IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "G", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER
I.T.A. No. 4666/DEL/2014
A.Y. : 2010-11
DCIT, ROHTAK CIRCLE, VS. SH. SUNIL AHUJA,
ROHTAK 1175/19, HARI NAGAR,
ROHTAK
(PAN: ADUPA1729P)
(ASSESSEE) (RESPONDENT)
Revenue by : Sh. N.K. Bansal, Sr. DR.
Assessee by : Sh. Naveen Gupta, Adv.
ORDER
PER H.S. SIDHU : JM
The Revenue has filed this Appeal against the impugned Order
dated 27.6.2014 of the Ld. CIT(A), Rohtak relevant to assessment
year 2010-11.
2. The grounds raised in the appeal read as under:-
1. On the facts and in the circumstances of the case,
the Ld. CIT(A) has erred in law and facts in deleting the
addition of Rs. 1,41,25,286/- representing deposits in
J & K Bank account not disclosed in the books of account
and has erred in accepting the explanation of the
assessee, particularly, when she herself has accepted in
her order that this bank account was undisclosed.
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2. On the facts and in the circumstances of the case,
the Ld. CIT(A) has erred in law and facts in directing the
AO to apply Net Profit of 5% on Sales and 2% on
investment merely on submission of assessee that the
same may be done even though she has not accepted
the explanation that these transactions were HUF
transactions.
3. On the facts and circumstances of the case, the Ld.
CIT(A) has erred in law and on facts in accepting the
contention of the assessee who has already been found
to be maintaining an undisclosed bank account, rather
than deciding the appeal on merits and without finding
any lacuna in the AO's findings.
4. That the appellant craves for permission to add,
delete or amend the grounds of appeal before or at the
time of hearing of appeal.
3. The brief facts of the case are that the assessee is an
individual and has been earning income from purchase, sale and
supply of medicines on whole sale bases for which he earns business
income or commission. The assessee filed the return of income on
31.10.2010 showing income of Rs. 6,24,320/- which worked out to
approximately 5.3% of the sales. Audit Report in the prescribed
form was also enclosed with the return. The case of the assessee
was selected for scrutiny and every type of information asked for
was readily supplied. The AO asked for copy of the impugned a/c
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maintained in J&K Bank Rohtak which was also furnished. The
account had been started only this year w.e.f. 27.5.2009 with initial
deposit of Rs. 5,000/-. Receipt and payments reflected therein
pertain to purchase and sale of medicines on whole sale basis. The
credit entries reflecting sale during the year; totaled to Rs.
1,41,05,286/-. The assessee has started this new business as that
belonging to the HUF for settling his son separately and
independently. However, no income accrued and hence, no separate
return was filed. Unfortunately, this fact was not mentioned in the
return filed before the AO by oversight nor a separate return for
HUF could be filed. The AO noticed several small creditors below
Rs. 20,000/- each. The assessee produced affidavit in respect of
many of them. In cases where proper evidence could not be filed,
the assessee surrendered the amount through a letter. The AO
treated the entire sale proceeds of Rs. 1,41,05,286/- as income of
the assessee on account of unaccounted sales not disclosed in the
books of account. No separate addition in respect of cash credits
received from several persons (each credit being below Rs. 20,000)
was made as the entire amount of deposits in the said account had
been treated as assessee's income and assessed the income of the
assessee at Rs. 1,17,60,530/- vide order dated 22.3.2013 u/s.
143(3) of the Act. Aggrieved by the assessment order, the assessee
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appealed before the Ld. CIT(A), who vide his impugned order dated
27.6.2014 has partly allowed the appeal of the assessee and
Against the order of the Ld. CIT(A), the Revenue is in appeal before
the Tribunal.
4. Ld. DR relied upon the Order of the AO and reiterated the
contentions raised in the grounds of appeal. He submitted that on
perusal of the audit report and balance sheet, AO has observed that
assessee has raised petty unsecured loans of amount below Rs.
20,000/- in respect of 32 persons during the year under
consideration. He further submitted that the assessee has not
furnished reliable documentary evidence to prove the
creditworthiness of persons advancing loans. He further submitted
that on perusal of bank statement it revealed that assessee has
withdrawn cash on various dates from this bank account which
has not been reflected in the books of accounts of the assessee. He
further submitted that it is clear that the assessee has withdrawn
cash which was introduced by him in the shape of these petty
unsecured loans from various persons. It was further stated that
since the entire deposits in the said bank account has been added to
the returned income, no separate addition is being made on this
count.
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5. Ld. counsel for the assessee relied upon the order of the Ld. CIT(A)
and stated that she has passed a well reasoned order which does not
need any interference on our part.
6. We have heard both the parties and perused the records especially
the impugned order. We find that AO has observed that the assessee is
maintaining a bank account with J&K Bank, Bhiwani Stand, Rohtak which
is not disclosed in the books of account of the assessee. The total
deposits made in this bank account during the year under consideration
are to the tune of Rs. 1,41,05,286 and assessee has no sustainable
explanation to offer regarding amount deposit in the aforementioned bank
account and therefore, the AO made the addition of Rs. 1,41,05,296/- to
the net profit of the assessee as an accounted sales not disclosed in the
books of accounts of the assessee. We further find that the main issue in
this case is relating to addition of a deposit of Rs. 1,41,05,286/- in M/s
J&K Bank by the assessee treating the entire amount as in accounted
sales. This addition had been made because no details were submitted at
the time of assessment proceedings. On the matter being remanded back,
the AO has examined the details of deposits and withdrawals alongwith
copies of supply order, purchase and sales bills. However, the AO has not
pointed out any fault with the explanation regarding the said entries in
the bank account. Therefore, Ld. CIT(A) has rightly held that no adverse
view can be taken in respect of accounts and the net profit needs to be
calculated on a reasonable basis, which in this case, as admitted by the
Assessee can be 5% (for NP) and an additional 2% for investment.
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Hence, the AO was rightly directed to calculate the amount of
disallowance on the formula method above as a result thereof the
assessee gets relief on the remaining amount, which does not need any
interference on our part, therefore, we uphold the action of the Ld.
CIT(A) on the issues in dispute and reject the grounds raised by the
Revenue.
7. In the result, the Revenue's Appeal stands dismissed
Order pronounced on 18/06/2019.
Sd/- Sd/-
[B.R.R. KUMAR] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 18/06/2019
SRBHATNAGAR
Copy forwarded to: -
1. Assessee -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT TRUE COPY
By Order,
Assistant Registrar, ITAT, Delhi Benches
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