Case Law Details
Anuradha Pandey Vs ITO (ITAT Varansi)
The limited controversy is regarding the source of investment from realization of closing stock and debtors as on 31st March, 2011. The assessee claimed that she has realized from the sale of old stock of Rs. 9,04,000/- and from debtors of Rs. 2,65,290/- total amounting to Rs. 11,65,690/- and claimed the source of investment in the house property to the tune of Rs. 11,00,000/- from this amount of realization from the closing stock of the previous year as well as from debtors. The CIT(A) estimated these amount of realization from the inventories and debtors at Rs. 5,00,000/- out of the claim of Rs. 11,00,000/-. As regards the claim of realization from debtors of Rs. 2,65,290/-, it is apparent from the balance-sheet filed by the assessee during the proceedings before the CIT(A) for the preceding assessment year showing only 1,25,634/- as closing balance of sundry debtors therefore, this claim of realization of Rs. 2,65,290/- is contrary to the balance of debtors as on 31st March, 2011. However, without going into these unreliable claims and figures which are not matching to each other if this amount of Rs. 9,08,300/- is considered as available to the assessee for making the investment after realizing the closing stock as well as debtors, then the estimation made by the CIT(A) on this account of Rs. 5,00,000/- would be unjustified and without any basis. Hence, in the facts and circumstances of the case, when the CIT(A) has accepted the correct figure of Rs. 9,08,300/- as shown in the return of income, then to that extent, the source from realization of closing stock and debtors ought to have been accepted. Accordingly, the addition sustained by the CIT(A) of Rs. 6,00,000/- is restricted to Rs.1,81,700/-
FULL TEXT OF THE ORDER OF ITAT VARANASI
This appeal by the assessee is directed against the order dated 13.11.2019 of CIT(A) for the assessment year 2012-13. The assessee has filed the following grounds:-
“(1) That the, only Difference amount of Rs. 5,00,000.00 (due to wrong Itr (other than the assessee) has been taken in the original assessment) by the Ld. CIT-Appeal Gorakhpur Without considering the fact and Documents produced before him.
(2) That the, During the CIT-Appeal, the Ld. CIT Appeal had not taken necessary steps to verify and consider the Annexure attached which is belongs to the Assessee. He had mentioned on his order that the contention made by the appellant regarding the debtor are an afterthought and do not reflect the correct position of the affairs. This statement shows that he had not considered and verified the annexure of debtors and passed the order that the statement of affairs is not correct and fair. It is very obvious that we can’t pass judgment on the correctness and fairness of the affairs without considering and verifying the all contents of the affairs. The appellate officer has not considered the part of the cash realized from the debtors and stocks. Even though Debtors list. Copy of Invoices and all the required documents has been already produced before the Ld. CIT-A Gorakhpur for the verification purpose.
(3) That the order has been passed by the Appellate officer is erroneous on the facts and in the law.
(4) The learned Appellate officer is not justified in treating the amount of Rs. 00 As total addition income.
(5) Any other ground or grounds as may be urged at the time of hearing.”
2. The assessee is an individual and stated to be in the business of trading of bricks. The assessee filed its return of income on 31st March, 2014 declaring total income of Rs. 3,19,890/-. The assessment was reopened by Assessing Officer vide notice under section 148 dated 13th March, 2015 in respect of the investment made by the assessee as it was detected by the Assessing Officer during the assessment proceedings of Shri. Balram Pandey proprietor of M/s Gangotri Diesels Awas Vikas Colony, Betia Hata, Gorakhpur for the assessment year 2012-13 that the assessee alongwith Sh. Balram Pandey and Smt. Bandana Pandey had purchased a house situated at New Suryanagar Colony, Daudpur, Gorakhpur for a consideration of Rs. 50,00,000/- and stamp duty payment of Rs. 12,10,070/-. Thus, the total investment in the house property is found at Rs. 62,40,070/- during the assessment proceedings of Sh. Balram Pandey. The assessee did not respond to the notice issued under section 148 nor in response to the notice issued under section 142(1) by the Assessing Officer. The Assessing Officer then issued a show cause notice for completion of the assessment under section 144 of the Income Tax Act on 12.10.2015. Finally, on 29.10.2015, the authorized representative of the assessee appeared before the Assessing Officer and filed written replies, still no return of income was filed by the assessee in response to notice under section 148 and consequently the Assessing Officer framed the assessment under section 144 of the Income Tax Act whereby the Assessing Officer made addition of Rs. 16,08,333/- on account of unexplained investment in purchase of house property. The assessee challenged the action of the Assessing Officer before the CIT(A) and challenged the addition made by the Assessing Officer. The CIT(A) called for a remand report and consequently restricted the addition to Rs. 6,00,000/- as against 16,08,333/-. Aggrieved by the order of the CIT(A) confirming the part addition, the assessee has filed the present appeal. Thus, the only issue in the appeal of the assessee is regarding the addition sustained by the CIT(A) to the tune of Rs. 6,00,000/-.
3. Before the Tribunal, the learned AR of the assessee has submitted that the Assessing Officer framed the assessment by considering the details of return of income of the sister concerned of the assessee and not of the assessee. He has referred to the correct details regarding amount of cash balance, bank balance, assets and inventories considered by the Assessing Officer at Rs. 4,89,070/- whereas the correct figure of these balances is Rs. 9,08,300/-. The assessee filed the return of income under presumptive tax provision of section 44AD and therefore, did not file any books of accounts or balance-sheet during the assessment proceedings. However, during the remand proceedings, the assessee filed the balance-sheet as on 31st March, 2011 showing the closing stock of the bricks which was sold during the year under consideration to the tune of Rs. 11,00,000/- being source of investment made in the house property in question. The CIT(A) has accepted only Rs. 5,00,000/- as realization from the sale of closing stock and debtors as against the claim of Rs. 11,00,000/-. This estimation of the CIT(A) is without any basis and ignoring the relevant record filed by the assessee in support of his claim. He has submitted that the assessee has given the details of the amount realized from the debtors as well as sale of the closing stock by filing the invoices / sale bills. The Assessing Officer as well as the CIT(A) has rejected this claim without conducting any enquiry. Thus, the learned AR has submitted that the addition sustained by the CIT(A) is unjustified and liable to be deleted.
4. On the other hand, the learned DR has submitted that the assessee is not maintaining any books of accounts and filling the return of income under section The assessee has accepted the fact that the alleged balance-sheet as on 31st March, 2011 was prepared by the assessee during the appellate proceedings before the CIT(A) and therefore, it is an afterthought manufactured evidence which cannot be accepted when the assessee is not maintaining any books of accounts. The assessee has also not shown any basis of preparing the said balance-sheet and therefore, it is pure gas work and estimation to match the figure of availability of source of investment made in the house property. He has further contended that the CIT(A) has granted a substantial relief while passing the impugned order which is proper and reasonable. He has relied upon the impugned order of the CIT(A).
5. I have considered the rival submissions as well as the relevant material on record. There is no dispute that while passing the assessment order under section 144 r.w.s. 147 of the Act, the Assessing Officer has made scanned copy of a portion of return of income showing the amount of cash balance, bank asset, inventories etc., at Rs. 4,89,070/- whereas the correct figure of the said amount is Rs. 9,08,300/-. It appears that the AO has scanned a wrong document belonging to some other assessee one of the co-investors in the property in question. However, this mistake was rectified by the CIT(A) by taking the correct amount of Rs. 9,08,300/- as under:-
“A perusal of the assessment order and submissions made by appellant shows that the appellant had claimed that the cash of Rs. 11,25,000/- was arranged by realizing debtors and sale of brought forward stock. The appellant had not disclosed any amount of sundry debtors or stock in trade for the F.Y. 2010-11 in the return of income filed by her. The appellant has submitted a copy of balance sheet as on 31.03.2011 according to which closing stock of Rs. 10,25,634/- and sundry debtor of Rs. 125634/- was with the appellant. The appellant has also submitted copies of bills issued to various parties to whom the sale of bricks was made and cash was realized. The appellant has claimed she had realized Rs. 265290/- from the debtors which included brought forward debtors and debtors created during the period prior to purchase of the asset. The contention made by the appellant regarding the debtors are an afterthought and do not reflect the correct position of the affairs. The contention of the appellant that she had should the brought forward stock and realized the cash is not support by any cogent evidence except the bills raised by her. A perusal of the bills raised by the appellant shows that mobile numbers have been mentioned in each of the bills. The appellant has claimed that he amount of cash balance, bank balance assets and inventories etc. has been wrongly mentioned as Rs. 489070/- by the AO in his assessment order whereas the correct figure is Rs. 9083 00/-. The appellant has submitted a copy of ITR in this regard. Contention made by the appellant regarding the closing stock of the previous years being sold do not match with the amount disclosed as cash in bank balance assets and inventories as disclosed by her in the return of income filed for the year. The appellant could not fully substantiate the claim made by her however the claim of closing stock being sold for realization of cash is not entirely wrong. The appellant has disclosed assets an inventories at Rs. 908300/-.The AO has considered it at Rs. 489070/- and had treated Rs. 25,000/- out of the above as explain cash of the appellant. Looking at the facts and circumstances of the case Rs. 5,00,000/- can be treated as cash realized by the appellant from the sale of closing stock and debtors. In view of the above the addition made by the AO is upheld upto an extent of Rs. 6,00,000/-, the appellant gets consequential relief.”
6. The CIT(A) considered the correct figure while deciding this issue and therefore, to that extent, no grievance of the assessee is left. The limited controversy is regarding the source of investment from realization of closing stock and debtors as on 31st March, 2011. The assessee claimed that she has realized from the sale of old stock of Rs. 9,04,000/- and from debtors of Rs. 2,65,290/- total amounting to Rs. 11,65,690/- and claimed the source of investment in the house property to the tune of Rs. 11,00,000/- from this amount of realization from the closing stock of the previous year as well as from debtors. The CIT(A) estimated these amount of realization from the inventories and debtors at Rs. 5,00,000/- out of the claim of Rs. 11,00,000/-. As regards the claim of realization from debtors of Rs. 2,65,290/-, it is apparent from the balance-sheet filed by the assessee during the proceedings before the CIT(A) for the preceding assessment year showing only 1,25,634/- as closing balance of sundry debtors therefore, this claim of realization of Rs. 2,65,290/- is contrary to the balance of debtors as on 31st March, 2011. However, without going into these unreliable claims and figures which are not matching to each other if this amount of Rs. 9,08,300/- is considered as available to the assessee for making the investment after realizing the closing stock as well as debtors, then the estimation made by the CIT(A) on this account of Rs. 5,00,000/- would be unjustified and without any basis. Hence, in the facts and circumstances of the case, when the CIT(A) has accepted the correct figure of Rs. 9,08,300/- as shown in the return of income, then to that extent, the source from realization of closing stock and debtors ought to have been accepted. Accordingly, the addition sustained by the CIT(A) of Rs. 6,00,000/- is restricted to Rs.1,81,700/-
7. In the result, the appeal of the assessee is partly allowed.
Order pronounced on 28.07.2022 at Allahabad, U.P. in accordance with Rule 3 4(4) of Income Tax (Appellate Tribunal) Rules, 1963.
