RAJESH MAHAWAR,JAIPUR vs. ITO, ALWAR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR Jh Hkkxpan] ys[kk lnL;] ds le{k BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER vk;dj vihy la-@ITA No. 564/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2011-12 cuke Rajesh Mahawar, Income Tax Officer, Vs. H.No. 4/9, Rajashtan Housing Ward 2(2), Board, Bhiwadi, Tijara, Alwar. Alwar. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BAXPM 3024 N vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (CA). jktLo dh vksj ls@ Revenue by : Smt. Poonam Roy (DCIT) lquokbZ dh rkjh[k@ Date of Hearing : 01/09/2017 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 08/11/2017 vkns'k@ ORDER

PER: BHAGCHAND, A.M. This is an appeal filed by the assessee emanates from the order of the ld. CIT(A), Alwar dated 10/03/2016 for the A.Y. 2011-12. 2. The assessee is engaged in the business of supply of sand, aggregate and stone etc. The assessee has filed its original return of income on 05/1/2011 declaring total income of Rs. 1,48,000/- under the head “Income from Salaries”. During the course of assessment proceedings, the assessee has filed a revised return on 10/12/2013

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declaring total income of Rs. 4,35,120/- under the head “Business and

Profession”. The Assessing Officer observed that as per provisions of

Section 139(5) of the Income Tax Act, 1961 (in short the Act), revised

return can be filed before expiry of one year but in this case the revised

return had not been filed within time hence treated as void ab initio. The

Assessing Officer has made various additions under the different heads.

The ld. CIT(A) has confirmed the additions made by the Assessing

Officer.

grounds of appeal:

“1. The Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the action of AO in assessing the income from business at Rs.7,97,114/- as against Rs.2,87,192/- accepted by the assessee.

ITA 564/JP/2016_ 3 Rajesh Mahawar Vs ITO The 1st ground of assessee’s appeal is against confirming the 4.

action of the Assessing Officer in assessing the income from business at

Rs. 7,97,114/- as against Rs. 2,87,192/-. The ld. CIT(A) has confirmed

the addition by holding as under:

“5.3 I have gone through the assessment order as well as submissions made by the appellant and find that an addition of Rs.7,97,114 has been made by the AO to the returned income of Rs. 1,48,000 declared by the appellant in the return filed. Based on the information available in the form 26AS of the appellant, it was found by the AO that appellant has transactions amounting to Rs.99,63,930 for the period under consideration for which nothing has been declared in the return of income. The appellant had failed to disclose even a single rupee of income on account of Income from business. The appellant had only declared an income of Rs. 1,48,000/- on account of income from salaries. 5.4 The appellant has stated in the course of assessment proceedings that these are the proceeds of business and accordingly a belated return of income was sought to be filed after declaring income on these receipts. AO has applied a profit rate of 8% as provided under the provisions of section 44AD of the IT Act on this amount of Rs. 99,63,930 and estimated the profits of the business at Rs. 7,97,114. The estimated rate of profits has to be applied in the absence of any income being declared by the appellant and also it suggests that no books of accounts and supporting vouchers were maintained. 5.5 The appellant has stated that a turnover of Rs.58,38,975 has been declared in the revised return which was filed on 10.12.2013 and profit @ 4.91% was declared at Rs.2,87,121 in the return filed. It is further

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stated that an amount of Rs.27,87,117 has been received on account of transport charges on which no income and no loss was incurred. Further, AO has included an amount of Rs.13,37,838 on account of receipts from M/s Rohan Builders (India) Pvt. Ltd. and this amount has been considered in the next financial year on accrual basis. AO has accounted for these receipts on cash basis. 5.6 Having considered the material placed on record, I find that appellant has filed inaccurate information in the return of income filed on 05.11.2011 as an income of only Rs. 1,48,000 on account of salaries was declared. Based on the information available in the ITD data base, it was found that appellant has business receipts of Rs. 99,63,930 for the period under consideration. During the course of assessment proceedings, efforts have been made by the appellant to further mislead and to furnish half information. It is submitted that turnover of the business was only Rs.58,38,975 and remaining receipts of Rs.27.87,117 are on account of transport receipts. These facts have remained unsubstantiated and no supporting evidence was ever brought on record either before the AO or in the course of appellant proceedings. No evidence of any transport business being carried out is available or has been put on record. The theory of earning of no profit and no loss on these receipts is to avoid declaration of business profits on such receipts. Further, the only possible logic is if such amount is considered as turnover by the appellant then the provisions of section 44AB of the IT Act also get attracted. Therefore, the appellant has chosen to under state the quantum of business receipts for the period under consideration. 5.7 Further, as regards the contractual receipts of Rs. 13,37,838 received from Rohan Builders are concerned, no evidence or other rational was filed as to why such receipts have been accounted for in the next year.

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The appellant has also failed to submit any evidence in the course of present proceedings to substantiate the claim of having included/declared such receipts in the return of income for the next year (even though it is unjustified) as claimed by the appellant. 5.8 Therefore, in view of the above facts, I hold that it is a clear case of furnishing of false information in the return of income and no books of accounts were ever maintained. The information furnished as regards business turnover, contractual receipts and receipts from transport business on which no profit or loss has been incurred is again not supported with any evidence but only to defeat the provision of IT Act and is aimed at avoiding the payment of rightful taxes which are due in this case. Thus, I hold that AO was justified in estimating the profits of the business @ 8% of the total receipts of Rs.99,63,930. Accordingly, I confirm the trading addition of Rs.7,97,114 made by the AO under this head.”

assessee has submitted as under: 1. In course of assessment proceedings, assessee explained that his turnover from supply of sand, aggregate, stone, etc., during the year is Rs.58,38,975/-. In support of the same books of accounts and the bill book was produced. The AO, however, observed that books of accounts are defective and thus liable to be rejected and income is required to be computed u/s 44AD.

ITA 564/JP/2016_ 6 Rajesh Mahawar Vs ITO

turnover of the business at Rs.99,63,930/- as against Rs.58,38,975/- declared by the assessee by not accepting the explanation of the assessee and thus assessed the income under the head business u/s 44AD at Rs.7,97,114/- (8% of Rs.99,63,930/-). 3. The Ld. CIT(A) at Pg 8, Para 5.6 to 5.8 upheld the findings of AO by holding that its claim that receipt of Rs.27,87,117/- is on account of transportation which has been paid back to the transporter remains unsubstantiated and its claim that receipt of Rs.13,37,838/- from Rohan Builders has been accounted for in the next year when actually received also remains unsubstantiated.

ITA 564/JP/2016_ 7 Rajesh Mahawar Vs ITO

back to the various transporters who did the transportation work. This is evident from the ledger account of transportation (PB 22-23) where the amount received from Gannon Dunkley and Goel Construction is credited and the same is paid to the various transporters/filling stations. Thus, the transportation receipt cannot be included in the turnover for estimating the presumptive rate u/s 44AD. Therefore, the turnover of the assessee should be considered at Rs.58,38,975/- and by applying n.p. rate of 8% on the same, the profit should be assessed at Rs.4,67,118/-

authorities below.

assessee has tried to confuse the issue by providing a chart wherein

turnover as per the assessee and turnover as per the Assessing Officer

had been shown. However, the facts remains that the assessee has

declared turnover of Rs. 58,38,975/- while filing the invalid revised

return on 10/12/2013. The amount of Rs. 27,87,117/-, which is claimed

towards the transport charge was also part of the turnover. Further the

ITA 564/JP/2016_ 8 Rajesh Mahawar Vs ITO

receipt of Rs. 13,37,838/- from M/s Rohan Builders India Pvt. Ltd. was

also part of turnover of the assessee for the year under consideration.

Thus, the total business receipts of the assessee to be considered to

determine the income for the year shall be of Rs. 99,63,930/-. Since the

assessee has not disclosed any income in his return of income from the

business for which the total turnover was Rs. 99,63,930/-. The assessee

has filed invalid revised return wherein the turnover declared was only

of at Rs. 58,38,975/-. The assessee has not declared any income from

the business in his return of income. Even while filing the invalid revised

return, the assessee has not come clean. He still concealed the receipts

under the garb of various non-sustainable explanations. Therefore, in

my considered view, the ld. CIT(A) has rightly sustained the estimate of

profit @ 8% on the total receipts. Hence, I confirm the addition of Rs.

7,97,114/-. This ground of assessee’s appeal stands dismissed.

The 2nd ground of the appeal is against not accept the cash 8.

balance of Rs. 4,00,628/- as on 01/4/2010 and thereby enhancing the

addition on account of unexplained cash to Rs. 4.00 lacs. The ld. CIT(A)

has enhanced the addition as made by the Assessing Officer by holding

as under:

ITA 564/JP/2016_ 9 Rajesh Mahawar Vs ITO

“6.3 I have gone through the assessment order as well as submissions made by the appellant and find that an addition of Rs. 2,50,628 has been made by the AO on account of unexplained cash in hand. The appellant had in the course of assessment proceedings submitted that cash balance of Rs. 4,00,628 as on 01-04-2010 may be considered as explained on account of past income. The appellant however failed to furnish any evidence with regard to the sources of cash. AO has after considering the explanation filed by the appellant treated the cash balance of Rs. 2,50,628 as the unexplained cash in hand. 6.4 In the course of appellate proceedings the appellant has reiterated the submissions filed earlier. The income declared by the appellant in the return for this year and for the preceding year was examined and it was found that only an income of Rs. 1,80,000 has been declared for this year and no return of income for the preceding year was found to have been filed. Accordingly, a show cause notice was issued to the appellant as to why not the whole amount of opening cash balance of Rs. 4,00,627.56 be treated as unexplained as a return declaring an income of only Rs. 1,80,000 was filed for the year under consideration and no return of income was filed for the preceding year i.e. AY 2010- 11. 6.5 In response to the show cause notice, the appellant has failed to furnish any evidence or satisfactory explanation with regard to the sources of cash in hand till the date of this order. Accordingly, I treat the cash balance of Rs. 4,00,000 as unexplained cash in hand.

assessee has submitted as under:

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claimed to be the cash balance of his business which is carrying from the year 2000. The AO considering the same estimated the cash balance as on 01.04.2010 at Rs.1,50,000/- and made addition for Rs.2,50,628/-.

authorities below.

made addition of Rs. 2,50,628/- as unexplained cash in hand of the

assessee. The ld. CIT(A) has enhanced the addition to Rs. 4.00 lacs as

unexplained cash in hand of the assessee as on 01/4/2010. After

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hearing both sides, I find that the assessee is carrying on business since

2000, hence there must be some opening cash balance with the

assessee. I have estimated the income for the year by estimating the

profit rate @ 8% of the total receipt during the year. The books of

account are not maintained. The assessee was doing the business since

long, therefore, I am of the view that the enhancement by the ld.

CIT(A) was not justified. I sustain the addition only to the extent of Rs.

2,50,628/- as made by the Assessing Officer. This ground of appeal is

partly allowed.

The 3rd ground of appeal is against confirming the addition on 12.

account of interest income at Rs. 2,323/- as against Rs. 1,898/-. The ld.

CIT(A) has upheld the action of the Assessing Officer by holding as

under:

7.3 I have gone through the assessment order as well as submissions made by the appellant and find that an addition of Rs. 2,323 has been made by the AO on account of interest income earned by the appellant which was found to have not been declared in the return of income filed. The appellant has failed to justify the non disclosure of this income and has stated that it is a part of business income. 7.4 The contention of the appellant is found to be not correct and is devoid of any merit as the business income itself was not disclosed in the return of income filed. Therefore, I find that AO was justified in making the said addition and accordingly confirm the addition of Rs. 2,323 on account of interest income from banks.”

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However, at the time of hearing, this ground of appeal was not pressed

by the ld AR due to small amount, therefore, the same is dismissed as

not pressed.

The 4th ground of appeal is against disallowing the claim of 14.

deduction under Chapter VI-A of Rs. 5,000/-. The ld. CIT(A) has

confirmed the disallowance by holding as under:

“8.3 I have gone through the assessment order as well as submissions made by the appellant and find that a disallowance of Rs. 3,050 has been made by the AO on account of non furnishing of evidence for claim of deduction u/s 80C of the IT Act. The appellant has merely reiterated the submissions without filing any evidence in the course of present proceedings to controvert the findings of the AO and has failed to furnish any evidence of having made the investments, eligible u/s 80C of the IT Act. Therefore, I confirm the disallowance of Rs. 3,050 made by the AO under this head.”

assessee has submitted as under:

ITA 564/JP/2016_ 13 Rajesh Mahawar Vs ITO which evidence is already submitted to the AO. The Ld. CIT(A), however, confirmed the disallowance made by the AO for want of evidence. 3. It is submitted that assessee has furnished the evidence of contribution made to equity link saving scheme for Rs.5,000/- and therefore, the AO be directed to allow deduction under Chapter VI-A on this amount also.

authorities below.

claims that he has furnished evidence of contribution towards the equity

link saving scheme of Rs. 5,000/-, the issue is restored to A.O. The

Assessing Officer is directed to allow deduction under Chapter VI-A of

the Act, if found in order. This ground of assessee’s appeal stands

allowed for statistical purposes.

Sd/- ¼Hkkxpan½ (BHAGCHAND) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 08th November, 2017 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Rajesh Mahawar, Alwar. 1. izR;FkhZ@ The Respondent- The ITO, Ward Ward 2(2), Alwar. 2. vk;dj vk;qDr@ CIT 3.

ITA 564/JP/2016_ 14 Rajesh Mahawar Vs ITO vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 564/JP/2016) 6.

vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत