RAMESH DINKAR WADEKAR, MUMBAI V. ITO-21(3)(1), MUMBAI

ITA 1667/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4866 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 20-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Opportunity of being heard
• Section: 201; 207; 68

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 1667 /MUM/ 201 9 (ASSESSMENT YEAR - ) SHRI RAMESH DINKAR WADEKAR C - 341, APMC VEGETABLE MARKET, SECTOR - 19, TURBHE NAVI MUMBAI - 400705. V S . ITO - 2(3)(1) ROOM NO. 207 PIRAMAL CHAMBERS PAREL, MUMBAI - 12. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI SUNIL MAKHIJA DEPARTMENT BY SHRI PRAMOD NIKALJE DATE OF HEARING 21 . 0 9 . 20 20 DATE OF PRONOUNCEMENT 09 .10 . 20 20 O R D E R THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEARNED CIT(A)] DATED 12.2.2019 PERTAINING TO A.Y. 2014 - 15. 2. THE GROUNDS OF APPEAL READ AS UNDER : - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A ) HAS ERRED IN CONFIRMIN G THE ADDITION OF RS. 19,24,400/ - MADE BY THE ASSESSING OFFICER U/S 68 OF THE I.T ACT, 1961 AS INCOME FROM OTHER SOURCES WITHOUT CONSIDERING THE FACTS OF THE CASE IN TOTALITY . 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR VARY ANY OF THE GROUNDS AT THE TIME OR BEFORE THE HEARING OF THIS APPEAL. 3. THE APPELLANT THEREFORE PRAYS THAT ADDITION OF RS. 19,24,400 / - MADE BY THE ASSESSING OFFICER ILLEGALLY AND UNJUSTIFIABLE MAY PLEASE BE DELETED. 3. BRIEF FACTS T HE ASSESSEE DERIVES INCOME FROM BUSINESS/PROFESSION AND INCOME FROM OTHER SOURCES. THE ASSESSEE UNDERTAKES THE PROFESSION OF A COMMISSION AGENT (KACCHA ARHATIYA) UNDER THE AUSPICES OF THE AGRICULTURE PRODUCE MARKETING COMMITTEE, MUMBAI AND INCOME FROM OTHER SOURCE EARNED BY WAY OF INTEREST FROM BANK ON SB ACCOUNT. DURING THE COURE OF ASSESSMENT THE ASSESSING OFFICER NOTICED THAT THE TOTAL GROSS RECEIPTS SHRI RAMESH DINKAR WADEKAR 2 DECLARED BY ASSESSEE IN THE RETURN OF INCOME WERE RS.40,08,698/ - CONSISTING OF GROSS COMMISSION OF RUPEES TO RS.22,30,298/ - AND GROSS RECEIPTS FROM SALE OF V EGETABLES ETC. OF RS.17,78,400/ - . HOWEVER, AS PER AIR INFORMATION, AVAILABLE WITH THE ASSESSING OFFICER, THE GROSS RECEIPTS OF ASSESSEE WERE RS. 59,33,100/ - . ACCORDINGLY, THE ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE . T HE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION. HE OBSERVED AS UNDER : - THE SUBMISSIONS MADE BY THE AR OF THE ASSESSEE HAVE BEEN CAREFULLY PERUSED AND PLACED ON RECORD. T HE EXPLANATION GIVEN BY THE ASSE SSEE THAT HE DEPOSITED CASH OF RS.59, 33,100/ - OUT OF HIS GROSS RECEIPT AND NOT GROSS TURNOVER IS NOT ACCEPTED. IN THIS REGARD, VIDE ASSESSEE'S AR'S SUBMISSION LETTER DATED 25/10/2016, THE ASSESSEE HAS HIMSELF ACCEPTED THAT HE DEPOSITED CASH AMOUNTING TO RS.59,33,100/ - IN DENA BANK, VASHI SAVI NG BANK ACCOUNT NO. 111310024635, WHICH CLEARLY INDICATES THAT THE GROSS RECEIPT OF THE ASSESSEE DURING F.Y. 2013 - 14 WAS RS.59,33,100/ - AS MENTIONED IN THE SHOW CAUSE NOTICE. THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE CASH DEPOSITS WERE OUT OF THE TUR NOVER RECEIPT OF COMMISSION BUSINESS. RATHER, THE VERY FIGURE OF TURNOVER OF COMMISSION BUSINESS CLAIMED BY THE ASSESSEE HAS BEEN COMPUTED BY HIM ON ESTIMATE BASIS BY MULTIPLYING THE MARKET FEES PAID WITH A FACTOR OF 100 (SINCE HE CLAIMED THAT THE MARKET F EES IS 1% OF THE TURNOVER) TO ARRIVE AT THE SAME, THIS FACT PROVES THAT HE DID NOT HAVE ANY ACCOUNT OF THE CASH COMPONENT OF THE TURNOVER ON THE COMMISSION BUSINESS BUT HAD PROPER ACCOUNT OF THE MARKET FEES AND COMMISSION ON TURNOVER. IT IS ALSO DOUBTFUL W HETHER HE KEPT A PROPER ACCOUNT OF THE TRADING RECEIPT AND THE COMMISSION RECEIPT SINCE COMMISSION INCOME HAS ALSO BEEN OFFERED BY HIM FROM THE ESTIMATED TURNOVER OF RS.6,19,45,985/ - @ 5% AND THAT TOO AFTER A TOTALLY UNSUPPORTED DISTRIBUTION OF THE SA ME BETWEEN HIS FATHER AND HIM. AS ACCEPTED BY HIM, THE TOTAL TURNOVER OF COMMISSION BUSINESS WAS RS.6,19,45,985/ - (COMPUTED BY HIM ON REVERSE ESTIMATE BASIS). THIS ENTIRE AMOUNT HAS NOT FOUND ITS WAY TO THE BANK ACCOUNT OF THE ASSESSEE BY ANY MEANS. HENCE THE PLEA THAT DIFFERENCE BETWEEN THE DEPOSITS IN THE BANK ACCOUNT AND THE RECEIPTS DECLARED IN THE RETURN OF INCOME RELATES TO THIS TURNOVER FROM THE COMMISSION BUSINESS IS WITHOUT ANY BASIS AND UNSUPPORTED BY ANY SORT OF EVIDENCE. THIS SEEMS TO BE A LAST DITCH EFFORT TO COVER UP THE ATTEMPT TO EVADE TAXES BY SUPPRESSION OF INCOME. IT IS A CLEAR AND COGENT INFERENCE THAT THE DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE AND THAT TOO CASH DEPOSITS CAN EITHER BE FROM THE GROSS RECEIPT OF THE TRADING BUSINESS O R THE COMMISSION RECEIVED ON THE AGENCY BUSINESS OR THROUGH SOME OTHER UNEXPLAINED SOURCE ENTIRELY IN CASH. EXPENSES ON THE TRADING BUSINESS AND COMMISSION BUSINESS HAVE ALREADY BEEN CLAIMED BY THE ASSESSEE AND THE AMOUNT OF CASH DEPOSITS OVER AND AB OVE TH E COMMISSION RECEIPT AND THE TRADING BUSINESS TURNOVER, ARE NOT EXPLAINED AT ALL. SINCE ALL THESE CASH DEPOSITS ARE IN THE NATURE OF INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCE. PENALTY PROCEEDINGS U/S.271(L)(C) OF THE I.T. ACT, 1961 ARE INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. SHRI RAMESH DINKAR WADEKAR 3 4. UPON ASSESSEES APPEAL LEARNED CIT(A) SUMMARIZED THE ASSESSEES EXPLANATION AS UNDER : - 1. ASSESSEE'S SUBMISSIONS ARE CONTAINED AT PAGE 3 AND 4 OF THE ASSESSMENT ORDER. BASICALLY THE ASSESSEE HAS STATED THAT GROSS COMMISSION INCOME OF ASSESSEE AS WELL AS HIS FATHER SHRI DINKAR DAGUDJI WADKAR TOTAL UP TO 30,97,299 / - . OUT OF THIS, THE COMMISSION RECEIPTS OF ASSESSEE WERE RS.22,30,298 / - AND OF FATHER WE RE RS. 8,67,001 / - . 2. SECOND ARGUMENT OF THE ASSESSEE WAS THAT THE DEPOSITS IN THE BANK ACCOUNT ARE OUT OF THE TURNOVER RECEIPTS OF THE COMMISSION. IT IS THE SUBMISSION OF ASSESSEE THAT TOTAL TURNOVER IS MUCH HIGHER AMOUNTING TO RS. 6,19,45,985 / - AND ASSE SSEE EARNED COMMISSION AT THE RATE OF 5% ONLY OF THIS GROSS TURNOVER. 3. ASSESSEE HAS ALSO STATED IN HIS WRITTEN SUBMISSIONS IN THE APPEAL PROCEEDINGS (REPRODUCED ABOVE IN PARA - 4), THAT TOTAL SALES TURNOVER OF ASSESSEE FOR BOTH THE ACTIVITIES OF COMMISSIO N AS WELL AS SALE OF VEGETABLES IS 4,63,84,360 / - . OUT OF THIS THE TURNOVER REFLECTED IN THE BANK IS 2,79,15,237 / - AND CASH TURNOVER IS RS. 1,84,69,122 / . 5.1.3 APART FROM THE ABOVE DETAILS, ALL OTHER PORTION OF ASSESSEE'S SUBMISSIONS IS REGARDING DETAILED EXPLANATION AND THE FACTS RELATED TO THE WORKING OF AGRICULTURAL MARKET AND THE DETAILS OF THE BUSINESS BEING DONE BY HIS FATHER AND HOW THIS BUSINESS WAS T AKEN OVER BY ASSESSEE GRADUALLY. 5. HOWEVER LEARNED CIT(A) WAS NOT CONVINCED. HE UPHELD THE ASSESSI NG OFFICERS ACTION BY OBSERVING AS UNDER : - 1. THE DISCREPANCY POINTED OUT BY ASSESSING OFFICER IN HIS SHOW CAUSE REMAINS UNEXPLAINED BY THE ASSESSEE. THERE IS NO PROOF THAT THERE IS A DIVISION OF THE GROSS RECEIPTS BETWEEN ASSESSEE AND HIS FATHER. THIS IS ONLY A CLAIM MADE BY ASSESSEE, HOWEVER, IT IS NOT SUBSTANTIATED BY ANY DETAILS OR DOCUMENTARY PROOF OF INCOME RETURNED BY ASSESSEE AND THE TOTAL TURNOVER CONSIDERED BY ASSESSEE IN SUCH A RETURN. THUS THIS ARGUMENT OF ASSESSEE IS WITHOUT ANY BASIS. FURTH ER, BY NO STANDARDS THE EXCESS DEPOSITS OF RS. 19,24,402 / - IN THE ASSESSES BANK ACCOUNT MATCH UP TO THE GROSS RECEIPTS OF ASSESSEE'S BUSINESS. IN FACT THE DEPOSITS IN ASSESSEE'S BANK ACCOUNT FOR MUCH SHORT OF THE GROSS RECEIPTS. THEREFORE, THE ARGUMENT THA T THESE EXCESS DEPOSIT S ARE PART OF THE GROSS RECEIPTS DOES NOT MATCH UP WITH THE FACTS OF ASSESSEE'S CASE AND THE MAGNITUDE OF THE GROSS RECEIPTS. EVEN IF THE GROSS RECEIPTS AND TURNOVER OF THE BANK IS CONSIDERED, THE DISCREPANCY DOES NOT MATCH OR COME CL OSE TO IT. THUS THE SECOND ARGUMENT OF ASSESSEE ALSO FALLS FLAT AND IS NOT CONVINCING AND DOES NOT EXPLAIN THE EXCESS DEPOSIT OF RS. 19,24,402 / - . 2. IN VIEW OF ABOVE FACTS OF THE ASSESSEE'S CASE, IT IS CLEAR THAT DESPITE SUFFICIENT OPPORTUNITY PROVIDED BY THE ASSESSING OFFICER IN THE ASSESSMENT SHRI RAMESH DINKAR WADEKAR 4 PROCEEDINGS AS WELL AS DURING THE APPEAL PROCEEDINGS, THE ASSESSEE COULD NOT EXPLAIN SATISFACTORILY THE DISCREPANCY POINTED OUT BY THE ASSESSING OFFICER. HENCE THE ADDITION MADE BY ASSESSING OFFICER IS UPHELD AND GR OUND NO. 1 OF APPEAL OF ASSESSEE IS DISMISSED. 6. AGAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES B ELOW. LEARNED COUNSEL REITERATED THAT ASSESSEES TURNOVER IS TO THE TUNE OF RS. 619,45,985/ - AND ASSESSEE HAS SHOWN ALL THE BANK ACCOUNTS IN ITS RETURN OF INCOME AND THE ACCOMPANYING DETAILS AND BALANCE SHEETS. HE SUBMITTED THAT AUTHORITIES BELOW HAVE NOT APPRECIATED THE M ATTER AND HAVE MADE THE IMPUGNED ADDITION WITHOUT PROPERLY APPRECIATING THE ASSESSEE ACCOUNTS AND THE ACTUAL NO. OF BANK ACCOUNTS OPERATED BY THE ASSESSEE WHERE ALL THE TURNOVER IS DULY REFLECTED. IN THE ALTERNATIVE HE PLEADED THAT HE IS READY TO OFFER 10% OF THE ALLEGED DIFFERENCE ADDED BY THE ASSESSING OFFICER AS UNEXPLAINED INCOME. 8. PER CONTRA LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 9. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. I FIND THAT THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE IS CORRECT INSOFAR AS IT IS A SUBMISSION THAT ASSESSEE HAS MORE BANK ACCOUNTS AND ALL OF THEM ARE REFLECTED IN THE BALANCE SHEET AND ACCOUNTS. I FIND THAT AUTHORITIES BELOW HAVE REJECTED THE ASSESSEE SUBMISSIONS CURS ORILY. THE ASSESSING OFFICER DID NOT EXAMINE PROPERLY THE ASSESSEES SUBMISSION THAT ASSESSEE HAS A DEPOSIT IN THE BANK ACCOUNT OF A MUCH LARGER SUM AND THE SAME IS ON ACCOUNT OF THE ASSE SSEES TURNOVER TO THE TUNE OF RS. 6,19,45,985 / - . HENCE IN MY CONSIDERE D OPINION INTEREST OF JUSTICE WOULD BE SERVED IF THE MATTER IS REMITTED TO THE FILE OF ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE ASSESSEES SUBMISSIONS AND EXPLANATIONS AFRESH WITH REFERENCE TO ASSESSEES RETURNS OF INCOME, BALANCE SHEET B ANK SHRI RAMESH DINKAR WADEKAR 5 ACCOUNTS AND THE CONCERNED BOOKS OF ACCOUNTS. THE ASSESSEE SHOULD BE GIVEN PROPER OPPORTUNITY OF BEING HEARD. 10. IN THE RESULT THE APPEAL BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULES ON 9.10.2020. SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMBAI ; DATED : 09 / 1 0 / 20 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI