Gulshan Hossain, Hooghly V. ITO, WD-52(2), KOLKATA, Kolkata

ITA 1373/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1597 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 16-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K SINHA
• Keywords: Business income; Income from undisclosed sources; Peak credit
• Section: 143(3); 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SRI A.T.VARKEY, JM & SHRI M.BALAG ANESH, AM ] I.T.A NO. 1373/KOL/20 14 ASSESSMENT YEAR : 2006-0 7 GULSHAN HOSSAIN -VS.- I.T.O., WARD-52(2 ) KOLKATA KOLKATA [PAN : AAQPH 8875 C] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SOMNATH GHOSH , ADVOCATE FOR THE RESPONDENT : SHRI A.K.SINHA, ADDL.CI T DATE OF HEARING : 08.06.2017. DATE OF PRONOUNCEMENT : 07.07.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED CIT(A)- XXXIII, KOLKATA IN APPEAL NO. 212/CIT(A)-XXXIII/I TO WARD-52(2),KOL/08-09 DATED 18.03.2014 AGAINST THE ORDER OF ASSESSMENT FR AMED FOR THE ASST YEAR 2006-07 U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL OF T HE ASSESSEE IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE ADDITION MADE U /S 68 OF THE ACT TOWARDS UNEXPLAINED DEPOSITS IN THE JOINT BANK ACCOUNT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING OF GARMENTS AND RETURN OF INCOM E FOR THE ASST YEAR 2006-07 WAS FILED BY HER ON 17.10.2006 DECLARING TAXABLE INCOME OF RS 1,50,210/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD AO FOUND T HAT THERE WERE CASH DEPOSITS IN THE 2 ITA NO.1373/KOL/2014 GULSHAN HOSSAIN A.YR.2006-07 2 SUM OF RS 18,84,700/- IN THE BANK ACCOUNT MAINTAINE D WITH STANDARD CHARTERED BANK, KOLKATA METRO MAIN BRANCH , N.S.ROAD, KOLKATA ON VA RIOUS DATES DURING THE FINANCIAL YEAR 2005-06 . THE LD AO CALLED FOR THE EXPLANATIO N OF THE SAME TOGETHER WITH THE SOURCES. SINCE NO EXPLANATION WAS GIVEN BY THE ASS ESSEE, THE LD AO PROCEEDED TO ADD THE SAID CASH DEPOSITS OF RS 18,84,700/- AS UNEXPLA INED CASH CREDIT U/S 68 OF THE ACT IN THE ASSESSMENT. 4. BEFORE THE LD CITA, THE ASSESSEE STATED THAT THE SAID BANK ACCOUNT WAS HELD JOINTLY WITH HER DAUGHTER MS SOFIA HOSSAIN AND THE CASH DEP OSITED IN THE SAID BANK ACCOUNT WAS MAINLY RECEIVED IN FOREIGN CURRENCY FROM MEHDI HOSS AIN (HER HUSBAND) AND SAIQUA SHAIKH (HER DAUGHTER) RESIDING IN GERMANY AND LONDO N RESPECTIVELY, THROUGH WESTERN UNION MONEY TRANSFER TO THE TUNE OF RS 13,94,000/-. IT WAS SUBMITTED THAT THE WESTERN UNION MONEY TRANSFER RECEIPTS WERE MISPLACED AND HE NCE THE SAME COULD NOT BE PRODUCED BEFORE THE LD CITA AS PROOF OF HER EXPLANA TION. THE LD AO DEPUTED HIS INSPECTOR TO POST OFFICE, ALIPORE BRANCH OF WESTERN UNION TO GATHER SOME INFORMATION TO VERIFY THE VERACITY OF THE CLAIM MADE BY THE ASS ESSEE BUT NOTED THAT NO FRUITFUL RESULT COULD BE SCORED FROM THE SAID ENQUIRY. THE LD AO I N HIS REMAND REPORT STATED THAT THOUGH THE ASSESSEE HAD PRODUCED TWO RECEIPTS FROM WESTERN UNION AMOUNTING TO RS 10,226/- AND RS 26,050/- DURING FINANCIAL YEAR 2005 -06 (RELEVANT TO YEAR UNDER APPEAL), THEY WERE MEANT FOR MEETING DAY TO DAY EXPENSES OF THE ASSESSEE AND HENCE THERE IS NO REASON FOR THE ASSESSEE TO DEPOSIT THE SAME IN THE BANK ACCOUNT. THE LD AO ALSO IN THE REMAND REPORT STATED THAT HUGE AMOUNTS RANGING FROM RS 50,000/- TO RS 2,50,000/- HAVE BEEN DEPOSITED IN CASH IN THE SAID ACCOUNT AND WITH DRAWN ON THE SAME DATE AND HENCE THERE IS NO EXPLANATION WITH EVIDENCES FURNISHED BY THE ASSESSEE. 4.1. IT WAS ALSO EXPLAINED THAT A SUM OF RS 2,45,90 0/- REPRESENTS CASH LOAN RECEIVED FROM FEW PARTIES WHICH THE LD AO IN THE REMAND REPORT HA D STATED THAT THE VERACITY OF THE LOAN CONFIRMATIONS COULD NOT BE VERIFIED IN THE ABSENCE OF PRESENT ADDRESSES OF THE SAID PARTIES AND ONE PARTY WAS IN DUBAI AND ONE PARTY HA D DECEASED. THE ASSESSEE WAS NOT 3 ITA NO.1373/KOL/2014 GULSHAN HOSSAIN A.YR.2006-07 3 ABLE TO PRODUCE THE PRESENT ADDRESSES OF THOSE PART IES AND SIMPLY STATED THAT THE SAID LOANS WERE SQUARED OFF AND HENCE THE ASSESSEE HAD L OST TOUCH WITH THEM THEREAFTER. THE LD AO IN THE REMAND REPORT STATED THE ALLEGED LOAN TRANSACTIONS STATED BY THE ASSESSE REMAINED UNSUBSTANTIATED AND UNPROVED TO SATISFY TH E CONDITIONS OF SECTION 68 OF THE ACT AND WOULD ALSO INVITE PENAL CONSEQUENCES U/S 269SS OF THE ACT. 4.2. IN RESPECT OF THE REMAINING SUM OF RS 2,44,800 /- , THE SAME WAS EXPLAINED BY THE ASSESSEE TO BE PART OF HER BUSINESS RECEIPTS, WHICH WAS STATED BY THE LD AO IN THE REMAND REPORT AS A COOKED UP STORY AS THE TOTAL GRO SS RECEIPTS OF THE ASSESSEE WAS ONLY RS 98,752/- OUT OF WHICH NET INCOME WAS RS 48,756/- . 4.3. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ALONG WITH ASSESSEES DAUGHTER MS SOFIA HOSSAIN APPEARED BEFORE THE LD AO AND FILED S UBMISSIONS STATING THAT THE DAUGHTER MS SOFIA HOSSAIN IS ASSESSED TO TAX IN WARD 28(4) A ND THE SAME ADDITION OF RS 18,84,700/- HAS BEEN MADE ON THE SAME GROUND. THE ASSESSEE STATED IN THE CASH FLOW STATEMENT FILED BEFORE THE LD AO , SINCE THE BANK A CCOUNT WAS A JOINT ACCOUNT, A SUM OF RS 10,70,900/- REPRESENTS ASSESSEES SHARE AND REMA INING SUM OF RS 7,48,900/- REPRESENTS HER DAUGHTERS SHARE. THERE IS NO BASIS EXPLAINED FOR DIVIDING THIS SUM ALSO BY THE ASSESSEE. 4.4. THE LD CITA OBSERVED THAT THE ASSESSEE HAD TAK EN DIVERGENT STANDS BEFORE THE LD AO IN THE REMAND PROCEEDINGS ITSELF ONCE BY APPORTI ONING RS 10,70,900/- AS HER SHARE OF TOTAL CASH DEPOSITS BUT LATER STATING THAT THE M ONIES REPRESENT AMOUNTS RECEIVED FROM HER HUSBAND FROM ABROAD, LOANS RECEIVED FROM FRIEND S AND RELATIVES AND BUSINESS PROCEEDS ETC. ALL THESE EXPLANATIONS WERE NOT SUBS TANTIATED WITH MATERIAL EVIDENCE. HENCE THE LD CITA UPHELD THE ADDITION MADE IN THE S UM OF RS 18,84,700/-. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US O N THE FOLLOWING GROUNDS:- 1. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) XXXIII, KOLKATA FELL IN ERROR IN UPHOLDING THE PURPORTED ADDITION O F RS. 18,84,700/- UNDER THE ALLEGED GUISE OF THE PROVISION OF S. 69 OF THE INCO ME TAX ACT, 1961 RESORTED TO BY THE LD. INCOME TAX OFFICER, WARD 52(2), KOLKATA BY MISREADING THE FACTUAL MATRIX 4 ITA NO.1373/KOL/2014 GULSHAN HOSSAIN A.YR.2006-07 4 OF THE INSTANT CASE AND THE PURPORTED CONCLUSION RE ACHED ON THAT ACCOUNT ON A TENUOUS BASIS FOR SUCH PERCEIVED ACTION IS COMPLETE LY UNFOUNDED, UNJUSTIFIED AND UNTENABLE IN LAW. 2. FOR THAT UNDER THE INSTANT FACTS AND CIRCUMSTANC ES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) XXXIII, KOLKAT A ACTED UNLAWFULLY IN SUSTAINING THE ADDITION OF RS. 18,84,700/- BY INVOK ING THE PROVISION OF S. 69 OF THE INCOME TAX ACT, 1961 MADE BY THE LD. INCOME TAX OFF ICER, WARD 52(2), KOLKATA INDULGING IN SPECULATION, SURMISE, SUSPICION AND CO NJECTURE WITHOUT SATISFYING THE STATUTORY PRESCRIPTION IN THAT RESPECT AND HIS PURP ORTED FINDING BASING ON SUCH EXTRANEOUS CONSIDERATIONS NOT GERMANE TO THE ISSUE IS WHOLLY ILLEGAL, ILLEGITIMATE AND INFIRM IN LAW. 3. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) XXXIII, KOLKATA WAS REMISS IN UPHOLDING THE SPECIOUS ACTION OF THE LD. INCOME TAX OFFICER, WARD 52(2), KOLKATA IN RESORTING TO THE PURPORTED ADDITI ON OF RS. 18,84,700/- BEING THE ENTIRE DEPOSITS IN THE BANK ACCOUNT ALLEGING INCOME FROM UNDISCLOSED SOURCES WITHOUT GIVING THE BENEFIT OF 'PEAK CREDIT' WHICH I S AN UNIVERSAL PRINCIPLE APPLICABLE UNDER THE CIRCUMSTANCES OF THE INSTANT C ASE AS WELL AND THE SPURIOUS FINDING ON THAT ISSUE WITHOUT ANY VALID JUSTIFICATI ON THEREFOR IS WHOLLY ARBITRARY, UNREASONABLE AND PERVERSE. 6. THE LD AR ARGUED THAT THE SIMILAR ADDITION WAS M ADE IN THE HANDS OF ASSESSEES DAUGHTER MS SOFIA HOSSAIN FOR THE ASST YEAR 2006-07 VIDE ORDER PASSED BY THE ITO WARD 28(4), KOLKATA U/S 143(3) OF THE ACT DATED 30. 12.2008 . HE PLACED A COPY OF THE ASSESSMENT ORDER TO PROVE THE SAME. HE STATED THA T SAID BANK ACCOUNT WITH STANDARD CHARTERED BANK HAS BEEN DULY CONSIDERED AND REFLECT ED IN THE BALANCE SHEET OF ASSESSEES DAUGHTER MS SOFIA HOSSAIN, WHEREIN SUBST ANTIVE ADDITION HAS BEEN MADE IN HER HANDS AND APPEAL IS PENDING BEFORE THE LD CITA. HE ALSO STATED THAT THE ASSESSEE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNTS AND BANK S TATEMENT CANNOT BE CONSTRUED AS BOOKS OF ACCOUNT. HENCE THE PROVISIONS OF SECTION 68 OF THE ACT CANNOT BE INVOKED AT ALL IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HE PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS BHA ICHAND H GANDHI REPORTED IN 141 ITR 67 (BOM) IN SUPPORT OF HIS CONTENTION. IN RES PONSE TO THIS, THE LD DR VEHEMENTLY RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND S TATED THAT THE ASSESSEE HAD TAKEN DIVERGENT STANDS AND HAD FURNISHED THE VARIOUS FIGU RES AS HER GROSS RECEIPTS AS COULD BE 5 ITA NO.1373/KOL/2014 GULSHAN HOSSAIN A.YR.2006-07 5 EVIDENT FROM THE PAPER BOOK FILED BY THE ASSESSEE. HENCE THE ASSESSEE IS DUTY BOUND TO COMPLY WITH THE PROVISIONS OF SECTION 44AA FOR MAIN TENANCE OF BOOKS OF ACCOUNTS OF HER BUSINESS RECEIPTS, WHICH HAS NOT BEEN DONE. HE NCE THE ASSESSEE HAS CHOSEN TO DELIBERATELY NOT MAINTAIN ANY BOOKS OF ACCOUNTS SO AS TO ESCAPE THE CASH DEPOSITS FROM TAXATION BY TAKING SHELTER FROM THE DECISION OF HON BLE BOMBAY HIGH COURT THEREBY PROVING THE MALAFIDE INTENTION OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD GIVEN DIFFERENT FIGUR ES TOWARDS HER GROSS RECEIPTS. AT PAGE 11 OF THE PAPER BOOK, THE SALES FIGURE FROM RE TAIL TRADE OF GARMENTS WERE REFLECTED AT RS 8,12,917/- IN THE TRADING, PROFIT AND LOSS AC COUNT FOR THE YEAR ENDED 31.3.2006 AND NET PROFIT OF RS 74,350/- WAS REFLECTED THEREON . BUT THE SAID NET PROFIT HAS NOT BEEN CARRIED OVER AND INSTEAD A SUM OF RS 1,50,208/- HAS BEEN REFLECTED IN THE CAPITAL ACCOUNT IN BALANCE SHEET AS ON 31.3.2006 REFLECTED IN PAGE 10 OF PAPER BOOK. IN YET ANOTHER PROFIT AND LOSS ACCOUNT ENCLOSED IN PAGE 48 OF PAPE R BOOK, THE RECEIPTS FROM TAILORING JOB WAS RS 1,60,829.50 AND MISCELLANEOUS RECEIPTS O F RS 74,350/-. HERE THE RECEIPTS FROM RETAIL TRADE OF GARMENTS WERE NOT SHOWN AT ALL . THE NET PROFIT REFLECTED IN THIS PROFIT AND LOSS ACCOUNT WAS RS 1,50,208/- WHICH HAS BEEN CONSIDERED IN THE BALANCE SHEET AS AT 31.3.2006 REFLECTED IN PAGE 10 OF PAPER BOOK AS STATED ABOVE. THE LD AO IN THE REMAND REPORT STATES THAT THE TOTAL GROSS RECEI PTS OF THE ASSESSEE FROM BUSINESS WAS ONLY RS 98,752/- WHICH IS REFLECTED IN PAGE 4 OF LD CITA ORDER. HENCE THERE ARE VARIOUS BUSINESS RECEIPTS SHOWN BY THE ASSESSEE AT DIFFEREN T LEVELS. THE REQUIREMENT OF NON- MAINTENANCE OF BOOKS HAVE TO BE LOOKED INTO FROM TH E POINT OF VIEW OF THESE DEFICIENCIES. HENCE IT COULD BE SAFELY CONCLUDED T HAT THE ASSESSEES GROSS RECEIPTS FROM BUSINESS HAD FAR EXCEEDED THE LIMITS PRESCRIBED U/S 44AA OF THE ACT AS PER ASSESSEES OWN SUBMISSION AT DIFFERENT STAGES. HENCE NOW THE ASSESSEE CANNOT TAKE THE PLEA THAT BOOKS OF ACCOUNTS ARE NOT REQUIRED TO BE MAINTAINED AND HENCE NOT MAINTAINED BY THE ASSESSEE AND ACCORDINGLY THE BANK STATEMENT CANNOT BE CONSTRUED AS BOOKS OF ACCOUNT AND GET AWAY FROM THE NET OF TAXATION BY TAKING REC OURSE TO DECISION OF HONBLE 6 ITA NO.1373/KOL/2014 GULSHAN HOSSAIN A.YR.2006-07 6 BOMBAY HIGH COURT SUPRA. HENCE WE ARE NOT INCLINED TO ACCEPT THE ARGUMENT OF THE LD AR IN THIS REGARD. 7.1. BUT WE FIND THAT THE SUBMISSION OF THE ASSESSE E THAT SHE HAS BEEN RECEIVING MONIES FROM ABROAD CANNOT BE SUMMARILY BRUSHED ASIDE IN VI EW OF THE FACT THAT THERE IS A CREDIT OF RS 44,679.42 IN STANDARD CHARTERED BANK ACCOUNT ON 3.11.2005 WHEREIN IT IS CLEARLY MENTIONED THAT THE SAME REPRESENTS AMOUNTS CREDITED IN USD. THIS BECOMES A CLINCHING EVIDENCE FOR APPRECIATING THE ARGUMENT OF THE ASSESSEE. WE ALSO FIND THAT THERE WERE SOME CASH WITHDRAWALS THAT WERE MADE FREQUENTL Y WHICH WOULD EXPLAIN THE SUBSEQUENT CASH DEPOSITS. HENCE IT WOULD NOT BE PR OPER TO TAX THE ENTIRE CASH DEPOSITS MADE IN THE BANK ACCOUNT. HOWEVER, WE ARE IN AGREEM ENT WITH THE OTHER ARGUMENT OF THE LD AR THAT THE DEPOSITS IN THE BANK ACCOUNT IN THE SUM OF RS 18,84,700/- CANNOT BE ADDED BACK SUBSTANTIVELY IN THE HANDS OF ASSESSEE A S WELL AS HER DAUGHTER. 7.2. IN VIEW OF THESE FINDINGS, WE DEEM IT FIT AND APPROPRIATE TO SET ASIDE THE ENTIRE APPEAL TO THE FILE OF THE LD AO FOR DENOVO ADJUDICA TION AND REFRAME THE ASSESSMENT IN ACCORDANCE WITH LAW, WITH A DIRECTION TO THE ASSESS EE TO CO-OPERATE WITH THE SET ASIDE ASSESSMENT PROCEEDINGS BY FURNISHING THE REQUISITE DETAILS FOR PROVING THE SOURCE OF DEPOSITS MADE IN THE JOINT BANK ACCOUNT. THE ASSE SSEE IS ENTITLED TO HAVE THE BENEFIT OF BIFURCATION OF MONIES DEPOSITED BETWEEN HERSELF AND HER DAUGHTER, IF PROVED BY MATERIAL EVIDENCES TO THAT EFFECT. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 07.07.2017 SD/- SD/- [A.T.VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.07.2017 [RG PS] 7 ITA NO.1373/KOL/2014 GULSHAN HOSSAIN A.YR.2006-07 7 COPY OF THE ORDER FORWARDED TO: 1.GULSHAN HOSSAIN, C/O S.N.GHOSH & ASSOCIATES, ADVO CATES, SEVEN BROTHERSLODGE, P.O. BUROSHIBTALA, P.S.CHINSURAH, DIS. HOOGHLY 712 105. 2. I.T.O., WARD-52(2), KOLKATA. . 3..C.I.T.(A)-XXXIII, KOLKATA 4. C.I.T.-XVIII, KOL KATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S