. If machinery is not shown in the balance sheet, at the most the assessee will not be able to claim depreciation. The appellant must have incurred other expenses also, like water & electricity exp., interest etc. and that stands allowed. The appellant has filed before me the ledger a/c of the expenses for both years. Most of the payments are made by cheque. Name of the suppliers of the material is also mentioned therein. In my view there is no reason to doubt the genuineness, necessity or 10 ITA 946 & 947/JP/2015_ ACIT Vs Ganesh Goyal reasonableness of the expenses claimed. The AO has not pointed out any specific defect. Having regard to the entire facts & circumstances, I hold that the disallowance of expenses is not justified. The disallowances so made by the AO for both the years are accordingly deleted and grounds of appeal are allowed."
The above finding on fact is not controverted by the revenue by placing any contrary material on record, therefore, we do not see any reason to interfere into the order of the ld. CIT(A), the same is hereby upheld on this issue. Accordingly, this ground of revenue is dismissed.
Similar finding is also given in the case of revenue for the A.Y. 2011-12.
9. Ground No. 5 of the revenue's appeal for the A.Y. 2010-11 is against deleting the disallowance made on account of investment in LIP. The ld DR has vehemently supported the order of the Assessing Officer. On the contrary, the ld AR of the assessee has relied on the order of the ld. CIT(A).
10. We have heard the rival contentions of both the parties, perused the material available on the record and also gone through the orders of 11 ITA 946 & 947/JP/2015_ ACIT Vs Ganesh Goyal the lower authorities. We find that the ld. CIT(A) has given a finding on fact at paragraph Nos. 7.3 of his order, which is as under:-
"7.3 I have given careful consideration to the issue involved. As stated above no proof the LIP payment was filed before AO. Though it is stated to have been filed before me, no proof is actually filed along with the submissions filed by the A/R. Therefore I am unable to accept the claim of the appellant. Copy of return of income is not before me. Therefore, the AO is directed to verify the return of income and make sure that the appellant has claimed deduction u/s. 80C (Chapter VI- A) while computing the total income. If the returned income as taken in the assessment order is gross total income (before deduction on a/c of LIP) then the addition made is not correct. In other words addition can be made only if the returned income taken by AO is after the deduction u/s. 80C."
From the above finding, it can be seen that the ld. CIT(A) has only directed the Assessing Officer to verify from the return of the income whether the assessee has claimed deduction U/s 80C of the Act while computing the total income. It is stated by the ld. CIT(A) that if the returned income has taken in the assessment order is gross total income (before deduction on account of LIP) then the addition made is not 12 ITA 946 & 947/JP/2015_ ACIT Vs Ganesh Goyal correct. We do not see any infirmity into the order of the ld. CIT(A), therefore, the same is hereby affirmed. This ground of the revenue is also dismissed.
Similar finding is also given in the case of revenue for the A.Y. 2011-12.
11. In the result, the both the appeals of the revenue are partly allowed for statistical purposes only.
Order pronounced in the open court on 27th December, 2016.
Sd/- Sd/-
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(BHAGCHAND) (Kul Bharat)
ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur
fnukad@Dated:- 27th December, 2016
*Ranjan
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- The A.C.I.T., Central Circle, Ajmer.
2. izR;FkhZ@ The Respondent- Shri Ganesh Goyal, Madangaj, Kishangarh.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 946 & 947/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar