ITO, New Delhi V. Shri Rajender Sharma, New Delhi

ITA 1507/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6830 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 21-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: VED JAIN MS UMANG LUTHRA
• Keywords: Unexplained cash credit; Bogus Share capital; Business income; Peak credit
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1507/DEL/2016 ASSESSMENT YEAR: 2011-12 ITO, WARD-46(4), NEW DELHI. VS RAJENDER SHARMA, 1898, GALI LEHSHWA, KUCHA PATI RAM, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE, MS UMANG LUTHRA, ADVOCATE & SHRI RISHABH JAIN, CA REVENUE BY : MS ASHIMA NEB, SR. DR DATE OF HEARING : 18.04.2019 DATE OF PRONOUNCEMENT : 29.04.2019 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 29 TH JANUARY, 2016 OF THE CIT(A)-17, NEW DELHI, RELATING TO ASSESSMENT YEAR 2011-12. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF PLYING PASSENGER CARS OWNED BY OTHE RS ON COMMISSION BASIS. HE FILED HIS RETURN OF INCOME ON 3 RD OCTOBER, 2012 DECLARING THE TOTAL INCOME OF RS.1,5 9,528/-. ITA NO.1507/DEL/2016 2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT DISCLOSED THE FOLLOWING BANK ACCOU NTS WHERE SUBSTANTIAL CASH HAS BEEN DEPOSITED, THE DETAILS OF WHICH ARE AS UNDER:- A) A/C NO.629205500356 IN THE NAME OF IP TRADING C OMPANY TOTAL CASH DEPOSITED: RS40,83,000/-; AND B) A/C NO.113201500415 IN THE NAME OF SH. RAJENDER SHARMA TOTAL CASH DEPOSITED: RS38,30,820/- 3. SINCE THE ASSESSEE DID NOT PRODUCE THE NECESSARY EVIDENCE/DOCUMENTS TO SUBSTANTIATE THE CASH DEPOSITS IN THE ABOVE TWO BAN K ACCOUNTS MAINTAINED WITH ICICI BANK, THE ASSESSING OFFICER INVOKING THE PROVISIONS OF SECTION 68 MADE ADDITION OF RS.79,13,820/- AND DETERMINED THE TOTAL INCOME AT R S.80,73,348/-. 4. BEFORE THE CIT(A), IT WAS ARGUED THAT THE ADDITI ON U/S 68 CANNOT BE MADE ON THE BASIS OF THE ENTRIES APPEARING IN THE BANK STATEMEN TS. EVEN IF THE ADDITION IS MADE, THEN ALSO, THE ENTIRE AMOUNT APPEARING IN THE CREDI T SIDE OF THE BANK STATEMENT CANNOT BE MADE AS INCOME OF THE ASSESSEE AND ONLY PEAK CRE DIT AT BEST CAN BE MADE. VARIOUS DECISIONS WERE ALSO BROUGHT TO THE NOTICE OF THE LD .CIT(A). 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE, THE LD.CIT(A) DIRECTED THE ASSESSING OFFICER TO ADD THE PEAK CREDIT WHICH COME S TO RS.4,44,300/- IN THE INSTANT CASE. HE FURTHER DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE PROFIT @ 5% ON THE UNDISCLOSED AMOUNT OF RS.79,13,820/- WHICH COMES TO RS.3,95,691/-. THUS, IN EFFECT, ITA NO.1507/DEL/2016 3 THE LD.CIT(A) RESTRICTED THE ADDITION TO RS.8,39,99 1/- AS AGAINST RS.79,13,820/- ADDED BY THE ASSESSING OFFICER. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REV ENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS:- 1. THAT THE LD.CIT (A) HAS ERRED IN FACTS AND IN LAW IN TREATING THE UNEXPLAINED CASH CREDITS OF RS.79,13,820/- AS BUSINESS RECEIPTS . 2. THAT THE LD.CIT(A) HAS ERRED IN FACTS AND IN LAW I N APPLYING 5% RATIO AS COMMISSION ON RS.79,13,820/- WITHOUT GOING INTO THE FACTS AS THERE IS NO EVIDENCE ABOUT THE NATURE OF THESE RECEIPTS, BROUGHT ON RECORD BY THE ASSESSEE. 3. THAT THE LD.CIT(A) HAS ERRED IN FACTS AND IN LAW I N DECIDING THE IMPUGNED ISSUE WITHOUT INVOKING PROVISIONS OF SECTION 250(4) OF THE I.T. ACT AS THERE WAS NOTHING ON RECORD FILED BY THE ASSESSEE WHICH COULD PROVE T HE NATURE OF CASH RECEIPTS AS BUSINESS RECEIPTS. 4. THAT THE ORDER OF THE LD.CIT (A) WAS PERVERSE, HE ACCEPTED UNTRUE FACTS PLACED BEFORE HIM BY THE ASSESSEE AND IGNORED ALL THE EVID ENCE BROUGHT ON RECORD BY THE AO. 5. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFOR E OR DURING THE HEARING OF THIS APPEAL. 7. THE LD. DR STRONGLY CHALLENGED THE ORDER OF THE CIT (A). SHE SUBMITTED THAT THE ASSESSEE DID NOT FURNISH THE FULL DETAILS BEFORE TH E ASSESSING OFFICER FOR WHICH THE ASSESSING OFFICER PASSED THE ORDER U/S 144 OF THE I T ACT. THE LD.CIT(A), IN ABSENCE OF ANY EVIDENCE FILED BY THE ASSESSEE BEFORE HIM, D IRECTED THE ASSESSING OFFICER TO ADD THE PEAK CREDIT AND 5% OF THE UNDISCLOSED AMOUNT AS AGAINST THE AMOUNT OF RS.79,13,820/- ADDED BY THE ASSESSING OFFICER WHICH IS NOT PROPER. THE LD. DR ALSO RELIED ON THE DECISION OF THE HON'BLE DELHI HIGH CO URT REPORTED IN 102 TAXMANN.COM 392. ITA NO.1507/DEL/2016 4 8. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND , STRONGLY SUPPORTED THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE LD.CIT(A), AF TER CONSIDERING THE FACTS OF THE CASE, HAS RESTRICTED THE ADDITION TO RS.8,39,991/- AS AG AINST RS.79,13,820/- ADDED BY THE ASSESSING OFFICER. HE SUBMITTED THAT ONLY REAL INC OME SHOULD BE TAXED AND THE ENTIRE CREDIT AMOUNT APPEARING IN THE BANK STATEMENT CANNO T BE ADDED WITHOUT CONSIDERING THE CORRESPONDING DEBITS APPEARING IN THE BANK ACCO UNTS ON VARIOUS DATES. HE SUBMITTED THAT A PERUSAL OF THE TWO BANK ACCOUNTS N OT DISCLOSED TO THE DEPARTMENT WOULD SHOW THAT THERE WERE DEPOSITS AND WITHDRAWALS ON A REGULAR BASIS ON VARIOUS DATES AND, THEREFORE, CONSIDERING ONLY THE CREDIT S IDE OF THE BANK STATEMENT WITHOUT CONSIDERING THE DEBIT SIDE IS NOT JUST AND PROPER. SINCE THE LD.CIT(A), IN THE INSTANT CASE, HAS CONSIDERED THE PEAK CREDIT AND HAS FURTH ER DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE PROFIT AT 5% OF THE UNDISCLOSED RECEIP TS, THEREFORE, NO FURTHER INTERFERENCE IS CALLED FOR ESPECIALLY WHEN THE ASSESSEE HAS NOT CHALLENGED FOR THE SETTING OFF OF THE CREDIT FROM THE ESTIMATED PROFIT SO DIRECTED BY THE CIT(A). HE ALSO RELIED ON THE FOLLOWING DECISIONS:- I) CIT VS. VIJAY AGRICULTURAL INDUSTRIES, (2007) 294 I TR 610 (ALL); II) ITO VS. RAKESH MEHRA 2012 (9) TMI 330 (DELHI ITAT); III) ITO VS. JAILLY GORAYA, 2017 (7) TMI 912 (DELHI ITAT ); IV) ACIT VS. RAJNEESH NAGAR, 2017 (1) TMI 1250 (ITAT DE LHI); AND V) SEJAL JAYESH VORA VS. ITO, 2017 99) TMI 308 (ITAT M UMBAI). ITA NO.1507/DEL/2016 5 9. SO FAR AS THE DECISION RELIED ON BY LD. DR IS CONCE RNED, HE SUBMITTED THAT THE SAME IS DISTINGUISHABLE ON FACTS AND NOT APPLICABLE TO THE FACTS OF THIS CASE. IN THAT CASE, THE ISSUE WAS ISSUE OF BOGUS SHARE CAPITAL WH ICH WAS KEPT ROTATING DURING THE YEAR AND THE PLEA OF THE ASSESSEE FOR PEAK CREDIT W AS REJECTED. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIED ON BY BOTH THE SIDES. IT IS AN AD MITTED FACT THAT THE ASSESSEE HAS NOT DISCLOSED TWO BANK ACCOUNTS ONE IN HIS INDIVIDUAL NAME AND THE OTHER IN THE NAME OF THE PROPRIETORSHIP CONCERN. WE FIND, THE ASSESSING OFFICER, INVOKING THE PROVISIONS OF SECTION 68 OF THE IT ACT, MADE ADDITION OF RS.79,13 ,820/- WHICH IS THE TOTAL OF THE CASH DEPOSITS MADE IN THE TWO BANK ACCOUNTS. WE FIND TH E LD.CIT(A) RESTRICTED THE ADDITION TO RS.8,39,991/- BEING THE AMOUNT OF PEAK CREDIT IN THE TWO BANK ACCOUNTS WHICH COMES TO RS.4,44,300/- AND 5% OF THE TOTAL CASH DEP OSITS IN THE TWO BANK ACCOUNTS WHICH COMES TO RS.3,95,691/- AS PROFIT OF THE ASSES SEE ON SUCH CASH DEPOSITS. WE DO NOT FIND ANY INFIRMITY IN THE FINDING OF THE CIT(A) ON THIS ISSUE. A PERUSAL OF THE ABOVE TWO BANK ACCOUNTS NOT DISCLOSED TO THE DEPART MENT SHOWS THAT THERE ARE SYSTEMATIC DEPOSITS AND WITHDRAWALS IN THE BANK ACC OUNTS. THE ASSESSEE, IN THE INSTANT CASE, IS ENGAGED IN THE BUSINESS OF PLYING PASSENGE R CARS BY HIRING OF VEHICLES FROM OTHERS. THEREFORE, WHEN THERE ARE SYSTEMATIC DEPOS ITS AND WITHDRAWALS IN THE TWO BANK ACCOUNTS, THE LD.CIT(A) IN THE INSTANT CASE HAS RIG HTLY HELD THAT THE PEAK CREDIT OF BOTH THE ACCOUNTS SHOULD BE ADDED WHICH, IN THE INSTANT CASE, COMES TO RS.4,44,300/-. THE ITA NO.1507/DEL/2016 6 LD. CIT(A) HAS FURTHER DIRECTED THE ASSESSING OFFIC ER TO ADD 5% OF THE TOTAL CASH DEPOSITS OF RS.79, 13,820/- WHICH COMES TO RS.3,95, 691/- AS INCOME OF THE ASSESSEE. THE ORDER OF THE CIT(A) IN THE INSTANT CASE, IN OUR OPINION, IS A REASONED ONE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. IT HAS BEEN HE LD IN VARIOUS DECISIONS THAT WHEN THE ASSESSEE IS UNABLE TO EXPLAIN THE DEPOSITS IN A PAR TICULAR BANK ACCOUNT, THE ENTIRE DEPOSITS CANNOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE AND ONLY THE PEAK CREDIT HAS TO BE ADDED WHEN THERE ARE BOTH CASH DEPOSITS A ND CASH WITHDRAWALS. THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSE SSEE IN THE PAPER BOOK SUPPORTS HIS CASE. THE DECISION RELIED ON BY THE LD. DR IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE, IN THAT CASE, IT WAS THE RECEIPT OF BOG US SHARE APPLICATION MONEY WHICH WAS DIVERTED TO CERTAIN OTHER PERSONS FOR WHICH PEAK CR EDIT WAS NOT ALLOWED. IN THIS VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE CIT(A) AN D THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE RE VENUE IS DISMISSED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 9.04.2019. SD/- SD/- (KULDIP SINGH) (R.K. PANDA) JUDICIAL MEMBER AC COUNTANT MEMFBER DATED: 29 TH APRIL, 2019 DK ITA NO.1507/DEL/2016 7 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI