Delhi High Court
Commissioner Of Income Tax ... vs Chander Prakash Pabreja on 4 February, 2015
Author: S.Ravindra Bhat
$~14
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on 4th February, 2015
+ ITA 383/2013
COMMISSIONER OF INCOME TAX DELHI-XIII .... Appellant
Through: Mr.Sanjay Kumar, Jr.Standing
counsel.
versus
CHANDER PRAKASH PABREJA ..... Respondent
Through: Mr. V.K.Sabharwal, Adv.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.K.GAUBA
MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
%
C.M.No.12111/2013 (delay)
For the reasons stated in the application, the delay of 42 days in re-
filing the appeal is condoned.
The application stands disposed of.
ITA 383/2013
1. The substantial question of law sought to be urged by the Revenue is:
Whether in the circumstances of the case the Income Tax Appellate Tribunal
(ITAT) was correct in holding that the addition of ₹47,37,120/- brought to
tax by the Assessing Officer (AO) was unwarranted.
2. The assessee during the relevant Assessment Year (AY) 2005-06
ITA 383/2013 Page | 1
claimed benefit of Section 44AF of Income Tax Act (hereinafter referred as
"the Act"), and had filed a return disclosing income of ₹2,15,292/-.
Subsequently, the assessment was reopened under Section 147 of the Act.
Assessing Officer (AO) framed an assessment under Section 144 since no
response was forthcoming on the part of the assessee. The AO considered
the source of a separate cash deposit of ₹31,29,880/- and further amount of
₹16,07,240/-. After adding these amounts, the AO reassessed the income on
regular basis bringing them to tax under Section 68 on the ground that this
amount was the assessee's income from undisclosed sources. The assessee's
appeal was partly allowed restricting to net profit rate of 5% applied on the
amount declared under Section 44AF, i.e. ₹ 2,36,856/-. The ITAT also
accepted the assessee's contention and rejected the Revenue's appeal. After
re-accounting the entire facts and circumstances and extracting the findings
of the CIT(Appeals), the impugned order concludes as follows:
"7. The aggrieved assessee carried the assessment order
in appeal before the Id. CIT(A) who sought remand re-
post from the Assessing Officer. The assessee was also
provided opportunity and in turn the assessee filed the
rejoinder. The Id. CIT (A) considered the remand report
as well as the rejoinder. We also perused the remand
report and the rejoinder of the assessee and observations
made in the impugned order. The Id. CIT(A) on the basis
of assessment order for assessment year 2008-09,
wherein the cash deposit of Rs.57,48,067/-in Punjab
National Bank was claimed to be the sale proceeds of his
business of aluminum sections, accepted the claim and
considering the past history. At page 15 of the impugned
order, there is a submission of the assessee that a
separate bank account was maintained by the assessee,
which he used to deposit the sale proceeds of the
business in the bank, which were not disclosed in the
ITA 383/2013 Page | 2
income-tax return. There is a further finding that the
bank statement for the relevant period from 01/04/2004
to 31/03/2005 was examined by the CIT(A) and it was
found that there was cash deposit on various dates
against the sale of material and the withdrawal refers to
payment made against such purchases of the material. As
per Sec. 44AF, which prescribes the special provision for
computing profits & gains of retail business, a sum equal
to 5% of the total turn over in the previous year on
account of such business, the profit can be qualified. The
Id. CIT(A) on the basis of facts of assessment year 2008-
09 quantified the net profit rate at 5% and ultimately
held that the amount of Rs.2,87,403/-was only assessable
from undisclosed business. No other material was
brought on record by the Revenue to substantiate its
version, therefore, we find no infirmity in the stand of the
Id. CIT(A). Therefore, it is upheld.
8. However, keeping in view the totality of facts and the
past history of the assessee, we are making it clear that
our above decision may not be quoted as a precedent, as
the assessee is expected to maintain its books of sale and
cooperate with the department. With this observation, the
order of the Id. CIT(A) is upheld.
9. So far as the cross-objection raised by the assessee
regarding issuance / service of notice is concerned, it
was not pressed by the learned counsel for the assessee,
therefore, the same is dismissed as not pressed."
3. We have heard the counsel for the parties. The assessee urged that the
AO made no effort to discern as to the character of the amounts and that
ITA 383/2013 Page | 3
some of them at least constituted expenses. It is further argued that the
assessee had voluntarily disclosed receiving ₹ 16,07,240/- during the course
of the assessment and under the circumstances was entitled to the benefit of
Section 44AF. It is lastly contended that for other periods the assessee's
returns were accepted which implied that this method of accounting was also
acceptable to the revenue.
4. As is evident from proviso to Section 44AF, the benefit of
presumptive rate of taxation on 5% of turnover for retail traders and others
of such category as are covered by the provision is subject to ceiling for
turnover of ₹40 lacs. The underlying principle is that the Income Tax
authority accepts the entire figures furnished by the assessee at face value
and there will be a presumptive rate of net profit which would be further
subjected to taxation.
5. In the present case the assessee had sought the benefit of that
provision but the revenue found later that the amounts deposited in its
account were far and excessive than what was disclosed. That the assessee
did not dispute the deposit of ₹16 lacs ipso facto would not absolve him
from failing to disclosed it in the first instance. The same reasoning would
apply for the other amount of ₹31,29,880/-. So far as the assessee's
explanation that some of the entries pertained to expenditure goes, the AO
observed that the assessee did not maintain any books of accounts and
produced any supporting document. His evidence was endorsed by the CIT
(A). The CIT(A), however, took note of all the circumstances and confined
the relief to the extent that the assessee had sought and justified.
6. In our opinion, the ITAT's decision, which has merely stated the
CIT(A)'s finding and does not contain any reasoning, appears to be guided
ITA 383/2013 Page | 4
by the decision on the assessment of other years. Furthermore, the ITAT
was conscious of the fact that this decision favouring the assessee was
perhaps unsupportable in law, as is evident from its observation in para 8
that the impugned order would not be quoted as a precedent.
7. Having regard to the circumstances, we are of the opinion that ITAT's
order cannot be sustained. It is accordingly set aside. The question of law is
answered in favour of the Revenue.
8. The appeal is consequently allowed in the above terms.
S. RAVINDRA BHAT, J
R.K.GAUBA, J
FEBRUARY 04, 2015
mr
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