Smt. Prativa Naresh Chidipal, Surat V. The Income Tax Officer, Ward-2(2), Surat

ITA 1150/AHD/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2274 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Assessee Lawyers: MEHUL R SHAH
• Keywords: Gift; Business income; Peak credit
• Section: 131; 44AD

Judgement Text

SMT. PRATIVA NARESH CHIDIPAL V. ITO 2(2) SURAT /I.T.A. NO.1150/AHD/2014/A.Y.09-10 PAGE 1 OF 6 INCOM TAX APPELLATE TRIBUNAL SURAT-BENCH-SURAT BEFORE SHRI C .M. GARG, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 1150/AHD/2014: ASSESSMENT YEAR: 2009-10 SMT. PR ATIVA NARESH CHIDIPAL, 102 NAVJIVAN APARTMENT, NEAR KADIWALA BUNKI HOSPITAL SURAT PAN: ABPPC 6792B V S . INCOME TAX OFFICER, WARD- 2(2) SURAT APPELLANT RESPONDENT ASSESSEE BY SHRI MEHUL R. SHAH, CA REVENUE BY SHRI R. P. RASTOGI, SR. D.R. DATE OF HEARING 01.08.2018 DATE OF PRONOUNCEMENT 10. 08.2018 ORDER PER O.P.MEENA, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, SURAT (IN SHORT THE CIT (A)) DATED10.02.2014 FOR THE ASSESSMENT YEAR 2009-10. 2. GROUND NO. 1 & 2 RELATES TO CONFIRMATION OF ADDITION OF RS.14,30,000 MADE ON ACCOUNT OF CASH DEPOSITS IN BANK ACCOUNT. 3. LEARNED AUTHORIZED REPRESENTATIVE (THE LD. A.R.) OF THE ASSESSEE SUBMITTED THAT THE BANK ACCOUNT WITH SURAT NATIONAL CO-OPERATIVE BANK AND BALANCE SHEET HAS BEEN DISCLOSED IN PERSONAL ACCOUNTS AND ARE REFLECTED IN THE RETURN OF INCOME. THE ASSESSEE HAD DISCLOSED THIS BANK SMT. PRATIVA NARESH CHIDIPAL V. ITO 2(2) SURAT /I.T.A. NO.1150/AHD/2014/A.Y.09-10 PAGE 2 OF 6 ACCOUNT IN THE RETURN OF INCOME FROM PAST SO MANY YEARS I.E. FROM ASSESSMENT YEAR 2006-07 WHEN THERE WAS MANUAL FILING OF RETURN OF INCOME, THE SAID BANK ACCOUNT IS ALSO REFLECTED IN THE RETURN AND PERSONAL ACCOUNTS FILED WITH THE DEPARTMENT. IN VIEW OF THIS MATTER, NO ADDITION COULD BE MADE. WITH REGARD TO SOURCE OF CASH DEPOSITS AMOUNTING TO RS. 14, 30,000, IT WAS EXPLAINED THAT A SUM OF RS. 5, 71,587 WAS CASH IN HAND AS ON 01. 04. 2008. THE PERSONAL SET OF BOOKS OF ACCOUNTS AND THE BANK ACCOUNTS WERE MAINTAINED WITH THE SAID BANK WAS ALSO SHOWN IN THE PERSONAL BOOKS OF ACCOUNTS. IT WAS FURTHER EXPLAINED THAT A SUM OF WHICH 5 LAKHS WAS RECEIVED AS GIFT FROM HER HUSBAND, WHICH WAS DULY CONFIRMED BY HER HUSBAND IN HIS STATEMENT RECORDED UNDER SECTION 131 BY THE AO AND ALSO BY HER IN HER STATEMENT RECORDED UNDER SECTION 131 OF THE ACT. FURTHER, A SUM OF RS.1,45,000 WAS RECEIVED TROUGH CASH BACK FROM DEBTORS TO WHOM WERE ADVANCES WERE GIVEN. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS FILED HER RETURN OF INCOME IN ITR-4 IN WHICH ONLY THE PROPRIETORSHIP ACCOUNTS WERE TO BE DISCLOSED AND NOT THE PERSONAL SET OF ACCOUNTS. THEREFORE, THE ASSESSEE HAS NOT INCLUDED THIS BANK ACCOUNT IN THE ITR-4 OF THE RETURN OF INCOME FILED BY THE ASSESSEE. THE ASSESSEE`S TURNOVER IS BELOW PRESCRIBED LIMITS HENCE, SHE WAS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS AS PER PROVISIONS OF SECTION 44AF/44AD. HOWEVER, IN SPITE THIS SHE MAINTAINED SMT. PRATIVA NARESH CHIDIPAL V. ITO 2(2) SURAT /I.T.A. NO.1150/AHD/2014/A.Y.09-10 PAGE 3 OF 6 PERSONAL SET OF BOOKS OF ACCOUNTS AS WELL AS BUSINESS ACCOUNTS OF HER PROPRIETARY CONCERN. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THERE ARE CASH WITHDRAWALS IN THIS BANK ACCOUNT TO THE TUNE OF RS. 9, 92, 000 AT SOME 13 INSTANCES AND THE SAME IS AVAILABLE FOR DEPOSIT IN ANY CASE IF THE CASH FLOW STATEMENT OF THE ASSESSEE IS NOT ACCEPTED. THE PEAK OF CASH DEPOSITS WITH THE BANK ACCOUNT COMES TO RS.5, 03,979 ONLY AS ON 04. 07. 2008. THIS AMOUNT OF RS.5,03, 979 IS EASILY EXPLAINED BY THE OPENING OF CASHBOOK AND CASH IN HAND OF RS.5,71, 587 AND RS. 66, 065, RESPECTIVELY. THE CREDIT OF THE SAME IS TO BE GIVEN AS ASSESSEE HAS CLEARLY PROVED THAT THE CASH IN BANK IS DISCLOSED IN THE BOOKS OF ACCOUNTS AND IF THE SAME IS NOT CONSIDERED, THERE WOULD NOT BE ANY DIFFERENCE IF TAXPAYERS MAINTAINING UNDISCLOSED BANK ACCOUNT AND IS STILL GETTING THE BENEFIT OF THE OF PEAK THEORY AND THE PRESENT ASSESSEE WHO HAD DISCLOSED THE BANK ACCOUNT IN HIS RETURN OF INCOME FROM PAST SO MANY YEARS AND IN A.Y.2006- 07, WHEN THERE WAS MANUAL FILING, THE SAID BANK ACCOUNT IS ALSO REFLECTED IN THE RETURN AND PERSONAL ACCOUNTS FILED WITH THE DEPARTMENT. IN VIEW OF THESE FACTS, NO ADDITION SHOULD HAVE BEEN MADE. FURTHER, WITHOUT PREJUDICE TO THE ABOVE, IT WAS SUBMITTED THAT THE AO HAS NOT DISPUTED THE REGULAR BUSINESS OF THE ASSESSEE EVEN THE TOTAL DEPOSIT IN BANK ACCOUNT IS CONSIDERED AS BUSINESS RECEIPTS, AND THE PROFIT RATE IN THE REGULAR SMT. PRATIVA NARESH CHIDIPAL V. ITO 2(2) SURAT /I.T.A. NO.1150/AHD/2014/A.Y.09-10 PAGE 4 OF 6 PROPRIETORSHIP OF 5.57% IS ADOPTED THEN, THE ADDITION AMOUNTS TO RS. 79, 651 AND THE ADDITION IF ANY SHOULD BE RESTRICTED TO THE SAID AMOUNT ONLY. 4. PER CONTRA, THE LD. SR. DR RELIED ON THE ORDER OF LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE HAS NOT DISCLOSED THIS BANK ACCOUNT IN HER RETURN OF INCOME. FURTHER, THE CASH IN HAND OF RS. 5.03 LAKHS IS NOT SUPPORTED BY REGULAR BOOKS OF ACCOUNTS, AS PERSONAL SET OF BOOKS OF ACCOUNTS IS NOT REFLECTED IN HER ITR-4. IT WAS ALSO SUBMITTED THAT WHEN THE ASSESSEE AND HER HUSBAND WERE MAINTAINING BANK ACCOUNT THEN WHAT WAS THE NEED OF GIFT IN CASH, HENCE, EXPLANATION OF GIFT IS ALSO NOT ACCEPTABLE. THEREFORE, IT WAS VEHEMENTLY ARGUED THAT THE AO HAS CORRECTLY MADE THE ADDITION OF CASH DEPOSITS REFLECTED IN BANK ACCOUNT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS FILED E RETURN IN ITR -4 IN WHICH ONLY REQUIREMENT WAS TO DISCLOSE ACCOUNT OF PROPRIETARY CONCERN. THEREFORE, THIS BANK ACCOUNT IS NOT REFLECTED IN SAID RETURN OF INCOME. WE ALSO OBSERVE THAT THE ASSESSEE HAS BEEN SHOWING INTEREST INCOME FROM SAVING BANK ACCOUNT FROM A.Y. 2006-07, HENCE, THIS ACCOUNT IN A WAY CANNOT BE TERMED AS NOT DISCLOSED. HOWEVER, WE FIND THAT THE SOURCE OF CASH DEPOSITS IS CLAIMED TO HAVE BEEN MADE BY WAY OF CASH IN HAND OF RS. 5,71,587 AND GIFT OF RS. 5 LAKH AND CASH RECEIPTS FROM DEBTORS AT RS. 1.45 SMT. PRATIVA NARESH CHIDIPAL V. ITO 2(2) SURAT /I.T.A. NO.1150/AHD/2014/A.Y.09-10 PAGE 5 OF 6 LAKHS AS AGAINST ADVANCE. HOWEVER, THE CASH FLOW STATEMENT WAS NOT FOUND ACCEPTABLE BY THE AO. HOWEVER, IT IS TRUE THAT THE ASSESSEE IS RUNNING A PROPRIETARY CONCERN OF WHICH ACCOUNTS ARE DISCLOSED BUT ENTRIES OF MENTIONED IN THIS BANK ACCOUNT ARE NOT PART OF PROPRIETARY CONCERN BUSINESS TRANSACTION BUT CERTAINLY IT COULD BE RELATED TO PERSONAL SET OF BOOKS OF ACCOUNTS OF WHICH THE ASSESSEE HAS SHOWN INCOME AT RS.1,19,001. HOWEVER, WE FIND THAT THERE ARE CASH WITHDRAWALS OF RS. 9,92,000 FROM THIS BANK ACCOUNT THEREFORE; THE ENTIRE CASH DEPOSITS CANNOT BE CONSIDERED AS UNDISCLOSED INCOME OF THE ASSESSEE HENCE, BENEFIT OF CASH WITHDRAWAL IS REQUIRED TO BE CONSIDERED. THEREFORE, THE CLAIM OF THE ASSESSEE THAT THE GROSS PROFIT RATE OF 5.57% DISCLOSED IN RESPECT OF PROPRIETARY CONCERN OF NARESH SILK MILL BE APPLIED TO TOTAL CASH DEPOSITS HAS ALSO FORCE THEREIN. IN VIEW OF THIS MATTER, WE ARE OF THE CONSIDERED OPINION THAT NET PROFIT RATE OF 8% AS PER PROVISIONS OF SECTION 44AD WOULD BE REASONABLE TO TOTAL CASH DEPOSITS OF RS.14,30,000 WHICH WORKED OUT TO RS.1,14,400 AND CONSEQUENTLY, THIS MUCH ADDITION BEING NET PROFIT OF BUSINESS IS SUSTAINED, CONSIDERING FACT THAT THIS BANK ACCOUNT STANDS DISCLOSED FROM A.Y. 2006-07 AND THEREFORE, THESE CASH DEPO SITS COULD BE LINKED TO OUTSIDE SALES BEING CARRIED OUT IN THE NAME OF M/S. NARESH SILK MILL. THEREFORE, CONSIDERING THE ENTIRETY OF FACTS AND TAKING A HOLISTIC APPROACH IN THE MATTER, WE ARE OF SMT. PRATIVA NARESH CHIDIPAL V. ITO 2(2) SURAT /I.T.A. NO.1150/AHD/2014/A.Y.09-10 PAGE 6 OF 6 THE CONSIDERED VIEW THAT ADDITION OF NET PROFIT AT RS. 1, 14,400 IS UPHELD AND BALANCE ADDITION OF RS. 13, 15,600 IS DELETED. THAT GROUND NO. 1 AND 2 OF THE APPEAL ARE PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 10.08.2018 . SD/- SD/- ( . . /C.M. GARG) ( . . /O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER DATED: 10 TH AUGUST 2018/OPM / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) THE CIT(A)4. / PR. CIT 5. , / D.R. (ITAT) 6. / GUARD FILE ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT