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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
Per Dr. M. L. Meena, AM:
This appeal has been filed by the assessee against the order dated 09.03.2018 passed by the Ld. Commissioner of Income Tax (Appeals)-2, Amritsar (Camp at Jammu) in respect of Assessment Year 2012-13,
2 ITA No. 342/Asr/2018 Veteran Engg. Industt. Estate v. ITO wherein the assessee has challenged the estimation of the receipts and
unexplained deposits in bank account.
At the outset, the ld. counsel for the assessee has submitted that the
assessee Firm engaged in the business of manufacturing of hardware
pipes and also erection of these pipes at supply sites where the assessee
has declared sales/turnover under VAT and under General Sales Tax Act,
and the assessee has declared net profit rate @ 8% on presumptive basis
under the provisions of section 44AD of the Act. The ld. AR argued that the
ld. AO has enhanced turnover of the assessee by Rs.7,77,499/- and made
addition of Rs.62,200/- by applying net profit rate of 8% of the said
enhanced turnover computing the contract receipt of Rs.19,35,550/- as per
Form 26AS without bringing any corroborative material on record.
The ld. DR stands by the impugned order.
We have heard both the sides, perused material on the record and
the impugned order. It is evident from the assessment order that the AO
has computed the gross receipts comprising of business receipts, contract
receipts and professional receipts from the details filed by the assessee
from the AIR data available on ITD and gross receipt declared in the return.
The ld. CIT(A) has rightly observed that since the AO has taken the figures
3 ITA No. 342/Asr/2018 Veteran Engg. Industt. Estate v. ITO of gross receipt declared in the VAT return filed by the AO and the AIR has
shown on the page 2 of the assessment order at Rs. 29,60,250/-. Thus, the
contract receipts, business receipts and professional receipts were all
corroborated by the amount of TDS deducted against these payments in
the credit available as prepaid taxes in Form 26AS. Thus, the assessee
has under stated gross receipt by an amount of Rs.7,77,499 (29,60,250/- to
21,82,751/-) and the AO applied net profit rate of 8% on these understated
receipt of Rs.7,77,499/- to correctly workout the understated income of
Rs.62,200/-.
It is pertinent to mention that the assessee has not produced
reconciliation of the contract receipt per se Form 26AS computed by the
AO in the assessment order, and that the contention of the ld. AR that
actual contract turnover as per books of the assessee was Rs.12,02,351/-
stands declared before Indirect Tax Authorities are not supported by any
documentary evidence. Either before the authorities below or before us. In
rebuttal to Form 26AS relied upon by the AO and the ld. CIT(A). Thus, we
find no merit and substance in the arguments of the counsel on the issue of
profit computed by the AO on the contract receipt under stated as above.
4 ITA No. 342/Asr/2018 Veteran Engg. Industt. Estate v. ITO 6. Accordingly, we find no infirmity and perversity in the order of the ld.
CIT(A) in confirming the addition of Rs.62,200/- as understated income on
receipt of Rs. 7,77,499/-, therefore, this addition of Rs.62,200/- is
confirmed.
Next issue pertains to addition of Rs.14,31,486/- on account of
unexplained deposits in the bank account.
During the assessment proceedings, the AO asked the assessee to
explain the excess deposits of Rs.14,31,486/- in the bank account to the
business turnover computed by the AO, at Rs.29,60,250/-. The assessee
has submitted before the AO that the excess deposit in the bank account is
related to the unrealized debtors, however, he failed to furnish the name,
address and PAN number of such debtors for further verification. The AO
stated that assessee also fails to furnish the copy of the ledger account,
and balance sheet reflecting the debtors for the previous financial year
2010-11. Accordingly, the AO held that excess deposit of Rs.14,31,486/- as
undeclared profit of the assessee from undisclosed source and added to
the return of income.
The ld. CIT(A) has also observed that the appellant assessee fails to
file the confirmation from the respective unrealized debtors for the relevant
5 ITA No. 342/Asr/2018 Veteran Engg. Industt. Estate v. ITO financial year under consideration. The ld. CIT(A) observed that since the
assessee failed to furnish the copy of the account, name, address and PAN
number of the disputed debtors claimed to be realized during the year
under consideration before the AO and the ld. CIT(A), as well. Accordingly,
the ld. CIT(A) had held that the claim of the appellant that the deposits of
Rs.14,31,486/- in the bank account of the appellant a/c no. CC248
represents realization of old debts remained unverified. Thus, he has
confirmed the said addition of Rs.14,31,486/- u/s 69 of the Act.
The ld. counsel submitted that from the bank account and balance
sheet of the current and previous year, it is clearly seen that there is a
reduction in debtors and cash credit limits. He submitted that the
outstanding CC limit as on 31.03.2011 is Rs.50,06,218.31 Cr. against
outstanding CC limit of Rs.18,48,699/- Cr. as on 31.03.2022. Further the
said fact is also apparent from the balance sheet as against the debtors of
Rs.56,64,660/- as on 31.03.2011, as against Rs.34,55,675/- only as on
31.03.2012. Thus, he explained that excess bank credit or previous debtors
and the said fact is also declared from the bank statement and all the
debtors stands received through cheque payments and he contended that
the entire additions is based on presumptions. When he was asked to
produce the copy of the bank account reflecting the CC limit and balance
6 ITA No. 342/Asr/2018 Veteran Engg. Industt. Estate v. ITO sheet and statement of account for two years, i.e., financial year 2010-11
and 2011-12 and the copy of the ledger account before the bench, he has
shown inability, in producing the same. Rather, he requested to restore the
matter to the file of the AO to examine the issue afresh after granting an
adequate opportunity of being heard on the issue of unrealized debtors.
The ld. DR stands by the impugned order, however, he has no
objection to the request of the assessee to remand back the matter to the
file of the AO on the issue of assessee’s claim of examination unrealized
debtors at Rs. 14,31,486/-.
Having heard both the sides, perusal of record, the written
submission and the impugned order, it is seen that there was an excess
deposit of Rs.14,31,486/- in the bank account of the assessee which is
claimed to be received from unrealized debtors during the year under
consideration, however, the assessee has failed to file confirmation in the
form of name, address, PAN number, copy of ledger account and bank a/c
of the respective unrealized debtors in support, to explain the source of
such excess deposit in bank account even if it is claimed by the appellant
from unrealized debtors. However, considering the request of the assessee
that he may be granted one more opportunity to explain and prove its claim
7 ITA No. 342/Asr/2018 Veteran Engg. Industt. Estate v. ITO before the Assessing Officer, the matter is remanded back to the file of the
AO with the direction to examine the issue of excess deposits in the bank
accounts to the business turnover being claimed by the assessee as
unrealized amount from the debtors afresh after granting adequate
opportunity of being heard. The assessee is directed to furnish all the
necessary information required by the AO for verification of the claim of the
unrealized debtors in the Form of copy of ledger account, name, address,
PAN number, bank account and ITRs of the respective debtors under
dispute or any other information may be required in the course of
assessment proceedings. Further, the assessee shall cooperate in the
proceedings before the AO. Accordingly, the issue of addition of
Rs.14,31,486/- on account of excess deposit in bank, being claimed by the
assessee from unrealized debtors is allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 13.10.2022
Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr/PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent:
8 ITA No. 342/Asr/2018 Veteran Engg. Industt. Estate v. ITO (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T