DHANJI V. NISHAR, MUMBAI V. ITO 20(20(1), MUMBAI

CO 189/MUM/2009

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4959 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-03-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 22-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUNIT K SINGH
• Keywords: Unexplained cash credit; Business income; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI R.S.PADVEKAR, JM ITA NO.2055/MUM/2009 : ASST.YEAR 2005-2006 THE INCOME TAX OFFICER WARD 20(2)1) MUMBAI. VS. SHRI DHANJI VIRJI NISAR PROP. BALAJI COLLECTIONS 113 MANISH VILLA BUILDING VERSOVA ROAD, ANDHERI (WEST) MUMBAI 400 053. PA NO.AABPN5298C. (APPELLANT) (RESPONDENT) CO NO.189/MUM/2009 : ASST.YEAR 2005-2006 SHRI DHANJI VIRJI NISAR PROP. BALAJI COLLECTIONS 113 MANISH VILLA BUILDING VERSOVA ROAD, ANDHERI (WEST) MUMBAI 400 053. VS. THE INCOME TAX OFFICER WARD 20(2)1) MUMBAI. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI SUNIT K.SINGH ASSESSEE BY : SHRI SANJAY PARIKH O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCO ME-TAX (APPEALS) ON 30.12.2008 IN RELATION TO THE ASSESSMENT YEAR 2005- 2006. 2. THE ONLY ISSUE RAISED BY THE REVENUE IN ITS APPE AL IS AGAINST THE DELETION OF ADDITION OF RS.10,53,730 MADE BY THE ASSESSING OFFI CER ON ACCOUNT OF UNACCOUNTED CASH CREDIT U/S.68 OF THE ACT. BRIEFLY STATED THE F ACTS OF THE CASE ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING IN TEXTILES AND READYMADE GARMENTS. MOST OF THE PURCHASES AND SALES WERE MADE ON CASH BASIS. ON THE PERUSAL OF THE BANK STATEMENT IT WAS NOTICED BY THE ASSESS ING OFFICER THAT THERE WERE DEPOSITS IN THE BANK INCLUDING INTEREST TOTALING TO RS.17,45,115. ON BEING CALLED UPON TO SHOW AS TO WHERE FROM THESE AMOUNTS CAME, T HE ASSESSEE FILED HIS AFFIDAVIT ITA NO.2055 & CO 189/MUM/2009 SHRI DHANJI VIRJI NISAR. 2 AND ADMITTED THAT DUE TO OVERSIGHT THE ACCOUNTANT F AILED TO RECORD THE TRANSACTIONS IN THE BOOKS OF ACCOUNT REPRESENTED BY CASH DEPOSIT S AND WITHDRAWALS ON ACCOUNT OF PURCHASES AND SALES MADE IN CASH. THE ASSESSING OFF ICER MADE ADDITION OF THE TOTAL CASH DEPOSITS AMOUNTING TO RS.17,45,115. THE LEARNE D CIT(A) UPHELD THE ASSESSMENT ORDER ON THE ISSUE THAT THE ASSESSEE WAS DOING BUSINESS OUTSIDE THE BOOKS OF ACCOUNT AND THERE WERE UNACCOUNTED SALES T O THE TUNE OF RS.17,45,115. HE APPLIED GROSS PROFIT RATE OF 32.73% (AS DISCLOSED B Y THE ASSESSEE IN THE RETURN OF INCOME) ON SUCH UNACCOUNTED SALES AND SUSTAINED ADD ITION OF RS.5,71,176. A FURTHER ADDITION OF RS.1,20,209 WAS SUSTAINED COMPR ISING OF TWO ITEMS VIZ., FIRST, A SUM OF RS.57,000 WHICH WAS WITHDRAWN BY THE ASSESSE E FROM THE BANK ACCOUNT BUT NOT RE-DEPOSITED AND USED FOR PERSONAL PURPOSES AND SECOND, AN AMOUNT OF RS.63,269 WHICH WAS THE PEAK BALANCE FROM THE BANK ACCOUNT. THE REVENUE IS IN APPEAL AGAINST THE RELIEF ALLOWED BY THE LEARNED CI T(A). THE ASSESSEE, IN HIS CROSS OBJECTION, IS AGAINST THE ADDITIONS SUSTAINED. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS FOUND AS AN UNDISPUTED POSITION THAT T HE ASSESSEE WAS ENGAGED IN PURCHASE AND SALE BUSINESS OUTSIDE THE BOOKS OF ACC OUNT. AS ADMITTED, TOTAL SALES WORTH RS.17,45,115 WERE MADE IN CASH OUTSIDE THE BO OKS OF ACCOUNT WHICH AMOUNT WAS DEPOSITED IN THE BANK ACCOUNT OVER THE PERIOD. THIS RS.17.45 LAKHS IS NOT A DEPOSIT IN SINGLE STROKE BUT AMOUNT SPREAD OVER THE PERIOD. APART FROM SUCH DEPOSITS, THE ASSESSEE WITHDREW SEVERAL AMOUNTS, REPRESENTING PURCHASES MADE IN CASH AND THE PEAK WAS FOUND BY THE CIT(A) AT RS.63 ,269 FOR WHICH HE HAS SUSTAINED THE ADDITION. A FURTHER SUM OF RS.57,000 REPRESENTING WITHDRAWALS MADE BY THE ASSESSEE THAT WERE NOT RECYCLED INTO BANK HA S ALSO BEEN SUSTAINED. IT IS OBVIOUS THAT THE ENTIRE UNRECORDED SALES CANNOT BE TREATED AS INCOME. ONLY THE PROFIT COMPONENT AND THE INITIAL INVESTMENT PLUS TH E AMOUNT WITHDRAWN AND BROUGHT INTO CYCLE NEEDS TO BE ADDED, WHICH HAS BEEN RIGHTL Y DONE BY THE LD. CIT(A). THERE IS NO JUSTIFICATION FOR MAKING ADDITION FOR THE ENT IRE SUM REPRESENTING UNACCOUNTED ITA NO.2055 & CO 189/MUM/2009 SHRI DHANJI VIRJI NISAR. 3 SALES. IN OUR CONSIDERED OPINION THE LEARNED CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION TO THIS EXTENT. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER. 4. THE LEARNED A.R. DID NOT PRESS THE CROSS OB JECTION. 5. IN THE RESULT, THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS 9 TH DAY OF JULY, 2010. SD/- SD/- (R.S.PADVEKAR) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 9 TH JULY, 2010 . DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT(A)-XX, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.