S.BAKKIAM, NAMAKKAL V. ITO WARD 1, NAMAKKAL

ITA 1404/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0428 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 07-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V.M. MAHIDAR
• Keywords: Peak credit; Revised return; Set aside
• Section: 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , ! ' # , % #& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.1404/CHNY/2019 ) *) / ASSESSMENT YEAR : 2015-16 MRS. S. BAKKIAM, NO.52, KARUNALAYAA, RAM NAGAR, KUMARASAMIPATTI, SALEM 636 007. PAN : AVDPB 2557 M V. THE INCOME TAX OFFICER, WARD 1, NAMAKKAL. (,-/ APPELLANT) (./,-/ RESPONDENT) ,- 0 1 / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE ./,- 0 1 / RESPONDENT BY : SHRI V.M. MAHIDAR, JCIT 2 0 3% / DATE OF HEARING : 06.08.2019 45* 0 3% / DATE OF PRONOUNCEMENT : 12.09.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), SALEM, DA TED 18.03.2019 AND PERTAINS TO ASSESSMENT YEAR 205-16. 2. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THERE WERE CA SH DEPOSITS IN THE SAVINGS BANK ACCOUNTS OF MORE THAN THE TURNOVER . ACCORDING TO 2 I.T.A. NO.1404/CHNY/19 THE LD. COUNSEL, THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE SALE PROCEEDS OF POULTRY RAW MATER IAL WAS DEPOSITED IN THE BANK ACCOUNT. HOWEVER, THE ASSESSING OFFICE R HAS TAKEN THE PEAK CREDIT AND MADE ADDITION OF 43,17,679/- AS UNEXPLAINED INCOME. ACCORDING TO THE LD. COUNSEL, WHAT WAS DEP OSITED IS ONLY THE SALE PROCEEDS OF POULTRY RAW MATERIAL, THEREFOR E, ONLY THE PROFIT ELEMENT EMBEDDED IN THE TURNOVER TO BE ADDED. REFE RRING TO THE STATEMENT SAID TO BE RECORDED FROM THE ASSESSEE, MO RE PARTICULARY, ANSWER TO QUESTION NO.6, THE LD.COUNSEL SUBMITTED T HAT THE ASSESSEE DURING THE COURSE OF EXAMINATION ON 16.10. 2017, CLARIFIED THAT THE SALE PROCEEDS WERE DEPOSITED. ACCORDING T O THE LD. COUNSEL, NO DOUBT, THE PROFIT FROM THE SALE OF POUL TRY RAW MATERIAL WAS NOT DISCLOSED IN THE ORIGINAL RETURN. HOWEVER, THE ASSESSEE WAS WILLING TO OFFER THE SAME AT THE RATE OF 8% OF THE TURNOVER DURING THE COURSE OF ASSESSMENT PROCEEDING. THEREFORE, TH E LD.COUNSEL SUBMITTED THAT THE PROFIT ELEMENT MAY BE CONSIDERED FOR TAXATION. ON A QUERY FROM THE BENCH, THE LD.COUNSEL CLARIFIED THAT NO REVISED RETURN WAS FILED DURING THE COURSE OF ASSESSMENT PR OCEEDING SINCE THE TIME LIMIT FOR FILING THE SAME HAD EXPIRED. HO WEVER, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE OFFERED 8% OF THE TUR NOVER AS PROFIT DURING THE COURSE OF ASSESSMENT PROCEEDING. 3 I.T.A. NO.1404/CHNY/19 3. ON THE CONTRARY, SHRI V.M. MAHIDAR, THE LD. DEPA RTMENTAL REPRESENTATIVE, SUBMITTED THAT NO DOUBT, THE ASSESS EE CLAIMED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF E XAMINATION THAT THE SALE PROCEEDS OF POULTRY RAW MATERIAL WERE DEPO SITED IN THE BANK ACCOUNT. HOWEVER, ACCORDING TO THE LD. D.R., THE PROFIT FROM THE BUSINESS, NAMELY, SALE OF POULTRY RAW MATERIAL, WAS NOT DISCLOSED IN THE RETURN OF INCOME. MOREOVER, THE ACTUAL SOURCE OF DEPOSIT OF CASH IN THE BANK ACCOUNT COULD NOT BE ID ENTIFIED. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEA LS) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THERE WAS CASH DEPOSIT OF 34,50,000/- IN THE SB ACCOUNT MAINTAINED WITH KARUR VYSYA BANK LTD., NAMAKKAL BRANCH AND 21,50,000/- IN THE ACCOUNT MAINTAINED WITH TAMILNAD MERCANTILE BANK LT D., KOOLIPATTI BRANCH. IN FACT, THE ASSESSEE HAS DEPOSITED 56,00,000/- IN BOTH THE BANKS. WHEN THE ASSESSEE WAS EXAMINED UNDER SE CTION 131 OF THE ACT ON 16.10.2017, IN RESPONSE TO QUESTION NO.6 , THE ASSESSEE EXPLAINED THAT THE SALE PROCEEDS OF POULTRY RAW MAT ERIAL WERE DEPOSITED IN BOTH THE ACCOUNTS. THE ASSESSING OFFI CER NOW 4 I.T.A. NO.1404/CHNY/19 OBSERVED IN THE IMPUGNED ORDER THAT THE SOURCE FOR DEPOSIT COULD NOT BE IDENTIFIED. WHEN THE ASSESSEE HAS NO OTHER SOURCE OF INCOME, THE PRESUMPTION IS THAT THE MONEY WAS FLOWN FROM KNOWN SOURCE, NAMELY, SALE PROCEEDS OF POULTRY RAW MATERI AL IS DEPOSITED IN THE BANK ACCOUNT. THEREFORE, AS RIGHTLY SUBMITT ED BY THE LD.COUNSEL FOR THE ASSESSEE, WHAT IS TO BE BROUGHT FOR TAXATION IS THE PROFIT ELEMENT EMBEDDED IN THE TURNOVER OF THE ASSE SSEE. IN OTHER WORDS, THE ENTIRE BANK DEPOSITS CANNOT BE MADE AS S UBJECT MATTER OF TAXATION. THE ASSESSEE IN RESPONSE TO QUESTION NO.10 HAS OFFERED 8% OF THE TURNOVER. THEREFORE, THIS TRIBUN AL IS OF THE CONSIDERED OPINION THAT THE PROFIT ELEMENT EMBEDDED IN THE TURNOVER HAS TO BE TAKEN AS 8%. ACCORDINGLY, 8% OF THE AMOU NT DEPOSITED IN BANK IS LIABLE FOR TAXATION. 5. NO DOUBT, WHILE FILING THE RETURN OF INCOME, THE ASSESSEE HAD NOT OFFERED ANY PROFIT FROM THE BUSINESS OF SALE OF POULTRY RAW MATERIAL. WHEN THE RETURN WAS TAKEN FOR SCRUTINY, DURING THE COURSE OF EXAMINATION UNDER SECTION 131 OF THE ACT, THE AS SESSEE OFFERED 8% OF TURNOVER. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE PROFIT ELEMENT EMBEDDED IN THE TURNOVER HA S TO BE TAKEN AS 5 I.T.A. NO.1404/CHNY/19 PROFIT IN THE BUSINESS OF SALE OF POULTRY RAW MATER IAL. ACCORDINGLY, THE SAME NEEDS TO BE BROUGHT TO TAXATION. 6. IN VIEW OF THE ABOVE DISCUSSION, THE ORDERS OF B OTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING O FFICER IS DIRECTED TO ESTIMATE 8% OF THE TURNOVER ON SALE OF POULTRY R AW MATERIAL / AMOUNT DEPOSITED IN BANK AND LEVY TAX THEREON AT TH E RATE APPLICABLE DURING THE FINANCIAL YEAR RELEVANT TO TH E ASSESSMENT YEAR UNDER CONSIDERATION. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 12 TH SEPTEMBER, 2019 AT CHENNAI. SD/- SD/- ( ! ' # ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 12 TH SEPTEMBER, 2019. KRI. 0 .389 :9*3 /COPY TO: 1. ,- /APPELLANT 2. ./,- /RESPONDENT 3. 2 ;3 () /CIT(A), SALEM 4. PRINCIPAL CIT, SALEM 5. 9< .3 /DR 6. =) > /GF.