M/S. KAMLA KANSAL,DELHI vs. ITO, NEW DELHI

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ITA 4602/DEL/2014Status: DisposedITAT Delhi17 October 2016AY 2007-084 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal directed the Assessing Officer to restrict the addition on account of cash realized from petty debtors to 25%. Similarly, for the addition on account of proceeds from cash business, the addition was also restricted to 25% due to lack of sufficient evidence.

What were the facts?

The assessee claimed relief for additions made on account of cash realized from petty debtors and proceeds from cash business. The Assessing Officer made additions after a test check, and the assessee argued that the entire amount should not be added as some debtors had responded or lived in villages.

What were the issues?

Whether the entire addition on account of cash realized from debtors and cash business proceeds is sustainable when only a test check was conducted and some debtors provided confirmations or lived in villages.

Which sections of the Income-tax Act were involved?

Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC-II’ NEW DELHI

Before: SMT DIVA SINGH

For Respondent: Ms. Anima Baranwal, Sr.DR
Hearing: 03.08.2016Pronounced: 17.10.2016

Date of Hearing 03.08.2016 Date of Pronouncement 17.10.2016 ORDER The present appeal has been filed by the assessee assailing the correctness of the order dated 16.06.2014 of CIT(A)-V, New Delhi pertaining to 2007-08 assessment year.

Various grounds have been raised by the assessee in the present appeal.

2.

However, at the time of hearing, the Ld.AR submitted that he would confine himself only to Ground Nos. 2 and 4 as Ground Nos. 1 and 3 are not being pressed. Accordingly Ground Nos. 2 and 4 are reproduced hereunder:-

2. “Whether the Ld.CIT(A) has erred in law and circumstances of the case in disallowing the relief to the assessee for the addition of Rs.2,11,000/- on account of cash realized from petty Debtors. …………… 4. Whether the Ld.CIT(A) has erred in law and circumstances of the case in disallowing the relief to the assessee for the addition of Rs.2,81,083/- on account of proceeds from cash business.”

3.

Addressing the facts it was submitted that the assessee returned an income of Rs.80,922/- and the said return was selected for scrutiny under CASS. It was his submission that the assessee derived income from sale and purchase of garments and cloth which is I.T.A .No.-4602/Del/2014 carried out by the assessee for the last 2- 3 years prior to the present year the record would show that the assessee had older debts amounting to Rs.2,10,970/-. The Assessing Officer required the assessee to provide the names and address of 20 parties from whom the above recovery was claimed. On a test check basis, he issued a notice under section 133 (6) to 6 persons therefrom. Replies were received from Sunita Agarwal and Alka Aggarwal subsequently their ITRs and affidavits were also filed in the Remand proceedings. The notices sent to the others ladies namely Radha, Manisha, Shakuntala and Bimla, it was submitted came back unserved. It was submitted these were domestic consumers living in villages thus for whatever reason notice was not served upon them cannot be a ground to add the entire amount in the hands of the assessee as these were 4 people out of the 6 picked up by the AO. Two had replied. The fact that there was nominal income in the hands of Sunita and Alka Aggarwal by itself does not detract from the claim that the amounts were outstanding. It has been submitted that the remaining 4 persons were admittedly living villages having income which may not have been sufficient to necessitate a return having been filed but the fact remains that some have filed confirmation in response to notice under section 133(6). In the circumstances, it was his prayer that how can the entire amount be added in the hands of the assessee because if it all addition can be made it should have been limited to three person who have not responded namely Radha, Manisha and Shakuntala.

4.

The Ld. Sr.DR on the other hand submitted that the entire case of the assessee is bogus as she has been coming out with different explanations at different times. However, the Ld.Sr.DR was unable to defend how in the case where there are 20 debtors and the Assessing Officer cares to issue notice only to 6 parties then in facts where 2 have affirmed

I.T.A .No.-4602/Del/2014 how the entire case can be said to be bogus. Considering the overall factual matrix, the Ld. AR agreed that part addition may be sustained and finally agreed that addition to the extent of 25% may be sustained and 75% may be deleted. The said prayer was not opposed by the Ld.Sr.DR who considering the overall facts and circumstances of the case agreed that Ground No. 2 raised by the assessee may be partly allowed.

4.1. Accordingly, in the light of the submissions of the parties and considering the facts on record, the Assessing Officer is directed to restrict the addition of Rs. 2,11,000/- to the extent of 25% only. Ground No.2 is partly allowed.

4.2. Addressing the addition made which is challenged by Ground No. 4, the Ld. AR submitted that the assessee has explained the same as cash deposit as representing the cash amount received from sundry debtors of home sales on credit which had been made in the financial year 2006 – 07. Herein also the assessee was held to have not filed sufficient supporting evidences. In the circumstances, it was his submission that since the evidence has been discarded on a partial test check basis the issue may be closed by way of identical estimate by restricting the addition to the extent of 25% and grant relief to the extent of 75%. The Ld.Sr.DR considering the overall factual matrix did not oppose the prayer.

Accordingly in the light of the submissions of the parties and the facts partial relief is granted to the assessee and the addition is directed to be restricted 25% for want of evidence. The above conclusion and estimates are based on peculiar facts of the present case and it is made clear that they shall not be precedent for the assessee in any future or subsequent assessment year.

I.T.A .No.-4602/Del/2014

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