Jai Bhagwan Vs DCIT (ITAT Chandigarh)
ITAT Chandigarh held that addition in the business income merely on the basis of closing bank balance unsustainable as there is nothing on record to show that assessee had any other income except agricultural income.
Facts-
Vide the present appeal, the assessee contended that CIT(A) wrongly confirmed the business income at Rs. 10,82,321/- simply on the basis of the closing bank balance as on 31-03-2010 in place of business income of Rs. 2,28,800/- declared by the assessee.
Conclusion-
In the facts of the present case, admittedly the assessee is shown to be a petty farmer having only 2 acres of agriculture land in the name of his wife which is hardly sufficient to maintain the family. It is also a fact that the assessee was approved by UHBVN HARYANA BIJLI VITRAN NIGAM for installation of pole mounting for release of Tubewell connections to farmers under ‘Self Execution Scheme’ of Uttar Haryana Bijli Vitran Nigam.
It is a matter of fact that the assessee has not been maintaining books of account. The amounts received for the installation of tube wells for farmers etc. has been consistently argued, the amounts had been deposited and withdrawn from the specific bank account and the payments have been made for the said purpose.
There is nothing on record to show that the assessee who was admittedly a licencee of Uttar Haryana Bijli Vitaran Nigal and entrusted with the task of installation of poles for tubewell connections had any other income except agricultural income. There is also nothing on record to show the educational qualification of the assessee or his capacity of maintaining accounts.
Held that some one stray errant payment received after the completion of work by itself cannot be the occasion to discount the entire version of the assessee. Accordingly, noticing my extreme disappointment in seeing how the Tax Authorities have functioned qua a vulnerable, ill equipped hapless citizen who has stepped out of his way to make available his time and local assistance for enabling the execution of the schemes of the Government. Referring to my extreme disappointment on the above issues, I on a consideration of the entirety of facts, and circumstances of the case and the submissions of the Revenue direct that the addition sustained by the CIT(A) in the facts be deleted.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
The present appeal has been filed by the assess ee wherein the correctness of the order dated 11.02.2019 of CIT(A) Ludhiana pertaining to 2010-11 assessment year is assailed on the following grounds:
“1. That the Id CIT(A) has wrongly confirmed the business Income at Rs 1082321 / simply on the basis of closing bank balance as on 31-03-2010 in place of Business income of Rs 228800/- declared by appellant in ITR.
2. That the CIT(A) has wrongly confirmed the business Income of Rs 1082321/- without appreciating the fact that closing bank balance represents advances from customers and same has been utilized for purchase of material in succeeding year.”
2. At the time of hearing, no one was present on behalf of the assess ee, however, an adjournment request was made seeking time. Considering the material available on record, the adjournment request was rejected and the ld. Sr.DR was directed to argue the appeal on merits.
3. The ld. Sr.DR specifically referring to pages 4 and 5 of the assessment order submitted that in view of the fact that huge deposits were found to have been made by the assessee in his bank account, the AO was justified to make the addition and considering the fact that a very meager earnings have been shown by the assessee from the activity despite a deposit of huge amounts in his bank account, the ld. Commissioner was fully justified to sustain the addition.
3.1 It was her submission that no doubt the assessee was doing the work of installation of tubewell connections and transformer connections for the farmers through Uttar Haryana Bijli Vitran Nigam (UHBVN), however, the assessee has failed to explain the deposits and the withdrawals.
3.2 Apart from that, the other hand the statement of Shri Mam Raj which has been recorded and confronted to the assessee was also relied upon. It was highlighted that he has categorically stated that the payment was made after the work was completed.
3.3 Accordingly, in the circumstances, the occasion to have an amount of Rs. 10,82,321/- outstanding in his bank account remains unexplained.
3.4 On query, she agreed that the work is not complete as the said activity is an ongoing activity for the assessee atleast in the next year.
4. Attention of the ld. Sr.DR was invited to page 2 of the assessment order wherein the AO has recorded that, “the assessee is a petty farmer having only 2 acres of agriculture land in the name of his wife which is hardly sufficient to maintain the family”. The AO, it was noticed has made the following observation also :
“Facts of the case are that assessee is an agriculturist based at VPO Sadhaura, Distt. Yamuna Nagar & holds about 02 Acres of agricultural land in his wife’s name.”
4.1 The ld. Sr.DR was required to address these findings.
5. Considering the record, ld. Sr.DR agreed that the assessee has pleaded in his written submissions dated 19. 12.20 17 that, “the assessee was approved (UHBVN HARYANA BIJLI VITRAN NIGAM) Licencee for installation of pole mounting” Sub Station and Material for release of Tubewell connections to farmers under ‘SELF EXECUTION SCHEME’ of Uttar Haryana Bijli Vitran Nigam. Assessee was also having agricultural land. However, it was her submission that assessee was not maintaining books of account which fact has been accepted by the assessee himself as per the explanation before the AO and noticed in the order.
5.1 For ready reference, it is extracted hereunder :
“The assessee was not maintaining any books of accounts, as assessee was not carrying any business. The assessee only acting on behalf of UHBVN as their licensee. Assessee was to get installed the transformers by procuring the material from market, providing labour and getting the same ‘inspected from UHBVN. However, an estimated statement of connections got installed by me during F.Y. 2009-10 is being enclosed herewith. Further, the deposits in bank accounts relate mainly to amounts received from farmers for installation of pole mounting Sub Station and Material for release of Tubewell connections”.
5.2 Accordingly, it was her submission that the AO specifically in view of sub-para (ii) and (iii) of para 4 of his order was fully justified in making the addition. Heavy reliance was placed upon the said finding. It is extracted hereunder for completensss :
“Keeping in view the facts & circumstances of the case, it is seen that chough the assessee has executed the contract as entered by it with HSEB, yet complete details thereof have not been maintained. The very collection of cash receipts from the farmers & its utilization in the execution of erecting of poles, installation of transformers, expenses on labour etc. is not supported with any substantiating material. The AR has put on record the details with names – of farmers alongwith other costs incurred on the purchase of wires, poles, labour charges which though could not lead to any conclusive end in the absence of any concrete evidence/records as to how, the assessee has finally arrived at a net profit of Rs.1,16,665/- as on 31.03.2010. It cannot be accepted in view of the followings findings/discrepancies observed:-
i. All the cash depo putation of income, the assessee has declared total income of Rs.2,91,113/- as under:-
