ITO, Madurai V. Shri T.Murugesan, Madurai

ITA 1488/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5124 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 09-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: G BASKAR
• Keywords: Business income; Salary income; Peak credit; Corroborative evidences
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NO.1488/MDS/2010 ASSESSMENT YEAR : 2007-08 THE ITO WARD II(1) MADURAI VS SHRI T.MURUGESAN PARTNER:M/S RAJALAKSHMI AUTO STORE 70, TAMILSANGAM ROAD,1 ST FLOOR MADURAI 625001 [PAN AEYPM5008C] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.B.SEKARAN RESPONDENT BY : SHRI G.BASKAR O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE, FOR ASSESSMENT YEAR 2007-08, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-I, MAD URAI, DATED 28.6.2010. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE DERIVES INCOME FROM SALARY AND INTEREST FROM FIRM. HE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 ON 18.12.2007 DE CLARING INCOME OF ` 77,540/-. THE REGULAR ASSESSMENT WAS COMPLETED O N A TOTAL INCOME OF ` 11,63,540/-. IT WAS NOTICED THAT THE ASSESSEE WAS HAVING ITA 1488/10 :- 2 -: A REGULAR SAVINGS BANK ACCOUNT NO.093100050301104 W ITH TAMILNAD MERCANTILE BANK LTD, SIMMAKKAL BRANCH, MADURAI. FU RTHER, THE ASSESSING OFFICER ALSO NOTICED FROM AIR REPORT THAT THE ASSESSEE WAS HAVING ANOTHER S.B ACCOUNT WITH THE SAME BANK WITH DIFFERENT NUMBER 093100050302643 WHICH WAS NOT DISCLOSED WITH THE RE TURN OF INCOME. AS DIRECTED BY THE ASSESSING OFFICER, THE ASSESSEE FILED BANK STATEMENT ACCEPTING THAT HE HAD CARRIED ON WHOLESALE VEGETABL E BUSINESS IN THE CENTRAL MARKET, MADURAI AND CASH DEPOSITS WERE MADE IN THE SAID BANK ACCOUNT FROM THAT BUSINESS. WHEN A.R OF THE ASSE SSEE WAS REQUIRED TO PROVE THAT THE ASSESSEE HAD CARRIED ON THIS BUSI NESS, DAY BOOK AND LEDGER RELATED TO THAT BUSINESS ENDED 31.3.2007 WER E PRODUCED BUT SUPPORTING EVIDENCE LIKE PURCHASE INVOICES, SALES B ILLS, LORRY FREIGHT VOUCHERS ETC COULD NOT BE PRODUCED. IT WAS EXPLAIN ED THAT THE ASSESSEE CARRIED ON THIS BUSINESS FOR A SHORT WHILE AND HAD ENDED IN HEAVY LOSS OF ` 2,17,691/- THAT IS WHY NO DETAILS WERE PROVIDED IN THE RETURNS. THIS BUSINESS WAS CLOSED IN MAY 2007 BEFO RE FILING THE RETURN OF INCOME BY SETTLING THE DUES TO THE SUPPLIERS. T HE ASSESSEE EXPLAINED THAT DURING THE PERIOD FROM 1.12.2006 TO 31.3.2007, HE HAD MADE PURCHASES WORTH ` 12,47.950/- AND SALES FOR ` 10,95,770/- AND THE TOTAL SALE REALIZATION WAS DEPOSITED IN THE SAM E BANK ACCOUNT BEARING NO.09300050302643 WITH TAMILNAD MERCANTILE BANK LTD, MADURAI. BUT THE ASSESSING OFFICER WAS NOT AGREEAB LE AND TREATED THE ITA 1488/10 :- 3 -: PEAK CREDIT OF THIS BANK ACCOUNT WHICH WAS AT ` 10,82,533/- AS ON 26.3.2007 AS UNDISCLOSED INCOME OF THE ASSESSEE AND BROUGHT THE SAME TO TAX U/S 69 OF THE ACT. AGGRIEVED, THE ASSE SSEE FILED APPEAL AND GOT PART RELIEF. THE LD. CIT(A) HAS ACCEPTED T HE BUSINESS HAVING BEEN DONE BY THE ASSESSEE AND SUBJECTING THE TOTAL SALES TURNOVER OF ` 10,95,990/- TO SECTION 44AF OF THE ACT, HE WORKED OUT NET PROFIT @ 5% OF THE SALES TURNOVER AT ` 54,800/-. HE DELETED THE BALANCE ADDITION OF ` 10,27,733/-. NOW THE REVENUE IS AGGRIEVED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE P ERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS TRUE THAT THE ASSESSEE HAD HIDDEN THE FACTUM OF CARRYING ON OF WHOLESALE VEGETABLE BU SINESS, FROM THE DEPARTMENT. THE ASSESSEE HAD DONE THIS BUSINESS FO R A SHORT PERIOD AND HAD SUFFERED HEAVY LOSS. HE MAY HAVE DRIVEN BY INSTINCT TO HIDE THE SAME ON THE REASONING THAT WHEN HE HAS SUFFERED LOSS, THERE IS NO NEED TO DISCLOSE THIS BUSINESS. THE ASSESSEE HAS R ELATED THE DEPOSITS AND WITHDRAWALS IN THE ANOTHER ACCOUNT WITH HIS WHO LESALE VEGETABLE BUSINESS. BUT HE HAS NOT PRODUCED EVIDENCE TO PROV E BEYOND DOUBT THAT HE HAD ACTUALLY DONE WHOLESALE VEGETABLE BUSIN ESS. BUT THE ASSESSING OFFICER COULD NOT REJECT THIS PLEA OF THE ASSESSEE BECAUSE HE HAD PRODUCED DAY-BOOK AND LEDGER RELATING TO THIS BUSINESS, FOR THE PERIOD ENDED ON 31.3.2007 ; AND THE ASSESSING OFFI CER HAS NOT STATED THAT THESE DOCUMENTS DID NOT RELATE TO WHOLESALE VE GETABLE BUSINESS. ITA 1488/10 :- 4 -: WHEN TWO SETS OF REASONINGS ARE PITTED AGAINST EACH OTHER, WE FIND IT JUSTIFIABLE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THAT THE BALANCE SHOULD TILT IN FAVOUR OF THE ASSESSEE. THE TREATMENT GIVEN TO THE PEAK DEPOSIT OF THIS BANK ACCOUNT BY THE LD. CI T(A), IN OUR OPINION, IS ONE OF THE BEST POSSIBLE METHODS AND DESERVES TO BE UPHELD. AS PER THE ACT, SMALL BUSINESSMEN ARE TO BE TAXED ON TOTAL SALES TURNOVER U/S 44AF OF THE ACT @ 5% OF THE TOTAL SALES TURNOVER. THE ASSESSING OFFICER DID NOT GO INTO OTHER ALLIED ASPECTS LIKE, THE MODUS OF PURCHASE OF THE VEGETABLES AND THE INVESTMENT MADE THEREIN, SO WE ARE NOT REQUIRED TO LOOK INTO THOSE ASPECTS. WE HAVE TO PR ESUME THAT THE ASSESSING OFFICER WAS SATISFIED WITH THE SOURCE OF INVESTMENT. THEREFORE, IN THE TOTALITY OF THE FACTS AND CIRCUMS TANCES OF THE CASE, WE HAVE TO CONFIRM THE IMPUGNED FINDING. ACCORDING LY, WE DISMISS THE APPEAL OF THE REVENUE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4.5 .2011 SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 4 TH MAY, 2011 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR