Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI MANISH AGARWAL
Jyoti Imprints, Vs ITO, Ward-1(1), Cuttack Banka Bazar, Cuttack, Odisha PAN No. : AAIFJ 6773 H (अपीलाथ" अपीलाथ" अपीलाथ" /Appellant) अपीलाथ" (""यथ" ""यथ" ""यथ" / Respondent) ""यथ" .. िनधा"रती क" िनधा"रती क" ओर ओर सेसेसेसे /Assessee by िनधा"रती िनधा"रती क" क" ओर ओर : Shri Mohit Sheth, Advocate राज"व राज"व क" राज"व राज"व क" क" ओर क" ओर ओर सेसेसेसे /Revenue by ओर : Shri S.C.Mohanty, Sr. DR सुनवाई क" तारीख / Date of Hearing : 11/12/2024 घोषणा क" तारीख/Date of Pronouncement : 11/12/2024 आदेश आदेश / O R D E R आदेश आदेश Per Bench : This is an appeal filed by the assessee against the order of ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 12.11.2024, passed in appeal No.NFAC/2015-16/10255526 vide DIN & Order No.ITBA/NFAC/S/250/2024-25/1070273233(1) for the assessment year 2016-2017, on the following grounds of appeal :-
1. For that under the facts and in the circumstances of the case the assessment as made u/s. 147 r.w.s. 144B is arbitrary, unjustified and barred by limitation. Notice u/s.148 as issue is barred by limitation. The order of the AO is against the facts and law of the case.
2. For that under the facts and in the circumstances of the case the addition of Rs.5,00,000/- as made u/s.69A by rejecting the explanation of the appellant is wholly uncalled for and unjustified.
3. For that the addition of Rs.46,960/- added to the total income by estimating 8% on contractual receipts is uncalled for and unjustified and highly excessive.
4. For that under the facts and in the circumstances of the case the Order u/s.250 of the I.T. Act. as made by the Commissioner of Income Tax (Appeals), NFAC, Delhi is arbitrary, unreasonable, unlawful, uncalled for and unjustified 2 as the CIT(A) without applying his mind and without going through the statement of fact and without understanding the fact had just passed the order abruptly by sustaining the addition of Rs.5,00,000/-u/s.69A and also sustaining the addition of Rs.46,960/- and dismissing this issue raised in the appeal.
5. For that under the facts and in the circumstances of the case Commissioner of Income Tax (Appeals), NFAC, Delhi was not justified to dismiss the appeal. The CIT(Appeal) had just flown with the assessment order and had dismiss the issue.
2. Brief facts of the case are that the assessee is a partnership firm engaged in retail trading and filed its return of income on 31.03.2017 declaring total income of Rs.3,742/-. The case was reopened after passing the order u/s.148A(b) of the Act, however, no return was filed by the assessee in response to the notice u/s.148 of the Act. Thereafter considering the submissions of the assessee the assessment order was passed u/s.147 r.w.s.144B of the Act at a total income of Rs.5,50,700/- by making various additions. Against the said order, the assessee preferred before the ld. CIT(A), who dismissed the appeal of the assessee, thus, the assessee preferred the present appeal before us.
In ground No.1, the assessee has challenged the order passed u/s.147 r.w.s.144B of the Act as barred by limitation, however, during the course of hearing, no argument, whatsoever, was made on this ground of appeal nor any submission is made on this issue in the written submission filed by the assessee in its paper book. Since the assessee has not made any argument on this ground, therefore, the same is dismissed being not persuaded by the assessee.
4. In ground No.2, the assessee has challenged the addition made by the AO u/s.69A of the Act. The AO had information that the assessee has 3 received a sum of Rs.5 lakhs from M/s Shree Shaym Trading Co., a proprietorship concern of Shrisatya Narayan More. The AO alleged that the assessee has failed to file the necessary details in regard to the identity of the person who has given this amount to the assessee, therefore, it was treated unexplained money u/s.69A of the Act.
5. Before us, ld. AR of the assessee submitted that during the year under appeal the assessee has sold embroidery machine to Shri Shyam Trading Co. and received sale consideration. In support of the claim the ld AR had filed copy of the ledger account of embroidery machine for F.Y.2014-2015 and F.Y. 2015-2016 and copy of the balance sheet as at 31.03.2015 and 31.03.2016, which are placed in the paper book pages 7 to 10. It was submitted by the ld. AR that all the details were filed before the AO during the course of proceedings u/s.148A of the Act and also during the course of assessment proceedings it was informed that the machine was appearing in ledger account as on the opening date of the previous year and also in the balance sheet in the respective years, however, the AO as well as ld. CIT(A) has failed to appreciate the same.
He further submitted that the department has already in possession of the details of M/s Shree Shyam Trading Co. based on which the proceedings u/s.148A of the Act were initiated in the case of the assessee. He further submitted that since this amount was received as sale consideration of a capital asset and is capital receipt, thus, it is not shown in the income declared by the assessee. Therefore, the entire addition made on this 4 account deserves to be deleted. Ld. AR has also filed his written submissions which read as under :-
The assessee sold the embroidery machinery to Shree Shyam Trading Company on receipt of Rs.5,00,000/-. The amount has been duly received on 15.10.2015 through RTGS and duly accounted in the assessee's books of accounts for the said asst. year crediting the machinery account against the sale of assets. Machine was sold by the assessee to the party and amount was received through RTGS. Once a dealing was done, machine was sold and amount was received, the assessee is not concern with what the other party is engaged in. The assessee was to sold the machine and get the amount. The other party is engaged in trading or is a salary person or doing any other business, the assessee is least concern regarding them. Shree Shyam Trading Company had purchased machinery and had paid through RTGS. This is the fact. It is neither the business of the assessee to look into the details of the other party that how he has transferred the amount, whether he has filed return or not, what business he is doing, how he had arranged the funds. It is not at all required on the part of the assessee to entered into such business. The amount is paid against the machinery and it has been duly accounted in the assessee books of accounts. On the basis of information it is not at all correct or justifiable to not accept the reply of the assessee. While doing assessment the AO have look into the books of account of the assessee and did the assessment accordingly. The AO had not rejected the books of accounts. On the basis of the details of the other party the assessee should not be assessed. The ledger copy of the assessee submitted alongwith the Balance Sheet reflecting the complete detail and the ledger itself is explainable it cannot be said that the receipt of Rs 5,00,000/- is to be treated as unexplained money u/s.69A and is to be taxed in accordance with the provisions of Sec. 115BBE of the L.T. Act. The receipts of Rs.5,00,000/- is against the sale of assets, it is neither an income nor is an receipts which is unaccounted, What statement the Shree Shyam Trading Co. had given or what details has been gather by the Investigation, the assessee is not concern regarding such statement. The ass rely on the fact and the books of accounts and accordingly had filed its return of income. Nothing has been concealed by the assessee. It is very much wrong to say that the assessee's reply was not justifiable. The assessee has alongwith his submission had produced all the details such bank Account, ledger with all supporting evidences.
In view of the above submission the assessee begs to submit that the receipts of Rs.5,00,000/- from M/s. Shree Shyam Trading Co, could not be treated as unexplained money u/s.69A of the I.T. Act and should not be taxed in accordance with the provisions of Section 115BBE of the I.T. Act.
5 5. Per Contra, ld. Sr DR vehemently supported the order of lower authorities and submitted that the assessee has failed to discharge the burden casted upon it to prove the identity of the person from whom the amount was received. He further submitted that the copy of the balance sheet available in the paper book at pages 7 & 8 were the additional evidences as they were not filed before the lower authorities, therefore, the same deserves to be ignored in absence of specific prayer for admission of additional evidence as per ITAT Rules, 1962.
We have heard the rival submissions and perused the material available on record. First of all, with regard to argument of the ld. Sr. DR that the balance sheets were not filed before the lower authorities, we find that in the assessment order itself the AO in para 3.3 has reproduced the reply of the assessee wherein it was stated that the copy of balance sheet for the year ending 31.03.2015 and 31.03.2016 along with copy of the ledger accounts have been filed by the assessee in support of the claim of selling of embroidery machines. Therefore, this plea cannot be accepted and the balance sheet so submitted by the assessee are not the additional evidence. Further it is seen that the assessee during the year not only sold one machine to M/s Shree Shyam Trading Co. but also sold certain other machines to various persons totaling to Rs.9 lakhs on the various dates which have not been doubted by the AO. Merely because the proprietor of M/s Shree Shyam Trading Co. is a non-filer of return, it was presumed that the amount received by the assessee towards sale consideration of machines as unexplained money of the assessee.
6 Admittedly, in this case the proceedings u/s.148 of the Act were initiated on the basis of bank account of the buyer M/s Shree Shyam Trading Co. available with the department from where the RTGS was received by the assessee. Merely because the assessee has not provided the details of the buyer of the machine though all the whereabouts of buyer and his bank account are already in possession of the department, we are unable to accept the allegation of the revenue that the assessee has failed to prove the identity of the person from whom the assessee had received the amount. Further the machine was duly disclosed/appeared in fixed assets in preceding years and the fact of sale of other machines is also not doubted. Moreover, this amount is duly recorded in the books of account, thus, the provisions of Section 69A of the Act cannot be invoked. Looking to these facts, the addition of Rs.5 lakhs made u/s.69A of the Act is hereby deleted.
The next ground of appeal is in relation to the addition of Rs.46,960/- made by the AO by applying 8% profit rate on the receipts of Rs.5,86,999/- being the difference between the gross receipts appearing in 26AS statement and the gross receipts declared by the assessee.
Before us, ld. AR submitted that the assessee has shown Rs.19,89,965/- as gross receipts and declared 8% profit on the same u/s.44AD of the Act and further claim of TDS of Rs.51,719/- as appearing in 26AS.
Assessee’s submission is that it had received only Rs.19,89,965/-. There was duplicate entry in 26AS statement. If the same are ignored the receipts as per 26AS are lower than the gross receipts declared by the 7 assessee, therefore, no addition is required to be made on this account.
For this, a copy of the 26AS statement is also filed and available in the paper book at page12 which is as under :-
8 8. Ld. AR submitted that from the perusal of the same, it is clearly evident that some entries at Sl.No.2 and 3 are common and duplicate entries and if the same are reduced, gross receipts declared by the assessee are more than the receipts as per 26AS. Thus, the ld. AR submitted that the addition made as 8% profit on such alleged undisclosed receipts of Rs.5,86,999/- deserve to be deleted.
On the other hand, ld. Sr. DR vehemently supported the orders of the lower authorities and submitted that the assessee has declared less receipts as compared to the 26AS statement and had failed to reconcile the same. As per ld. Sr. DR though the assessee has filed reconciliation statement in the paper book at page 11, however, since the same was not filed before the lower authorities, according to the ld. Sr. DR, it is an additional evidence and should not be admitted in absence of the proper application for admission of additional evidence as prescribed in the ITAT Rules, 1962. He, thus, prayed that the addition made by the AO and confirmed by the ld. CIT(A) deserves to be upheld.
We have considered the rival submissions and perused the material available on record. From the perusal of the 26AS statement, we found that a sum of Rs.9,82,855/- was appearing as total amount paid/credited against the deductor namely, “Sumit Rajgarhia” and TDS of Rs.19657/- is appearing as deducted and deposited at Sl.No.2. Further total amount of Rs.11,48,300/- appeared as paid/credited by the deductor M/s Shakti Fashions on various dates and TDS of Rs.23,146/- is appearing as deducted and deposited at Sl.No.3. A careful perusal of the entries 9 appearing in these two deductors details it appears that all the entries appearing in the name of Sumit Rajgarhia; TAN: CALS22885C are matching with the entries appearing in the name of deductor M/s Shakti Fashions; TAN : CALS34842D. It is surprising that two different parties in the month of July has paid the identical amounts to the assessee on various dates. It appears that contention of the assessee of duplicate entries in 26AS statement is correct. This needs to be verified as to whether there is an error in the 26AS statement as claimed by the assessee or they are two separate payments made to the assessee by two different parties. At this stage, we are unable to verify these facts, though from the perusal of 26AS statement this appears to be duplicate entries. Therefore, this issue is set aside to the file of AO to make necessary verification of the fact that whether it is an error in 26AS statement and if common entry is appearing in the name of two different deductor, no addition is required to be made on this account. Further, since the assessee has claimed the TDS as appearing in both the deductors, simultaneously the TDS claim of Rs.19,657/- if related to the duplicate entry, should be reduced from the total amount of TDS allowable to the assessee. With the above directions, this issue is set aside to the file o AO for making necessary verification of the total receipts and duplicate entries as claimed by the assessee. Needless to say, the assessee be provided adequate opportunity of being heard before concluding this issue.
10 11. Other grounds of appeal are in support of the additions made and upheld by the ld. CIT(A) has already been decided hereinabove. Thus, these grounds do not require any separate adjudication.
In the result, appeal of the assessee is partly allowed for statistical purposes.