Amrit Goyal, Manimajra V. ITO, W-3(4), Chandigarh

ITA 1489/CHANDI/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1220 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIV SWAROOP SINGH
• Keywords: Peak credit; Additional evidence
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH SMC CHANDIGARH , ! BEFORE: SMT. DIVA SINGH, JM ./ ITA NO. 1489/CHD/2017 !' # $# / ASSESSMENT YEAR : 2009-10 AMRIT GOYAL, BOOTH NO. 933-934, LOCAL BUS STAND,MANI MAJRA. VS THE DCIT, CIRCLE, PARWANOO. ./PAN NO: AAJFB4564B /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI ATUL GOYAL / REVENUE BY : SHRI SHIV SWAROOP SINGH, SR.DR /DATE OF HEARING : 29.05.2019 !'#$%& /DATE OF PRONOUNCEMENT : 04.06.2019 %&/ ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 20.07.2017 OF CIT(A), CHANDIGARH PERTAINING T O 2009-10 ASSESSMENT YEAR WHEREIN THE ADDITION MADE BY THE AO TO HIS RETURNED INCOME OF R S. 72,900/- WAS CONFIRMED IN APPEAL BY THE CIT(A). THE SPECIFIC GROUNDS READ AS UNDER : 1 (I) THAT THE HON'BLE CIT(A) AND ASSESSING OFFICER HAS ERRED BOTH IN LAW AND FACTS IN CONFIRMING THE ADDITION OF RS. 16,15,700/- UNDER TH E PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT 1961 ON ACCOUNT OF CASH DEPOSITS IN THE ACCOUNTS OF THE ASSESSEE. (II) THAT THE HON'BLE CIT(A) AND ASSESSING OFFIC ER HAS ERRED IN LAW AND FACTS BY NOT APPRECIATING THE DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE IN RESPECT OF THE DEPOSIT OF THE CASH IN THE BANK ACCOUNT. (III) THE HON'BLE CIT(A) AND ASSESSING OFFICER HAS FAILED TO GIVE BENEFIT OF PEAK CREDIT TO THE ASSESSEE. (IV) THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEN D ANY GROUND OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDINGS. 2. THE FACTS WHICH WERE FOUND TO BE NOT CONVINCING BY THE AO WERE THAT THE ASSESSEE'S EXPLANATION IN REGARD TO HAVING RENTED OUT A RUNNIN G SHOP WHEREIN HE WAS EARLIER SELLING MEDICINES WAS LATER ON HANDED OVER TO SHRI NARESH K UMAR S/O SHRI KALI RAM WHO HAD MADE ITA 1489/CHD/2017 A.Y. 2009-10 PAGE 2 OF 4 THESE PAYMENTS AND THUS, THESE WERE CLAIMED TO BE B USINESS RECEIPTS OF THE ASSESSEE. RENT DEED AND LEASE DEED ETC. MADE AVAILABLE TO THE AO W ERE RELIED UPON. 2.1 IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE MADE ALTERNATE SUBMISSIONS THAT EVEN OTHERWISE THE AMOUNT FOUND DE POSITED IN HIS BANK ACCOUNT COULD BE EXPLAINED FROM THE CASH WITHDRAWALS. SAID EXPLANATI ON WAS DISCARDED BY THE CIT(A). FOR READY REFERENCE, THE SAME IS REPRODUCED HEREUNDER : 4.3.2 IT WOULD BE WORTHWHILE TO COMPARE THE TWO EXPLANATIONS OF FERED BY THE APPELLANT IN THE FOLLOWING TABLE I.E. - (I) SOURCE OF CASH IS THE SALE OF MEDICINE (II) SOURCE OF CASH IS MONEY WITHDRAWN FROM HIS OWN BANK ACCOUNT . SI. DATE AMOUNT EXPLANATION - 1. EXPLANATION 2. NO. DEPOSITED (IN RS.) 1 30.04.2008 7,000/ - DEPOSITED DEPOSITED FROM CASH OF RS. FROM CASH 2,58,000/- WITHDRAWN ON RECEIVED ON 15.04.2008. ACCOUNT OF SALE OF MEDICINE 2 13.05.2008 65,000/- -DO - DEPOSITED FROM CASH OF RS. 2,58,000/ - WITHDRAWN ON 15.04.2008 AND RS. 21,000/- WITHDRAWN ON 09.05.2008. 3 13.05.2008 2,00,000/ - - DO - - DO - 4 22.05.2008 11,00,000/ - - DO - DEPOSITED FROM CASH OF RS. 2,58,000/- WITHDRAWN ON 15.04.2008 AND RS. 21,000/- WITHDRAWN ON 09.05.2008 AND IN ADDITION CASH OF RS. 2,00,000/ - WITHDRAWN ON 15.05.2008. 5 30.05.2008 3,13,000/- - DO - RS. 50,000/- CASH WITHDRAWN ON 23.05.2008. 6 03.10.2008 2,00,000/ - - DO - RS. 2,65,200/ - CASH WITHDRAWN FROM 01.08.2008 TO 28.09.2008. 4.3.3 ON ONE HAND THE APPELLANT IS SAYING THAT CASH DEPOS ITED IN VARIOUS DATES HAS BEEN RECEIVED ON ACCOUNT OF SALE OF MEDICINE AND ON THE OTHER HE IS ADVOCATING THAT THE MONEY' WAS DEPOSITED OUT OF CASH WITHDRAWN ON DIFFERENT DA TES, WITHOUT SUBMITTING THE REASONS AND PURPOSE FOR MAKING CASH WITHDRAWAL AND DEPOSITS. TH IS EXPLANATION IS CONTRARY TO THE EXPLANATION SUBMITTED REGARDING THE SOURCE OF CASH BEING THE SALE OF MEDICINE. THE APPELLANT IS NOT SURE ABOUT THE SOURCE OF CASH DEPO SITS AND THE EXPLANATION BEING OFFERED SEEM TO BE MADE UP AND AN AFTERTHOUGHT. THE ASSESSI NG OFFICER HAS ALREADY GIVEN BENEFIT TO THE APPELLANT WITH RESPECT TO OPENING CASH OF RS. 2 ,00,000/-. THEREFORE, THE PLEA OF THE APPELLANT IS NOT ACCEPTABLE AND ADDITION IS CONFIRM ED. GROUNDS OF APPEAL NOS. 2 AND 3 ARE DISMISSED. 2.2 AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. THE LD. AR RELYING UPON THE SUBMISSIONS ADVANCED BEFORE THE AO AND CIT(A) SUBMI TTED THAT EXPLANATION-I AS TITLED BY THE CIT(A) WAS THE ORIGINAL EXPLANATION OF THE ASSE SSEE AND THE ASSESSEE HAD ALSO FILED A CASH- ITA 1489/CHD/2017 A.Y. 2009-10 PAGE 3 OF 4 FLOW STATEMENT ON THE BASIS OF WHICH IT HAD BEEN SU BMITTED THAT AT BEST A PEAK CREDIT COULD HAVE BEEN ADDED. THE SECOND EXPLANATION WAS WITHOU T PREJUDICE EXPLANATION OFFERED THAT EVEN OTHERWISE THE ENTIRE ADDITION COULD NOT HAVE B EEN MADE. HOWEVER, RELYING UPON THE TOTALITY OF FACTS WHERE HE HAS ADDRESSED THE FACTUA L POSITION IN REGARD TO HOW THE BUSINESS WAS RUN, IT WAS HIS SUBMISSION THAT AT BEST IF THE DEPA RTMENT IS ADAMANT TO TREAT IT AS UNDISCLOSED INCOME OF THE ASSESSEE, EVEN IN SUCH CIRCUMSTANCES ONLY PEAK CREDIT COULD BE ADDED I.E. AN AMOUNT OF RS. 7,90,800/- WHICH OFFER WAS MADE TO TH E CIT(A) ALSO WHO HAS FAILED TO ADDRESS THE SAID ASPECT. IN THE PRESENT PROCEEDINGS THE LD . AR SUBMITTED THAT HE HAS BEEN INSTRUCTED TO LIMIT HIMSELF TO THE ALTERNATE PAYER NAMELY ONLY P EAK CREDIT BE ADDED. ATTENTION WAS INVITED TO PARA 10 OF THE BRIEF SYNOPSIS FILED WHIC H IS EXTRACTED HEREUNDER : 1. THE ASSESSEE WAS RUNNING CHEMIST SHOP UNDER THE NAM E AND STYLE OF M/S M.A. ENTERPRISES. 2. IN DECEMBER 2007, THE ASSESSEE ENTERED INTO AN AGRE EMENT WITH SH. NARESH KUMAR FOR PROVIDING THE SHOP ON RENT ALONG WITH STOCK AND FUR NITURE AND FIXTURE. 3. THE STOCK WAS TO BE TAKEN OVER 30% LESS THAN THE MR P AND THE CONSIDERATION FOR FURNITURE AND FIXTURE WAS DETERMINED AT RS. 260000/ -. IN LIEU OF THE SAME THE ASSESSEE RECEIVED AN ADVANCE CHEQUE OF RS. 100,000/-. 4. THE INITIAL AGREEMENT PROVIDED THAT THE FINAL RENT AGREEMENT SHALL BE AGREED SUBSEQUENTLY. 5. IN MARCH 2008, THE FINAL RENT AGREEMENT WAS ENTERED INTO BETWEEN ASSESSEE AND M/S GANPATI PHARMA IN WHICH SON OF SH. NARESH KUMAR I.E . NARINDER KUMAR WAS A PARTNER ALONG ANOTHER PERSON SH. SURINDER SINGLA. 6. AS PER THE INITIAL AGREEMENT WHOLE OF THE STOCK WAS TRANSFERRED/SOLD TO THE FIRM M/S GANPATI PHARMA BEFORE 31.03.2008 AND THE ASSESSEE C LOSED THE BUSINESS AND THE SAME HAS BEEN SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME FOR AY 2008-09 (RELEVANT TO FY 2007- 08). THE FINANCIAL STATEMENT FOR THE FY 2007-08 IS FILED BY WAY OF ADDITIONAL EVIDENCE ON 1 15.02.2019. 7. SUBSEQUENTLY, THE ASSESSEE RECEIVED THE AMOUNT ON A CCOUNT OF SALE OF MEDICINES MADE TO M/S GANPATI PHARMA AND THE SAME WAS DEPOSITED BY THE ASSESSEE IN THE SAVING BANK ACCOUNT AS THE ASSESSEE HAD CLOSED HIS BUSINESS. 8. THE ASSESSEE RECEIVED A SUM OF RS. 9,94,000/- ON AC COUNT OF MEDICINES SOLD TO THE FIRM M/S GANPATI PHARMA. 9. THE LD. A.O. HAS CONSIDERED THE WHOLE OF DEPOSIT IN THE BANK ACCOUNT OF RS. 16,15,700/- AS UNDISCLOSED INCOME OF THE ASSESSEE C OMPLETELY REJECTING THE SUBMISSIONS OF THE ASSESSEE VIDE REPLY DATED 24.11.2011 WHEREIN TH E ASSESSEE FILED THE SOURCE OF THE CASH DEPOSITED. 10. THE ASSESSEE TOOK A ALTERNATE PLEA BEFORE THE CIT(A ) THAT THE BENEFIT OF PEAK BALANCE BE GIVEN TO THE ASSESSEE AND FILED THE CASH FLOW ST ATEMENT FOR THE BANK ACCOUNT ON 13.02.2017. ITA 1489/CHD/2017 A.Y. 2009-10 PAGE 4 OF 4 11. THE CIT(A) MISTAKENLY CONCLUDED THAT THE ASSESSEE I S GIVING TWO DIFFERENT VERSIONS. AND UPHELD THE ADDITION OF RS. 16,15,700/-. 3. THE LD. SR.DR MR.SHIV SWAROOP SINGH THOUGH RELIE D UPON THE IMPUGNED ORDER, HOWEVER CONSIDERING THE ALTERNATE PRAYER SUBMITTED THAT THE DEPARTMENT WOULD BE SATISFIED IF THE PEAK CREDIT OF RS. 7,90,800/- IS ADDED. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. ACCORDINGLY, IN THE LIGHT OF THE SUBMISSIONS OF THE PARTIES BEFORE THE BENCH, THE ASSESSEE WHO HAS EXPLAINED HIS CONDUCT IN THE BRIEF SYNOPSIS FIL ED, IT IS DEEMED APPROPRIATE TO ACCEPT THE PRAYER MADE IN PARA 10 OF THE BRIEF SYNOPSIS, THE P EAK BALANCE IS OFFERED BY THE ASSESSEE FOR TAXATION. ACCORDINGLY, GROUND 1(III) IS ALLOWED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JUNE,2019. SD/- ( ) (DIVA SINGH) ! / JUDICIAL MEMBER ) ' '( )* +*% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. , / CIT 4. , ( )/ THE CIT(A) 5. *-. / , /& , 012.3 / DR, ITAT, CHANDIGARH 6. .2 4 / GUARD FILE '( / BY ORDER, 5 / ASSISTANT REGISTRAR