SANJEEV SABLOK,JAMSHEDPUR vs. ITO WD-1(4), JSR

आयकर अपीऱीय अधिकरण, रााँची न्यायपीठ, रााँची IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI श्री चन्द्र मोहन गगग, न्द्याययक सदस्य एवं श्री एऱ.पी.साहु, ऱेखा सदस्य के समऺ । BEFORE SHRI CHANDRA MOHAN GARG, JM AND SHRI L.P. SAHU, AM आयकर अपीऱ सं./ITA No.147/RAN/2018 (नििाारण वषा / Assessment Year :2010-2011) Sanjeev Sablok, Vs. ITO, Ward-1(4), 4, I.C.Road, Circuit House Area Jamshedpur Bistupur, Jamshedpur-831001 स्थायी ऱेखा सं./ जीआइआर सं./ PAN/GIR No. : ADKPS 4050 M (अपीऱाथी /Appellant) (प्रत्यथी / Respondent) .. निर्धाऩिती की ओर से /Assessee by : Shri M.K.Choudhary, Advocate राजस्व की ओर से /Revenue by : Shri P.K.Mondal, Addl.CIT(DR)

सुनवाई की तारीख / Date of Hearing : 27/08/2019 घोषणा की तारीख/Date of Pronouncement : 29/08/2019 आदेश / O R D E R Per Bench : This appeal has been filed by the assessee against the order of Commissioner of Income Tax (Appeals), Jamshedpur, dated 28.02.2018 for the assessment year 2010-2011, on the following grounds :- 1. For that the proceedings initiated u/s 147 and notice issued u/s.148, after lapse of 4 years, is illegal and unjustified. 2. For that Ld. CIT(Appeals) was not justified in confirming the addition of Rs. 9,61,984/- representing the total cash deposits made in the bank account which related to business of building material supply and construction. The deposits made are explained. Only the net profit earned from the business u/s 44AD could have been added. However, Ld. CIT(A) failed to appreciate submission made by the appellant. 3. For that Ld. CIT(Appeals) was not justified in confirming the addition of Rs. 11,10,000/- being Unsecured Loans from Smt. Parvati Devi Rs. 9,90,00/- and from Mr. Tajuddin Rs. 1,20,000/-. The amount was received through banking channel was duly

2 ITA No.147/Ran/2018 confirmed by them. The disallowance made on hearsay grounds is unjustified and illegal. 4. For that the interest U/s 234A and 234B should be charged on returned income and not on assessed income following the decision of Hon'ble Jharkhand High Court. In any view the same could have been charged u/s 234A(3) and 234B(3) only. 5. For that other grounds in detail will be argued at the time of hearing. 2. The assessee has also filed additional grounds of appeal, which read as under :- ADDITIONAL GROUND OF APPEAL : 1. For that in respect of addition of Rs. 2,43,236/- consisting of interest and maturity of FDs, Ld. CIT(A) erred in directing to reduce only the amount interest already shown in the ROI, after due verification. The maturity value same also consisted of the face value of FDs, amounting to Rs. 48,113/- x 4 = Rs. 1,92,452/- as on 10.10.2008, which did not amount to income of the appellant. As such further direction be given to reduce the face value of the FDs also. It is, stated and submitted that the above ground arises out of the order of Ld. AO and Ld. CIT(Appeals). However, at the time of filing of appeal, due to mistake of the Counsel, it was not taken in the Ground of Appeal, already filed. It is, therefore, requested that the same may be admitted and the appeal be heard on this ground also. 3. Brief facts of the case are that the the assessee derived income from running proprietorship business in the name & style as "Sablok Associates" which deals in readymade garments etc., income from other sources etc and filed his original Return of Income showing total income at Rs.7,09,240/- on 29/09/2010, which was processed u/s 143(1) of the Act. Thereafter, the case was reopened and notice u/s 148 of the Act was issued on 29/03/2017. The assessee did not file return of income in response to notice u/s 148 of the Act. Thereafter notice u/s 142(1) was issued on 14/06/2017, in response to which the assessee appeared and

3 ITA No.147/Ran/2018 case was discussed. Thereafter the assessee furnished copy of acknowledgement for filing original return of income, computation of income and tax thereon, audit report as on 31/03/2010. The Assessing Officer required the assessee to comply with all the points as per notice u/s 142(1) dated 14/06/2017, and to furnish name and address of sundry creditors aiong with their ledger, evidence for payment of statutory liability, evidence for claiming deduction u/s 80C of the Act, ledger of interest received, details of deposits made in A/c No. 2731101002157 with Canara Bank, Loyola Branch, Jamshedpur and 340010100011431 with Axis Bank, Sakchi, Jamshedpur, cash book, ledger of ail the expenses, sale register and purchase register, details of sale of shop, audit report for F.Y.2008-09, receipts for shop rent paid etc. In compliance to the same, the assessee submitted his written submission along with ledger copy for telephone expenses, security guard, wheels, sales promotion, expenses, printing & stationery, staff salary, sweeper salary, shop rent, profit on sale of shop, interest on term loan, interest on unsecured loan, details of unsecured loan, computation of income for Asst. Yr. 2009-10 along with balance sheet and profit & loss account, schedule of fixed asset, schedule of loan and advances. The assessee further submitted his written submission along with copy of acknowledgement no. 193025431300817 dated 30/08/2017 for filing return of income for Asst. Yr. 2010-11 in response to notice u/s 148 showing total income of Rs.7,09,241/-. Accordingly, the Assessing Officer framed the assessment u/s.147/143(3) of the Act, dated 27.10.2017 assessing total income of the assessee at

4 ITA No.147/Ran/2018 Rs.30,48,780/- and made addition of Rs.9,61,984/- on account of undisclosed receipts or income, Rs.2,43,236/- on account of income from other sources, Rs.24,318/- u/s.43B of the Act and Rs.11,10,000/- on account of unsecured loan, respectively. 4. Feeling aggrieved from the assessment order, the assessee appealed before the CIT(A), wherein the CIT(A) after considering the submissions of the assessee and findings of the Assessing Officer, upheld the additions made by the Assessing Officer except the addition made on account of income from other sources and directed the Assessing Officer to examine the issue and to reduce the addition after deducting the interest already shown in the return of income. Finally, the CIT(A) partly allowed the appeal of the assessee. 5. Further aggrieved from the order of CIT(A), the assessee is in appeal before the Income Tax Appellate Tribunal. 6. Ld. AR before us did not argue the ground No.1 on legal issue regarding challenging the reopening the assessment u/s.147/148 of the Act. Accordingly, ground No.1 is dismissed as not pressed. 7. For rest of the grounds, ld. AR reiterated the submissions made before the lower authorities and filed paper book containing 24 pages. Further ld. AR submitted that in respect of addition of Rs.9,16,984/- regarding cash deposit made in the bank account. He submitted that the assessee had filed return of income u/s.44AD of the Act and deposit was made from the civil contract works and under this section the only profit u/s.44AD of the Act can be added. The assessee was carrying

5 ITA No.147/Ran/2018 readymade garments business and apparels of different brands during the financial year 2009-2010, which has been got audited by the Chartered Accountant. In addition to this, the assessee is also engaged in the petty contract job and total aggregating contract job receipts of Rs.21,69,320/- out of which some amounts were directly deposited in savings bank account with Canara Bank, Loyola Branch bearing account no.2731101002157 and with Axis Bank, Sakchi, Jamshedpur bearing A/c. No. 340010100011431. From the above contract receipts, 10% of income has been offered by the assessee u/s.44AD and accordingly it was credited to the profit and loss account of M/s Sablok and Associates. Therefore, the ld. AR of the assessee submitted that it was not an undisclosed income. Further in respect of addition made u/s.68 of the Act regarding unsecured loan of Rs.11,10,000/-, the assessee had discharged his liabilities for compliance of Section 68 of the Act before the lower authorities. All the amounts were received through proper banking channels. Merely return of notice issued by the Assessing Officer, does not amount that the assessee was not in existence. Ld. AR further submitted that the assessee has submitted confirmations were also provided during the course of assessment proceedings. Therefore, ld. AR submitted that the addition made by the Assessing Officer and confirmed by the CIT(A) may kindly be deleted. 8. With regard to additional ground, ld. AR submitted that the CIT(A) has erred in directing to reduce only the amount interest already shown in the return of income. Ld. AR further submitted that due to mistake of the

6 ITA No.147/Ran/2018 Counsel, it was not taken in the Ground of Appeal, already filed. Therefore, ld. AR requested that the same may be admitted and the appeal be heard on this ground also. 9. On the other hand, ld. DR relied on the orders of lower authorities and submitted that the assessee had not disclosed these bank accounts in which the assessee has deposit of Rs.9,61,984/-. He could not substantiate that any work has been carried out by him as a petty contractors from the outside. No any external receipts were also submitted by the assessee, neither any labour details or labour payments or any work orders have been submitted by the assessee. Further in respect of unsecured loan, ld.DR submitted that the assessee could not establish his liability to comply the provisions of Section 68 of the Act. The letters sent by the Assessing Officer were returned unserved. Once the letters issued by the Assessing Officer returned unserved, it was the duty of the assessee to comply the notice but he could not do so. Further the AR of the assessee has produced bank statements before the Tribunal only for a short period in which only opening balance is appearing. Further, it was noticed that there was a cash deposit of Rs.1,75,000/-. Thereafter no other deposits had been made by Parvati Pal. Further no creditworthiness have been proved by the assessee. Therefore, in these circumstances, the lower authorities are justified. In respect of additional ground, ld.DR had no objection for sending back the issue to the file of Assessing Officer for verification.

7 ITA No.147/Ran/2018 10. After hearing the submissions of both the parties and perusing the material available on record along with the orders of lower authorities, we find that apart from the grounds of appeal filed by the assessee, the assessee has also filed additional ground and submitted that due to inadvertent mistake, this ground could not be raised in Form No.36 along with other grounds before the Tribunal. Therefore, ld. AR prayed for admitting the additional ground. Considering the submission of the assessee and respectfully following the decision of Hon’ble Supreme Court in the case of National Thermal Power Corporation Ltd., [1998] 229 ITR 383 (SC), we admit the additional ground raised by the assessee. 11. We notice that in respect of ground No.2 regarding addition of Rs.9,61,984/-, the Assessing Officer has added the cash deposits made in the two accounts maintained with Canara Bank, Loyola Branch bearing account no.2731101002157 and with Axis Bank, Sakchi, Jamshedpur bearing A/c. No. 340010100011431. On perusal of the documents submitted by the assessee, we also notice that the assessee has shown turnover of Rs.21,69,320/-. The assessee has offered 10% of the income u/s.44AD of the Act i.e. 10% which comes to Rs.2,16,932/-. On further perusal of the trading profit and loss account of the assessee, the assessee has offered in the trading profit and loss account as receipts from petty contract jobs and the total income earned from Sablok & Associates of Rs.3,81,047.33. Further on perusal of the computation of income produced before us, the assessee has shown income from business as under :-

8 ITA No.147/Ran/2018 Interest of capital from parthership firm Rs.1,09,130.00 Partners’ remuneration from partnership firm Rs. 75,686.50 Net profit from Sablok & Associates Rs.3,81,047.33 Total income under the head income from business has been declared Rs.5,65,863.83 Further, we notice that if the assessee has offered income u/s.44AD of the Act, he should separately shown in the computation of income that the profit has been earned from civil contract and it has been offered for taxation under the presumptive Section 44AD of the Act. The assessee has also not produced any details before us of the relevant part of the Income Tax Return in which there is a separate columns for the income offered u/s.44AD of the Act. The assessee is also unable substantiate with any external vouchers that the amount has been received from the contractee for civil contract works done. No any work order nor any receipts from the contractee has been produced by the assessee. The assessee is only to correlate with the receipts from the contractee as well as the deposit of some amount in the bank account. Ld. AR before us submitted that there was a profit of Rs.2,16,932/- has been earned from the civil petty contract but he has deposited of Rs.9,61,984/- in his bank account. The assessee could not establish the deposits in bank account that it has been received from the contractee with cogent materials. Therefore, keeping in view of the facts and circumstances of the case, we are of the opinion that the observations of the lower authorities in this regard are justified. This ground of appeal is dismissed. 12. Further in respect of unsecured loan of Rs.11,10,000/-, the assessee was unable to discharge his liabilities as per Section 68 of the

9 ITA No.147/Ran/2018 Act. We notice from the bank statements produced at page 19 and 20 of the paper book that there are opening balance of Rs.7,35,638/- & Rs.6,93,559/- respectively in both the bank statements and from the bank statements on 11.05.2009 Rs.4,95,000/-, Rs.4,95,000/- has been transferred to Sablok & Associates. On further perusal of page No.20, the account holder name is Manju Devi whereas the assessee has shown in the name of Smt. Parvati Pal and in the confirmations also Parvati pal has confirmed at page No.18 of the paper book that she had given to the assessee of Rs.9,90,000/- and it is outstanding as on 31.03.2010. The assessee has not proved the creditworthiness of the lenders in respect of total loan received by him. The letter sent by the Assessing Officer was also returned back which has not been made compliance before any of the authorities below. Keeping in view of the facts and circumstances of the case and considering the submissions of both the sides, we dismiss this ground of appeal of the assessee. 13. In ground No.4 the assessee has challenged the charging of interest u/s 234A & 234B of the Act by the AO and confirmed by the CIT(A). We find that the Hon’ble jurisdictional High Court in the case of Ajay Prakash Verma Vs. ITO(2010) TA No 38 of 2010 reported in 2013(1) TMI 140 has held that the revenue can levy the interest only on the total income declared in the return of income and not on the income assessed and determined by the AO to that extent. We further notice that in case of Pr. CIT Vs. Haldia Petrochemicals Ltd., [2019] 107 taxmann.com 435(SC), in case of charging of interest u/s.234B & 234C of the Act, the

10 ITA No.147/Ran/2018 Hon’ble Supreme Court has admitted the SLP of the Revenue. Since the decision of the Hon’ble jurisdictional High Court prevails as on date, we allow this ground of appeal of the assessee and direct the AO to delete the interest levied u/s.234A & 234B of the Act. 14. Further, in respect of additional ground raised by the assessee before us, ld. AR before us submitted copy of Fixed Deposits and further submitted that due to inadvertent circumstances, it could not be submitted before the lower authorities. Keeping in view of the request of the assessee, to which the ld. DR has no objection, we remit the matter to the file of Assessing Officer for verification. Needless to say, the assessee shall be given reasonable opportunity of hearing. Accordingly, the additional ground raised by the assessee is allowed for statistical purposes. 15. In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 29/08/2019. Sd/- Sd/- (C.M.GARG) (L.P.SAHU) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER रााँची Ranchi; ददनांक Dated 29/08/2019 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अपीऱाथी / The Appellant- . 1. Sanjeev Sablok, 4, I.C.Road, Circuit House Area Bistupur, Jamshedpur-831001 प्रत्यथी / The Respondent- 2. ITO, Ward-1(4), Jamshedpur 3. आयकि आयुक्त(अपील) / The CIT(A), आयकर आयुक्त / CIT 4.

11 ITA No.147/Ran/2018 निभधगीय प्रनतनिनर्, आयकि अपीलीय अनर्किण, रााँची / DR, ITAT, Ranchi 5. गार्ग फाईऱ / Guard file. 6. सत्यापपत प्रयत //True Copy// आदेशािुसार/ BY ORDER, (Senior Private Secretary) ITAT Cuttack Bench, Cuttack Camp at ITAT Ranchi Bench, Ranchi