The ITO, Ward-5(2), RAJKOT-GUJARAT V. Shri Vijaysinh G. Dodiya, RAJKOT-GUJARAT

ITA 165/RJT/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6656 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: M J RANPURA A R
• Keywords: Peak credit
• Section: 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.165/RJT/2014 ( / ASSESSMENT YEAR : 2008-09) THE INCOME TAX OFFICER WARD-5(2) RAJKOT / VS. SHRI VIJAYSINH GAGJISINH DODIYA PROP. OF M/S.VIJAY TIME INDUSTRIES 2/1, AMARNAGAR UMAKANT PANDIT UDYOGNAGAR, RAJKOT ./ ./ PAN/GIR NO. AGAPD 7786 Q ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI C. S. ANJARIA, SR.DR ! / RESPONDENT BY : SHRI M.J. RANPURA, A.R. ' #$% ! & / DATE OF HEARING 15/03/2017 '( ! & / DATE OF PRONOUNCEMENT 21/03/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-IV, RAJK OT [CIT(A) IN SHORT] DATED 20/12/2013 FOR THE ASSESSMENT YEAR (AY) 2008-09. ITA NO.165/RJT/ 2014 ITO VS. SHRI VIJAYSINH GAGJISINH DODIYA ASST.YEAR 2008-09 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE RE AD AS UNDER:- 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ESTIMATE 10 % OF THE CASH DEPOSITS IN THE UNACCOUNTED BANK ACCOUNTS AS N ET PROFIT OF THE BUSINESS OF THE ASSESSEE AND TREAT RS.1,00,0 00/- AS ESTIMATED INITIAL INVESTMENT INSTEAD OF ENTIRE DISA LLOWANCE OF RS.39,38,058/- U/S.69 OF THE ACT MADE BY THE AO. 2. IN DOING SO, THE LD.CIT(A) HAS NOT APPRECIATED T HE FACT THAT THE ASSESSEE HAD NOT DISCLOSED THE BANK ACCOUNT IN HIS ROI AND IT WAS ONLY WHEN THE MATTER WAS CONFRONTED BEFO RE THE ASSESSEE, THAT IT WAS ACCEPTED BY HIM. 3. FURTHER, THE ASSESSEE HAS FAILED TO PROVE HIS CL AIM THAT THE TRANSACTIONS OF THE RELEVANT BANK ACCOUNT ARE RELAT ED TO HIS DAY TO DAY BUSINESS ACTIVITY. 3. BRIEFLY STATED, THE ASSESSEE IS ENGAGED IN THE B USINESS OF MANUFACTURING AND TRADING OF QUARTZ AND WATCH CASES & JOB WORK. THE RETURN OF INCOME FOR THE AY 2008-09 WAS FILED AT RS .1,12,950/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT. IT WAS FOUND BY THE ASSESSING OFFICER (AO) THAT THE ASSESSEE HAS MADE A CASH DEP OSIT DURING THE YEAR AMOUNTING TO RS.39,38,058/- IN ICICI BANK WHICH WAS FOUND UNEXPLAINED. ACCORDINGLY, THE AFORESAID AMOUNT WAS ADDED AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE BY INVOKING SECTION 69 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS 'THE ACT'). IN THE FIRST APPEAL, THE CIT(A) GRANTED PARTIAL RELIEF AFT ER EXAMINATION OF FACTS. THE RELEVANT PARA OF THE ORDER OF THE CIT(A) READS AS UNDER:- ITA NO.165/RJT/ 2014 ITO VS. SHRI VIJAYSINH GAGJISINH DODIYA ASST.YEAR 2008-09 - 3 - 4. I HAVE CONSIDERED CAREFULLY, THE SUBMISSIONS O F THE APPELLANT AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OF FICER. AIR INFORMATION RECEIVED BY THE ASSESSING OFFICER REVEA LED THAT THE APPELLANT HAS MADE CASH DEPOSITS OF RS.39,38,058 IN THE IMPUGNED BANK ACCOUNT DURING THE FINANCIAL YEAR UNDER CONSID ERATION. THE APPELLANT FAILED TO RESPOND TO THE SHOW-CAUSE LETTE R ISSUED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. IN THE ABSENCE OF ANY REPLY, THE ASSESSING OFFICER HAS ADDED ENTIRE CASH DEPOSITS OF RS.39,38,058 AS UNDISCLOSED INCOME OF THE APPELLANT FOR ASSESSMENT YEAR UNDER CONSIDERATION. THE ACTION OF THE ASSESSING OFFICER IN TREATING THE ENTIRE CASH D EPOSITS OF RS.39,38,058 AS APPELLANTS UNDISCLOSED INCOME IS N OT ONLY HARSH BUT ALSO UNREASONABLE. IF THE STATEMENT OF IMPUGNE D BANK ACCOUNT, WHEN EXAMINED CAREFULLY, THERE ARE SERIES OF DEPOSI TS AND WITHDRAWS OF SMALL AMOUNTS DURING THE FINANCIAL YEA R UNDER CONSIDERATION. VARIOUS COURTS AND TRIBUNALS HAVE H ELD THAT IN A CASE LIKE THIS, WHERE WERE FIND SERIES OF UNEXPLAIN ED CREDITS AND DEBITS IN TANDEM IN ANY BANK ACCOUNT, A BOGUS CREDI T AND DEBIT MAY CANCEL OUT EACH OTHER, UNLESS THERE ARE CIRCUMS TANCES TO INDICATE THAT WITHDRAWAL IS UTILIZED FOR PURPOSES O THER THAN REINTRODUCTION. IN SUCH SITUATION, PEAK CREDIT CAN BE CONSIDERED FOR ADDITION. ALTERNATIVELY, COURT AND TRIBUNALS H AVE ALSO HELD THAT THE UNEXPLAINED DEPOSITS IN THE BANK IF EMANAT ED FROM THE BUSINESS OF THE APPELLANT, THEN SET PROFITS ON THE TOTAL UNACCOUNTED RECEIPTS APPEARING IN THE IMPUGNED BANK ACCOUNT CAN BE ESTIMATED HAVING REGARD TO THE NATURE OF THE BUSINESS THE APP ELLANT IS ENGAGED IN. 5. AS PER THE ASSESSMENT ORDER, THE APPELLANT IS I N THE BUSINESS OF WATCH CASE CASTING, WHEREBY, HE DECLARED TOTAL INCO ME OF RS.1,12,950 FOR ASSESSMENT YEAR 2008-09. THEREFORE , TAKING INTO CONSIDERATION THE NATURE OF BUSINESS IN WHICH, THE APPELLANT IS ENGAGED IN, I DIRECT THE ASSESSING OFFICER TO ESTIM ATE THE NET PROFITS @ 10% ON THE TOTAL CASH DEPOSITS OF RS.39,38,058, A CCORDING TO ITA NO.165/RJT/ 2014 ITO VS. SHRI VIJAYSINH GAGJISINH DODIYA ASST.YEAR 2008-09 - 4 - WHICH THE SAME COMES TO RS.3,93,806/- TO MEET THE E NDS OF JUSTICE. ALSO IN VIEW OF THE JUDGEMENT OF HONBLE ITAT RAJKO T BENCH, RAJKOT IN THE CASE OF SHRI RAMESHBHAI G.PAVASIA IN ITA NO.683/RJT/2010, I ALSO DIRECT THE ASSESSING OFFICE R TO TAX THE INITIAL INVESTMENT WHICH WAS NOT DISCLOSED TO THE DEPARTMEN T BE ESTIMATED AT RS.1,00,000 FOR ASSESSMENT YEAR 2008-0 9. THEREFORE, THE TOTAL ADDITION THAT IS SUSTAINED IS AT RS.4,93, 806 (RS.3,93,806 PLUS 1,00,000). THE APPELLANT GETS RELIEF OF RS.34 ,44,252/-.. 4. AGAINST THE ORDER OF THE CIT(A) GRANTING PARTIAL RELIEF, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL PLACED ON RE CORD. WHILE THE LD.DR ASSAILS THE ORDER OF THE CIT(A) IN GRANTING R ELIEF, THE LD.AR FOR THE ASSESSEE SUBMITS THAT THE PEAK CASH DEPOSIT AT ANY POINT OF TIME AFTER CONSIDERING THE DEPOSITS AND WITHDRAWALS DONE AT RE GULAR INTERVAL STANDS AT RS.3,68,413/- ONLY. THEREFORE, THE ADDITION CON FIRMED BY THE CIT(A) AT RS.3,93,806/- STILL EXCEEDS THE AFORESAID AMOUNT OF PEAK CREDIT. WE HAVE GONE THROUGH THE BANK STATEMENT WHEREIN THE IM PUGNED CASH DEPOSITS HAVE BEEN MADE. WE FIND THAT SMALL AMOUNT S RANGING BETWEEN RS.10,000/- TO RS.50,000/- HAS BEEN DEPOSITED IN MU LTIPLE TRANCHES AND CONTINUOUSLY WITHDRAWN FROM TIME TO TIME. THUS, TE STED ON THE TOUCHSTONE OF PREPONDERANCE OF PROBABILITIES, IT CA N BE REASONABLY ACCEPTED THAT THE CASH DEPOSITS MADE IS OUT OF CASH WITHDRAWALS. THEREFORE, UNDER THESE FACTS OF CONTINUOUS OF INFLO W AND OUTFLOW OF CASH, ITA NO.165/RJT/ 2014 ITO VS. SHRI VIJAYSINH GAGJISINH DODIYA ASST.YEAR 2008-09 - 5 - THE ADDITION CAN BE REASONABLY SUSTAINED AT PEAK DE POSITS ORDINARILY. SINCE THE CIT(A) HAS SUSTAINED THE ADDITION IN EXCE SS OF THE PEAK DEPOSIT, THE GRIEVANCE OF REVENUE AGAINST THE ORDER OF THE C IT(A) IS PRIMA-FACIE NOT JUSTIFIED. CONSEQUENTLY, WE DO NOT FIND ANY ME RIT IN THE APPEAL OF THE REVENUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 21/ 03/ 2017 AT AHMEDABAD. SD/- SD/- ( MAHAVIR PRASAD) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD ; DATED 21/03/2017 ..#, $.,#../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. - & ' .& / CONCERNED CIT 4. ' .& ( ) / THE CIT(A)-IV, RAJKOT 5. 2$34 ,&,# , , /DR,ITAT, RAJKOT 6. 4?@ A% / GUARD FILE. / BY ORDER, 2& ,& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) %&, / ITAT, RAJKOT 1. DATE OF DICTATION .. 15.3.17 (DICTATION-PAD 6- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 17.3.17 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER