SHRI SANJEEV SABLOK,JAMSHEDPUR vs. ITO WARD-1(4), JAMSHEDPUR

PDF · subscribers
ITA 167/RAN/2016Status: DisposedITAT Ranchi30 May 2018AY 2009-1010 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal decided to remit the issue of unexplained investments to the CIT(A) for further examination and verification, providing an opportunity for the assessees to substantiate their claims. For the issue of undisclosed interest in one appeal, the Tribunal upheld the CIT(A)'s order.

What were the facts?

The appeals concerned assessment year 2009-2010, involving additions made by the Assessing Officer (AO) and confirmed by the CIT(A) regarding unexplained investments and undisclosed interest. The assessees challenged these additions, arguing they had provided explanations and evidence.

What were the issues?

Whether additions made on account of unexplained investments and undisclosed interest were justified. The tribunal also considered the applicability of Section 44AF and the proper calculation of interest.

Which sections of the Income-tax Act were involved?

Section 69,Section 44AF,Section 69C,Section 234A,Section 234B

AI-generated summary — verify with the full judgment below

Before: SHRI N.S.SAINI & SHRI PAVAN KUMAR GADALE

For Appellant: Shri M.K.Choudhary
For Respondent: Shri P.K.Mondal, JCIT
Hearing: 28.05.2018Pronounced: 30.05.2018

1 ITA Nos.166&167/Ran/2016

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI

BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.166/Ran/2016 A.Y. : 2009-2010 Smt. Navita Sablok, vs ITO, Ward-1(4), 4 I.C.Road, Beside Bank of Jamshedpur India, C.H.Area, Bistupur, Jamshedpur-831001 PAN No. : AOYPS 1564 H Respondent (Appellant) . AND ITA No.167/Ran/2016 A.Y. : 2009-2010 Shri Sanjeev Sablok, vs ITO, Ward-1(4), 4 I.C.Road, Beside Bank of Jamshedpur India, C.H.Area, Bistupur, Jamshedpur-831001 PAN No. : ADKPS 4050 M Respondent (Appellant) .

Assessee by : Shri M.K.Choudhary Revenue by :Shri P.K.Mondal, JCIT Date of Hearing : 28.05.2018 Date of Pronouncement : 30.05.2018

O R D E R Per Pavan Kumar Gadale, JM: These are the appeals filed by the different assessees against the

order of CIT(A), Jamshedpur, dated 26.02.2016 & 10.02.2016 for the

assessment year 2009-2010.

2 ITA Nos.166&167/Ran/2016 2. Since both the appeals are interconnected and the similar issues are

involved, therefore, for the sake of convenience we consider the facts and

grounds narrated in ITA No.166/Ran/2016, wherein the assessee has

raised the following grounds :-

That, the Ld. Assessing Officer has added Rs.10,07,700/- under 1. section 69 of the Income Tax Act, 1961 to the total income of the assessee and the Ld. CIT(Appeals), Jamshedpur is not justified in confirming the same. That the Ld. Assessing Officer has added Rs.22,020/- as 2. undisclosed interest and the Ld. CIT(Appeals), Jamshedpur is not justified in confirming the same. 3. Brief facts of the case are that the assessee derives income from

petty trading activities and filed the return of income for the assessment

year 2008-2009 on 31.03.2010 with total income of Rs.2,11,140/- and the

return of income was duly processed u/s.143(1) of the Act and the case

was selected for scrutiny under CASS. Subsequently, notice u/s.143(2) &

142(1) of the Act were issued to the assessee. In compliance, the AR of

the assessee appeared from time to time and case was discussed.

Thereafter the AO completed the assessment and made various additions

and assessed total income at Rs.12,40,860/- and passed order u/s.143(3)

of the Act, dated 29.11.2011.

4.

Aggrieved by the assessment order, the assessee has filed an

appeal with the CIT(A). In the appellate proceedings the assessee argued

the grounds and reiterated the submissions made before the AO. The

CIT(A) after considering the submissions of assessee and the findings of

AO, dismissed the appeal of the assessee.

3 ITA Nos.166&167/Ran/2016 5. Aggrieved by the order of CIT(A), the assessee has filed an appeal

before the Tribunal.

6.

Ld. AR before us submitted that the CIT(A) erred in confirming the

addition made by the AO u/s. 69 of the Act. Ld. AR further submitted that

unrecorded sale deposited into bank account cannot be regarded as the

profit of the assessee. To estimate the dispute of rate of net profit, the

assessee has himself offered the rate of that profit u/s.44AF of the Act. Ld.

AR further submitted that the assessee has submitted all the details of

transporter through whom trading of building materials was carried out

during the period under consideration. Ld. AR further submitted that the

assessee has also filed the details of transporter through whom the

assessee carried her business of supply of building materials, which is

reproduced at page 8 of the assessment order and the same was not

considered by the AO and made the addition and the CIT(A) confirmed the

same. In regard to addition on account of undisclosed interest, ld. AR

submitted that the assessee has already offered to tax the income,

therefore, no addition is required and ld. AR prayed for allowing the appeal.

7.

Contra, ld.DR relied on the orders of lower authorities.

8.

We heard the rival submissions and perused the material on record.

Prima facie, on the first disputed issue of addition made on account of

unexplained investment, we find that the AO during the assessment

proceedings has found that no evidence of any retail trade being carried

out during the financial year under consideration and also the fact that no

4 ITA Nos.166&167/Ran/2016 such declaration was made in the return of income, the claim of provisions

in terms of section 44AF of the Act is untenable. On appeal, the CIT(A)

observed that the onus was on the assessee to substantiate her claim

before the AO, however, the assessee failed to do so. Ld. CIT(A) further

observed that there is admittedly undisclosed bank account in which

deposit of cash was made and subsequently during the assessment

proceedings admitted undisclosed trade receipts which is not acceptable to

the AO as the assessee failed to substantiate its claim. However, before us

ld.AR of the assessee submitted that in the trading business of sand,

bricks, chips etc., there is such high competitive market that the persons

who are suppliers of these items are very mentally ready to supply their

goods on credit basis. On perusal of assessment order at page 3, we find

that the assessee herself disclosed 5% profit on the total turnover of

Rs.13,31,716/-. We in the interest of substantial justice and fairplay,

provide one more opportunity to the assessee to substantiate its claim

before the CIT(A) and remit the matter back to the file of CIT(A), who shall

examine and verify the total turnover of the assessee and pass an order

after providing adequate opportunity of hearing to the assessee. The

assessee is directed to submit the information and substantiate its claim

with proper evidence, so as to enable the CIT(A) to pass a speaking order.

Accordingly, this ground of appeal of the assessee is allowed for statistical

purposes.

5 ITA Nos.166&167/Ran/2016 9. So far as the second ground with respect to addition on account of

undisclosed interest is concerned, we find that the assessee could not

substantiate its claim either before the AO or before the CIT(A). Hence, we

are in agreement with the order of CIT(A) on this ground and accordingly

we uphold the same and dismiss this ground of appeal of the assessee.

10.

Thus, ITA No.166/Ran/2016 is partly allowed for statistical purposes.

11.

Now we shall take up the appeal of assessee Shri Sanjeev Sablok in

ITA No.167/Ran/2016, wherein the assessee has raised the following

revised grounds of appeal :-

1.

For that Ld. CIT(A) was not justified in confirming the addition of Rs. 42,28,147/- representing the deposits made in the bank account which relates to business of building material supply and construction. The deposits made are explained. However, Ld. CIT(A) failed to appreciate submission made by the appellant. 2. For that as per Ld. CIT(A) himself there was closing balance of Rs. 23.28 lacs, as such, addition for entire deposits made is incorrect, unjustified and illegal. Closing balance represents, the amount due to be paid to the suppliers from whom goods were purchased. The addition made is therefore unjustified and illegal. 3. For that the addition of Rs. 3 lacks on protective basis towards the sale of immovable property is unjustified, since M/s Crystal Construction had disclosed a profit of Rs. 3 lacs in their regular return and they the same stood accepted in order u/s 143(1) on the return filed. As such the addition made on protective basis be deleted. 4. For that the addition of Rs. 80,000/- made u/s 69C is unjustified and illegal. The property was purchased jointly by the appellant and his wife and expenses on the same was also incurred jointly. The expenses incurred was included in the drawing of both the persons separately. As such, no addition is called for.

6 ITA Nos.166&167/Ran/2016 5. 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. 6. For that other grounds in detail will be argued at the time of hearing.

12.

In this case the assessee filed return of income for the assessment

year 2009-2010 on 31.03.2010 with total income of Rs.3,39,460/-. The

return of income was processed u/s.143(1) of the Act and the same was

selected for scrutiny under CASS. Subsequently, notices u/s.143(2) &

142(1) of the Act were issued to the assessee. In compliance, the AR of

the assessee appeared from time to time and case was discussed.

Thereafter the AO completed the assessment and made various additions

and assessed total income at Rs.49,93,470/- and passed order u/s.143(3)

of the Act, dated 23.12.2011.

13.

Aggrieved by the assessment order, the assessee has filed an

appeal with the CIT(A). In the appellate proceedings the assessee argued

the grounds and reiterated the submissions made before the AO. The

CIT(A) after considering the submissions of assessee and the findings of

AO, dismissed the appeal of the assessee.

14.

Aggrieved by the order of CIT(A), the assessee has filed an appeal

before the Tribunal.

15.

Ld. AR before us submitted that the CIT(A) was not justified in

confirming the addition of Rs.42,28,147/- representing the deposits made

in the bank account which relates to business of building material supply

and construction and the assessee has explained the deposits. Further ld.

7 ITA Nos.166&167/Ran/2016 AR submitted that the addition of Rs.3 lacks made by the AO and

confirmed by the CIT(A) on protective basis towards the sale of immovable

property is unjustified. With respect to addition made u/s.69C of the Act, ld.

AR submitted that the property was purchased jointly by the assessee and

his wife and expenses on the same was also incurred jointly. The

expenses incurred was included in the drawing of both the persons

separately, therefore prayed of allowing the appeal.

16.

Contra, ld. DR supported the orders of lower authorities.

17.

We heard the rival submissions and perused the material on record.

Prima facie, on the first disputed issue of addition made on account of the

deposits made in the bank account which relates to business of building

material supply and construction, ld. AR submitted that there was closing

balance of Rs. 23.28 lacs. It was the contention of ld. AR of the assessee

that closing balance represents, the amount due to be paid to the suppliers

from whom goods were purchased. We find that the CIT(A) has confirmed

the addition of Rs.42,28,147/- on the basis of the order passed in the case

of the assessee Smt.Navita Sablok. However, while considering the appeal

of assessee Smt. Navita Sablok in ITA No.166/Ran/2016, we have remitted

the disputed issue to the file of CIT(A) for examination and verification of

the details. Therefore, the reasoning given by us in the case of assessee

Smt. Navita Sablok will be applicable to the present appeal and accordingly

we remit the disputed issue to the file of CIT(A), who shall examine and

verify the total turnover of the assessee and pass an order after providing

8 ITA Nos.166&167/Ran/2016 adequate opportunity of hearing to the assessee. The assessee is directed

to submit the information and substantiate its claim with proper evidence,

so as to enable the CIT(A) to pass a speaking order. Accordingly, this

ground of appeal of the assessee is allowed for statistical purposes.

18.

With regard to addition on account of protective basis towards the

sale of immovable property, ld.AR’s contention that since M/s Crystal

Construction had disclosed a profit of Rs. 3 lacs in their regular return and

the same stood accepted in order u/s 143(1) of the Act on the return filed.

We find that the AO while dealing with the disputes issue has stated that

the assessee has not filed any details of withdrawals made, therefore,

made the addition. We find that the addition of Rs.3 lacs made by the AO

on the basis that the assessee submitted that the profit on sale of

immovable property has been taken in the computation of income of M/s

Crystal Construction. We find that the assessee has not raised this ground

before the CIT(A). However, during the appellate proceedings the

assessee has filed written submission and made a request to admit the

additional evidence submitted vide letter dated 18.01.2013, wherein it is

mentioned that the assessee has offered the profit of Rs.3 lacs for taxation.

Accordingly, we are of the opinion the matter needs verification at the end

of CIT(A) as to whether the assessee has offered the profit on sale of

immovable property at Raipur for taxation. If the CIT(A) finds that the profit

has been offered for taxation as envisaged by the assessee, then the same

may be deleted. Hence, we remit the disputed issue to the file of CIT(A),

9 ITA Nos.166&167/Ran/2016 who shall verify and examine the details and pass order after affording

adequate opportunity of hearing to the assessee and the assessee is

directed to cooperate in submitting the information. Accordingly, this

ground of appeal of the assessee is allowed for statistical purposes.

19.

Next ground is with respect to addition of Rs.80,000/- u/s.69C of the

Act, the contention of ld. AR is that when the property was purchased

jointly by the assessee and his wife and expenses on the same was also

incurred jointly, the expenses incurred was included in the drawing of both

the persons separately. We find that the CIT(A) has dealt on the disputed

issue and deleted the addition. The observation of the CIT(A) is as under :-

“5.3. I have gone through the order of the learned AO as well as the remand report and the written submission made by the appellant. The assessee in his submission dated 24.08.2012 stated that ‘if the explanation of the assessee i.e. Rs. 80,000/- incurred out of drawing is not accepted. The unexplained expenditure should not be added and be exempted u/s 10(2A). The assessee has mis-presented the facts. The assessee failed to substantiate as to how it is exempted u/s 10(2A) when the addition has been made for unexplained expenditure. The stated property for which unexplained expenditure has been added by AO is purchased in individual capacity of the assessee and his wife. How withdrawal will be considered from the firm. The assessee even failed to furnish the partners account in firm to substantiate the claim. Also assessee did not substantiate the same before the AO. However in asses see’s case the AO has' determined undisclosed income of Rs. 42,28,147/- which has been upheld, it can be construed that the assessee had sufficient fund thereafter to meet the expenses of Rs. 80,000/-. Hence relying on this fact addition of Rs. 80,000/- made by the AO is hereby deleted.” From the order of the CIT(A), it is not clear as to whether the CIT(A) has

deleted addition made on account of 69C of the Act. Accordingly, we remit

the disputed issue to the file of CIT(A), who shall pass order on this

10 ITA Nos.166&167/Ran/2016 disputed issue after considering the submission of the assessee as well as

after affording adequate opportunity of hearing to the assessee. This

ground of appeal of the assessee is allowed for statistical purposes.

20.

Next ground is with regard to charging of interest u/s.234A&234B of

the Act, which is consequential, and the AO is directed to calculate the

interest u/s.234A & 234B of the Act as per the law laid down by the Hon’ble

jurisdictional High Court in case of Ajay Prakash Verma in ITA No.38 of

2010 reported in 2013(1) TMI 140. We order accordingly.

21.

In the result, appeal of the assessee (Smt. Navita Sablok) in ITA

No.166/Ran/2016 is partly allowed for statistical purposes and ITA

No.167/Ran/2016 (Shri Sanjeev Sablok) is allowed for statistical purposes.

Order pronounced in the open court on 30/05 /2018

Sd/- Sd/- (N.S.SAINI) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ranchi, Dated 30/05/2018 Prakash Kumar Mishra , Sr. Ps Copy of the Order forwarded to : 1. The Appellant –

2.

The Respondent – ITO, Ward-1(4), Jamshedpur 3. The CIT(A) concerned 4. CIT , concerned 5. DR, ITAT, Ranchi 6. Guard file. BY ORDER,

//True Copy// SR.PS, ITAT, RANCHI

More judgments on Section 69

All 9,011 judgments and leading authorities on Section 69 →

Recent GST High Court judgments

Search GST case law →