ITO, Wd-9(4), Ahmedabad v. Satyanarayan T. Agarwal
[Citation -2016-LL-0930-74]

Citation 2016-LL-0930-74
Appellant Name ITO, Wd-9(4), Ahmedabad
Respondent Name Satyanarayan T. Agarwal
Court ITAT-Ahmedabad
Relevant Act Income-tax
Date of Order 30/09/2016
Assessment Year 2009-10
Judgment View Judgment
Keyword Tags regular books of account • unexplained cash credit • contractual receipt • tds certificate • cash deposited • gross receipt • hire charges • peak credit
Bot Summary: To verify the facts and contention of the appellant, Form No. 26AS as available in the case of appellant for previous year was examined This form show details in the form of name of the payer/parties from whom appellant received transportation charges, total such received or credited, amount of TDS including surcharges etc. Calchem Industries Ltd. 16,16,816 36,618 Total ; 60,98,324 1,08,648 Shown by appellant 44,95,316 72,417 Balance 16,03,008 36,231 It is also gathered from the details of return of income filed by appellant that, TDS amount of Rs.72,417/- was claimed by appellant and not Rs. 1,08,6487- as per this detail. Now considering the fact that appellant already'claimed other expenditure hence it will be reasonable to consider 10 of income from the receipt of Rs. 16,03,008/- i.e. Rs. 1,60,300/- which can be added to totai income of the appellant. Therefore though no such ground is made by appellant in grounds of appeal but the basis of addition is on account of form 26AS and TDS deduction, the A.O. is directed to verify about the credit of TDS given to appellant and the same should be as per form 26AS in the case of appellant i.e. at Rs. 1,08,6487- instead of as claimed by appellant in return of income at Rs. 72,417-. CIT(A) has given a clear finding on this issue and has deleted the addition by observing as below :- Now coming to other ground against the addition of Rs. 39,21,381/- u/s 68 of the Act on the fact that appellant s bank account at ICICI bank shows frequent cash deposit, in total of Rs. 39,21,381/- for which appellant failed to offer any explanation for its source before A.O. hence he made this addition u/s 68. Year 2009-10 appellant took the objection that such addition u/s 68 of the Act is not legally correct since the deposit is found in appellant's pass book of bank and as per Hon'bie Bombay high court decision in the case of CIT Poona Vs. Bhaichand H. Gandhi the bank pass book is; not books of account. Considering the total hire receipt shown by appellant of Rs. 44,95,316/- and deposit of cheque transfer entries of Rs. 31,28,413/-, it can be concluded that the appellant is in receipt of hire charges in cash also.


IN INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD Before Shri Rajpal Yadav, JM, & Shri Manish Borad, AM. ITA No. 1068/Ahd/2013 Asst. Year: 2009-10 ITO, Wd-9(4), Ahmedabad. Vs. Shri Satyanarayan T. Agarwal, 16-D, Avkar Apartment, Odhav, Nr. Navrang High School, Odhav, Ahmedabad. Appellant Respondent PAN ADDPA 7779E Appellant by Shri James Kurien, Sr.DR Respondent by None Date of hearing: 28/9/2016 Date of pronouncement: 30/9/2016 ORDER PER Manish Borad, Accountant Member. This is appeal by Revenue for Asst. Year 2009-10 against order of ld. CIT(A) XV, Ahmedabad dated 23rd January, 2013 vide appeal no.CIT(A)XV/ITO/9(4)/324/11-12 passed against order u/s 143(3) of IT Act, 1961 (in short Act) framed on 17/10/2011 by ITO Wd-9(4), Ahmedabad. 2. Briefly stated facts of case are that assessee is individual engaged in business of Transport contractor. Return of income for Asst. Year 2009-10 was filed on 24.9.2009 declaring total ITA No. 1068/Ahd/2013 2 Asst. Year 2009-10 income at Rs.2,03,290/-. case was selected for scrutiny assessment and notices u/s 143(2) & 142(1) of Act along with questionnaire were issued which were duly replied by assessee and ld. AR attended from time to time and submitted audited books of account and Tax Audit Report.. On verification of books of accounts, ld. Assessing Officer observed that gross total receipt of Rs.44,95,417/- has been shown. On cross verification of gross receipts shown and in profits and loss account with gross contract amount shown in form 26AS on income-tax web-site ld. Assessing Officer observed that figures shown in web site stood at Rs.60,98,324/- as against Rs.44,95,417/- shown in books. Ld. Assessing Officer was of view that assessee has suppressed receipts of Rs.16,02,907/- and accordingly made addition of this undisclosed receipts. It was also observed that cash on various dates was deposited in S.B. a/c with ICICI bank Ahmedabad totaling to Rs.39,12,381/- and in lack of necessary details and evidences from assessee, ld. Assessing Officer invoked provisions of section 68 and made addition on account of unexplained cash credit at Rs.39,21,381/-. In total after making addition of Rs.55,24,288 (16,02,907/- + 39,21,381/-) income was assessed at Rs.57,27,578/-. 3. In appeal before first appellate authority, assessee got part relief. 4. Now Revenue is in appeal before Tribunal. 5. None appeared on behalf of assessee. ITA No. 1068/Ahd/2013 3 Asst. Year 2009-10 6. Since none appeared on behalf of assessee, we proceed to decide appeal after hearing ld. DR and going through material on record. 7. First we take up ground no.1 which reads as under :- 1) Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts in adopting profit @10% of undisclosed contract receipt. 8. Ld. DR supported order of Assessing Officer. 9. We have heard ld. DR and gone through records placed before us. On going through order of ld. CIT(A) we find that detailed speaking order taking into account all facts has been passed by ld. CIT(A) sustaining 10% of undisclosed receipt of Rs.16,02,907/- by observing as under :- 5. A.O. on basis of ITS details and Annual Information report gathered that total receipt of appellant during previous year is of Rs. 60,98,324/- on which TDS was deducted u/s 194C of Act by payer companies/parties and deposited in to govt. account. As against this total receipt, appellant's audited books of account shows only Rs. 44,95,417/-as total receipt. It is therefore, difference of Rs 16,02,907/- (60,98,324 -44,95,417) was contractual receipt which was not reflected by appellant. appellant has not submitted any explanation before A.O. and therefore he made addition of this entire amount. During appeal proceeding, appellant contended that his books of account are audited duly supported by bills & vouchers for which A.O. has not given any adverse findings. It was contended that, one of payer party has paid freight for transportation directly to truck owner, who transported goods of that company and appellant was to receive his commission part in form of TDS but no such intimation or certificate was received by appellant hence this receipt or such commission was not shown. appellant further relied on ITA No. 1068/Ahd/2013 4 Asst. Year 2009-10 Hon'ble Gujarat high court decision in case of Mitesh Rolling Mills P. Ltd. to emphasize fact that it is only real income or net of receipt & payment which is required to be taxed and not entire gross receipt. appellant except this contention has not submitted any details or evidences to support his contention i.e. from which such party, said receipt were not accounted. To verify facts and contention of appellant, Form No. 26AS as available in case of appellant for previous year was examined (A print out copy is enclosed with this order as Ann. -A for ready reference,) This form show details in form of name of payer/parties from whom appellant received transportation charges, total such received or credited, amount of TDS including surcharges etc. deducted out of such payment and date of deposit of such TDS. party wise summary is prepared reflecting total amount of hire charges received from one party and TDS deducted on it. same is as follows: Payer or Parties from whom transportation charge Amount paid/credited TDS deducted received. 1. Maruti Cargo and Chemicals Pvt. Ltd. 23,82,540 24,540 2.Gulshan Sugars & Chemicals Ltd. 47,127 971 3. Jaimurty Minerals & Chemicals Pvt. Ltd. 20,52,841 46,519 4. Calchem Industries (India) Ltd. 16,16,816 36,618 Total ; 60,98,324 1,08,648 Shown by appellant 44,95,316 72,417 Balance 16,03,008 36,231 It is also gathered from details of return of income filed by appellant that, TDS amount of Rs.72,417/- was claimed by appellant and not Rs. 1,08,6487- as per this detail. Further tax audit report in form 3CB & 3CD dt. 21/09/2009 in its profit & loss account shows that appellant credited Rs. 44,95,316/- (Not 44,95,417I- as taken by A.O.)as hire receipt. This gives discrepancy of non recording of receipt of Rs. 16,03,008/- as well as non claim of Rs. 36,231/- as TDS. appellant's reply dt. 28/02/2011 to A.O. in respect of reconciliation of receipts as per TDS certificate as per books of account has following detail Name of party Total amount of transportation charges TDS received/credited. (a) Calchem Industries (I) Ltd. 59935 1198 (b) Maruti Cargo and Chemical Pvt. Ltd. 2382540, 24540 (c) Jai Murthy Minral & Chemicals Pvt. 2052841, 46519 Ltd. Total 4495316 72257 ITA No. 1068/Ahd/2013 5 Asst. Year 2009-10 It is therefore, such discrepancy can be attributed for non recording of receipt from M/s Calchem Industries (India) Ltd. and Gulshan Sugar & Chemicals. It is therefore, I am partly inclined with contention of appellant that he was not informed nor given TDS certificate by M/s Calchem Industries (India) Ltd. in respect of freight paid by them directly to truck owner for transportation of Goods but name of appellant was included in return filed for TDS deducted out of such payment. This position is supported by fact that appellant is not owning any truck but arranges such transportation as & when required by party. Further considering discrepancy of Rs.16,03,008/- on receipt (TDS Rs.36,231/-) as against total receipt from such party of Rs. 16,15,816/- (TDS Rs. 36,6187-), appellant has done part work of this party and appellant is known to this party. It is therefore, if appellant has given credit of TDS of Rs. 1,08,648/- though it claimed only Rs. 72,417/-, income from corresponding receipt of Rs. 16,03,008/- has to be considered and not entire receipt. appellant also contended same by relying on Hon'ble Gujarat high court order. It is in this regard, P & L account of appellant reflect that out of total receipt of Rs. 44,95,316/-, appellant claimed hire charges of Rs. 40,45,784/- i.e. gross profit is shown at Rs. 4,49,532/-. (4495316-4045784) i.e. 10% of receipt. Now considering fact that appellant already'claimed other expenditure hence it will be reasonable to consider 10% of income from receipt of Rs. 16,03,008/- i.e. Rs. 1,60,300/- which can be added to totai income of appellant. A.O. is therefore directed to adopt figure of Rs. 1,60,3007- for addition at place of Rs. 16,02,907/-. addition to this extent is upheld and confirmed. balance amount of Rs. 14,42,607/-(16,02,907 - 1,60,300) is directed to be deleted. appellant gets relief accordingly. As per demand notice u/s 156 of Act dt. 17/10/11, it is gathered that interest u/s 244A of Rs. 5,687/- is charged i.e. appellant was granted refund while processing u/s 143(1) of Act. Therefore though no such ground is made by appellant in grounds of appeal but basis of addition is on account of form 26AS and TDS deduction, A.O. is directed to verify about credit of TDS given to appellant and same should be as per form 26AS in case of appellant i.e. at Rs. 1,08,6487- instead of as claimed by appellant in return of income at Rs. 72,417-. 10. From going through findings of ld. CIT(A) we are of view that impugned undisclosed receipt was on account of payments directly made by parties of assessee to truck owners and tax was deducted at source in name of assessee. There was reasonable cause on part of assessee in not being able to enter such direct payments to truck owners in its books of account. ITA No. 1068/Ahd/2013 6 Asst. Year 2009-10 Further impugned gross receipt cannot be treated as income as it is in nature of freight charges and profits element in impugned receipt can only be taxed and not gross amount. Therefore, ld. CIT(A) has rightly sustained addition to extent of 10% of gross receipt. We find no reason to interfere with finding of ld. CIT(A). We uphold same. This ground of Revenue is dismissed. 11. Now we take ground no.2 which reads as under :- 2) Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts in deleting addition of Rs.39,21,281/ made on account of unexplained cash deposit. 12. This addition made u/s 68 at Rs.39,21,381/- was towards cash deposit on various dates in year in S.B. account in name of assessee. From going through submissions made by assessee before lower authorities it is pertinent to note that impugned bank account in which cash was deposited stands duly disclosed in regular books which have been audited and all transactions shown in this impugned bank account are duly accounted for in regular books. 13. We further observe that ld. CIT(A) has given clear finding on this issue and has deleted addition by observing as below :- Now coming to other ground against addition of Rs. 39,21,381/- u/s 68 of Act on fact that appellant s bank account at ICICI bank shows frequent cash deposit, in total of Rs. 39,21,381/- for which appellant failed to offer any explanation for its source before A.O. hence he made this addition u/s 68. ITA No. 1068/Ahd/2013 7 Asst. Year 2009-10 appellant took objection that such addition u/s 68 of Act is not legally correct since deposit is found in appellant's pass book of bank and as per Hon'bie Bombay high court decision in case of CIT Poona Vs. Bhaichand H. Gandhi bank pass book is; not books of account. With due regards to such decision, I am not inclined* with appellant that in spite of fact that he had not offered any explanation for source of such cash deposit in bank account, A.O.'s finding which is in conformity of unexplained cash deposited in substance be setasided just on technical reason that he made addition u/s 68 of Act. In my view, section 292B of Act will take due care of such asstt. and I myself has power coterminous with that of A.O. and to replace part or portion of asstt. order with my own order. It is in this regard, I treat such addition by A.O. in substance u/s 69 of Act. This grounds is therefore dismissed as far as technicality is concerned. On merit, appellant contended that bank account reflect deposit of cash from hire receipt and withdrawal of cash from same account and alternatively if A.O. wants to make any addition, only peak amount can be added. It is in this regard, copy of appellant's bank account no. 624401518551 with ICICl bank, Maninagar branch was examined for period 01/04/08 to 31/03/09. It is worth noting at this moment that this bank account is duly reflected by appellant in his books of account since closing bank balance of Rs. 2,224/- is duly tallied in its audited balance sheet.ylt is verified that appellant deposited Rs. 70,49,895/- (both cash & cheque including transfer entries) in this account and withdrawn Rs. 70.59.164/- (both cash & cheque includina transfer entries) during previous year. It is also verified that out of total deposit of Rs. 70,49,895/- amount of Rs. 31,28,413/- is deposited through cheque or transfer entry and similarly out of Rs. 70,59,162/- withdrawals amount of Rs. 9,95,099/- is withdrawn through cheque or transfer entry. Considering total hire receipt shown by appellant of Rs. 44,95,316/- and deposit of cheque & transfer entries of Rs. 31,28,413/-, it can be concluded that appellant is in receipt of hire charges in cash also. Considering contra entries out of such deposit and withdrawals, I am inclined with contention of appellant that all entries as appearing in this disclosed bank ITA No. 1068/Ahd/2013 8 Asst. Year 2009-10 account is from business transactions of appellant. cash so deposited of Rs. 39,21,482/- (7049895 - 3128413) is either receipt of business or made out of withdrawals from this account beside contra entries. It is therefore such deposit is explained and there is no need to make any addition u/s 69 of Act or of peak credit of this disclosed account. minor difference if at all there is duly explained by nature of receipt of appellant i.e. hire receipt for which addition is already made. A.O. is therefore directed to delete addition so made of Rs. 39,21,281/-. appellant gets relief accordingly. 13. From going through finding of ld. CIT(A) and submissions made by assessee before lower authorities and in absence of any contrary evidence placed by ld. DR against finding of ld. CIT(A), we are of view that as impugned bank account in which cash has been deposited has been shown in regular books of account and all debits and credits in this bank account have been reflected in related account in books and closing bank balance of SB account is also shown in audited balance sheet as observed by ld. CIT(A). Certainly there is no element of unexplained cash credit so as to invoke provisions of section 68 of Act as impugned amount of Rs.39,21,381/- is duly explained either as business receipt or out of regular cash withdrawal. We therefore, find no reason to interfere with order of ld. CIT(A) and uphold same. This ground of Revenue is also dismissed. 14. Ground Nos. 3 & 4 are of general nature, which need no adjudication. ITA No. 1068/Ahd/2013 9 Asst. Year 2009-10 15. In result, appeal filed by Revenue is dismissed. Order pronounced in open Court on 30th September, 2016 Sd/- sd/- (Rajpal Yadav) (Manish Borad) Judicial Member Accountant Member Dated 30/9/2016 Mahata/- Copy of order forwarded to: 1. Appellant 2. Respondent 3. CIT concerned 4. CIT(A) concerned 5. DR, ITAT, Ahmedabad 6. Guard File BY ORDER Asst. Registrar, ITAT, Ahmedabad 1. Date of dictation: 29/09/2016 2. Date on which typed draft is placed before Dictating Member: 30/09/2016 other Member: 3. Date on which approved draft comes to Sr. P. S./P.S.: 4. Date on which fair order is placed before Dictating Member for pronouncement: __________ 5. Date on which fair order comes back to Sr. P.S./P.S.: 6. Date on which file goes to Bench Clerk: 30/9/16 7. Date on which file goes to Head Clerk: 8. date on which file goes to Assistant Registrar for signature on order: 9. Date of Despatch of Order: ITO, Wd-9(4), Ahmedabad v. Satyanarayan T. Agarwal
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