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SUNRISE REALCONSULTANCY PRIVATE LIMITED ,BHIWADI vs INCOME TAX OFFICER, WARD-BHIWADI, BHIWADI | BharatTax

SUNRISE REALCONSULTANCY PRIVATE LIMITED ,BHIWADI vs. INCOME TAX OFFICER, WARD-BHIWADI, BHIWADI

ITA 1308/JPR/2024Status: DisposedITAT Jaipur08 May 2025AY 2013-141 pages

AI SummaryN/A

Facts

The assessee company failed to file its return of income for AY 2013-14, despite significant transactions like purchasing a motor vehicle and receiving commission/brokerage. The Assessing Officer reopened the case under Section 147 due to unexplained investment and undisclosed income. The assessee did not respond to notices, leading to a best judgment assessment.

Held

The Tribunal held that the addition for the car purchase (Rs. 16,56,453) needed to be deleted as the source was explained by the director's personal funds and loan. For the commission income (Rs. 31,17,181), the Tribunal directed that income should be considered at 20% of the total receipt as against the assessed net profit of 18.22%. The penalty under Section 271(1)(b) was reduced to Rs. 10,000.

Key Issues

Whether the addition for unexplained investment in a car and commission income as undisclosed income are justified. Whether the penalty under Section 271(1)(b) is sustainable.

Sections Cited

147, 144, 144B, 69, 194H, 148, 142(1), 133(6), 271(1)(b), 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM

For Appellant: Adv. राजस्व की ओर से /

Hearing: 23/04/2025Pronounced: 08/05/2025

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA Nos. 1307 & 1308/JP/2024 fu/kZkj.k o"kZ@Assessment Year : 2013-14 cuke Sunrise Real Consultancy Pvt Income Tax Officer, Vs. Limited Ward-Bhiwadi, Khasara No. 46 village saidpu, Bhiwadi Op Ashiyana Angan Bhiwadi, Alwar LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAQCS0499E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. S. L. Poddar, Adv. jktLo dh vksj ls@ Revenue by : Sh. Gautam Singh Choudhary, Addl. CIT (Through V.C.) lquokbZ dh rkjh[k@ Date of Hearing : 23/04/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 08/05/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM

There are two appeals filed by the assessee aggrieved from the order of the learned National Faceless Appeal Centre, Delhi [ for short CIT(A) ] both for the assessment year 2013-14 and dated 08.10.2024, which in turn arises from the order passed by the Assessing Officer under Section 147 of the Income tax Act, 1961 (in short 'the Act') dated 22.02.2022 in quantum 18.08.2022. the assessee has taken the following grounds of appeal;

1. In the facts and circumstances of the case the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in passing the order u/s 147 read with section 144 r.w.s. 144B of the Income Tax Act, 1961 which is void ab-initio and deserves to be quashed.

2. In the facts and circumstances of the case, the Learned CIT(A) has erred in confirming the addition of Rs. 16,56,453/- made by the Learned Assessing Officer u/s 69 of the Income Tax Act, 1961 on account of alleged unexplained investment for purchase of car.

1. Facts of the case – The assessee company has purchased Motor Vehicles of Rs. 35,46,667/- and also received commission/brokerage u/s 194H of the I.T. Act, 1961 amounting to Rs. 31,17,181/- during the F.Y. 2012-13 relevant to A.Y. 2013-14. The Learned Assessing Officer has issued a notice under section 133(6) to Bird Automotive Pvt. Ltd., from which the vehicle was purchased. Bird Automotive Private Limited confirmed the sale of the car to the assessee, providing details of the invoice, ledger account, and payment records. The total cost of the car, including registration, amounted to Rs. 40,96,817/-. Out of Rs. 40,96,817/- the assessee company has paid Rs. 16,56,453/- from its own sources, and the remaining balance was financed by BMW Financial Services Pvt. Ltd. Before the Learned CIT(A) the assessee has contended that it was pleaded by the director Shri Sandeep Yadav from his own bank account out of his own income. Shri Sandeep Yadav is assessed to income tax with the same ITO and his PAN is ABRPY1119R and duly reflected in his record and income tax file. Copy of bank statement is placed on paper book page no. 3 to 11 and income tax return of & 1308/JP/2024 Sunrise Real Consultancy Pvt. Ltd. vs. ITO Sandeep Yadav is placed on paper book page no. 24 to 35. Shri Sandeep Yadav has declared the substantial income in his income tax return. Therefore, the investment of Rs. 16,56,453/- is duly disclosed and accounted for in the books of assessee company as well as in the personal account of director Shri Sandeep Yadav. Therefore, the addition deserves to be deleted. It is submitted that the assessee has well explained the source of purchase of car. The payment of Rs. 16,31,332/- was made directly by Shri Sandeep Yadav (Director of the assessee company) from his bank account No. 00348380000213 to the Car Company M/s Bird Automotive Private Limited on 31/03/2013 vide cheque no. 378521. The same amount was entered in the books of assesee company as loan taken from director Shri Sandeep Yadav. The car was purchased in the name of assessee company M/s Sunrise Realconsultancy Pvt Ltd. A copy of bill and registration certificate is available on paper book page no. 1 and 2. The director Shri Sandeep Yadav has also established his creditworthiness by submitting his ITR during the course of appellate proceedings. A copy of bank statement of Shri Sandeep Yadav reflecting this transaction is enclosed at paper book page no. 3 to 11. (Entry of payment is reflected on page no. 11) These facts have not been considered by the Learned Assessing Officer as well the Learned CIT(A). Otherwise, the source of investment is well established. The addition made by the Learned Assessing Officer deserves to be deleted.

& 1308/JP/2024 Sunrise Real Consultancy Pvt. Ltd. vs. ITO From the perusal of this section, it is revealed that the section 69 is applicable when the assessee has made investments which are not recorded in the books of account. Here the assessee has disclosed this transaction in its books of accounts under the head fixed assets and also claimed depreciation on it. Hence the provision of section 69 is not applicable even distantly. The addition made by the Learned Assessing Officer and confirmed by the Learned CIT(A) deserves to be deleted. Ground No. 3 – In the facts and circumstances of the case, the Learned CIT(A) has erred in confirming the addition of Rs. 31,17,181/- made by the Learned Assessing Officer by treating the entire commission receipt of Rs. 31,17,181/- as undisclosed income of the assessee company without considering the submission of the assessee. The Learned Assessing Officer has made the addition of Rs. 31,17,181/- by treating the entire commission receipt of Rs. 31,17,181/- shown in 26AS. The Learned CIT(A) has confirmed this addition by mentioning that "no details were provided during the assessment or appeal proceedings to dispute the AO's findings except Form no. 26AS during appeal proceeding, although the return of income for the relevant year was not filed by the appellant company, the nature of receipts is established from Form no. 26AS as commission income. In such situation when the return of income was never filed for the relevant year and audit report never submitted to the department on the portal facility before or after the due date of filling audit report by the assessee AO’s findings in the assessment order are not disturbed." In this regard it is submitted that the assessee could not filed its financial statement before the Learned Assessing Officer due to non-service of notice u/s 148 or 142(1) of the Income Tax Act, 1961. But during the course of appellate proceedings the assessee submitted computation of income, its financial statements including Balance Sheet, Profit & Loss A/c and its annexure. In the Profit & Loss A/c the assessee has shown total Commission and Brokerage Receipts of Rs. 37,62,021.65 which is higher than Rs. 31,17,181/- added by the Learned Assessing Officer. The assessee has also claimed expenditures of Rs. 30,76,646.97 and shown Net Profit of Rs. 6,85,734.68 as income of the assessee company for the year under consideration. Copy of Financial Statements including Balance Sheet, Profit & Loss A/c and its annexure is available on paper book page no. 13 to 23. On the income of Rs. 6,85,734.68 the tax was payable of Rs. 1,12,393.64. The assessee has also claimed credit of TDS deducted of Rs. 3,14,402/- and refund of Rs. 2,02,008.36 after deduction of & 1308/JP/2024 Sunrise Real Consultancy Pvt. Ltd. vs. ITO tax. All these were submitted before the Learned CIT(A) but the Learned CIT(A) has not considered the same and confirmed the addition made by the Learned Assessing Officer. It is settled position of law that entire receipts cannot be taxed as income of the assessee. The Learned Assessing Officer or the Learned CIT(A) should have been applied a reasonable NP rate. How a business can run without any expenditure. It is necessary to incur various expenditures to run a business and office. In the case of Commissioner of Income Tax Vs. Williamson Financial Services & Ors (SLP(C) 2275/2007, the Hon'ble Supreme Court has held that "It is important to bear in mind that under section 4 the levy is on "total income" of the assessee computed in accordance with and subject to the provisions of the Income Tax Act. What is chargeable to tax under the Income Tax Act is the profit and gains of a year. What is chargeable to tax under the Income Tax Act is not the gross receipts, but income. Under the Income Tax Act, the tax is on income and not on gross receipts" The Hon'ble Delhi High Court in the case of Commissioner of Income-tax- XII vs. Subodh Gupta [2015] 54 taxmann.com 343 (Del) held that in absence of material to show net profit rate, presumptive net profit rate of 8% as stipulated in section 44AD could be taken for estimation of income. In the case of Commissioner of Income Tax Vs. Balchand Ajitkumar 263 ITR 610 (2003), the Hon'ble MP High Court held that total sale cannot be regarded as the profit of the assessee. In the case of Commissioner of Income Tax Vs. President Industries (2002) 258 ITR 0654, the Hon'ble Gujarat High Court held that it cannot be a matter of an argument that the amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represented the price received by the seller of the goods for the acquisition of which it has already incurred the cost. Therefore, your honour is requested to delete the addition made by the Learned Assessing Officer and confirmed by the Learned CIT(A). Ground No. 4 – The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing. Not pressed.