Himanshu Kumar Chemi, Bhubaneswar V. ITO, Ward-2(1), Bhubaneswar

ITA 15/CTK/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7583 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 14-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: N R BISWAL
• Keywords: Unexplained cash credit; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N. S SAINI, ACCOUNTANT MEMBER ITA NO.15 /CTK/2016 ASSESSMENT YEAR : 2009 - 2010 SRI HIMANSU KUMAR CHEMI, PLOT NO.5, KALARAHANGA, MANCHESWA R , BHUBANESWAR. VS. ITO, WARD 2(1), BHUBANESWAR. PAN/GIR NO. AFYPC 3901 R (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI N.R.BISWAL REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 2 6 /10 / 2016 DATE OF PRONOUNCEMENT : 26 /10 / 2016 O R D E R THIS I S AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 2, BHUBANESWAR , DATED 15.5.2015 , FOR THE ASSESSMENT YEAR 2009 - 2010. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: 1. FOR THAT, THE LD. CIT(A) IS ILLEGAL AND UNJUSTIFIED TOWARDS ADDITION OF RS. 1,28,836 / - BY DETERMINING PROFIT OF 14.51% OF RS. 8,87,857/ - , CREDITED IN THE BANK STATEMENT, TREATING THE SAME AS BUSINESS I NCOME. THEREFORE ADDITION OF RS. 1,28,836/ - BY THE LD. C1T(A) IS ARBITRARY, UNJUSTIFIED, ILLEGAL ON THE FACTS &. CIRCUMSTANCES OF THE CASE. THE SAME SHOULD BE DELETED IN FULL. 2. FOR THAT, THE LD. C1T(A) IS ILLEGAL AND UNJUSTIFIED TOWARDS ADDITION OF RS.26,00,000/ - CREDITED ON DIFFERENT DATES IN THE SAVING BANK ACCOUNT MAINTAINED IN ALLAHABAD BANK AS 2 ITA NO.15 /CTK/2016 ASSESSMENT YEAR :2009 - 2010 'UNEXPLAINED CASH CREDIT'. THE CASH CRED IT IN THE SAVING BANK ACCOUNT IS DULY EXPLAINED BEFORE THE LD. CIT(A). THEREFORE ADDITION OF RS. 26,00,000/ - BY THE LD. CIT(A) IS ARBITRARY, UNJUSTIFIED, ILLEGAL ON THE FACTS & CIRCUMSTANCES OF THE CASE. THE SAME SHOULD BE DELETED IN FULL. 3. FOR THAT, IF GROUND NO. - 1 & GROUND NO. - 2 IS NOT ACCEPTED, THEN THE ENTIRE AMOUNT OF RS. 27,28,836/ - MAY BE TREATED AS BUSINESS RECEIPT &. ESTIMATION OF PROFIT SHOULD BE @ 5%. THEREFORE ADDITION BY THE LD. CIT(A) IS ARBITRARY, UNJUSTIFIED, ILLEGAL ON THE FACTS & CIRCUMSTANCES OF THE CASE. 4. FOR THAT, THE APPELLANT MAY ADD, ALTER, AMEND ANY OTHER GROUNDS OF APPEAL AT TIME OF HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS MAINTAINING THREE BANK ACCOUNTS IN ST ATE BANK OF INDIA, UNION BANK OF INDIA AND ALLAHABAD BANK, IN WHICH, CASH DEPOSIT S TOTALING TO RS.48,38,107/ - WERE MADE. AS A GAINST THE SAME, TOTAL TURNOVER DISCLOSED IN THE RETURN OF INCOME FILED FOR T H E ASSESSMENT YEAR 2009 - 2010 WAS ONLY RS.13,50,250/ - , THE DETAILS OF WHICH ARE AS UNDER: SL.NO. NAME OF THE BANK ACCOUNT NO. TOTAL AMOUNT DEPOSITED DURING F.Y. 08 - 09 (INCLUDING CASH & CH.(RS.) 1. SBI, KIIT SQUARE, BBSR 310426510250 84,500/ - (CASH DEPOSITS) 2. UNION BANK OF INDIA, CHANDRASEKHARPUR BRANCH, BBSR 450502010007556 RS.3,30,660/ - (INCLUDING CASH DEPOSIT OF RS.2,95,000 3. ALLAHABAD BANK, MAYFAIR LAGON BRANCH, BBSR 20043823935 RS.44,22,947/ - (INCLUDING CASH DEPOSIT OF RS.27,38,000/ - TOTAL: 48,38,107/ - 3 ITA NO.15 /CTK/2016 ASSESSMENT YEAR :2009 - 2010 4. THE ASSESSING OFFICER OBSERVED THAT OUT OF TOTAL CASH DEPOSITS OF RS.27,38,000/ - MADE IN ALLAHABAD BANK , RS.26,00,000/ - WAS DEPOSITED ON THE FOLLOWING DATES: 29.5.2008 : RS.5,00,000/ - 21.10.2008 : RS.10,00,000/ - 22.10.2008 : RS.11,00,000/ - TOTAL: RS.26,00,000/ - 5. THE ASSESSEE WAS REQU IRED TO EXPLAIN THE SOURCE OF DEPOSITS. THE ASSESSEE SUBMITTED THAT HE WAS RUNNING A SHOE SHOP AND ALSO DERIVES INCOME FROM SALE OF MILK . THE ASSESSING OFFICER OBSERVED THAT NO EXPLANATION WAS FURNISHED ABOUT CASH DEPOSITS MADE HIS BANK ACCOUN T. THE ASSE SSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN GROSS RECEIPTS FROM THE BUSINESS ACTIVITY AT RS.13,50,250/ - . IN ABSENCE OF ANY SATISFACTORY EXPLANATION, THE ASSESSING OFFICER ADDED RS.26,00,000/ - TO THE INCOME OF THE ASSESSEE ON THE GROUND THAT THE ASSESS EE WAS ENGAGED IN RETAIL BUSINESS AND NO BOOKS OF ACCOUNT WERE MAINTAINED AND CONSIDERING THE VOLUME OF BUSINESS, IT WAS NOT PROBABLE THAT DEPOSITS WERE FROM RETAIL TRADE OF THE ASSESSEE. 6. FURTHER, THE ASSESSING OFFICER TREATED THE BALANCE AMOUNT OF DE POSIT OF RS.22,38,107/ - IN THE BANK ACCOUNT OF THE ASSESSEE AS BUSINESS RECEIPTS AND ALSO OBSERVED THAT THE ASSESSEE HAD SHOWN GROSS BUSINESS RECEIPTS OF R S.13,50,250/ - AND ESTIMATED NET PROFIT OF RS.2,06,880/ - WHICH WORKS 4 ITA NO.15 /CTK/2016 ASSESSMENT YEAR :2009 - 2010 OUT TO 15% OF THE GROSS REC EIPTS. THEREFORE, HE ESTIMATED THE PROFIT FROM THE BUSINESS ACTIVITIES OF THE ASSESSEE @ 15% OF GROSS RECEIPTS OF RS.22,38,107/ - , WHICH WORKS OUT TO RS.3,35,716/ - AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 7. ON APPEAL, LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 8. BEFORE ME, THE ONLY ARGUMENT OF LD A.R. OF THE ASSESSEE IS THAT SINCE THE ASSESSEE WAS A RETAILER, INCOME FROM BANK DEPOSITS SHOULD BE ASSESSED @ 5% OF THE GROSS RECEIPTS AS PER SECTION 44AF OF THE ACT. 9. LD D.R. ON TH E OTHER HAND, SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 10. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON REC ORD. IN THE INSTANT CASE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE WAS MAINTAINING THREE BANK ACCOUNTS , NAMELY, WITH STATE BANK OF INDIA, UNION BANK OF INDIA AND ALLAHABAD BANK, WHEREIN, THE ASSESSEE HAD MADE TOTAL CASH DEPOSITS OF RS.48,38,107/ - DURING THE YEAR . HE OBSERVED THAT THE ASSESSEE HAS DISCLOSED TURNOVER OF RS.13,50,250/ - AND THE ASSESSEE WAS NOT MAINTA INING ANY BOOKS OF ACCOUNT, THEREFORE, THE EXPLANATION OF THE ASSESSEE THAT DEPOSITS WERE OUT OF HIS BUSINESS RECEIPTS WAS NOT PROBABLE AND CANNOT BE ACCEPTED. HE, THEREFORE, TREATED RS.26,00,000/ - AS UNDISCLOSED INCOME OF THE ASSESSEE AND MADE ADDITION F OR THE SAME. 5 ITA NO.15 /CTK/2016 ASSESSMENT YEAR :2009 - 2010 11. REGARDING BALANCE AMOUNT OF RS.22,38,107/ - , THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IN THE RETURN OF INCOME HAS DISCLOSED TURNOVER OF RS.13,50,250/ - AND SHOWN PROFIT OF RS.2,06,880/ - , WHICH WORKS OUT TO 15%. HE, THEREFORE, ESTIMA TED INCOME @ 15% ON THE BALANCE DEPOSITS OF RS.22,38,107/ - AND MADE ADDITION OF RS.3,35,716/ - TO THE INCOME OF THE ASSESSEE, WHICH WAS CONFIRMED IN APPEAL BY THE LD CIT(A). 12. I FIND THAT THE ONLY ARGUMENT OF LD AR OF THE ASSESSEE IS THAT THE INCOME FROM DEPOSITS IN THE BANK OF RS.27,28,836/ - @ 5% SHOULD BE ESTIMATED AND BROUGHT TO TAX U/S.44AF OF THE ACT. I ALSO FIND FROM THE ORDER OF THE ASSESSING OFFICER THAT THE ASSESSING OFFICER HAS ESTIMATED PROFIT @ 15% ON THE BALANCE DEPOSIT IN BANK OF RS.22,38,10 7/ - OUT OF THE TOTAL DEPOSITS OF RS.48,38,107/ - AND DETERMINED THE INCOME ON THE SAID AMOUNT AT RS.3,35,716/ - . THE ARGUMENT OF THE LD A.R. OF THE ASSESSEE THAT THE DEPOSITS OF RS.27,28,836/ - IN THE BANK SHOULD BE ASSESSED @ 5% UNDER SECTION 44AF OF THE ACT IS NOT CORRECT. THIS IS SO BECAUSE THE ASSESSING OFFICER HAS TAKEN THE BALANCE DEPOSIT OF RS.22,38,107/ - TO BE OUT OF BUSINESS OF THE ASSESSEE INCLUDING RS.13,50,250/ - SHOWN BY THE ASSESS EE IN THE RETURN OF INCOME. THEREFORE, OUT OF RS.27,28,836/ - , RS.1,28,836/ - IS THE PROFIT DETERMINED @ 15% BY THE ASSESSING OFFICER ON BANK DEPOSITS OF RS.8,87,857/ - . THUS, THE DEPOSITS IN THE BANK OF RS.26,00,000/ - WHICH IS CONSIDERED BY THE ASSESSING O FFICER AS INCOME IN ITS ENTIRETY IS TO BE CONSIDERED AS BUSINESS RECEIPTS OF THE ASSESSEE ACCORDING TO THE LD A.R. OF 6 ITA NO.15 /CTK/2016 ASSESSMENT YEAR :2009 - 2010 THE A SSESSEE AND INCOME THEREON IS TO BE ESTIMATED @ 15%. I FIND THE SUBMISSION OF LD A.R. OF THE ASSESSEE IS A PLAUSIBLE ONE. NO REASON HAS BEEN GIVEN EITHER BY THE ASSESSING OFFICER OR BY THE LD CIT (A) AS TO WHY OUT OF TOTAL DEPOSITS OF RS.48,38,107/ - , ONLY RS.22,38,107/ - WAS PARTLY ACCEPTED TO BE OUT OF BUSINESS TURNOVER OF THE ASSESSEE AND THE BALANCE AMOUNT OF RS.26,00,000/ - WAS NOT TO BE CONSIDERED OUT OF BUSINESS TURNOVER OF THE ASSESSEE. ACCORDING TO LD A.R. OF THE ASSESSEE, THE ASSESSEE HAD NO OTHER SOURCE OF INCOME EXCEPT THE BUSINESS OF SHOE SHOP AND SALE OF MILK. THEREFORE, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DIR ECT THE ASSESSING OFFICER TO DETERMINE THE INCOME @ 15% ON THE BANK DEPOSIT OF RS.26,00,000/ - WHICH IS THE RATE OF PROFIT SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME FILED BY THE ASSESSEE AND TO ASSE SS THE INCOME OF THE ASSESSEE ON RS.26,00,000/ - AT RS.3 ,90,000/. THUS, THE ASSESSEE GETS RELIEF OF RS.22,10,000/ - . THUS, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 26 /10 /2016 IN THE PRESENCE OF PARTIES. S D / - ( N. S SAINI ) A CCOUNTANT MEMBER CUTTACK; DATED 26 /10 /2016 7 ITA NO.15 /CTK/2016 ASSESSMENT YEAR :2009 - 2010 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : SRI HIMANSU KUMAR CHEMI, PLOT NO.5, KALARAHANGA, MANCHESWA R , BHUBANESWAR 2. THE RESPONDENT. ITO, WARD 2(1), BHUBANESWAR. 3. THE CIT(A) - 2, BHUBANESWAR 4. CIT , BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//