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2016 (6) TMI 783 - ITAT AMRITSAR

2016 (6) TMI 783 - ITAT AMRITSAR - [2016] 48 ITR (Trib) 382 - Revision u/s 263 - addition u/s 69 - Held that:- The fact of issuing of notice under section 148 is mentioned in the assessment order itself. However, in the assessment year 2008-09, we find that no such regularisation under section 148 has been mentioned in the assessment order and, therefore, in this year the revised return was after the prescribed period of time. The due date for filing the revised return in this year is March 31, .....

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f that the bank deposits reflected the turnover of the assessee from retail trade because the claim of the assessee being engaged in retail trade was open to scrutiny and the Assessing Officer had carried sufficient enquiries in this respect. Therefore, these are not the cases where no enquiry has been done. - In the present cases, the Assessing Officer has completed the assessments after accepting the submissions of the assessee that the bank deposits reflected the turnover from retail busi .....

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en by Assessing Officer is unsustainable in law. - THus we are in agreement with the arguments of learned authorised representative that the Assessing Officer had passed orders after due application of mind and these are not the cases fit for action under section 263. - Decided in favour of assessee - I. T. A. Nos. 67 and 68/(Asr)/2012 - Dated:- 18-3-2016 - A. D. Jain (Judicial Member) And T. S. Kapoor (Accountant Member) For the Petitioner : P. N. Arora For the Respondent : Tarsem Lal ORDER .....

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arlier dismissed for non-prosecution, vide the Tribunal order dated April 9, 2014, however, the said order was recalled, vide the Tribunal order dated September 26, 2014, and the appeals were listed for hearing on the merits. 3. At the outset, the learned authorised representative submitted that the assessment in these cases was completed under section 143(3) after due application of mind by the Assessing Officer and the learned Commissioner of Income-tax has wrongly completed the proceedings un .....

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ng under the provisions of section 44AF of the Act. He submitted that the assessment was completed under section143(3) on November 30, 2010, at an income of ₹ 5,09,510 after taking into consideration the revised return. The learned authorised representative submitted that the revised returns were filed because of the fact that the assessee had forgotten to include his income from retail trade business and, therefore, before the questionnaire was issued on August 31, 2010, the assessee volu .....

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eply wherein he submitted that in view of the provisions of section 44AF which opens with a non obstante clause, the provisions of section 28 to section 43C for computation of income under the head "Business" were not applicable to the assessee. The learned authorised representative further invited our attention to the paper book pages 68 to 70 where a copy of the letter dated November 11, 2010, written to the Assessing Officer was placed and submitted that the assessee had relied upon .....

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ed as the Assessing Officer had completed the assessment after satisfying himself from all angles. The learned authorised representative submitted that though the Assessing Officer had not written his order elaborately but that does not mean that the order was erroneous. Reliance in this respect was placed on the decision of the Income-tax Appellate Tribunal Delhi Bench in the case of Addl. CIT v. Shipra Estate Ltd. [2010] 35 SOT 256 (Delhi) for the proposition that where the Assessing Officer a .....

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nd, accordingly, granted the deduction under section 80-IB, the order of the learned Commissioner of Income-tax for revision was held to be not valid. Reliance was also placed on the decision of the Income-tax Appellate Tribunal, Amritsar Bench, in the case of Roshan Lal Vegetable Products Pvt. Ltd. v. ITO [2011] 9 ITR (Trib) 431 (Amritsar) in ITA No. 6(Asr)/2010, for the proposition that where the relevant issues have duly been considered and adjudicated by the Assessing Officer while making th .....

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he interests of the Revenue. Further, reliance was placed on the case law of CIT v. Max India Ltd. reported in [2007] 295 ITR 282 (SC), for the proposition that where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree it cannot be treated as erroneous or prejudicial to the interests of the Revenue. The learned authorised representative also placed his reliance on the decision of the honourable Supreme Court in the case of Malabar Indust .....

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learned Commissioner of Income-tax has not passed a separate order and has passed order for the assessment year 2007-08 holding that the facts of the case for the assessment year 2007-08 are similar to the assessment year 2008-09 and, therefore, this order cannot be said to be valid order. 5. The learned Departmental representative, on the other hand, submitted that the assessee after coming to know that the Assessing Officer had certain information had filed the revised returns which were beyo .....

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not initiate any such enquiry and also did not enquire as to whether the business was whole seller or retailer. He further submitted that no enquiry regarding co- relation between the so-claimed business and deposit in the bank account were made and, therefore, the order of the Assessing Officer was erroneous and prejudicial to the interests of the Revenue. 6. The learned authorised representative in his rejoinder submitted that necessary enquiry was conducted by the Assessing Officer and in th .....

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r had completed the assessment. The learned authorised representative submitted that in this reply dated November 11, 2010, the assessee had relied upon the case law of the Income-tax Appellate Tribunal, Amritsar Bench, for the proposition that where the assessee claims income under section 44AF, no further enquiries can be made. Therefore, the learned authorised representative argued that the Assessing Officer had completely applied his mind. 7. We have heard the rival parties and have gone thr .....

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. The show-cause notice is reproduced as under : In your case, two separate assessments for the assessment years 2007-08 and 2008-09 have been completed by the Income-tax Officer, Ward 5(4), Amritsar, vide two separate orders dated December 30, 2010, and November 30, 2010, at an income of ₹ 3,40,197 and ₹ 5,09,510, respectively. The proposal has now been received from the Income-tax Officer, Ward 5(4), Amritsar, under section 263 of the Income-tax Act, 1961, stating that the assessme .....

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notice under section 143(2) was issued on August 17, 2009, i.e., to verify your bank deposits in the IDBI Bank. (iii) You have filed revised returns for the assessment years, i.e., 2007-08, 2008-09 on June 24, 2010, declaring an income of ₹ 3,00,197 and ₹ 4,49,510. The basis of revision of income has been attributed to the following reasons appended to the revised return as under : '2. The revised return is being filed suo motu in order to declare the income which I had failed t .....

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77; 1,06,872. (ii) Sale of gems and diamonds-Cash deposited ₹ 18,05,250 (offered under section 44AF)-Maximum estimate sale ₹ 25,00,000. (iii) Minimum profit at 5 per cent. under section 44AF ₹ 1,25,000 (iv) Maximum estimated profit from business ₹ 3,32,000. (iv) The revised returns have been filed only after the issue of notice under section 143(2) for the assessment year 2008-09. You attended the office on June 18, 2010, and submitted a written reply. At that time you we .....

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you have also been bound twisting from the main issue of verification of your business in retail trade by seeking shelter of section 44AF of the Income-tax Act, 1961, that you are not required to maintain the books of account. (vi) The compliance with the provisions of section 143(2), i.e., to prove the correctness of your return revised for all these years which is the mandatory requirement of this section has, therefore, remained untouched during the course of assessment proceedings for both .....

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n so far as it is prejudicial to the interests of the Revenue are, therefore, required to be revised. You are hereby given an opportunity of being heard and to submit your reply in the matter on December 7, 2011'." To the abovesaid notice the assessee filed a reply wherein he reiterated that in the case the income is offered under section 44AF, no further questions are required to be asked as none of the provisions of section 28 to section 43(c) are applicable for determination of incom .....

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return was not enquired by the Assessing Officer. In this respect, we find that the Assess ing Officer first enquired about the income under section 44AF, vide notice dated August 31, 2010, placed at the paper book page 62 wherein the Assessing Officer, vide question No. 3 had required the assessee to the following query. "3. Please furnish the detail of business in respect of which income has been declared under section 44AF explaining, inter alia, the source of investment made in the said .....

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e income under section 44AF, it is outside the purview of section 44AA." We further find that, vide the order-sheet entry dated October 18, 2010, the assessee was asked to file a cash flow statement and copy of sales tax/VAT return and in reply the assessee filed a letter dated November 11, 2010, wherein again a detailed reply was filed and wherein the assessee relied upon the decision of the Income-tax Appellate Tribunal, Amritsar Bench, in the case of Smt. Saviti alias Sweety Sekhir v. IT .....

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ing it was enquired by you from me that I should furnish a cash flow statement, returns of sales tax and state ment. In reply, I submit as under : I have already stated in paragraph 2 of my letter October 18, 2010, about the non-applicability of section 44AA regarding the maintenance of books of account which have been specifically excluded as per section 44AF. Further, the non obstante clause at the beginning of section 44AF also excludes the applicability to section 28 to section43C. Therefore .....

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rew our attention to section 44AF of the Income-tax Act and submitted that section 44AF is applicable to the assessee engaged in retail trade in any goods or merchandise whose turnover was more than ₹ 40 lakhs and the assessee is required to offer a sum not less than five per cent. of the total turnover as income of the assessee under the head "Profits and gains of business or profession" subject to other conditions laid down in the section. He submitted that there is no necessit .....

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er accepted the income declared by the assessee under section 44AF of the Act once again made the addition with regard to the deposit in the bank account, which is highly improper and is liable to be deleted. 4.1 Further, he submitted that the impugned deposits in the bank account at ₹ 24,38,100 which is already included in the turn over declared by the assessee at ₹ 25,00,000 and making addition once again towards deposit in the bank account will result in double addition, which is .....

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de of the textile/fabrics and offered the turnover of ₹ 25,00,000 for taxation at five per cent. and this amount of 5 per cent. at ₹ 1,25,000 is considered as income of the assessee. The fact of income at five per cent. on the turnover of ₹ 25 lakhs is not disputed by the Assessing Officer. In addition to this ₹ 1,25,000 the assessee also offered ₹ 1,00,000 towards peak in the said bank account and thus the total income offered was at ₹ 2,25,000. The Assessing .....

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ics and turnover is less than ₹ 40 lakhs and profit declared at five per cent. of the total turnover to be accepted as income of the assessee. The Assessing Officer accepted this portion of the assessee. Later on the Assessing Officer cannot go against this and made further addition on account of deposit in the bank account. The assessee when said that the deposit in the bank account represent the turnover and the only five per cent. is income as per section44AF, the Assessing Officer is n .....

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e on presumptive manner at five per cent. of the total turnover as income of the assessee then the Assessing Officer cannot apply the provisions of section 28(2) to section 43 of the Act and also other sections 68, 69, 69A, 69B, 69C and 44AF of the Act, 1961. Accordingly, these grounds of appeal of the assessee are allowed. Had the Assessing Officer wanted to the assess the deposits in the bank account as unexplained income of the assessee, he should have excluded the income declared by the asse .....

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co-operation I am enclosing herewith the cash flow statement from April 1, 2007, to March 31, 2008, correlated to deposits and withdrawals of cash to and from various bank accounts maintained by me. I have furnished all the information that was legally tenable to be required of me and I am sure you will find it in order." Therefore, from the above queries of the Assessing Officer and the replies filed by the assessee from time to time we find that the Assessing Officer has made sufficient e .....

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te Tribunal Delhi Bench in the case of Addl. CIT v. Shipra Estate Ltd. [2010] 35 SOT 256 (Delhi) has held that where the Assessing Officer acting in accordance with law frames an assessment order, the same cannot be branded as erroneous simply because according to the Commissioner, the order should have been written more elaborately. In the case of Roshan Lal Vegetable Products Pvt. Ltd. v. ITO [2011] 9 ITR (Trib) 431 (Amritsar) in ITA No. 6(Asr)/2010 (ITAT-Amritsar) it has been held that where .....

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prejudicial to the interests of the Revenue unless the view taken by Assessing Officer is unsustainable in law. We find that in the present cases the Assessing Officer had made sufficient enquiries and on the basis of the reply of the assessee and his reliance on the case of the Income-tax Appellate Tribunal, Amritsar Bench in the case of Smt. Saviti alias Sweety Sekhir v. ITO (supra) has completed the assessment and has accepted the claim of the assessee under section 44AF of the Act. The view .....

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in the assessment year 2007-08 the Assessing Officer had regularised the revised return by issuing notice under section 148, therefore, for the assessment year 2007-08 it cannot be said that the Assessing Officer had taken cognizance of the revised return because in this assessment year revised return on the basis of the reply from the assessee had become return filed under section 148 of the Act. The fact of issuing of notice under section 148 is mentioned in the assessment order itself. Howev .....

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return beyond the prescribed period of time. But the question remains that whether the Assessing Officer could have ignored such revised return. It was not even necessary on the part of the assessee to file the revised return as he could have claimed during the assessment proceedings itself that the bank deposits reflected the turnover of the assessee from retail trade because the claim of the assessee being engaged in retail trade was open to scrutiny and the Assessing Officer had carried suff .....

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ower by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of the learned counsel for the Revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expend iture in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that .....

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