Nurul Islam, Nagaon V. Income Tax Officer, Ward-Nagaon, Nagaon

ITA 144/GTY/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7729 (ITAT-GUWAHATI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 07-09-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBRAJYOTI BHATTACHARYA AD DL
• Keywords: Business income; Peak credit
• Section: 44AD; 142(1); 133(6); 69A; 68

Judgement Text

ITA NO. 144/GAU/2020 NURUL ISLAM, A.Y. 2017-18 1 | P A GE IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI BENCH: GUWAHATI VIRTUAL HEARING AT KOLKATA [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 144/GAU/2020 ASSESSMENT YEAR: 2017-18 NURUL ISLAM (PAN: AAPPI 3563 D ) VS. ITO, WARD-2, NAGAON APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 15.01.2021 DATE OF PRONOUNCEMENT 20.01.2021 FOR THE APPELLANT SHRI AKKAL DUDHWEWALA, A.R FOR THE RESPONDENT SHRI SUBRAJYOTI BHATTACHARYA, AD DL. CIT ORDER THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF LD. CIT(A)- GUWAHATI-1, DATED 29.05.2020 FOR A.Y. 2017-18. 2. AT THE OUTSET, IT IS NOTED THAT THERE IS A DEL AY OF 34 DAYS IN FILING THIS APPEAL. IT IS NOTED THAT THE IMPUGNED ORDER IS DATED 29.05.202 0 AND DUE TO COVID-19 PANDEMIC, THE ASSESSEE COULD NOT FILE THE APPEAL ON TIME AND, THEREFORE, THERE IS A DELAY OF 34 DAYS IN FILING THIS APPEAL. THEREFORE, THERE IS REA SONABLE CAUSE FOR CAUSING THE DELAY. SO, I CONDONE THE DELAY AND ADMIT THE APPEAL. 3. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST TH E ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 8,75,500/- MADE BY T HE AO. 4. BRIEF FACTS OF THE CASE AS NOTED BY THE AO IS TH AT THE ASSESSEE HAS NOT FILED HIS INCOME TAX RETURN (ITR) FOR AY 2017-18. THE AO ISSU ED NOTICE U/S 142(1) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT) ON 15.03.2018 AND DIRECTED THE ASSESSEE TO SUBMIT HIS RETURN OF INCOM E. ACCORDING TO AO , THE ASSESSEE FINALLY FILED HIS RETURN OF INCOME SHOWING INCOME O F RS. 2,86,934/-. THE AO NOTES THAT THE ASSESSEE HAD DEPOSITED CASH TO THE TUNE OF RS.17,01,000/- AFTER 8/9 TH ITA NO. 144/GAU/2020 NURUL ISLAM, A.Y. 2017-18 2 | P A GE NOVEMBER, 2016 WHEREIN THE CURRENCY NOTES OF THE DE NOMINATION OF RS. 500 AND RS. 1,000 WAS DECLARED NO LONGER A LEGAL TENDER (DEMONE TIZED). 5. THE AO NOTES THAT THE ASSESSEE HAS DEPOSITED CAS H AMOUNTING TO RS. 17,01,000/- IN THE BANK AFTER 8 TH NOVEMBER, 2016 AND BEFORE 31 ST OF DECEMBER 2016. THE AO NOTES AT PARA 9 OF THE ASSESSMENT ORDER AS U NDER: 9. .. AFTER 08/11/2019 THE ASSESSEE HAS DEPOSITED CASH TO THE TUNE OF RS. 17,01,000/- IN HIS BANK ACCOUNTS AND DOES NOT GIVE THE SOURCE NOTI CE U/S 133(6) OF THE INCOME-TAX WAS ISSUED TO THE, INDIAN OVERSEAS BANK, BARA BAZAR, MA ULANA AZAD ROAD, HAIBARGAON, DECCANPATTY, NAGAON-782001 AND STATE BANK OF INDIA, CHRISTIAN PATTY, PALASHANI, NAGAON-782001, ASSAM TO PROVIDE THE DETAILS OF SPEC IFIED BANK NOTES DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE, IN RESPONSE TO THE NO TICE THE STATE BANK REPLIED AND FURNISHED THE DETAIL OF SPECIFIED BANK NOTES DEPOSI TED DURING THE DEMONETIZATION PERIOD. THE ASSESSEE HAD ALSO ADMITTED THAT RS. 10,75,500/- WAS DEPOSITED IN SPECIFIED BANK NOTES OUT OF TOTAL DEPOSIT OF RS. 17,01,000/- DURIN G THE DEMONETIZATION PERIOD, BUT THE SOURCE OF THE CASH WAS NOT EXPLAINED . THUS, IT IS CLEAR THAT THE ASSESSEE IS FOUND TO B E THE OWNER OF SUCH MONEY AND THE SAME HAS COME TO THE KN OWLEDGE OF THE DEPARTMENT BECAUSE IT WAS DEPOSITED TO THE BANK. SINCE THE DEMONETIZAT ION WAS A SPECIAL INSTANCE WHICH REQUIRED ALL CASH TO BE DEPOSITED AND AS ASSESSEE I S A BUSINESSMAN, SO THEY HAVE TO KEEP SOME LIQUID CASH FOR DAY-TO-DAY EXPENSES, THEREFORE RS. 2,00,000/- IS ADDED TO BUSINESS INCOME AND COMPUTED U/S 44AD AND RS. 8,75,5000/- I. E. (RS. 10,75,000/- MINUS RS. 2,00,000) TREATED AS UNEXPLAINED MONEY IN ABSENCE O F VERIFIABLE INFORMATION OR DOCUMENTS/EVIDENCES U/S 69A OF INCOME TAX ACT, 1961 AND TAXED THEREON AS PER PROVISION OF SECTION 115BBE. (EMPHASIS GIVEN BY ME) 6. THUS, THE AO MADE AN ADDITION OF RS. 8,75,500/-. AGAINST THE ACTION OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A), WHICH WAS DISMISSED. AGGRIEVED THE ASSESSEE IS BEFORE ME. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS. THE LD. A.R OF THE ASSESSEE SHRI AKKAL DUDHWEWALA ASSAILING THE ACTION OF THE AO DREW MY ATTENTION TO PARA 12 OF THE ASSESSMENT ORDER AND WHEREIN THE AO HAS MADE THE FOLLOWING FINDINGS: IN THIS CASE, PROVISIONS OF SECTION 44AD OF ACT AR E CLEARLY ATTRACTED , AS PER THE BANK STATEMENTS TOTAL CREDITS/ DEPOSITS MADE DURING THE PERIOD 01/04/2016 TO 31/03/2017 IS RS. 59,46,583/- OUT OF WHICH RS. 17,01,000/- WAS DEPOSI TED DURING THE DEMONETIZATION PERIOD AND OUT OF THAT RS. 10,75,500/- WAS DEPOSITED IN SPECIF IED BANK NOTES (OLD CURRENCY) AND RS. 6,25,500/- WAS DEPOSITED IN THE NEW CURRENCY NOTES (I.E. RS. 2000/- NEW DENOMINATION NOTES), THEREFORE, THE AMOUNT OF RS. 6,25,500/- HAS BEEN PR ESUMED AS BUSINESS TURNOVER IN ABSENCE OF BOOKS OF ACCOUNTS AND DOCUMENTS/EVIDENCE OR ANY VER IFIABLE INFORMATION, THEREFORE RS. 4,05,686/- WHICH IS DETERMINED U/S 44AD OF THE ACT @ 8% OF RS. 50,71,083/- (RS. 42,45,583/- + 6,25,500/- + 2,00,000/-) IN ABSENCE OF REGULAR BO OKS OF ACCOUNTS AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. DRAWING MY ATTENTION TO THE AFORESAID FINDING THE L D. A.R SUBMITTED THAT THE ASSESSEE WHO IS INTO THE BUSINESS OF A TEA TRADING HAS DEPOS ITED IN HIS BANK ACCOUNTS FROM ITA NO. 144/GAU/2020 NURUL ISLAM, A.Y. 2017-18 3 | P A GE 01.04.2016 TO 31.03.2017 TOTAL SUM OF RS. 59,46,583 /-. IT WAS POINTED OUT BY THE LD. A.R THAT AFTER THE DEMONETIZATION ON 8/9 NOVEMBER, 2016 THE ASSESSEE HAD DEPOSITED ONLY RS. 17,01,000/- OUT OF WHICH RS. 6,25,500/- WA S THE NEW CURRENCY NOTES ISSUED BY THE RBI AND ONLY AN AMOUNT OF RS. 10,75,500/- WA S INVALID TENDER (OLD CURRENCY NOTES). ACCORDING TO LD. A.R, THE AO HAS ACCEPTED R S. 50,71,083/- (RS. 42,45,583/- + RS. 6,25,500/- + 2,00,000) OUT OF TOTAL RS. 59,46,5 83/- DEPOSITED IN THE BANK ACCOUNT. ACCORDING TO LD. A.R, THE ASSESSEES TOTAL TURNOVER IS LESS THAN RS. 60 LAKHS IT ATTRACTS SECTION 44AD OF THE ACT AND THEREFORE, AS PER LAW, THE ASSESSEE IS NOT REQUIRED TO MAINTAIN ITS BOOKS OF ACCOUNT. ACCORDING TO LD. A.R , A PERUSAL OF BANK STATEMENT WOULD REVEAL THAT THERE WERE REGULAR BANK DEPOSITS OF CASH AND PAYMENT TO THE CREDITORS (TEA VENDORS). MOREOVER, MY ATTENTION WAS DRAWN TO PAGES 3 TO 9 OF THE PAPER BOOK WHEREIN THE ASSESSEE HAS KEPT THE EXTRAC TS OF THE DAILY BANK BOOK FOR THE PERIOD BETWEEN 01.04.2016 31.03.2017. THE LD. AR POINTED OUT THAT THE OPENING BALANCE WAS TO THE TUNE OF RS.4,83,122/- AND THERE WERE SEVERAL DEPOSITS AND PAYMENTS/WITHDRAWALS REGULARLY WHICH I FIND TO BE C ORRECT. FURTHER, HE POINTED OUT THE PEAK CREDIT IN THE BANK BOOK ON 30.04.2016 WAS TO T HE TUNE OF RS.5,10,109/-, WHICH COMMENSURATE WITH THE DAILY BANK BALANCES DURING TH E PERIOD 08.11.2016 TO 30.12.2016, WHICH WERE IN THE RANGE OF RS.2,39,505/ - TO RS.27,550/-. SO, ACCORDING TO LD. AR, THESE FIGURES DEMONSTRATE THAT THE CASH DEP OSITS OF SPECIAL BANK NOTES OF RS.500/- AND RS.1000/- MADE DURING THE DEMONETIZATI ON PERIOD, WAS NOTHING UNUSUAL AND FORTIFIES ASSESSEES CONTENTION THAT THESE DEPO SITS WERE MADE IN THE REGULAR COURSE OF BUSINESS. THE DETAILS OF DEPOSIT OF CASH IN VARI OUS ACCOUNTS OF ASSESSEE ARE CAPTURED IN THE CHART BELOW: ITA NO. 144/GAU/2020 NURUL ISLAM, A.Y. 2017-18 4 | P A GE 8. FROM THE AFORESAID DETAILS, IT CAN BE SEEN THAT THERE HAS BEEN REGULAR BANK DEPOSITS OF CASH FROM 01.04.2016 TO 2.11.2016 AND A S WELL AS AFTER DEMONETIZATION ALSO. IT IS NOTED THAT THE TOTAL TURNOVER OF ASSESS EE IS AROUND RS.60 LAKHS. SO, THE AVERAGE MONTHLY TURNOVER COME TO RS. 5,00,000/- AND THE AMOUNT ADDED BY THE AO IS TO THE TUNE OF RS. 8,75,500/-. AND FROM A PERUSAL O F THE MONTHLY DEPOSIT OF CASH IN HIS ACCOUNTS IT IS NOTED THAT ASSESSEE HAS DEPOSITED AN AMOUNT OF RS.21,14,600/- (PRE- NOVEMBER DEMONETIZATION) AND RS.29,36,400/- (POST-D EMONETIZATION) OTHER THAN THE RS.8,75,000/- WHICH HAS BEEN BROUGHT TO TAX U/S. 68 OF THE ACT. SINCE THE AO HAS ACCEPTED THE ASSESSEES CLAIM THAT HE IS INVOLVED I N ELIGIBLE BUSINESS IN ACCORDANCE TO SECTION 44AD OF THE ACT AND THE TOTAL DEPOSIT COMES TO RS. 59,46,583/- AND OUT OF WHICH RS. 50,71,083/- HAS BEEN ACCEPTED BY THE AO A S TURNOVER FROM ELIGIBLE BUSINESS JUST BECAUSE THE ASSESSEE HAD WITH HIM AN AMOUNT OF RS.8,75,000/- SPECIFIED NOTES WHICH HE DEPOSITED IN THE BANKS COULD NOT BE TAKEN ADVERSELY AGAINST THE ASSESSEE. THE ASSESSEE HAS DEMONSTRATED THAT HE WAS INTO THE BUSI NESS OF TEA-TRADING AND AS NOTED FROM THE EXTRACTS OF THE DAILY BANK BOOK, THE OPENI NG BALANCE WAS TO THE TUNE OF RS.4,83,122/- AND THERE WERE SEVERAL DEPOSITS AND PAYMENTS/WITHDRAWALS REGULARLY AND THE PEAK CREDIT IN THE BANK BOOK ON 30.04.2016 WAS TO THE TUNE OF RS.5,10,109/-, WHICH COMMENSURATE WITH THE DAILY BANK BALANCES DUR ING THE PERIOD 08.11.2016 TO 30.12.2016, WHICH WERE IN THE RANGE OF RS.2,39,505/ - TO RS.27,550/-, THEREFORE THE DEPOSIT OF RS 8,75,000/- [RS 2,00,000/-ACCEPTED BY AO ] CANNOT BE SAID TO BE AS RESULT OF NON-GENUINE BUSINESS RECEIPT OR A CASE OF BLACK MONEY AND THEREFORE, IN THE PECULIAR FACTS NARRATED ABOVE, INCLUDING THE PAST HISTORY TA KEN NOTE OF AND THE PATTERN OF MONEY DEPOSITED PRE-DEMONETIZATION AND POST THAT EVENT AS DISCUSSED, ADDITION WAS NOT WARRANTED AND IT IS DIRECTED TO BE DELETED; AND FUR THER, I AM OF THE OPINION THAT THE PROFIT EMBEDDED IN RS. 8,75,500/- NEED TO BE TAXED @ 8% AND IT IS ORDERED ACCORDINGLY. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2021. SD/- DATED: 20 TH JANUARY, 2021. ( (A. T. VARKEY) VICE PRESIDENT JUDICIAL MEMBER ITA NO. 144/GAU/2020 NURUL ISLAM, A.Y. 2017-18 5 | P A GE SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- NURUL ISLAM, C/O, RAHUL RAJ JAIN & CO. H . NO. 15, 1 ST FLOOR, BYE LANE-2, SHAKTIGARH PATH, BHANGAGARH, G.S.ROAD, ASSA M-781005. 2. RESPONDENT- ITO, WARD-2, NAGAON 3. THE CIT(A)- GUWAHATI 4. CIT- , GUWAHATI 5. DR, GAUHATI BENCH, GUWAHATI TRUE COPY BY ORDER SR. PRIVATE SECRETARY