Sh. Rajiv Kumar Prop., Amritsar. V. The Income-tax Officer, Amritsar.

CO 60/ASR/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2047 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 26-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PADAM BHAL
• Keywords: Peak credit
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A NO. 454(ASR)/2014 ASSESSMENT YEAR: 2005-06 ITO, WARD-1(2), AMRITSAR. VS. SH. RAJIV KUMAR PROP. R.K.& CO, 84-GOENKA MKT. AMRITSAR. PAN:AAZPK8925D (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.60(ASR)/2014 (ARISING OUT OF ITA NO.454(ASR)/2014) ASSESSMENT YEAR: 2005-06 SH. RAJIV KUMAR PROP. R.K.& CO, 84-GOENKA MKT. AMRITSAR. PAN:AAZPK8925D VS. ITO, WARD-1(2), AMRITSAR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY: SH. TARSEM LAL (DR.) RESPONDENT BY: SH. PADAM BHAL (CA.) DATE OF HEARING: 09.03.2016 DATE OF PRONO UNCEMENT: 23.03.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDER OF LEARNED CIT(A), AMRITSAR, DATED 15.04.3014, FOR THE ASST. Y EAR 2005-06. ITA NO.454 & C.O. N O.60(ASR)/2014 ASST. YEAR: 2005-0 6 2 2. ONLY ONE EFFECTIVE GROUND HAS BEEN TAKEN BY REVENUE IN THIS APPEAL WHICH IS THE GRIEVANCE WITH THE ACTION OF LEARNED CIT(A), BY WHICH HE HAD RESTRICTED THE ADDITION OF RS.1,03,00,000/- TO RS.1 6,17,350/-. 3. THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS TO THE APPEAL AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL. (I) THAT THE LEARNED COMMISSIONER OF INCOME TAX(AP PEALS), AMRITSAR HAS GROSSLY ERRED IN COMPUTING THE PEAK BANK BALANCE AT RS.14,24,850/- ON 21.05.2004 INSTEAD OF RS.11,73,562/- ON 24.05.2005. (II) THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS), AMRITSAR HAS GROSSLY ERRED IN COMPUTING PROFIT EARNED BY THE ASS ESSEE BETWEEN 21.05.2004 & 28.07.2004 AT RS.2,47,500/- INSTEAD OF RS.2,20,000/-. 4. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT THE RE IS DELAY OF SEVEN DAYS IN FILING CROSS OBJECTIONS WHICH HAD HAPPENED AS THE EARLIER COUNSEL OF THE ASSESSEE HAD ADVISED HIM THAT SINCE LEARNED CIT(A) HAS ALLOWED SUFFICIENT RELIEF, THEREFORE, THERE WAS NO NEED FOR FILING FURTHER APPEAL BUT WHEN IT WAS OBSERVED THAT REVENUE HAD FI LED APPEAL AGAINST THE ORDER OF LEARNED CIT(A) AND THEREFORE, HE WAS A DVISED TO FILE CROSS OBJECTIONS ALSO. THE LEARNED AR IN THIS RESPECT SUB MITTED THAT DELAY MAY BE CONDONED. 5. THE LEARNED DR, HOWEVER OBJECTED TO CONDONNATION OF SUCH DELAY, HOWEVER, KEEPING IN VIEW THE SUBSTANTIAL JUSTICE WE CONDONED THE DELAY AND THEREFORE, LEARNED AR WAS ADVISED TO PROCEED WI TH HIS CROSS OBJECTIONS. THE LEARNED AR SUBMITTED THAT ASSESSING OFFICER HAD MADE ADDITION U/S 69A ON ACCOUNT OF CASH DEPOSITS IN IDB I BANK AND LEARNED CIT(A) HAD ALLOWED RELIEF AND HAS RESTRICTED THE AD DITION TO THE PEAK ITA NO.454 & C.O. N O.60(ASR)/2014 ASST. YEAR: 2005-0 6 3 CREDIT. HE SUBMITTED THAT WHILE ARRIVING AT THE FIG URE OF PEAK CREDIT THE LEARNED CIT(A) WRONGLY TOOK THE FIGURE OF RS.14,24, 850/- AS ON 21.05.2004. WHEREAS THE CLOSING BALANCE ON 21.5.201 4 WAS RS.11,20,916/- AND IN THIS RESPECT HE INVITED OUR A TTENTION TO PAPER BOOK PAGE 12 WHERE A COPY OF IDBI BANK ACCOUNT OF ASSES SEE WAS PLACED. IN VIEW OF THE ABOVE, THE LEARNED AR SUBMITTED THAT TH E CORRECT FIGURE SHOULD HAVE BEEN TAKEN. 6. ARGUING UPON THE SECOND GROUND, THE LEARNED AR SUBMITTED THAT THE GROSS PROFIT CALCULATED BY LEARNED CIT(A) ON TH E TURN OVER BETWEEN 21.05.2004 TO 28.07.2004 WORKS OUT TO BE 2,20,000/- AND THEREFORE, THE ADDITION SHOULD HAVE BEEN SUSTAINED OF RS.2,20,000/ - INSTEAD OF RS.2,47,500/-. 7. THE LEARNED DR REPLYING TO THE ARGUMENTS OF LEAR NED AR SUBMITTED THAT FOR CONSIDERING THE PEAK AMOUNT WITHDRAWALS AR E NOT TO BE CONSIDERED AND FIGURE OF PEAK AMOUNT WAS TO BE TAKE N AS THE MAXIMUM AMOUNT WHICH LEARNED CIT(A) HAS TAKEN CORRECTLY AND THEREFORE, FIRST GROUND OF CROSS OBJECTIONS FILED BY ASSESSEE SHOULD BE DISMISSED. 8. REGARDING SECOND GROUND OF CROSS OBJECTIONS, THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) HAS RIGHTLY ARRIV ED AT GROSS PROFIT ON THE CASH DEPOSIT BETWEEN 21.05.2004 TO 28.07.2004 @ 5.5% AND THEREFORE, SECOND GROUND SHOULD ALSO BE DISMISSED. ITA NO.454 & C.O. N O.60(ASR)/2014 ASST. YEAR: 2005-0 6 4 9. ARGUING UPON THE REVENUES APPEAL, THE LEARNED D R HEAVILY PLACED HIS RELIANCE ON THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT LEARNED CIT(A) WITHOUT VERIFYING OF PURCHASERS, THE QUANTIT Y OF GOODS OF SUPPLIER AND CASH COLLECTION MADE FROM PARTY HAD ALLOWED THE RELIEF WHICH IS NOT JUSTIFIED. 10. THE LEARNED AR IN HIS SUBMISSIONS SUBMITTED THA T LEARNED CIT(A) HAD MADE A CLEAR FINDING OF FACT THAT THE CHEQUES I SSUED BY ASSESSEE AGAINST CASH DEPOSITS WERE IN FAVOUR OF VARIOUS TRA DING FIRMS OF SURAT AND HE HAS FURTHER MADE A FINDING OF FACT THAT CHEU QES WERE CLEARED IN BANK BRANCHES OF SURAT AND THEREFORE, HE HAS RIGHTL Y RESTRICTED THE ADDITION BY TAKING PEAK AMOUNT AS THE ASSESSEE WAS MAKING SALES IN CASH AND WAS MAKING PAYMENTS TO SUPPLIERS THROUGH P AYEES ACCOUNT CHEQEUS. 11. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. FIRST WE TAKE THE APPEAL FILED BY REVENUE. WE FIND THAT ASSESSEE HAD NOT DISCLOSED IN HIS RETURN OF INCOME THE TRANSACTIONS IN IDBI BANK AND CASE OF THE ASSESSEE WAS REOPENED U/S 148 TO VERIFY THE CASH DEPOSITS IN ACCOUNT NO.14146 WITH IDBI BANK. BEFORE THE ASSESSING OFFICER THE ASSESSEE SUBMITTED THAT HE WAS EARNING COMMISSION ON SALES OF CLOTHS AND HE HAS BEEN COLLE CTING AMOUNT FROM BUYERS ON BEHALF OF SELLER OF GOODS AND HE USED TO DEPOSIT THE SAME IN HIS BANK ACCOUNT AND REMIT THE SAME TO THE SUPPLIERS TH ROUGH ACCOUNT ITA NO.454 & C.O. N O.60(ASR)/2014 ASST. YEAR: 2005-0 6 5 PAYEE CHEQUES. ON A FURTHER QUERY FROM ASSESSING OF FICER, THE ASSESSEE FURNISHED A LIST OF 86 PARTIES OF SUPPLIERS AND FUR NISHED OF 84 PARTIES TO WHOM PAYMENTS THROUGH CHEQUES WERE REMITTED FROM TH E BANK HOWEVER, HE DID NOT FILE DETAIL OF PURCHASING PARTIES AND HA D SUBMITTED THAT HE HAD NO DETAILS OF PURCHASE PARTIES BECAUSE PARTIES HAD STOPPED THEIR BUSINESS AND LEFT AMRITSAR. IT WAS ALSO SUBMITTED T HAT OUT OF 80-90 PURCHASING UNITS ONLY 15-20 WERE IN EXISTENCE AND R EMAINING PROCESSING UNIT HAD CLOSED DOWN. HOWEVER, THE ASSESSING OFFICE R WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND THEREFORE, HE MADE THE ADDITION OF CASH DEPOSITS IN THE BANK U/S 69A OF THE ACT. TH E LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE REJECTE D THE THEORY OF ASSESSEE THAT HE WAS ACTING AS COMMISSION AGENT AND HELD THAT ASSESSEE WAS ENGAGED IN UNRECORDED TRADING ACTIVITIES AND HA S BEEN BUYING AND SELLING OF CLOTH BUT HE HELD THAT ENTIRE AMOUNT OF CASH DEPOSITS CANNOT BE TAXED AND HE THEREFORE, TOOK A PEAK AMOUNT AS ON 21 .5.2004 AND RESTRICTED THE ADDITION TO THE PEAK AMOUNT OF RS.14 ,25,850/-. THE LEARNED CIT(A) TREATED THIS PEAK AS UNDISCLOSED IN VESTMENT OF THE ASSESSEE AND THEREAFTER, ON DEPOSITS OF RS.45 LACS FROM 21.05.2004 TO 28.07.2004, HE CALCULATED GP @ 5.5 % ON THE BASIS O F TRADING ACCOUNT OF M/S UNIVERSAL SILK MILLS (A PROPRIETORSHIP FIRM OF ASSESSEE) AND MADE AN ADDITION OF RS.2,47,500/- THEREBY RESTRICTING THE T OTAL ADDITION TO RS.16,17,350/-. WE FIND THAT LEARNED CIT(A) HAS RIG HTLY RESTRICTED THE ADDITION TO THE PEAK AMOUNT AS PER THE STATEMENT OF IDBI BANK. IT IS VERY ITA NO.454 & C.O. N O.60(ASR)/2014 ASST. YEAR: 2005-0 6 6 MUCH APPARENT THAT ASSESSEE HAD BEEN ISSUING CHEQUE S AGAINST THE CASH DEPOSITS AND THE FIGURES OF CHEQEUS SUGGESTS THAT T HESE MUST HAVE BEEN AGAINST PURCHASES AS NONE OF THE CHEQUES ISSUED BY ASSESSEE ARE IN ROUND FIGURES, THEREFORE WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF LEARNED CIT(A). IN VIEW OF THE ABOVE, THE APPEAL FI LED BY REVENUE IS DISMISSED. 12. NOW COMING TO THE CROSS OBJECTIONS FIELD BY ASS ESSEE, WE FIND THAT LEARNED CIT(A) HAS RESTRICTED THE ADDITION TO THE M AXIMUM PEAK AT ANY POINT OF TIME WHICH IN THE BANK ACCOUNT IS ON 21.05 .20114 AT RS.14,24,850/-. THE LEARNED AR, HAS ARGUED THAT THE FIGURE SHOULD HAVE BEEN RS.11,73,562/- WHICH IS A CLOSING FIGURE AS ON 21.5.2004. HOWEVER, WE ARE NOT IN AGREEMENT WITH THE ARGUMENT OF THE LE ARNED AR AS LEARNED CIT(A) HAS TAKEN THE MAXIMUM PEAK IN THE BANK ACCOU NT WHICH HAPPENS TO BE RS.14,24,850/- ON 21.5.2004 AND WHICH HAS BEEN RIGHTLY TAKEN BY THE LEARNED CIT(A). THIS IS HIGHEST AMOUNT IN THE BANK ACCOUNT AT ANY POINT OF TIME AND WHICH HAS BEEN RIGHTLY TAK EN BY LEARNED CIT(A) AS MAXIMUM PEAK CREDIT. IN VIEW OF THE ABOVE, THE G ROUND NO. 1 OF CROSS OBJECTIONS IS DISMISSED. 13. NOW COMING TO GROUND NO.2, WE FIND THAT ASSESSE E HAD DEPOSITED CASH AMOUNTING TO RS.45 LACS IN THE BANK ACCOUNT BE TWEEN THE PERIOD 21.05.2014 TO 28.07.2004 AND LEARNED CIT(A) HAS CAL CULATED A GROSS PROFIT @ 5.5% ON THIS FIGURE AND THE RESULTING FIGU RE COMES OUT AT ITA NO.454 & C.O. N O.60(ASR)/2014 ASST. YEAR: 2005-0 6 7 RS.2,47,500/- AND NOT RS.2,20,000/- AS CLAIMED BY LEARNED AR AND THEREFORE, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A) IN THIS RESPECT. IN VIEW OF THE ABOVE GROUND NO. 2 OF CROSS OBJECTIONS IS ALSO DISMISSED. 14. IN NUTSHELL, THE APPEAL FILED BY THE REVENUE AS WELL AS THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23.03.2016 /PK/PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.