Income Tax Appellate Tribunal - Raipur
Mukesh Kumar Jain, vs I.T.O, Ward 2(3), Bilaspur(Cg) on 22 September, 2016
I TA N o. 20 9/ RP R/ 2 01 4 As s ess m e nt Ye a r: 20 11 - 1 2 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, "SMC", RAIPUR [Coram: Pramod Kumar AM] ITA No.209/RPR/2014 Assessment Year: 2011-12 Mukesh Kumar Jain, .............Appellant C/o. Ratan Kumar Nirmal Kumar Jain, Chhota Bazar, Chirmiri Dist. Korea (C.G.) [PAN: ADGPJ 1074 L] Vs. Income Tax Officer, Ward - 2(3), Bilaspur (C.G.) .............Respondent Appearances by:
R.B. Doshi, for the appellant D.K. Jain, for the respondent Date of concluding the hearing: 23.06.2016 Date of pronouncing the order : 22.09.2016 O R D E R By way of this appeal, the assessee appellant has challenged correctness of the order dated 28.04.2014, passed by the learned CIT(A), Bilaspur (C.G.), in the matter of assessment under section 143(3) of the Income Tax Act, 1961 for assessment year 2005-06, on the following ground :-
"1. In the facts and circumstances of the case, learned Commissioner of Income-tax (Appeals) erred in confirming addition of Rs.6,88,586/- made by the Assessing Officer on account of alleged net profit @ 8% on sales of Rs.86,07,321/-. The addition made by the Assessing Officer and confirmed by CIT(A) is not justified."
2. To adjudicate on this appeal only a few material facts need to be taken note of. During the course of assessment proceedings the Assessing Officer noted that while the assessee has produced bank statement, Profit & Loss account and Ledger I TA N o. 20 9/ RP R/ 2 01 4 As s ess m e nt Ye a r: 20 11 - 1 2 Page 2 of 4 etc. on the total sales/turnover of Rs.78,29,905/-, the assessee has not audited his books of account under section 44AB, hence the book result is not reliable and not acceptable. Assessing Officer was of the view that as the books of account have not been audited, the books of accounts were not maintained by the assessee. It was in this back drop the Assessing Officer proceeded to estimate the profit @ 8% on the basis of total cash/cheque deposits by the assessee in his bank account. These deposits aggregate to Rs 86,07,321/- and the profit so calculated comes to Rs.6,88,586/-. Aggrieved, the assessee carried the matter in appeal before the learned CIT(A) but without any success. While doing so, learned CIT(A) has observed as follows:-
"Decision - The appellant filed the return of income in ITR-SAHAJ declaring income from other sources as per "Chapter TV F" at Rs. 1,64,036/-. As per the computation of total income filed alongwith the return, interest received from M/s. Ratan Kumar Nirmal Kumar Jain is Rs. 43,836/-, other income is Rs. 96,200/- and other interest income is Rs. 24,000/-, thus totaling to Rs.1,64,036/-. The appellant has disclosed income in the returns of the earlier years under the head 'Income from Other Sources'. This year, as evident from the above, the appellant has only income from other sources and not any income from other heads. The case was picked up for scrutiny through CASS basically for the purpose of verification of source of huge cash deposits in the appellant's bank account bearing No. 10958003145 with SBI, Chirirmiri. The total deposits made in the above bank account during the year under consideration is Rs. 86,07,321/-. The appellant produced the Profit and Loss A/c, Balance Sheet and other details in course of assessment proceedings in his efforts to create evidence favorable to him to justify that whatever deposits and withdrawals made in the account were the turnover and related expenses of his business in retail trading of consumer goods with the plea that the income from the business was inadvertently included with income from other source due to ignorance of law and that the books of account were not audited since it was the first year of the business activities in retail trading. Such ignorance of law is not an excuse for non-compliance with law of disclosing the business income separately under separate head and to get the books of accounts audited. [Relied on CIT Vs. Lloyed Institution (I) (P) Ltd. reported in 164 CTR 196 (SC)]. The return was filed in the form where there was no liability of the appellant to maintain books of account or to furnish details of assets and liabilities with the Department. It was only when the appellant's case was selected for scrutiny, he came up with the details of purchases and sales relating to his retail trading in consumer goods so that source of deposits and purpose of withdrawals in the alleged bank account I TA N o. 20 9/ RP R/ 2 01 4 As s ess m e nt Ye a r: 20 11 - 1 2 Page 3 of 4 could possibly be furnished. The AO ignored the details furnished in course of assessment proceedings as after thoughts simply because of the fact that such information are not available in the return filed with him. It is true that the appellant could establish the purchases made from single supplier M/s. Fashion Suiting Private Limited by producing bills, but the fact remains the same that the transactions in the bank account and the profits from retail trading in consumer goods is undisclosed. In the given facts and circumstances of the case, I find that the AO is reasonable enough in treating the deposits in the bank account as turnover from his undisclosed retail trading business, applied presumptive rate only as provided in the amended provisions of section 44AD of the Act and added Rs.6,88,5867- to the returned income and hence, no further interference in the order of the Assessing Officer is warranted. Accordingly, the ground of appeal is rejected.
3. Assessing Officer is not satisfied and is in appeal before me.
4. I have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. I find that the only reason of the Assessing Officer deciding to ignore the book result is that these books of accounts were not audited. Consequence of books of account not being audited despite the requirement for getting the books audited under section 44AB is set out separately. Once the books of account has been produced by the assessee and the relevant details are duly submitted by him in which no discrepancies have been pointed out by the Assessing Officer, it cannot be open to the Assessing Officer to disregard the book results. In this view of the matter, in my considered view, there was no occasion for the Assessing Officer to disturb the Net Profit from the business disclosed by the assessee. The addition made by the Assessing Officer is devoid of any legally sustainable merit. Therefore, I delete the same.
5. In the result, appeal is allowed. Pronounced under rule 34(4) of the Appellate Tribunal Rules 1963 today on 22nd day of September, 2016.
Sd/-
Pramod Kumar (Accountant Member) Dated: the 22 nd day of September, 2016.
I TA N o. 20 9/ RP R/ 2 01 4 As s ess m e nt Ye a r: 20 11 - 1 2 Page 4 of 4 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File By order Assistant Registrar Income Tax Appellate Tribunal Raipur Bench, Raipur