Income Tax Appellate Tribunal - Panji
Sh. Kamaljit Singh Prop., Bathinda vs The Income Tax Officer, Bathinda on 25 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR
BEFORE SH. T.S. KAPOOR, ACCOUNTANT MEMBER AND
SH. N.K.CHOUDHRY, JUDICIAL MEMBER
I.T.A No.675(Asr)/2013
Assessment Year:2009-10
Sh. Kamaljit Singh Prop. Vs. Income Tax Officer,
M/s Dhanoa Brothers, Ward-1(1),
Bathinda. Bathinda.
PAN:AZOPS-2539R
(Appellant) (Respondent)
Appellant by: Sh. Ashwani Kalia (Ld. CA)
Respondent by: Sh. Rahul Dhawan (Ld. D.R)
Date of hearing: 06.09.2017.
Date of pronouncement: 25.10.2017
ORDER
PER N.K.CHOUDHRY:
The instant appeal has been preferred by the assessee, on feeling aggrieved against the order dated 16.08.2013 passed by the Ld. CIT(A), Bathinda, for Asst. Year:2009-10.
2. The assessee has raised the following grounds of appeal.
"1. That the Ld. CIT(A) has erred in confirming the assessment framed u/s 144 by the A.O.
2. That the Ld. CIT(A) has erred in law and on facts is sustaining the addition of Rs.15,86,371/- made by the A.O. by invoking the provisions of section 69 of the Act.
3. That the Ld. CIT(A) has erred in confirming the disallowance of Rs.50,000/- out of various expense on adhoc basis.
4. That the order is bad in law and on facts."
3. The brief facts of the case are as under:
The assessee is a cement dealer and filed his return of income by declaring an income of Rs.1,88,390/- for the 2 ITA No.675 (Asr)/2013 Asst. Year:2009-10 Asst. Year 2009-10 on 30.09.2009. The case was selected for scrutiny under CASS. Statutory notices have been issued and the copy of audit report alongwith capital account, trading & profit & loss account, balance sheet and other documents were obtained and placed on file. Thereafter, a detailed questionnaire alongwith notice u/s 142(1) was also issued on 19.01.2011 and thereafter, around 17 opportunities have been offered to the assessee, however, the assessee on some of the dates, on the one or other ground sought adjournment and did not co-operate with the assessment proceeding and no books of account ever produced except written reply and finally the Assessing Officer was having no option except to frame the assessment in accordance with the Sec.144 of the I.T. Act. It was held in the assessment that the assessee has maintained a saving bank account No.2420 1010, 012 5031 with the Axis Bank, Bathinda and has deposited an amount of Rs.25,20,000/- in the said account in cash during the year under consideration and the closing balance in the said account as on 31 st March, 2009 stands at Rs.8,030/-. The assessee was asked to explain the source of amount deposited in the said account and in reply thereof the assessee has submitted that during the year under consideration, the assessee had tried to get C&F of a cement company and appointed new as well as his sole dealers to take the said C&F and received some amounts as refundable security deposit from them. The assessee has also submitted a list of 81 such persons from whom the assessee has received an amount of Rs.19,500/- during the period from 29 th Nov.2008 to 01.12.2008 i.e. within 3 days. Surprisingly the amount received is Rs.19,500/- from 8 3 ITA No.675 (Asr)/2013 Asst. Year:2009-10 persons each and is invariably in cash in each case. The assessee was required to produce identity and capacity of the above persons as well as genuineness of the transactions. However, despite so many opportunities provided, the assessee has not provided a single document to prove the same. Even account books have not been produced.
Further, the assessee also failed to explain as to why closing balance of Rs.8,030/- of the said account is not appearing in the balance sheet of the assessee, although, it was submitted by the assessee that he has failed to take the C&F from the company, however, from the aforesaid facts, the assessee was unable to furnish any documentary evidence qua source of amount invested by him in the Saving Bank Account with the Axis Bank Ltd. Bathinda, therefore, in order to give natural justice the Assessing Officer worked out the amount of Rs.15,86,371/- as peak amount from the Bank Statement and added the same to the income of the assessee u/s 69 of the I.T. Act.
Further, insurance commission of Rs.1,920/- was also added to the income of the assessee and Rs.50,000/- in lump sum out of the expenses debited to P&L Account was also disallowed by the Assessing Officer.
4. On feeling aggrieved against the assessment order, the assessee preferred the first appeal before the Ld. CIT(A), who dismissed the appeal of the assessee.
4 ITA No.675 (Asr)/2013Asst. Year:2009-10
5. The assessee further carried the matter before us by filing the instant appeal and in support of its case submitted that the assessee is proprietor of firm M/s. Dhanoa Bros and is engaged in the business of trading in cement. In addition to the above the assessee is also engaged in the renting of shuttering material and earning commission income on purchase and sale of property. The total returned income of the assessee for the year under appeal was Rs.1,99,989/- including commission income of Rs.50,000/- and income from leasing of shuttering income of Rs.48,427/-.
It was further submitted the Ld. AR that the assessee is absolutely illiterate and lay man and had no knowledge of tax matters. This is evident from the fact that even he cannot put his signature in English and the assessee had engaged an lawyer Sh. Anil Kumar Jain who attended the proceedings on behalf of the assessee and during the Financial Year: 2008-09 relevant to assessment year 2009-10 had opened one saving A/c with AXIS BANK on 5.9.2008 in which cash deposited of Rs.2520000 was made. The AO made enquiry as regards the source of deposit of the said cash in bank and the assessee's counsel without consulting with the assessee filed explanation that the said amount was received from certain persons by way of security deposit for being appointed as dealers of cement and same was required to deposit with company for getting C & F of a particular cement company and he has also filed list of persons before the AO who had given the said amount to the assessee be kept as security deposit and this all was done by assessee's counsel and the assessee signed certain statements as advised by his counsel and the assessee was absolutely neither knowing the same nor he understood the implication of the income tax laws being a lay man and the AO disbelieved the explanation regarding the source of deposit of cash in the bank and added peak amount of deposit 5 ITA No.675 (Asr)/2013 Asst. Year:2009-10 of Rs.15,86,176/- in the Bank by invoking the provisions of section 69A to the returned of income.
It was further submitted before the Ld. CIT(A) that since the assessee was also engaged in the business of property dealer, at times the buyer of property used to pay him amount in advance for the purchase of property as per their needs and in one of such case, one Sh. Jasbir singh, R/o Talwanid Sabo Distt. Bathinda gave Rs.15 lacs for the purchase of property and the said amount of Rs.15 lacs was deposited by the assessee in his saving bank on 2.12.2008 and thereafter, immediately, withdrawn on 4.12.2008 for the purchase of property for Jagsir Singh and the said amount of Rs.15 lacs was received by Jagsir Singh on the sale of his house on 12.9.2008 situated at Adarsh Nagar, Bathinda. Copy of the said Sale Deed was also filed before the CIT(A) and it was also submitted that out of the said amount of advance, the assessee paid on behalf of said Jagsir Singh for purchase of land in Village Bokhra for Rs.660000 (Rs.604000 cost of land & Rs.54000 cost for stamp papers etc.) on 4.12.2008 and balance amount of Rs.870000 was re-deposited in the bank on 17.12.2008 as per the instructions of Sh. Jagsir Singh for the purchase of another property.
However, since subsequently no suitable property could be found, therefore, the balance amount was returned to Sh. Jasbir Singh after withdrawing the same from bank within 10-12 days and the whole transactions in the bank of deposits, withdrawals, redeposit and withdrawals are in one month only i.e. month of December 2012 and the copy of Sale Deed of house by Jagsir Singh and copy of Purchase Deed of land for Jagsir Singh were filed before CIT(A). However, the Ld. CIT(A) disbelieved the 6 ITA No.675 (Asr)/2013 Asst. Year:2009-10 submission of the assessee on the ground that the assessee had given different explanation before AO and he has submitted different explanation before him and refused to take the fresh evidence on record on the ground that sufficient opportunities were given to the assessee by AO to submit the necessary evidences and cannot be accepted by him under Rule 46A as sufficient opportunities was given to the assessee by the A.O. Further, it was submitted by the Ld. AR that the assessee's case falls squarely in clause (1) sub clause (b) and (c) of Rule 46A as he was prevented by sufficient cause for not producing the correct and necessary evidence before AO as the assessee had no knowledge about the explanation being submitted by his counsel before the AO as he was kept in dark by the counsel and he came to know as to what had happened only after receiving the assessment order and moreover, if the CIT(A) was not inclined the accept the additional evidence then there was no need to seek the Remand Report from the AO.
Further, it was submitted by the ld. AR that there is only one deposit of Rs.15,75,000/- in the account which support the assessee's contention that this amount was received from buyer of property and there are no regular operations in the bank account and after the withdrawn Rs.6,60,000/- was spent and balance amount was redeposited which was subsequently withdrawn within 10-12 days for repayment to Jagsir Siingh and further the assessee relied upon the decision of Bombay High Court in the case of Smt. Prabhavati S. Shah Vs. CIT 231 ITR 1 (1998) wherein it was held as under:
7 ITA No.675 (Asr)/2013Asst. Year:2009-10 "The information sought to be produced by the appellant was necessary to decide the controversy in regard to the genuineness of the loan taken by the assessee and, thereafter, the first appellate authority should have exercise the powers conferred upon it u/s 250(4) and taken on record such information and considered the same for deciding the genuineness of the loan."
In support of ground No.3 qua disallowance of Rs.50,000/- out of various expenses, it was submitted by the Ld. AR that from the copy of Trading & Profit & Loss Account, it will be observed that the assessee had total sale of more than Rs.1 Crore and total expenses are only Rs.2 Lacs approximately which includes interest of Rs.82,722/- and depreciation of Rs.38,753/-, therefore, the addition of Rs.50,000/- made by the AO and confirmed by the Ld. CIT(A) without any justification in view of the fact that total expenses are very nominal. The total expenses are only Rs.78,000/- approximately and out of these the disallowance of Rs.50,000/- is highly excessive and needs to be deleted.
6. On the other hand, the Ld. DR vehemently raised the objection with regard to the maintainability of the additional evidences under Rule-46 of the I.T. Rules and further submitted that story putforth before the Assessing Officer and the Ld. CIT(A) are altogether different which in any case cannot be allowed to be entertained and if entertain will open Pandora Box for each and every case.
7. We have gone through with the facts and circumstances of the case, it is not in controversy that despite offering 17 opportunities, the assessee did not co-operate with the assessment proceeding and on the one or the other pretext evaded the assessment proceedings and failed to explain the nature and source of the cash deposit of Rs.25,20,000/-in his bank account, therefore, in compelling circumstances, finding no alternative, the Assessing Officer proceeded with the assessment u/s 144 and further considering the explanation 8 ITA No.675 (Asr)/2013 Asst. Year:2009-10 of assessee with regard to trying to get C & F of a cement company and appointed new as well as his sole dealers to take the said C&F and received some amounts as refundable security deposit from them and the assessee has also submitted a list of 81 such persons from whom the assessee has received an amount of Rs.19,500/- each during the period from 29.11.2008 to 01.12.2008 i.e., within 3 days invariably in cash in each case, finally the Assessing officer worked out the peak amount at Rs.15,86,371/- and added to the income of the assessee.
However, in the appellate proceedings, the assessee had taken altogether different stands/pleas that the assessee was ignorant about the explanation given by the erstwhile counsel of the appellant, while the truth of the matter was that the amounts deposited in the Bank represented the 'advance money' received from the clients who were desirous to purchase the property and this fact also stood corroborated from the fact that the assessee had disclosed income of Rs.50,000/- under the head 'other income'. Further the Ld. AR also relied upon a copy of registration deed no. 9120 dated 12.09.2008 in order to show that one person Sh. Jagsir Singh have been sold a property worth of Rs.15,00,000/- and the said amount was given to the assessee for purchase of another property and the assessee deposited the same in his account with Axis Bank on 02.12.2008 and the said amount was withdrawn on 04.12.2008 for purchase of land in village Bhokra in the name of Sh. Jagsir Singh, Smt. Gurpreet Kaur and Shri Kamaljit Singh for consideration of Rs.6,05,000/- and the balance amount was again deposited in the Bank. The remaining amount was withdrawn in the month of December, 2008 and returned to the said of Sh. Jasgir Singh because he was not interested to purchase of his property.
As we realize that the Ld. CIT(A) while passing the impugned order, carefully perused the submissions of the Ld. AR, assessment order as well as Remand Report of the AO and came to the conclusion 9 ITA No.675 (Asr)/2013 Asst. Year:2009-10 that during the assessment proceedings, it was contended by the appellant that the cash deposits in the bank were out of the securities advances received from 81 persons and each person deposited Rs.19,500/- and it was never been contended by the assessee that the cash deposit in the Axis Bank was out of 'advances' received from the customers for purchase of immovable property. The Ld. CIT(A) while considering the application u/s 46A of the I.T. Rule 1962 came to the conclusion that from the perusal of the assessment order, it is found that AO at no stage refused to admit any additional evidence which ought to have been admitted even the appellant has not been able to make out any case that which was prevented by sufficient cause from producing the evidence which was called for produced by the A.O. and from the assessment order it clearly reflects that the case of the assessee was fixed for hearing on 17 occasions during the more one year but at no stage the assessee expressed any intention to adduce any such evidence as is being adduced at the appellate stage, therefore, it cannot be said that the assessee was prevented by a sufficient cause from producing the evidence which was called upon to produce by the AO, and also prevented by a sufficient case from producing before the AO any evidence which was relevant to any ground of appeal.
We have given thoughtful consideration to the observation made by Ld. CIT(A), while deciding an application u/s 46A of the appellant herein, although the assessee/appellant has not raised any specific ground with regard to the rejection of its application before us, however, we are of the considered opinion that the Ld. CIT(A) rightly rejected the same because the assessee was unable to demonstrate any reason to substantiate its ground to fall under the sub-rule of clause (1) sub-clause (b) and (c) of Rule 46A.
10 ITA No.675 (Asr)/2013Asst. Year:2009-10 While coming to the merit of the case and specific for adjudication of ground No.2, we have realized that the assessee has failed to make out his case in any stretch of imagination because in the assessment proceedings, the assessee specifically taken the stand with regard to cash deposit of Rs.25,20,000/-, by explaining that he wanted to get C & F of a Cement Company and appointed new and sole dealers from whom some amounts in the shape of "refundable security" was received. In support of the said contention, the assessee submitted a list of 81 persons which was duly signed by 81 persons and further stated that from each such person an amount of Rs.19,500/- was received. It was never been brought on record by the assessee directly or in directly that the assessee has doubt in the integrity of his counsel and /or submissions of his counsel. Once the vakaltnama has been filed on behalf of the party, which in this case has not been disputed, every authority conferred to its counsel to plead his case by taking any ground/objection and or any defence on behalf of the assessee and if wrong submissions has been made by counsel on behalf of the assessee by getting signature or with or without his assent, then also because of vakaltnama, the assessee is liable for consequences directly or indirectly. If we seriously consider the issue under hand as it reflects that the assessee has taken stand that he had received security advance of 81 persons and also filed a list of which is signed by 81 persons in the assessment proceedings, however, during the appellate proceeding the same was denied on the pretext that the assessee being ignorant having no proper knowledge about the explanation given by the counsel while the truth of the matter was different, it prima-facie shows that the assessee had produced forge and fabricated documents in the assessment proceedings for which the assessee along with his erstwhile counsel liable for the appropriate proceedings under Civil and Criminal Law and even otherwise it is not a case of the assessee that the assessee has 11 ITA No.675 (Asr)/2013 Asst. Year:2009-10 already initiated any criminal proceedings against his erstwhile counsel for making forge/false claim in the assessment proceedings. From the facts as emerged from the assessment proceedings as well as the appellate stage, we are of the considered opinion, that there are plethora of concocted stories and malafide claims which in our considered opinion cannot be sustained.
The assessee has failed to bring on record any receipt of having received any amount from the proprieties buyer and evenotherwise from the property document it does not reflects that the same have been purchased through assessee and consideration amount has also been given by assessee.
Even otherwise from the profit and loss account of the assessee, it reflects that the assessee had made sale of more than Rs.1 Crore, therefore, from the total sale it can easily be construed that the assessee is much competent and knowledgeable to run the business and having basic sense at least, therefore, the explanation that being ignorant having no proper knowledge about the explanation given by the counsel seems to be illogical and ignorant of law or its improper knowledge have no excuse in law.
On the aforesaid observations, we are of the considered opinion that the assessee has failed to offer any statutory explanation about the nature and source of Rs.25,20,000/-. Hence, we affirm the addition of Rs.15,86,371/-.
With regard to Ground Nos. 1, 4 & 5 no specific averments/argument have been made by the Ld. AR, hence, does not require any specific adjudication as the same are formal in nature.
Now coming to Ground No.3 as to confirm the disallowance of Rs.50,000/- out of various expenses on adhoc basis as it was argued 12 ITA No.675 (Asr)/2013 Asst. Year:2009-10 by the Ld. AR that total expenses which is claimed by the assessee was Rs.2 Lakhs approximately which includes interest of Rs.87,722/- and deprecation of Rs.38,753/- which in actual frequencies, total expenses come to Rs.78,000/- approximately and out of these expenses, Rs.50,000/- was disallowed.
We have given thoughtful consideration and gone through with the assessment order where it is not specified that how much expenses have been debited by the assessee qua Telephone, Vehicle, Stationary, Electricity etc. in P&L Account, however, as the assessee had failed to furnish any expenditure vouchers or other documentary evidence and the books of account,, therefore, the Assessing Officer disallowed a sum of Rs.50,000/- in lumpsum out of expenses from the P&L Account of the assessment year under consideration. It reflects that the assessee has claimed various expenses which is of Rs.20,0524/- which includes interest of Rs.82,722/- and depreciation of Rs.38,753/- and remaining amount comes to Rs.74,549/-only, however, the Assessing Officer disallowed Rs.50,000/- out of the said expenses which in our considered opinion excessively high, therefore, we restrict the same to the tune of Rs.7,500/- only, being 10% of expenses of Rs.75,000/-. Hence, Ground No.3 of the appeal is partly allowed.
8. In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open Court on 25.10.2017.
Sd/- Sd/-
(T. S. KAPOOR) (N.K.CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 25.10.2017.
/PK/ Ps.
Copy of the order forwarded to:
13 ITA No.675 (Asr)/2013
Asst. Year:2009-10
(1) The Assessee:
(2) The
(3) The CIT(A),
(4) The CIT,
(5) The SR DR, I.T.A.T.,
True copy
By order