Shri Dev Kumar Verma, Surat V. The Income Tax Oficer, Ward 2(2), Surat

CO 164/AHD/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8854 (ITAT-AHMEDABAD)
• Duration Of Justice: 30 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 24-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J P JANGID
• Assessee Lawyers: RAMESH MAL
• Keywords: Unexplained investment; Business income; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 139/AHD/2013 A.Y: 2009-10 ITO, WARD 2(2), ROOM NO.117, IST FLOOR, AYAKAR BHAVAN, MAJURAGATE, SURAT. VS SHRI DEV KUMAR VERMA, SURAT, PLOT NO. D-2, KESAR BHAVANI SOCIETY, GODADRA, SURAT. PAN: AGXPV 5977A (APPELLANT) (RESPONDENT) CO NO. 164/AHD/2013 (ARISING OUT OF ITA NO.139/AHD/2013) A.Y: 2009-10 SHRI DEV KUMAR VERMA, SURAT, PLOT NO. D-2, KESAR BHAVANI SOCIETY, GODADRA, SURAT. PAN: AGXPV 5977A VS ITO, WARD 2(2), ROOM NO.117, IST FLOOR, AYAKAR BHAVAN, MAJURAGATE, SURAT. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI J.P. JANGID SR. D.R. ASSESSEE(S) BY : SHRI RAMESH MALPANI, A.R. / // / DATE OF HEARING : 01/08/2013 / DATE OF PRONOUNCEMENT: 23/08/2013 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THE REVENUE IS IN APPEAL AND THE ASSESSEE HAS FILE D CROSS OBJECTION, BOTH ARISING FROM THE ORDER OF LEARNED C IT(A)-II, SURAT DATED 30.10.2012. ITA NO.139/AHD/2013 DEV KUMAR VERMA VS. ITO SURAT A.Y. 2009-10 - 2 - A. ITA NO. 139/AHD/2013, A.Y.2009-10 (REVENUES APPEAL ) 2. THE ONLY GROUND RAISED IS REPRODUCED BELOW: ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LA W, THE LD. CIT(A)-I, SURAT HAS ERRED IN RESTRICTING THE ADDITI ON OF RS.24,32,959/- TO RS.2,63,497/- MADE U/S 69 OF THE IT ACT ON ACCOU NT OF UNEXPLAINED INVESTMENT DESPITE OF THE FAILURE ON PART OF THE AS SESSEE TO REFLECT THE BANK ACCOUNT IN THE RETURN OF INCOME AND THE SOURCE OF DEPOSITS IN THE ACCOUNT WAS ALSO NOT EXPLAINED. 3. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S 143(3), DATED 26.12.201 1 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY IS IN THE BUSIN ESS OF RETAIL TRADING OF CLOTH. AN INFORMATION WAS RECEIVED BY T HE AO THROUGH AIR. AS PER THE INFORMATION, IT WAS FOUND T HAT THE ASSESSEE HAD DEPOSITED A SUM OF RS.18,00,450/- IN S TATE BANK OF INDIA. THE ASSESSEE HAS INFORMED THAT FOR THE PURPO SE OF RUNNING THE RETAIL TRADE BUSINESS, THE ASSESSEE WAS HAVING A SAVING BANK ACCOUNT WITH STATE BANK OF INDIA. FOR THE YEAR UNDE R CONSIDERATION, RETURN OF INCOME WAS FILED OF THE RE TAIL BUSINESS DISCLOSING AN INCOME OF RS.1,39,857/-. THE ASSESSEE HAS INFORMED THAT THE RETURN WAS FILED U/S. 44AF BEING RETAIL TR ADE INCOME. THE COMPUTATION AS INFORMED DURING ASSESSMENT PROCEEDIN GS WAS AS UNDER:- RETAIL TRADE INCOME U/S. 44AF (5.000% OF TURN OVER RS.2001260) RS.100063 INCOME OFFERED FOR TAXATION U/S. 44AF RS.135248 NET BUSINESS INCOME RS.135248 INCOME FROM OTHER SOURCES INTEREST FROM LOAN & ADVANCES RS.4609 TOTAL INCOME RS.139857 ITA NO.139/AHD/2013 DEV KUMAR VERMA VS. ITO SURAT A.Y. 2009-10 - 3 - 4. THE AO WAS NOT CONVINCED AND HELD THAT SAID BANK ACCOUNT WAS NOT DISCLOSED BY THE ASSESSEE. HE WAS ALSO NOT CONVINCED THAT THE SALE PROCEEDS OF THE GOODS WERE DEPOSITED IN TH E BANK ACCOUNT. IN CONCLUSION, HE HAS HELD THAT THE TOTAL CASH DEPO SITS OF RS.22,89,473/- IN SBI WAS UNEXPLAINED DEPOSIT, WHIC H WERE TAXED ACCORDINGLY. 4.1 WHEN THE MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY, LEARNED CIT(A) HAS GIVEN THE PART RELIEF AS FOLLOWS:- I HAVE CONSIDERED THE FACTS OF THE CASE AND FOUND T HAT ON THE BASIS OF FACTS AVAILABLE IN POSSESSION OF AO IT CAN BE CLEAR LY CONCLUDED THAT THE AFORESAID BANK ACCOUNTS WERE NOT DISCLOSED BY A PPELLANT IN HIS RETURN OF INCOME. THEREFORE, THE CREDIT AND DEBIT E NTRIES OF THE SAID BAND ACCOUNTS REMAIN UNEXPLAINED. BUT IN SUCH CASES , THE WHOLE OF THE DEPOSITS CANNOT BE TREATED AS UNEXPLAINED FOR T HE REASON THAT THE FUNDS HAVE BEEN CIRCULATED THROUGH WITHDRAWALS AND DEPOSITS. THE SAME FUND HAS RUN THROUGH ALL THE TRANSACTIONS RELA TED TO THAT YEAR IN THOSE BANK ACCOUNTS. IN SUCH SITUATION, TAKING THE PEAK AMOUNT OF TRANSACTIONS IS BEST SUITED COURSE OF ACTION. AS PE R THE WORKING GIVEN BY APPELLANT, PEAK AMOUNT OF PURCHASE AND SALE TRAN SACTIONS COMES AT RS.1,21,007/- (ON 05.12.2008) IN ACB. FURTHER, THES E PEAK BALANCES PERTAIN TO A PARTICULAR DATE OF FINANCIAL YEAR WHIC H INCLUDED THE PROFIT EARNED BY APPELLANT ON THESE TRANSACTIONS. HOWEVER, THE PROFIT EARNED ON THE TRANSACTIONS OF THE LATER PART OF THE YEAR H AS ALSO TO BE WORKED OUT. AS PER WORKING GIVEN BY APPELLANT, THIS GROSS PROFIT COMES TO RS.73,889/- (SBI) AND RS.5,048/- (ACB) ON TOTAL TUR NOVER SUBSEQUENT TO PEAK AMOUNT ON PURCHASE-SALE TRANSACTIONS, APPLY ING THE RATE OF 6.75% WHICH IS SHOWN IN THE REGULAR BUSINESS OF APP ELLANT. WHILE CALCULATING THE TOTAL TAXABLE PROFIT, PEAK AMOUNT A ND GP AMOUNT HAS TO BE ADDED WHICH COMES AT RS 1,94,896/- (RS.1,21,0 07 + RS.73,889) AND RS.68,601/- (RS.63,553 + RS.5,048/-. IN THE LIG HT OF THIS WORKING, AO IS DIRECTED TO TAKE THE AMOUNT OF RS.2,63,497/- (RS.1,94,896/- + RS.68,601/-) AS TAXABLE INCOME IN PLACE OF RS.24,32 ,959/- ADDED BY HIM. 5. HAVING HEARD THE SUBMISSION OF BOTH THE SIDES A S ALSO CONSIDERING THE FACTS EMERGING FROM THE ORDERS OF T HE AUTHORITIES ITA NO.139/AHD/2013 DEV KUMAR VERMA VS. ITO SURAT A.Y. 2009-10 - 4 - BELOW. IT IS APPARENT THAT DEPOSITS AND WITHDRAWALS APPEARING IN THE BANK WERE REPEATED DURING THE YEAR UNDER CONSID ERATION. ON APPRECIATION OF THIS FACT AS ALSO ON CONSIDERING TH E PROVISIONS OF SECTION 44AF OF THE IT ACT, LEARNED CIT(A) HAS ARRI VED AT THE CONCLUSION THAT THE PEAK DEPOSITS SHOULD BE TAKEN I NTO ACCOUNT. THEN HE HAS WORKED OUT THE PERCENTAGE OF PROFIT IN THIS LINE OF BUSINESS. IN OUR OPINION, LEARNED CIT(A) HAS TAKEN A CORRECT VIEW. WE FIND NO FALLACY IN THE STANDS TAKEN BY THE LEARN ED CIT(A) HENCE, THE SAME IS HEREBY CONFIRMED. RESULTANTLY, T HIS GROUND OF THE REVENUE IS HEREBY DISMISSED. B. CO NO.164/AHD/2013, A.Y.2009-10 (ASSESSEES APPEAL) 6. THE ASSESSEE HAS RAISED THE CROSS OBJECTION AND GROUNDS ARE AS FOLLOWS:- THAT HONBLE CIT(A) HAS ERRED IN SUSTAINING THE ADD ITION OF PEAK BALANCE OF BANK ACCOUNTS I.E. STATE BANK OF INDIA A ND ADINATH CO-OP. BANK OF RS.1,94,896(I.E. RS.1,21,007 + RS.73,889) T HROUGH AMOUNT DEPOSITED IN THESE BANK ACCOUNTS PERTAINS TO SALES PROCEEDS REFLECTED BY THE ASSESSEE IN HIS RETURN OF INCOME. THAT HONBLE CIT(A) HAS ERRED IN ESTIMATING GROSS P ROFITS OF RS.63,553/- AND RS.5,048/- TOTALING TO RS.68,601/- IN RESPECT OF TRANSACTIONS IN BANK ACCOUNT OF STATE BANK OF INDIA AND ADINATH CO- OP. BANK DESPITE THE FACT THAT ASSESSEE HIMSELF HAS SHOWN BUSINESS INCOME OF RS.1,35,248/- IN HIS RETURN OF INCOME. 7. AFTER DUE CONSIDERATION OF THE FACTS AND THE TOT ALITY OF THE CIRCUMSTANCES OF THE CASE, WE HAVE ALREADY UPHELD T HE VIEW TAKEN BY THE LEARNED CIT(A). IN CONSEQUENCE THEREOF, THE CROSS OBJECTION OF THE ASSESSEE DOES NOT SURVIVE. THE GRO UNDS RAISED IN THE CROSS OBJECTION ARE HEREBY DISMISSED. ITA NO.139/AHD/2013 DEV KUMAR VERMA VS. ITO SURAT A.Y. 2009-10 - 5 - 8. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. SD/- SD/- (T.R. MEENA ) (MUKUL KR. S HRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMB ER AHMEDABAD; DATED 23/08/2013 PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD