Income Tax Appellate Tribunal - Ahmedabad
Satyanarayan T.Agarwal,, Ahmedabad vs Department Of Income Tax on 30 September, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD '' B " BENCH - AHMEDABAD
Before Shri Rajpal Yadav, JM, & Shri Manish Borad, AM.
ITA No. 1068/Ahd/2013
Asst. Year: 2009-10
ITO, Wd-9(4), Ahmedabad. Vs. Shri Satyanarayan T.
Agarwal, 16-D, Avkar
Apartment, Odhav, Nr.
Navrang High School,
Odhav, Ahmedabad.
Appellant Respondent
PAN ADDPA 7779E
Appellant by Shri James Kurien, Sr.DR
Respondent by None
Date of hearing: 28/9/2016
Date of pronouncement: 30/9/2016
ORDER
PER Manish Borad, Accountant Member.
This is an appeal by the Revenue for Asst. Year 2009-10 against the order of ld. CIT(A) XV, Ahmedabad dated 23rd January, 2013 vide appeal no.CIT(A)XV/ITO/9(4)/324/11-12 passed against order u/s 143(3) of the IT Act, 1961 (in short the Act) framed on 17/10/2011 by ITO Wd-9(4), Ahmedabad.
2. Briefly stated facts of the case are that the assessee is an individual engaged in the business of Transport contractor. Return of income for Asst. Year 2009-10 was filed on 24.9.2009 declaring total ITA No. 1068/Ahd/2013 2 Asst. Year 2009-10 income at Rs.2,03,290/-. The case was selected for scrutiny assessment and notices u/s 143(2) & 142(1) of the Act along with questionnaire were issued which were duly replied by the assessee and ld. AR attended from time to time and submitted audited books of account and Tax Audit Report.. On verification of books of accounts, ld. Assessing Officer observed that gross total receipt of Rs.44,95,417/- has been shown. On cross verification of the gross receipts shown and in the profits and loss account with gross contract amount shown in form 26AS on income-tax web-site ld. Assessing Officer observed that the figures shown in the web site stood at Rs.60,98,324/- as against Rs.44,95,417/- shown in the books. Ld. Assessing Officer was of the view that assessee has suppressed receipts of Rs.16,02,907/- and accordingly made addition of this undisclosed receipts. It was also observed that cash on various dates was deposited in S.B. a/c with ICICI bank Ahmedabad totaling to Rs.39,12,381/- and in lack of necessary details and evidences from assessee, ld. Assessing Officer invoked the provisions of section 68 and made addition on account of unexplained cash credit at Rs.39,21,381/-. In total after making an addition of Rs.55,24,288 (16,02,907/- + 39,21,381/-) income was assessed at Rs.57,27,578/-.
3. In appeal before the first appellate authority, assessee got part relief.
4. Now Revenue is in appeal before the Tribunal.
5. None appeared on behalf of the assessee.
ITA No. 1068/Ahd/2013 3Asst. Year 2009-10
6. Since none appeared on behalf of the assessee, we proceed to decide the appeal after hearing the ld. DR and going through the material on record.
7. First we take up ground no.1 which reads as under :-
1) The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts in adopting the profit @10% of the undisclosed contract receipt.
8. Ld. DR supported the order of Assessing Officer.
9. We have heard ld. DR and gone through the records placed before us. On going through the order of ld. CIT(A) we find that detailed speaking order taking into account all the facts has been passed by ld. CIT(A) sustaining 10% of the undisclosed receipt of Rs.16,02,907/- by observing as under :-
5. The A.O. on the basis of ITS details and Annual Information report gathered that the total receipt of the appellant during previous year is of Rs. 60,98,324/- on which TDS was deducted u/s 194C of the Act by payer companies/parties and deposited in to govt. account. As against this total receipt, the appellant's audited books of account shows only Rs. 44,95,417/-as total receipt. It is therefore, the difference of Rs 16,02,907/- (60,98,324 -44,95,417) was the contractual receipt which was not reflected by appellant. The appellant has not submitted any explanation before the A.O. and therefore he made addition of this entire amount.
During appeal proceeding, appellant contended that his books of account are audited duly supported by bills & vouchers for which A.O. has not given any adverse findings. It was contended that, one of the payer party has paid the freight for transportation directly to the truck owner, who transported the goods of that company and the appellant was to receive his commission part in the form of TDS but no such intimation or certificate was received by appellant hence this receipt or such commission was not shown. The appellant further relied on ITA No. 1068/Ahd/2013 4 Asst. Year 2009-10 Hon'ble Gujarat high court decision in the case of Mitesh Rolling Mills P. Ltd. to emphasize the fact that it is only the real income or net of receipt & payment which is required to be taxed and not the entire gross receipt. The appellant except this contention has not submitted any details or evidences to support his contention i.e. from which such party, the said receipt were not accounted.
To verify the facts and contention of the appellant, Form No. 26AS as available in the case of appellant for previous year was examined (A print out copy is enclosed with this order as Ann. -A for ready reference,) This form show details in the form of name of the payer/parties from whom appellant received transportation charges, total such received or credited, amount of TDS including surcharges etc. deducted out of such payment and date of deposit of such TDS. A party wise summary is prepared reflecting the total amount of hire charges received from one party and TDS deducted on it. The same is as follows:
Payer or Parties from whom transportation charge Amount paid/credited TDS deducted received.
1. Maruti Cargo and Chemicals Pvt. Ltd. 23,82,540 24,540 2.Gulshan Sugars & Chemicals Ltd. 47,127 971
3. Jaimurty Minerals & Chemicals Pvt. Ltd. 20,52,841 46,519
4. Calchem Industries (India) Ltd. 16,16,816 36,618 Total ; 60,98,324 1,08,648 Shown by appellant 44,95,316 72,417 Balance 16,03,008 36,231 It is also gathered from the details of return of income filed by appellant that, TDS amount of Rs.72,417/- was claimed by appellant and not Rs. 1,08,6487- as per this detail. Further the tax audit report in form 3CB & 3CD dt. 21/09/2009 in its profit & loss account shows that appellant credited Rs. 44,95,316/- (Not 44,95,417I- as taken by A.O.)as hire receipt. This gives a discrepancy of non recording of receipt of Rs. 16,03,008/- as well as non claim of Rs. 36,231/- as TDS.
The appellant's reply dt. 28/02/2011 to the A.O. in respect of reconciliation of receipts as per TDS certificate as per books of account has following detail Name of party Total amount of transportation charges TDS received/credited.
(a) Calchem Industries (I) Ltd. 59935 1198
(b) Maruti Cargo and Chemical Pvt. Ltd. 2382540, 24540
(c) Jai Murthy Minral & Chemicals Pvt. 2052841, 46519
Ltd.
Total 4495316 72257
ITA No. 1068/Ahd/2013 5
Asst. Year 2009-10
It is therefore, such discrepancy can be attributed for non recording of receipt from M/s Calchem Industries (India) Ltd. and Gulshan Sugar & Chemicals. It is therefore, I am partly inclined with the contention of the appellant that he was not informed nor given TDS certificate by M/s Calchem Industries (India) Ltd. in respect of freight paid by them directly to truck owner for transportation of Goods but name of appellant was included in the return filed for TDS deducted out of such payment. This position is supported by the fact that appellant is not owning any truck but arranges such transportation as & when required by the party. Further considering the discrepancy of Rs.16,03,008/- on receipt (TDS Rs.36,231/-) as against total receipt from such party of Rs. 16,15,816/- (TDS Rs. 36,6187-), the appellant has done part work of this party and appellant is known to this party. It is therefore, if the appellant has given credit of TDS of Rs. 1,08,648/- though it claimed only Rs. 72,417/-, the income from the corresponding receipt of Rs. 16,03,008/- has to be considered and not the entire receipt. The appellant also contended the same by relying on Hon'ble Gujarat high court order. It is in this regard, the P & L account of appellant reflect that out of total receipt of Rs. 44,95,316/-, the appellant claimed hire charges of Rs. 40,45,784/- i.e. the gross profit is shown at Rs. 4,49,532/-. (4495316-4045784) i.e. 10% of receipt. Now considering the fact that appellant already'claimed other expenditure hence it will be reasonable to consider 10% of income from the receipt of Rs. 16,03,008/- i.e. Rs. 1,60,300/- which can be added to totai income of the appellant. The A.O. is therefore directed to adopt the figure of Rs. 1,60,3007- for addition at the place of Rs. 16,02,907/-. The addition to this extent is upheld and confirmed. The balance amount of Rs. 14,42,607/-(16,02,907 - 1,60,300) is directed to be deleted. The appellant gets relief accordingly. As per demand notice u/s 156 of the Act dt. 17/10/11, it is gathered that interest u/s 244A of Rs. 5,687/- is charged i.e. the appellant was granted refund while processing u/s 143(1) of the Act. Therefore though no such ground is made by appellant in grounds of appeal but the basis of addition is on account of form 26AS and TDS deduction, the A.O. is directed to verify about the credit of TDS given to appellant and the same should be as per form 26AS in the case of appellant i.e. at Rs. 1,08,6487- instead of as claimed by appellant in return of income at Rs. 72,417-.
10. From going through the findings of ld. CIT(A) we are of the view that the impugned undisclosed receipt was on account of payments directly made by the parties of assessee to the truck owners and tax was deducted at source in the name of assessee. There was a reasonable cause on the part of assessee in not being able to enter such direct payments to truck owners in its books of account.
ITA No. 1068/Ahd/2013 6Asst. Year 2009-10 Further the impugned gross receipt cannot be treated as income as it is in the nature of freight charges and the profits element in the impugned receipt can only be taxed and not the gross amount. Therefore, ld. CIT(A) has rightly sustained the addition to the extent of 10% of the gross receipt. We find no reason to interfere with the finding of ld. CIT(A). We uphold the same. This ground of Revenue is dismissed.
11. Now we take ground no.2 which reads as under :-
2) The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts in deleting the addition of Rs.39,21,281/~ made on account of unexplained cash deposit.
12. This addition made u/s 68 at Rs.39,21,381/- was towards cash deposit on various dates in the year in the S.B. account in the name of assessee. From going through the submissions made by assessee before the lower authorities it is pertinent to note that the impugned bank account in which cash was deposited stands duly disclosed in the regular books which have been audited and all the transactions shown in this impugned bank account are duly accounted for in regular books.
13. We further observe that ld. CIT(A) has given a clear finding on this issue and has deleted the addition by observing as below :-
Now coming to other ground against the addition of Rs. 39,21,381/- u/s 68 of the Act on the fact that appellant's bank account at ICICI bank shows frequent cash deposit, in total of Rs. 39,21,381/- for which appellant failed to offer any explanation for its source before A.O. hence he made this addition u/s 68. The ITA No. 1068/Ahd/2013 7 Asst. Year 2009-10 appellant took the objection that such addition u/s 68 of the Act is not legally correct since the deposit is found in appellant's pass book of bank and as per Hon'bie Bombay high court decision in the case of CIT Poona Vs. Bhaichand H. Gandhi the bank pass book is; not books of account. With due regards to such decision, I am not inclined* with appellant that in spite of the fact that he had not offered any explanation for the source of such cash deposit in bank account, the A.O.'s finding which is in conformity of unexplained cash deposited in substance be setasided just on technical reason that he made addition u/s 68 of the Act. In my view, section 292B of the Act will take due care of such asstt. and I myself has the power coterminous with that of A.O. and to replace the part or portion of asstt. order with my own order. It is in this regard, I treat such addition by A.O. in substance u/s 69 of the Act. This grounds is therefore dismissed as far as technicality is concerned. On merit, the appellant contended that the bank account reflect the deposit of cash from the hire receipt and withdrawal of cash from the same account and alternatively if A.O. wants to make any addition, only the peak amount can be added. It is in this regard, a copy of appellant's bank account no. 624401518551 with ICICl bank, Maninagar branch was examined for the period 01/04/08 to 31/03/09. It is worth noting at this moment that this bank account is duly reflected by appellant in his books of account since the closing bank balance of Rs. 2,224/- is duly tallied in its audited balance sheet.ylt is verified that the appellant deposited Rs. 70,49,895/- (both cash & cheque including transfer entries) in this account and withdrawn Rs. 70.59.164/- (both cash & cheque includina transfer entries) during the previous year. It is also verified that out of total deposit of Rs. 70,49,895/- an amount of Rs. 31,28,413/- is deposited through cheque or transfer entry and similarly out of Rs. 70,59,162/- withdrawals an amount of Rs. 9,95,099/- is withdrawn through cheque or transfer entry. Considering the total hire receipt shown by appellant of Rs. 44,95,316/- and deposit of cheque & transfer entries of Rs. 31,28,413/-, it can be concluded that the appellant is in receipt of hire charges in cash also. Considering the contra entries out of such deposit and withdrawals, I am inclined with the contention of the appellant that all the entries as appearing in this disclosed bank ITA No. 1068/Ahd/2013 8 Asst. Year 2009-10 account is from the business transactions of the appellant. The cash so deposited of Rs. 39,21,482/- (7049895 - 3128413) is either receipt of business or made out of the withdrawals from this account beside the contra entries. It is therefore such deposit is explained and there is no need to make any addition u/s 69 of the Act or of peak credit of this disclosed account. The minor difference if at all there is duly explained by the nature of receipt of appellant i.e. hire receipt for which an addition is already made. The A.O. is therefore directed to delete the addition so made of Rs. 39,21,281/-. The appellant gets relief accordingly.
13. From going through the finding of ld. CIT(A) and the submissions made by assessee before the lower authorities and in absence of any contrary evidence placed by ld. DR against the finding of ld. CIT(A), we are of the view that as the impugned bank account in which cash has been deposited has been shown in the regular books of account and all the debits and credits in this bank account have been reflected in the related account in the books and the closing bank balance of SB account is also shown in the audited balance sheet as observed by ld. CIT(A). Certainly there is no element of unexplained cash credit so as to invoke provisions of section 68 of the Act as the impugned amount of Rs.39,21,381/- is duly explained either as business receipt or out of regular cash withdrawal. We therefore, find no reason to interfere with the order of ld. CIT(A) and uphold the same. This ground of Revenue is also dismissed.
14. Ground Nos. 3 & 4 are of general nature, which need no adjudication.ITA No. 1068/Ahd/2013 9
Asst. Year 2009-10
15. In the result, appeal filed by the Revenue is dismissed.
Order pronounced in the open Court on 30th September, 2016 Sd/- sd/-
(Rajpal Yadav) (Manish Borad)
Judicial Member Accountant Member
Dated 30/9/2016
Mahata/-
Copy of the order forwarded to:
1. The Appellant
2. The Respondent
3. The CIT concerned
4. The CIT(A) concerned
5. The DR, ITAT, Ahmedabad
6. Guard File
BY ORDER
Asst. Registrar, ITAT, Ahmedabad
1. Date of dictation: 29/09/2016
2. Date on which the typed draft is placed before the Dictating Member: 30/09/2016 other Member:
3. Date on which approved draft comes to the Sr. P. S./P.S.:
4. Date on which the fair order is placed before the Dictating Member for pronouncement: __________
5. Date on which the fair order comes back to the Sr. P.S./P.S.:
6. Date on which the file goes to the Bench Clerk: 30/9/16
7. Date on which the file goes to the Head Clerk:
8. The date on which the file goes to the Assistant Registrar for signature on the order:
9. Date of Despatch of the Order: