Ram Nandan Mishra, Delhi V. ITO, New Delhi

ITA 135/DEL/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4110 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 25-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Income from undisclosed sources; Opportunity of being heard; Peak credit; Onus to prove
• Section: 143(3); 131

Judgement Text

I IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO. 135 /DEL/201 4 AY: 2010 - 11 SHRI RAM NANDAN MISHRA VS. ITO, WARD 39(3) C/O SH.KAPIL GOEL, ADV. NEW DELHI A 1/25, SECTOR 15, ROHINI DELHI 110 085 PAN: ANMPM 8959 P (APPELLANT) (RESPONDENT) APPELLANT BY : SH. KAPIL GOEL, ADV. RESPONDENT BY : SH. F.R.MEENA, SR.D.R. ORDER PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF LD.CIT(APPEALS) - XXVIII, NEW DELHI DATED 10.10.2013 PERTAINING TO THE ASSESSMENT YEAR (A.Y.) 2010 - 11 ON THE FOLLOWING GROUNDS. BEING AGGRIEVED BY THE ORDER DATED 10.10.2013 PASSED BY LD.CIT(APPEALS) - 28, NEW DELHI (CIT(A)) U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), Y OUR APPELLANT PREFERS THIS APPEAL, AMONG OTHERS, ON THE FOLLOWING GROUNDS OF APPEAL, EACH OF WHICH IS WITHOUT PREJUDICE TO, AND INDEPENDENT OF, THE OTHER: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT - A ERRED IN CONFIRMIN G THE ADDITION OF CASH DEPOSIT IN BANK ACCOUNTS WITH ORIENTAL BANK OF COMMERCE AND HDFC BANK RESPECTIVELY AMOUNTING TO RS. 29,04,050 AND RS. 15,72,750/ - TOT ALLING TO RS. 44,76,800/ - IGNORING T HE FAULTLESS PLEA OF APPELLANT TO BE ASSESSED EITHER AS PER AP PLICATION OF II REASONABLE PROFIT RATE TO SUBJECT CASH DEPOSITS BEING CASH SALES FROM UNACCOUNTED BUSINESS ACTIVITY OR ASSESSMENT AS PER PEAK THEORY AS THERE ARE REGULAR CASH WITHDRAWALS AND DEPOSITS IN SUBJECT BANK ACCOUNT ON MERE BASIS OF CONJECTURES AND S URMISES. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT - A ERRED IN CONFIRMING THE ADDITION OF CASH DEPOSIT IN BANK ACCOUNTS WITH ORIENTAL BANK OF COMMERCE AND HDFC BANK RESPECTIVELY AMOUNTING TO RS. 29,04,050 AND RS. 15,72 ,750 TOTALLING TO RS. 44,76,800/ - WITHOUT A PPRECIATING THAT ASSESSEE HAS SUCCESSFULLY DISCHARGED ITS ONUS FOR PROVING CASH DEPOSITS ARE UNACCOUNTED SALES AS EVIDENT FROM THE FACT THAT: A. AMOUNT INVOLVED IS NOT SUBSTANTIAL AND B. MAGNITUDE/FREQUENCY OF CASH DEPOSITS HAVE SUFFICIENT NEXUS WITH AS SE SSEE S BUSINESS (IN FIGURES OF 10,000 AND 12,000 ETC) ; C. IN (AY 2009 - 10) SAME PLEA ON IDENTICAL FACTS IS ACCEPTED BY LD AO U/S 143(3) ASSESSMENT ; D. IT IS DIFFICULT TO PRESAGE THAT ASSESSEE CAN PROVIDE FULL FLEDGED VOUCHERS/DETAILS/AUDIT TRAIL FOR UNACCOUNTED BUSINESS ACTIVITY/SALES ; E. LD AO HAS HIMSELF OBSERVED AT PARA 17.6(B) AND PARA 17.8 THAT CASH DEPOSITS REPRESENT PROFIT ELEMENT IN UNACCOUNTED BUSINESS ACTIVITY; F. ASSESSEE HAS NO OTHER SOURCE OF B USINESS AND NO UNACCOUNTED ASSET/INVESTMENT PARALLEL TO ALLEGED INCOME IS THERE; G. EVEN UNDER SEARCH PENALTY PROVISIONS LIKE SECTION 271AAA/271AAB, MERE STATING OF MANNER OF EARNING THE INCOME IS TREATED AS SUFFICIENT COMPLIANCE FOR CLAIMING IMMUNITY THE REIN; 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT - A ERRED IN CONFIRMING THE ADDITION OF CASH DEPOSIT IN BANK ACCOUNTS WITH ORIENTAL BANK OF COMMERCE AND HDFC BANK RESPECTIVELY AMOUNTING TO RS. 29,04,050 AND RS. 15,72,750 TOTALLING TO RS. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT - A ERRED IN CONFIRMING THE ADDITION OF 299,232 ON A/ OF ALLEGED UNACCOUNTED HOUSE HOLD EXPENSES ON MERE BASIS OF CURRENT LEVEL OF INFLATION AND PERCEPTION FOR EXPENDITURE REQUIRED ON DAY TO DAY RUNNING OF HOUSE WITHOUT ANYTHING MORE. III RELIEF CLAIMED I) TO DELETE THE ADDITION OF RS 44,76,800 AND DIRECTION TO BE ASSESSED AS PER REASONABLE PROFIT RATE APPLICATION OR ANY LUMP SUM ADDITION AND/ OR PEAK THEORY; II) TO HOLD CIT - A GAVE PERVERSE FINDINGS DEHORS THE MATERIAL ON RECORD AND IGNORED RELEVANT MATERIAL; HI) TO DELETE THE WRONGFUL ADDITION FOR ALLEGED HOUSE HOLD EXPENSES OF RS 299,232/ - IV) ANY OTHER RELIEF AS DEEMED FIT AND APPROPRIATE IN FACTS AND CIRC UMSTANCES OF THE CASE . THAT THE APPELLANT CRAVES LEAVE TO ADD, TO, AMEND, MODIFY, RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STATED HEREIN ABOVE, EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT - A ERRED IN CONFIRMING THE ADDITION OF 299,232 ON A/ C OF ALLEGED UNACCOUNTED HOUSE HOLD EXPENSES ON MERE BASIS OF CURRENT LEVEL OF INFLATION AND PERCEPTION FOR EXPENDITURE REQUIRED ON DAY TO DAY RUNNING OF HOUSE WITHOUT A NYTHING MORE. RELIEF CLAIMED I) TO DELETE THE ADDITION OF RS 44,76,800 AND DIRECTION TO BE ASSESSED AS PER REASONABLE PROFIT RATE APPLICATION OR ANY LUMP SUM ADDITION AND/ OR PEAK THEORY; II) TO HOLD CIT - A GAVE PERVERSE FINDINGS DEHORS THE MATERIAL ON RE CORD AND IGNORED RELEVANT MATERIAL; III ) TO DELETE THE WRONGFUL ADDITION FOR ALLEGED HOUSE HOLD EXPENSES OF RS 299,232/ - . IV) ANY OTHER RELIEF AS DEEMED FIT AND APPROPRIATE IN FACTS AND CIRCUMSTANCES OF THE CASE . THAT THE APPELLANT CRAVES LEAVE TO ADD, TO , AMEND, MODIFY, RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STATED HEREIN ABOVE, EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. IV 2. FACTS OF THE CASE: - THE FACTS OF THE CASE AS PER ASSESSMENT ORDER ARE THAT AIR INFORMATION WAS RECEIVED THA T THE ASSESSEE HAD DEPOSITED CASH AMOUNTING TO RS.40,31,000/ - IN HIS SB ACCOUNT WITH ORIENTAL BANK OF COMMERCE, PUSHPANJALI ENCLAVE AND HDFC BANK, PUSHPANJALI ENCLAVE, DELHI. IN RESPONSE TO NOTICE ISSUED BY THE ASSESSING OFFICER (A.O.) BALANCE SHEET, PROF IT AND LOSS ACCOUNT AND BANK STATEMENT OF UNION BANK OF INDIA WAS FILED. AS PER THESE DETAILS, SALES OF MIXI AND SPARE PARTS HAVE BEEN SHOWN AT RS.1,79,545/ - . THE A.O. DEPUTED AN INSPECTOR TO THE SHOP OF THE ASSESSEE. ON VERIFICATION IT WAS FOUND THAT O NLY 33 BILLS HAVE BEEN ISSUED OVER A PERIOD OF 2 YEARS. THE BOOKS OF ACCOUNTS WERE NOT AVAILABLE AT THE SHOP. IT WAS CLAIMED THAT ALL PURCHASES AND SALES WERE MADE IN CASH AND THERE WAS NO STOCK REGISTER. NO JOB WORK WAS BEING DONE. TO VERIFY THE CLAI M OF THE ASSESSEE , SUMMONS U/S 131 WERE ISSUED TO PRODUCE THE BOOKS OF ACCOUNTS AND BILLS AND VOUCHERS OF THE TRANSACTIONS BEING CARRIED OUT BY THE ASSESSEE. NO COMPLIANCE TO THE SUMMONS AND THE SUBSEQUENT SHOW CASE WAS MADE. A FINAL SHOW CAUSE WAS ISSU ED FOR 4.2.2013, IN RESPONSE TO WHICH THE A.R. PROPOSED TO SURRENDER 8% OF THE CASH DEPOSITED IN THE BANK I.E. RS.44,76,800/ - . HOWEVER NO DETAILS/DOCUMENTS IN SUPPORT OF THE CLAIM THAT THE CASH DEPOSITS REPRESENTED SALES WERE FILED BY THE ASSESSEE. AS DE TAILED IN THE ASSESSMENT ORDER , AMPLE OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE TO PRODUCE THE DETAILS AS REQUIRED BY THE AO TO FINALISE THE ASSESSMENT AND TO VERIFY THE CLAIM OF THE ASSESSEE. HOWEVER, NO SUCH DETAILS WERE FURNISHED. FURTHER THE CLAIM OF THE ASSESSEE TO REVISE HIS RETURN WAS ALSO REJECTED AS THE ORIGINAL RETURNS HAVE BEEN FILED MUCHBEYOND TIME ON 6.7.2011. IN THE ABSENCE OF SUPPORTING DOCUMENTS AND ON THE BASIS OF DETAILED REASONS IN THE ASSESSMENT ORDER THE A.O. MADE AN ADDITION OF RS.44,76,800/ - AS UNACCOUNTED INCOME OF THE ASSESSEE U/S 69A. THE ASSESSEE FILED LETTER DT. 21.8.2013 ALONG WITH A COPY OF AFFIDAVIT STATING THE NATURE OF PERSONAL BUSINESS AND CLAIMING THAT THE SOURCE OF CASH DEPOSITS IN THE TWO BANKS ARE OUT OF SALES PROCEEDS. STATEMENT OF THE ASSESSEE MR.RAM NANDAN MISHRA WAS RECORDED ON OATH AND HE WAS ASKED TO FURNISH DETAILS OF QUANTUM OF SALES, VOUCHERS ETC. THE ASSESSEE WAS UNABLE V TO FURNISH ANY DOCUMENTARY EVIDENCE TO SUPPORT HIS CLAIM. THE ASSESSEE HAS NOT DISCHARGED HIS ONUS AS REGARDS THE IDENTITY OF SELLER OR PURCHASER. 2.1. THERE IS NO DOCUMENTARY EVIDENCE IN REGARD TO THE CLAIM OF THE ASSESSEE. THE A.O. COMPUTED THE TOTAL INCOME AT RS.59,52,980/ - BY MAKING AN ADDITION ON ACCOUNT OF UNEXPLAINED CASH D EPOSITS OF RS.44,76,800/ - AND ON ACCOUNT OF LOW WITHDRAWALS OF RS.2,99,232/ - . 2.2. ON APPEAL THE FIRST APPELLATE AUTHORITY DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT, THE ASSESSEE HAS NOT DISCHARGED THE BURDEN OF PROOF. FURTHER AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 3. AFTER HEARING RIVAL SUBMISSIONS WE FIND THAT THE CLAIM OF THE ASSESSEE THAT THE DEPOSITS IN THIS UNDISCLOSED BANK ACCOUNT ARE NOTHING BUT SALE PROCEEDS AND THAT THE WITHDRAWALS FROM THESE UNDISCLOSED BANK ACCOUNT S , WER E PURCHASES, IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE WHATSOEVER. THE ASSESSEE HAS FAILED TO PROVE ITS CLAIM. THUS THE FIRST APPELLATE AUTHORITY WAS RIGHT IN COMING TO A CONCLUSION THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMARY ONUS TO PROVE T HE SOURCE OF CASH DEPOSITS BY RELYING ON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF INDUS VALLEY PROMOTERS VS. CIT 305 ITR 202 AND OTHER CASE LAWS. THUS WE UPHOLD THIS FINDING. 4. ON THE ALTERNATIVE PLEA OF THE ASSESSEE THAT, ONLY THE PEAK CR EDIT IN THIS ACCOUNT HAS TO BE ADDED, WE ARE OF THE CONSIDERED OPINION THAT THIS PLEA IS JUSTIFIED. THE ASSESSEE HAS RIGHTLY RELIED ON THE DECISION OF THE ITAT DELHI F BENCH IN ITA 2906/DEL/13 FOR THE A.Y. 2009 - 10 ORDER DT. 27.3.2015 WHEREIN AT PARA 4 IT WAS HELD AS FOLLOWS. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ONLY DISPUTE IN THIS APPEAL IS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER TOWARDS CERTAIN DEPOSITS MADE IN TWO BANK ACCOUNTS MAINTAINED BY THE ASSESSEE, TOTALING RS. 45.50 LAKHS. THE ASSESSEE FURNISHED CASH FLOW STATEMENT BEFORE THE LEARNED CIT(A) BY CONTENDING THAT THE WITHDRAWALS FROM THESE BANK ACCOUNTS CONSTITUTED THE SOURCE OF DEPOSITS THEREIN. WE HAVE SEEN A COPY OF THE BA NK ACCOUNT MAINTAINED BY THE ASSESSEE VI WITH ICICI BANK LTD., FROM WHICH IT IS APPARENT THAT THERE ARE SEVERAL ITEMS OF DEPOSITS AND WITHDRAWALS. THE ASSESSING OFFICER HAS SIMPLY PICKED UP THE DEPOSIT SIDE OF THE PASS - BOOK AND MADE THE ADDITION FOR ALL THE D EPOSITS MADE IN THE BANK ACCOUNTS, IGNORING THAT THERE ARE SEVERAL WITHDRAWALS ALSO. THIS COURSE OF ACTION ADOPTED BY THE ASSESSING OFFICER IN MAKING THE ADDITION FOR ALL THE DEPOSIT ENTRIES IN THE BANK ACCOUNTS, HAS NO SANCTION OF LAW. IF THERE ARE CERTAI N DEPOSITS AND WITHDRAWALS AS WELL AND THERE IS NOTHING IN THE ASSESSMENT ORDER TO CO - RELATE THESE WITHDRAWALS WITH ANY INVESTMENTS MADE BY THE ASSESSEE, THE PRESUMPTION IS THAT SUCH WITHDRAWALS WERE UTILIZED FOR MAKING DEPOSITS. IN SUCH CIRCUMSTANCES, THE MAKING OF ADDITION TO THE EXTENT OF PEAK CREDIT IS A MORE RATIONAL WAY RATHER THAN ALL THE DEPOSIT ENTRIES. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER ON THIS SCORE AND SEND THE MATTER TO THE FILE OF ASSESSING OFFICER FOR MAKING AN ADDITION FOR AN AMOUNT EQUAL TO PEAK BALANCE IN THESE BANK ACCOUNTS. NEEDLESS TO SAY, THE ASSESSEE WILL BE ALLOWED A REASONABLE OPPORTUNITY OF BEING HEARD IN SUCH FRESH PROCEEDINGS. 4.1. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE SET ASIDE THE MATTER TO THE FILE OF THE A.O. W ITH A SPECIFIC DIRECTION THAT ONLY THE PEAK CREDIT IN THIS BANK ACCOUNT SHOULD BE BROUGHT TO TAX. 5. ON THE SECOND ISSUE OF ADDITION ON ACCOUNT OF LOW HOUSE HOLD EXPENSES, WE FIND NO INFIRMITY IN THE ORDER OF THE FIRST APPELLATE AUTHORITY. THUS THE SAME I S DISMISSED. 6. IN THE RESULT ASSESSEE S APPEAL IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2016. SD/ - SD/ - (KULDIP SINGH) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 10 TH AUGUST, 2016 M ANGA VII COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR VIII