Ghanshyam Agarwal, Kolkata V. ITO, Ward - 45(1), Kolkata, Kolkata

ITA 1122/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54770 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 29-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N DUTTA GUPTA D R
• Assessee Lawyers: A K TIBREWAL
• Keywords: Unexplained investment; Unexplained expenditure; Peak credit

Judgement Text

, ' , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA ( ) . . , , , , , , ) [BEFORE SRI S.V. MEHROTRA, A.M. & SRI MAHAVIR SING H, J.M.] ! ! ! ! / I.T.A NO. 1122/KOL/2011 ASSESSMENT YEAR : 2006-2007 GHANSHYAM AGARWAL, KOLKATA -VS.- INCOME TAX OFFICER, WARD-45(1), KOLKATA (PAN : AEGPA 5496 N) ( '# /APPELLANT ) ( $%'# / RESPONDENT ) FOR THE APPELLANT ( '# ) : SHRI A.K. TIBREWAL, A.R. FOR THE RESPONDENT ( $%'# ) : SHRI N. DUTTA GUPTA, D.R. &' ( ) * &' ( ) * &' ( ) * &' ( ) * /DATE OF HEARING : 30.12.2011 +, ) * +, ) * +, ) * +, ) * /DATE OF PRONOUNCEMENT : 30.12.2011 - / ORDER PER SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER/ . . , :- THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER OF LD. COMMISSIONER OF INCOME- TAX (APPEALS)-XXX, KOLKATA DATED 22.07.2011 FOR THE ASSESSMENT YEAR 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED HIS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.99,570/-. THE ASSESSING OFFICER ON THE BASIS OF AIR INFORMATION NOTED THAT THE ASSESSEE HAD DEPOSITED CASH OF RS.15,98,356/- INTO A BANK ACCOUNT MAINTAINED WITH STANDARD CHARTERED BANK DURING THE PERIOD 01.04.2005 TO 31.0 3.2006. THE ASSESSING OFFICER OBTAINED THE COPY OF BANK ACCOUNT WITH THE STANDARD CHARTERE D BANK. THE ASSESSEE EXPLAINED THAT BANK ACCOUNT BEARING NO.32210432008 WITH STANDARD CHARTE RED BANK, SHAKESPEARE SARANI, KOLKATA HAD NOT BEEN SHOWN IN THE BALANCE-SHEET BECAUSE THA T BANK ACCOUNT WAS CONTROLLED BY PARTY DURING THE YEAR. THE ASSESSEE HAD GIVEN THE FOLLOWI NG EXPLANATION :- BANK ACCOUNT BEARING NO. 32210432008 AT STANDARD C HARTERED BANK, SHAKESPEARE SARANI, KOLKATA HAS NOT SHOWN IN THE BA LANCE SHEET BECAUSE THAT BANK ACCOUNT WAS CONTROLLED BY PARTY D URING THE YEAR. THE ASSESSEE WAS THE BROKER AGENT OF M/S. BAJRANGBALI T EXTILES, AALOO KATHRA, AMRITSAR. HE WAS SELLING GOODS OF THE SAID FIRM ONLY. THE OWNER ADVISED THAT YOU COLLECT MONEY FROM CUSTOMER AND BE DEPOSITED INTO ITA NO. 1122/KOL./2011 2 BANK. WE WITHDRAW THEIR MONEY AT SURAT/ AMRITSAR. A SSESSEE WAS GETTING ONLY COMMISSION FROM THE PARTY. THIS IS THE FACT CA SE. NOW PLEASE CONSIDER OF MY FACTS. THE ASSESSING OFFICER FURTHER RAISED QUERY WHICH AR E GIVEN AT PAGE 3 & 4 OF THE ASSESSMENT ORDER. HE HAS OBSERVED THAT THE ASSESSEE CHANGED HI S STAND AND SUBMITTED THAT HE HAD STARTED PROPRIETORSHIP BUSINESS M/S. GHANSHYAM & CO. DEALER IN DRESS MATERIALS AND PRODUCED A NEWLY TRADING AND PROFIT & LOSS A/C. AND THE BALANCE-SHEE T ALONGWITH BOOKS SHOWING SOME ENTRIES SUPPORTING NEW BUSINESS. IN VIEW OF CONTRADICTORY S TANDS TAKEN BY THE ASSESEE AND ALSO IN THE ABSENCE OF VARIOUS DETAILS REGARDING PURCHASES, ETC . BEING FURNISHED BY ASSESSEE, AS NOTED AT PAGE 4 OF ASSESSMENT ORDER, THE ASSESSING OFFICER C ONCLUDED THAT THE ASSESSEES CLAIM OF BEING ENGAGED IN THE PROPRIETORSHIP BUSINESS IN THE NAME OF M/S. GHANSHYAM & CO. REMAINED UNEXPLAINED AND THE GENUINENESS OF ENTRIES IN THE B OOKS PRODUCED COULD NOT BE VERIFIED. THEREFORE, HE MADE AN ADDITION OF RS.15,98,356/-. 3. LD. CIT(APPEALS) CONFIRMED THE ACTION OF ASSESSI NG OFFICER, INTER ALIA OBSERVING THAT THE ASSESSEE HAD TO PROVIDE EVIDENCE OF BUSINESS AC TIVITY TO SUBSTANTIATE ITS ASSERTION THAT THE DEPOSITS IN ITS BANK ACCOUNT WERE OF SALE PROCEEDS. HE FURTHER OBSERVED THAT NO EXPLANATION WAS FORTHCOMING IN RESPECT OF THE DEPOSITS IN ITS B ANK ACCOUNT. HE FURTHER OBSERVED THAT THERE WAS NO EXPLANATION IN RESPECT OF THE BALANCE-SHEET AND PROFIT & LOSS A/C. OF THE SO-CALLED BUSINESS NOT BEING SUBMITTED WITH THE INCOME-TAX RE TURN. HE, THEREFORE, CONFIRMED THE ACTION OF ASSESSING OFFICER. 4. LD. COUNSEL FOR THE ASSESEE FILED BEFORE US COPY OF BANK ACCOUNT TO DEMONSTRATE THAT THERE WERE REGULAR CASH DEPOSITS AND CASH WITHDRAWA LS TO SUBSTANTIATE ITS CLAIM THAT ASSESSEE WAS REGULARLY WITHDRAWING THE AMOUNT FOR BUSINESS P URPOSES AND DEPOSITS IN THE BANK ACCOUNT WERE OF SALE PROCEEDS. LD. COUNSEL REFERRED TO THE DECISION DATED 30.07.2010 OF THIS TRIBUNAL IN THE CASE OF TANMOY CHATTERJEE VS.- ITO IN ITA NO. 1434/KOL./2009 AND DECISION DATED 28.11.2011 OF ITAT, MUMBAI IN THE CASE OF SMT. SONI YA J. SHAH VS.- ITO IN ITA NO. 2182/MUM./2010 AND IN SUPPORT OF HIS CONTENTION SUB MITTED THAT ONLY PEAK CREDIT COULD BE ADDED AND NOT THE ENTIRE DEPOSITS. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. IT IS WELL SETTLED LAW THAT IN CASE, THER E ARE REGULAR DEPOSITS AS WELL AS WITHDRAWALS ITA NO. 1122/KOL./2011 3 FROM UNDISCLOSED BANK ACCOUNT, THEN ONLY PEAK CREDI T CAN BE ADDED IF BOTH THE DEPOSIT AND WITHDRAWAL IS FROM SAME SOURCE. IN THIS REGARD, WE MAY REFER TO THE DECISION DATED 30.07.2010 IN THE CASE OF TANMOY CHATTERJEE VS.- ITO IN ITA N O. 1434/KOL./2009, WHEREIN TRIBUNAL HAS HELD AT PARA 3.7 AS UNDER :- 3.7. WE FURTHER OBSERVE THAT THE AO MADE THE ADDI TION OF RS.49 LAKHS BY OBSERVING THAT THERE WERE UNEXPLAINED EXPENDITURE BY WAY OF W ITHDRAWAL FROM THE SAID BANK ACCOUNT OF RS.42 LAKHS. HOWEVER, ON PERUSAL OF THE DETAILS STATED BY THE AO IN PARA 4 AT PAGE 3 OF THE ASSESSMENT ORDER, THE TOTAL COMES TO RS.49.09 LAKHS. THEREFORE, THE LD. CIT(A) HAS CONSIDERED THE AGGREGATE AMOUNT OF THE D EPOSITS AS RS.49.09 LAKHS AS UNEXPLAINED DEPOSIT U/S. 69A OF THE ACT. WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS MADE CASH DEPOSIT AND ALSO CASH WITHDR AWAL FROM TIME TO TIME FROM THE SAID BANK ACCOUNT. THE ASSESSEE HAS ALSO NOT BEEN A BLE TO EXPLAIN THE SOURCE OF DEPOSIT IN THE SAID BANK ACCOUNT. FURTHER, THE DEPA RTMENT HAS ALSO NOT BROUGHT ANY EVIDENCE ON RECORD THAT THE SAID CASH WITHDRAWAL HA S BEEN SPENT BY THE ASSESSEE. THEREFORE, WE FIND SUBSTANCE IN THE SUBMISSION OF T HE ASSESSEE THAT THE ASSESSEE MADE WITHDRAWAL FROM THE SAID BANK ACCOUNT AND AGAIN DEP OSITED THE SAME AS THE ASSESSEE COULD NOT UTILIZE THE WITHDRAWAL AMOUNT FOR THE PUR POSE FOR WHICH IT WAS WITHDRAWN. NO DOUBT THE ASSESSEE HAS NOT STATED ANY WHERE THE PURPOSE FOR WHICH THE AMOUNT WAS WITHDRAWN FROM TIME TO TIME. THE ASSESSEE HAS ALSO PLACED THE BANK STATEMENT AT PAGE 7 OF THE PAPER BOOK. CONSIDERING THE SAID BANK STAT EMENT, THE EXTRACT OF WHICH HAS BEEN GIVEN BY THE LD. CIT(A) AT PAGE 3 OF THE IMPUG NED ORDER, WHICH HAS ALREADY BEEN REPRODUCED HEREINABOVE, WE ARE OF THE CONSIDERED VI EW THAT THE PEAK OF THE BALANCE IN THE SAID BANK ACCOUNT SHOULD BE CONSIDERED AS UNEXP LAINED INVESTMENT U/S. 69 OF THE I.T. ACT. ON PERUSAL OF THE SAID BANK STATEMENT, WE OBSERVE THAT THE PEAK BALANCE AS ON 14TH JUNE, 2005 OF RS.16,15,261/- AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SAID AMOUNT COULD BE CONSIDERED AS UNEXPLAINED INVE STMENT BY WAY OF DEPOSIT IN THE SAID UNDISCLOSED BANK ACCOUNT. THEREFORE, WE MODIFY THE ORDERS OF THE AUTHORITIES BELOW AND RESTRICT THE ADDITION TO RS.16,15,261/- U /S. 69 OF THE I. T. ACT AS AGAINST RS.49.09LACS U/S. 69A AS SUSTAINED BY THE LD. CIT(A ). HENCE, THE GROUND NOS.1 TO 3 OF THE APPEAL TAKEN BY THE ASSESSEE ARE ALLOWED IN PAR T. ITAT, MUMBAI VIDE ORDER DATED 28.01.2011 IN THE CAS E CASE OF SMT. SONIYA J. SHAH VS.- ITO IN ITA NO. 2182/MUM./2010 HAS OBSERVED AT PARA 3 AS UNDER :- 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE LIMITED RELIEF WHI CH HAS BEEN SOUGHT BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEA RING BEFORE US IS THAT INSTEAD OF MAKING THE TOTAL ADDITION ON ACCOUNT CAS H DEPOSITS OF 10,26,300/-, ONLY THE PEAK AMOUNT SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE AS THERE WERE WITHDRAWALS OF CASH MADE BY THE ASSESSEE FROM THE SAME BANK ACCOUNT. HE HAS ALSO PREPARED AND FURNISHED WORKING OF SUCH PEAK CREDIT WHICH SHOWS THAT THE PEAK CREDIT OF THE CASH DEPOSITS AND WITHDRAWALS WAS ONLY TO THE EXTENT OF 2,69,500/-. THE LEARNED D.R. HAS NOT BEEN DISPUTED THAT THERE BEING CASH DEPOSITS AND WITHDRAWALS MADE FROM THE S AME BANK ACCOUNT, THE ADDITION ONLY TO THE EXTENT OF PEAK CREDIT HAS TO B E MADE. SHE, HOWEVER, HAS URGED THAT THE A.O. MAY BE GIVEN AN OPPORTUNITY TO VERIFY THE WORKING OF PEAK CREDIT PREPARED AND FURNISHED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL. ACCORDINGLY, THE IMPUGNED ORDER OF TH E LD. CIT(A) ON THIS ITA NO. 1122/KOL./2011 4 ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO TH E FILE OF THE A.O. WITH A DIRECTION TO VERIFY THE WORKING OF PEAK CREDIT PREP ARED AND FURNISHED BY THE ASSESSEE AND RESTRICT THE ADDITION MADE ON THIS ISS UE TO THE EXTENT OF PEAK CREDIT ONLY. BOTH THE REVENUE AUTHORITIES BELOW HAVE ADDED THE E NTIRE PROCEEDS ON THE GROUND THAT THE ASSESSEE FAILED TO ESTABLISH ITS BUSINESS ACTIVITY. HOWEVER, NO OTHER UNEXPLAINED INVESTMENTS HAD BEEN FOUND AND, THEREFORE, NORMAL PRESUMPTION W OULD BE THAT THE WITHDRAWALS FROM THE BANK ACCOUNT WERE UTILIZED FOR MAKING VARIOUS PAYME NT AND DEPOSITS WERE FROM SALE PROCEEDS SINCE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD A NY OTHER PURPOSE FOR UTILIZATION OF WITHDRAWALS. THE ASSESSEE HAS FILED A STATEMENT OF PEAK CREDIT CONTAINED AT PAGES 5-7 OF THE PAPER BOOK AND THE AMOUNT SHOWN DATED 02.10.2005 IN THE STATEMENT OF RS.3,07,727.17 HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER. WE, THEREFO RE, RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER FOR EXAMINING THE PEAK CREDIT STA TEMENT AND IF THE SAME IS FOUND TO BE CORRECT, THEN TO RESTRICT THE ADDITION TO THE EXTEN T OF PEAK CREDIT. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. . / . / . / . / ' 0. ' 0. ' 0. ' 0. 1) 1) 1) 1) 2 22 2 34 34 34 34 56 56 56 56 7 7 7 7 8 8 8 8 9 99 9 ORDER PRONOUNCED IN THE OPEN COURT ON 30/ 12 /2011. & : ; - 30/12/2011. SD/- SD/- [ MAHAVIR SINGH / ] [S.V. MEHROTRA/ ( . . )] JUDICIAL MEMBER/ ACCOUNTANT MEMBER/ DATED : 30/ 12/ 2011 COPY OF THE ORDER FORWARDED TO: 1. GHANSHYAM AGARWAL, 74/1, COTTON STREET, KOLKATA-7. 2 ITO, WARD-45(1), KOLKATA, 3, GOVERNMENT PLACE (W), KOLKATA-700 001 3. COMMISSIONER OF INCOME-TAX (APPEALS)- , KOLKATA 4. CIT- , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.