Raj Kumar, Delhi V. ITO, New Delhi

ITA 1527/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4507 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 02-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 22-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: V K TULSIYAN
• Keywords: Business income; Salary income; Additional evidence
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER ITA NO. 1527/DEL/2016 ASSTT. YEAR : 2009-10 RAJ KUMAR A-246, CHATTARPUR ENCLAVE, PHASE-I DELHI VS ITO WARD-70(4) NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. ASNPK8678D ASSESSEE BY : SH. V.K.TULSIYAN, CA REVENUE BY : SH. T VASANTHAN, S R. DR DATE OF HEARING : 26.09.2017 DATE OF PRONOUNCEMEN T : 28 . 09.2017 ORDER PER R.K.PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 22 ND JANUARY, 2016 OF THE CIT(A)-21, NEW DELHI RELATIN G TO ASSESSMENT YEAR 2009-10. 2. THIS APPEAL WAS EARLIER DISMISSED BY THE TRIBUNA L FOR NON- APPEARANCE. SUBSEQUENTLY, THE TRIBUNAL VIDE ORDER D ATED 18 TH AUGUST, 2017 RECALLED ITS EARLIER ORDER. HENCE, THIS IS A R ECALLED MATTER. 3. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. WHETHER LD. CIT(A) WAS JUSTIFIED, BY UPHOLDING THE ADDITION OF RS. 16,54,000/- ON ACCOUNT OF CASH DEPOSIT IN BA NK, EVEN AFTER ADMITTING THE ISSUE THAT THE DEPOSIT WAS OUT OF THE SALE PROCEED OF FABRIC TRADING BUSINESS. ITA NO.1527/DEL/2016 (RAJ KUMAR ) 2 2. WHETHER THE LD. CIT(A) WAS JUSTIFIED BY NOT ACC EPTING THE APPELLANT PLEA OF HAVING BUSINESS ACTIVITY DESPITE OF FACT ASSESSEE SUBMITTED REVISED COMPUTATION OF INCOME BY DECLARING BUSINESS PROFIT @ 8%, WITHOUT PROPER CONSIDERING TH E SUBMISSION IN RIGHT PROSPECTIVE AND EVIDENCES. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 18 TH MAY, 2009 DECLARING TAXABLE INCOME OF RS. 89,504/-. THE CASE WAS SELECTED FOR S CRUTINY BY ISSUE OF STATUTORY NOTICES TO WHICH THE ASSESSEE APPEARED BE FORE THE AO AND SUBMITTED THE DETAILS AS CALLED FOR. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT ASSESSEE IN HIS SAVINGS BANK ACCOUNT MAINTAINE D WITH AXIS BANK HAS DEPOSITED CASH AMOUNTING TO RS. 16,54,000/-. HE OBSERVED THAT THE ASSESSEE DERIVED SALARY INCOME FROM M/S. COMMUNIQUE MARKETING SOLUTION PVT. LTD. HE, THEREFORE ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF SUCH CASH DEPOSITS. IN ABSENCE OF ANY SAT ISFACTORY EXPLANATION GIVEN BY THE ASSESSEE, THE AO MADE ADDI TION OF RS. 16,54,000/- TO THE TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE IT ACT. 6. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT HE IS RUNNING THE BUSINESS OF FABRIC MERCHANT APART FROM SALARY INCOM E FROM M/S. COMMUNIQUE MARKETING SOLUTIONS PVT. LTD. THE CASH RECEIPTS DEPOSITED IN THE SAID BANK ACCOUNT REPRESENTS THE P ROCEEDS OF THE FABRIC TRADING BUSINESS. IT WAS SUBMITTED THAT THE GROSS RECEIPTS FOR THE YEAR UNDER CONSIDERATION WAS RS. 23,19,870/- AND TH E ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS DURING THE F.Y 200 8-09 AS THE SAME IS NOT REQUIRED U/S 44AF OF THE IT ACT. IT WAS ACCO RDINGLY ARGUED THAT ITA NO.1527/DEL/2016 (RAJ KUMAR ) 3 THE INCOME OF THE ASSESSEE SHOULD BE COMPUTED @ 8% OF THE TURN OVER FROM SUCH FABRIC TRADING BUSINESS. 7. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE A RGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE ADDITION MA DE BY THE AO BY OBSERVING AS UNDER : I HAVE CAREFULLY CONSIDERED APPELLANT'S SUBMISSION IN THIS REGARD AND FIND THAT IN THE RETURN OF INCOME FILED BY THE APPELLANT, HE HAS NOT SHOWN ANY SUCH BUSINESS INCOME WHATSOEVER. FURTHER, THE APPELLANT HAS ALSO FAILED TO PRODUCE ANY EVIDENCE WHATSOEVER TO ESTABLISH THAT HE HAS UN DERTAKEN THE IMPUGNED BUSINESS ACTIVITY SUCH AS ADDRESS OF PLACE FROM WHE RE IMPUGNED TRADING WAS CONDUCTED, PURCHASE BOOK, SALE BOOK, TRADE LICENSE, TRANSPORTATION DETAILS, COMMUNICATION WITH THE CLIENTS, DETAILS OF BUYERS A ND SELLERS ETC. MOREOVER, THE APPELLANT HAS ALSO FAILED TO FURNISH COMPLETE CASH FLOW STATEMENT SO AS TO EXPLAIN THE NATURE AND SOURCE OF CASH DEPOSITS IN HIS BANK ACCOUNT. AS SUCH, FOR WANT OF EVIDENCE I AM NOT INCLINED TO ACCEPT THE APPELLANT' S PLEA OF HAVING CARRIED OUT ABOVE BUSINESS ACTIVITY. ON THE CONTRARY, THE PROVI SIONS OF SEC.68 OF THE I.T. ACT PLACES ON THE APPELLANT THE PRIMARY ONUS TO ESTABLI SH THE NATURE AND SOURCE OF IMPUGNED CASH DEPOSITS WHICH THE APPELLANT HAS FAIL ED TO DISCHARGED FOR REASONS BEST KNOWN TO HIM ONLY. MOREOVER, NO NEW FACTS OR E VIDENCE HAVE BEEN FURNISHED BY THE APPELLANT IN SUPPORT OF HIS CONTENTION, AS A BOVE. THEREFORE, I AM NOT INCLINED TO INTERFERE WITH THE ASSESSMENT ORDER PAS SED BY THE AO WHICH IS HEREBY CONFIRMED . 8. AGGRIEVED WITH SUCH ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 9. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PA GE 10 OF THE PAPER BOOK DREW THE ATTENTION OF THE BENCH TO THE ADDITIO NAL EVIDENCES FILED BEFORE THE CIT(A) AS PER LETTER DATED 10 TH JUNE, 2015. REFERRING TO PAGE 11 OF THE PAPER BOOK, THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE LETTER ISSUED BY THE CIT(A) TO THE ITA NO.1527/DEL/2016 (RAJ KUMAR ) 4 ASSESSING OFFICER CALLING FOR A REMAND REPORT FROM HIM. REFERRING TO PAGE 12 OF THE PAPER BOOK HE SUBMITTED THAT THE AO HAS ISSUED A LETTER TO THE ASSESSEE ON 6 TH AUGUST, 2015 ASKING HIM TO APPEAR BEFORE HIM AND EXPLAIN THE ADDITIONAL EVIDENCES FILED BEFORE T HE CIT(A). HE SUBMITTED THAT WHEN THE CIT(A) PASSED THE ORDER DIS MISSING THE APPEAL OF THE ASSESSEE, HE HAS NOT CONSIDERED THE REMAND R EPORT CALLED FOR BY HIM FROM THE AO. HE SUBMITTED THAT IN THE INTEREST OF JUSTICE THE INCOME FROM FABRIC TRADING ACTIVITY SHOULD BE ESTIM ATED @ 8% OF THE TURN OVER OF RS. 23,19,870/-. FOR THE ABOVE PROPOSI TION, HE RELIED ON THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL I N THE CASE OF M/S. PERLOS TELECOMMUNICATION VS. ACIT VIDE ITA NO. 1037 /MDS/2013 ORDER DATED 18.11.2013 FOR ASSESSMENT YEAR 2008-09. 10. LD. DR ON THE OTHER HAND, HEAVILY RELIED ON TH E ORDER OF THE CIT(A). HE SUBMITTED THAT SINCE THE ASSESSEE DID NO T DECLARE THE INCOME FROM FABRIC TRADING IN THE ORIGINAL RETURN, NOW HE CAN NOT EXPLAIN THE BANK DEPOSITS AS SALE PROCEEDS OF SUCH FABRIC TRADING. HE SUBMITTED THAT THE CIT(A) HAS GIVEN JUSTIFIABLE REA SONS FOR UPHOLDING THE ADDITION. THEREFORE, THE SAME SHOULD BE UPHELD. HE ALSO RELIED ON THE DECISION OF THE HONBEL BOMBAY HIGH COURT IN TH E CASE OF ARUN KR. J. MUCHHALA VS. CIT VIDE ITA NO. 363/2015 ORDER DATED 24 AUGUST, 2017 AND THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF SUCHIR KUMAR SHARMA (HUF) VS. CIT REPOR TED IN 224 TAXMAN 178. 11. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOIND ER SUBMITTED THAT SINCE THE ASSESSEE WAS AN EMPLOYEE WITH COMMUNIQUE MARKETING SOLUTION PVT. LTD. HE DID NOT INFORM THEM REGARDING ITS TRADING ACTIVITY OUT OF FEAR. HE SUBMITTED THAT THE VARIOUS DECISION S RELIED ON BY THE LD. ITA NO.1527/DEL/2016 (RAJ KUMAR ) 5 DR ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT C ASE, SINCE THEY ALL RELATE TO SHARE CAPITAL ISSUE. HOWEVER, IN THE INS TANT CASE THE DEPOSITS ARE OUT OF TRADING ACTIVITY. 12. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED T HE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE AO MADE ADDITION OF RS. 16,54,000/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE BANK AC COUNT MAINTAINED WITH AXIS BANK. I FIND BEFORE THE CIT(A), THE ASSES SEE MADE A SUBMISSION THAT HE IS ENGAGED IN FABRIC TRADING BUS INESS AND THE GROSS TURN OVER WAS RS. 23,19,870/-. FURTHER IT WAS ARGUE D THAT HE IS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS FOR SUCH RET AIL TRADING BUSINESS AS PER PROVISIONS OF SECTION 44AF AND HE REQUESTED FOR ESTIMATING THE PROFIT AT THE RATE OF 8% ON TURN OVER OF RS. 23,19, 870/-. I FIND BASED ON THE ADDITIONAL EVIDENCES FILED BEFORE HIM, THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE AO AS PER HIS LETTER DATED 1 0 TH JUNE, 2015, TO THE AO A COPY OF WHICH IS PLACED AT PAGE 11 OF THE PAPER BOOK AND WHICH READS AS UNDER : OFFICE OF THE COMMISSIONER OF INCOME TAX (APPEALS) -21, ROOM NO.312, 3 RD FLOOR B BLOCK, CIVIC CENTRE, NEW DELHI TELEPHONE NO. (O):-23213601, 23212593 F.NO.CIT(A)21/REMAND REPORT/2015-16/ DATED: 10/06/2015 INCOME TAX OFFICER WARD 70(4) D-BLOCK, CIVIC CENTRE NEW DELHI. SUB : APPEAL NO. 3361/11-12 IN THE CASE OF SH. RAJ KUMAR, A.Y. 2009-10- SIR, KINDLY FIND ENCLOSED THE BROAD SUBMISSIONS AND AN A PPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCES UNDER RULE 46A OF I.T. RULE 19 62 FILED BY THE AR OF THE APPELLANT FOR ITA NO.1527/DEL/2016 (RAJ KUMAR ) 6 YOUR COMMENTS THEREON. YOUR COMMENTS SHOULD NOT BE RESTRICTED TO THE ADMISSIBILITY OR OTHERWISE OF THE ADDITIONAL EVIDENCES FILED AT THE APPELLATE STAGE BUT SHOULD ALSO BE ON THEIR MERITS. AS THE APPELLATE PROCEEDINGS ARE PENDING PLEASE SEN D YOUR COMMENTS POSITIVELY BY 16/07/2015. SD/- ( UPAMANYU BASU) COMMISSIONER OF INCOME TAX (APPEALS) - 21, NEW DELHI 13. I FIND THE AO VIDE LETTER DATED 6 TH AUGUST, 2015 HAD CALLED FOR THE DETAILS FROM THE ASSESSEE AFTER RECEIVING THE L ETTER FROM THE CIT(A), COPY OF WHICH IS PLACED AT PAGE 12 OF THE P APER BOOK AND WHICH READS AS UNDER :- OFFICE OF THE INCOME TAX OFFICEI WARD 70(4), ROOM NO. 309, D BLOCK, 'PRATAYAKASHKAR BHAWAN, S.P.MUKHERJEE CIVIC CENTRE J.L NEHRU MARG, NEW DELHI-1L0002 PH. 23234704 ITO/WARD-70(4)/2015-16 /107 TO, SH.RAJ KUMAR A-246, CHARTARPUR ENCLAVE, PHASE- NEW DELHI-110074, SIR, SUB.: APPEAL NO. 3361/1 1-12 FOR A.Y. 2009-10-REGAR DING DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE C IT(A)-21, NEW DELHI, YOU HAVE FILED ADDITIONAL EVIDENCES UNDER RULE 46 A. OF THE INCOME TAX RULES, 1962 WITH REGARD TO ORDER PASSED BY THE A.O. U/S 143(3) ON 22.12.2011. IN THIS REGARD YOU ARE REQUESTED TO ATTEND THIS OFFICE ON OR BEFORE 12.08.2015 TO EXPLA IN THE ADDITIONAL EVIDENCES FILED BY YOU BEFORE THE LD.CIT(A). THE COPIES FILED BY YOU AS AD DITIONAL EVIDENCE ARE NOT LEGIBLE. HENCE, YOU ARE REQUESTED TO BRING COPIES OF ADDITIONAL EVI DENCE WHICH SHOULD BE LEGIBLE. YOURS FAITHFULLY SD/- (ANTRIKSH KUMAR) INCOM TAX OFFICER . WARD-70(4), NEW DELHI ITA NO.1527/DEL/2016 (RAJ KUMAR ) 7 14. HOWEVER, I FIND FROM THE ORDER OF THE CIT(A) TH AT THERE IS NO WHISPER ABOUT SUCH REMAND REPORT FROM THE AO. UNDER THESE CIRCUMSTANCES, I FIND MERIT IN THE SUBMISSION OF TH E LD. COUNSEL FOR THE ASSESSEE THAT HIS PROFIT FROM FABRIC TRADING BUSINE SS SHOULD BE ESTIMATED AT 8% ON THE TURN OVER OF RS. 23,19,870/- . I THEREFORE, DIRECT THE AO TO ADOPT THE PROFIT @ 8% ON TURN OVER OF RS. 23,19,870/- IN PLACE OF RS. 16,54,000/- MADE BY AO U/S 68 OF THE I T ACT. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARLY ALLOWE D. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 28 .09.201 7) SD/- (R.K.PANDA) ACCOUNTANT MEMBER DATED: 28/09/2017 *BINITA* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGIS TRAR ITA NO.1527/DEL/2016 (RAJ KUMAR ) 8 DATE INITIAL 1. DRAFT DICTATED ON 26/09/2017 2. DRAFT PLACED BEFORE AUTHOR 26/09/2017 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER /09/2017 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. /09/2017 5. APPROVED DRAFT COMES TO THE SR.PS/PS /09/2017 6. KEPT FOR PRONOUNCEMENT ON /09/2017 7. FILE SENT TO THE BENCH CLERK /09/2017 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.