Partha Majumder, Kolkata V. DCIT, Circle - 49, Kolkata, Kolkata

ITA 1753/KOL/2008

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3194 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 04-06-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 10-09-2008
• Court: TRIBUNAL
• Department Lawyers: K N JANA SR DR
• Assessee Lawyers: S JHAJHARIA
• Keywords: Salary income; Peak credit; Bonafide belief
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1753/KOL/2008 ASSESSMENT YEAR:2005-06 PARTHA MAJUMDER VIP ROAD, TEGHORIA, KOLKATA 700 059 [ PAN NO.AIUPM 2519 E ] / V/S . DCIT, CIRCLE-49, 229, A.J.C. BOSE ROAD, 6 TH FLOOR, KOLKATA 700 029 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI S.JHAJHARIA, AR /BY RESPONDENT SHRI K.N.JANA, SR-DR /DATE OF HEARING 10-06-2013 /DATE OF PRONOUNCEMENT 21-06-2013 /O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL FILED BY ASSESSEE ARISING OUT OF ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-XXXII, KOLKATA (CIT(A) FOR SHORT) IN AP PEAL NO.88/CIT(A)-XXXII/DC.CIR- 49/07-08/KOL DATED 29-01-2008. THE ASSESSMENT WAS F RAMED BY DCIT, CIRCLE-49, KOLKATA U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 27-12-2007 FOR THE ASSESSMENT YEAR (AY) 2005- 06. 2. FIST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS.16,42,500/- EARNED FROM UNDISCLO SED RETAIL BUSINESS OF POTATOES AND VEGETABLE. FOR THIS, ASSESSEE HAS RAISED THE FO LLOWING GROUND NO.1:- ITA NO.1753/KOL/2008 A.Y.2005-06 PARTHA MAJUMDAR V. DCIT CIR-49 KOL PAGE 2 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN SU9STAINING THE ADDITION OF RS.1642500/- IN LIEU OF RS.526350/- AS DISCLOSED BY THE APPELLANT BEING INCOME FROM RETAIL BUSINESS OF POTATOES AND VEGETABLES WIT HOUT GIVING PROPER CONSIDERATION TO THE FACTS AND RELEVANT JUDICIAL PRONOUNCEMENTS INVOLVIN G SUCH ISSUES. AS SUCH THE ENHANCEMENT DESERVES TO BE DELETED. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE FILED ITS RETURN OF INCOME FOR THE RELEVANT AY 2005-06 ON 30-03-2006 DECLARING TOTAL INCOME AT RS.4,22,340/-. THE ASSESSEE IS EARNING INCOME FROM SALARY, INTEREST FROM PARTNERSH IP FIRM, M/S.. KINGS CROWN & M/S. LOKNATH GRIHA ENTERPRISES AND ALSO RENTAL INCO ME AND INCOME FROM OTHER SOURCES, I.E., BANK INTEREST. THE ASSESSING OFFICER , DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 143(2) OF THE ACT NOTICED THAT ASS ESSEE HAS HUGE CASH DEPOSITED IN AXIS BANK LTD., AIRPORT BRANCH, KOLKATA BEING ACCOU NT NO. 410010100025878. THE DETAILS OF DEPOSITS OF RS.16,42,500/- AS UNDER:- AMOUNT OF CASH DEPOSIT (RS) DATE 3,30,000/- 26/5/2004 99,000/- 7/12/2004 50,500/- 7/12/2004 99.000/- 7/12/2004 92,500/- 20/12/2004 99,000/- 20/12/2004 99,000/- 20/12/2004 99,000/- 20/12/2004 95,500/- 28/12/2004 99,000/- 28/12/2004 52,000/- 5/1/2005 99,000/- 5/1/2005 99,000/- 5/1/2005 99,000/- 5/1/2005 32,000/- 8/1/2005 99,000/- 8/1/2005 WHEN THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN THE DEPOSITS, HE STATED THAT IT IS ENGAGED IN THE RETAIL TRADING OF POTATOE S, CARROTS AND OTHER VEGETABLE AT GAIGHATA. THE ASSESSEE CLAIMED THAT THE TOTAL TURNO VER OF ITS BUSINESS IS AT RS.37,59,640/- AND WHICH IS FULLY COVERED U/S. 44AF OF THE ACT. IT IS TO BE MENTIONED THAT ASSESSEE HAS NOT DISCLOSED ANY BUSINESS OR ANY TURNOVER IN ITS RETURN OF INCOME. ITA NO.1753/KOL/2008 A.Y.2005-06 PARTHA MAJUMDAR V. DCIT CIR-49 KOL PAGE 3 ON A SPECIFIC QUERY BY THE BENCH, NOW LD. COUNSEL F OR THE ASSESSEE FAIRLY ADMITTED THAT IN THE RETURN OF INCOME NOTHING IS DISCLOSED. BUT THE TURNOVER OF RS.37,59,640/- ON ACCOUNT OF TRADING OF POTATOES AND OTHER VEGETAB LE IS DISCLOSED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NOW, DURING THE ASSESSME NT PROCEEDINGS, THE ASSESSEE HAS DISCLOSED PROFIT FROM RETAIL BUSINESS AT RS.5,2 6,350/- ON ACCOUNT OF THIS RETAIL TRADE BUSINESS OF POTATOES AND OTHER VEGETABLE. THE AO HAS NOT ACCEPTED THAT THE ASSESSEES BUSINESS FALL UNDER THE COMPUTATION OF U /S. 44AF OF THE ACT FOR THE FOLLOWING REASONS:- THE INCOME FROM POTATO BUSINESS (NOT SHOWN IN TH E RETURN) SHOWN IN THE REVISED COMPUTATION FOR RS.5,26,350/- U/S. 44AF IS NOT ACCE PTABLE AS ASSESSEES CASE IS NOT COVERED U/S. 44AF, AND MORE SO NO BOOKS OF ACCOUNTS OF SUCH POTATO BUSINESS HAS BEEN PRODUCED, AND THERE HAS BEEN CASH DEPOSIT FOR RS.16,42,500/- WHICH APPEARS TO BE OUT OF POTATO BUSINESS. EVEN ASSESSEE COULD NOT PROVE THE DEPOSITS MADE IN THE BANK, RATHER ASSESSEE TRIED TO EXPLAIN THAT THESE DEPOSITS ARE MADE OUT OF SALE PR OCEED OF RETAIL BUSINESS OF POTATO AND OTHER VEGETABLE. BUT THE ASSESSEE COULD NOT ADD UCE ANY EVIDENCE IN SUPPORT OF ITS CLAIM. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEF ORE CIT(A), WHO CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- I HAVE GONE THROUGH THE ASSTD. ORDER AND WRITTEN S UBMISSION MADE BY THE AR OF THE APPELLANT. THE DETAILS FILED BY THE A/R OF THE APPE LLANT REVEAL THAT THE THAT THE APPELLANT IS IN POSSESSION OF AGRICULTURAL LAND HOLDING VALUED A T RS.6,82,100/- AS 31.03.05 AND IN THE AY 02-03, 03-04 AND 04-05, INCOME FROM AGRICULTURAL HAS BEEN SHOWN AT RS.42,168/-, RS.63,118/- AND RS.67,670/-, RESPECTIVELY BUT UNFOR TUNATELY NO SUCH INCOME WAS OFFERED DURING THIS YEAR. THEREFORE, THERE SUBMISSION TO TH E EFFECT THAT THE APPELLANT IS ON THE BONAFIDE BELIEF THAT INCOME GENERATED OUT OF THE SA LE PROCEEDS OF POTATO AND OTHER VEGETABLES CULTIVATED ON THE VAST AGRICULTURAL LAND WITHIN THE GAIGHATA PANCHAYAT IS OUTSIDE THE SCOPE OF INCOME TAX AND ACCORDINGLY THE INCOME EARNED AND ACCRUED OUT OF SUCH ARE NOT INCLUDED IN THE ORIGINAL RETURN BUT ON ADVICE OF HIS AUTHORIZED COUNSEL THAT WAS OFFERED ON PRESUMPTIVE BASIS U/S. 44AF OF THE I T ACT IS CONTRADICTORY OF ITS CLAIM. ON ONE HAND, IT HAS BEEN CLAIMED THAT HE IS EARNING AG RICULTURAL INCOME TO THE PAST BUT SUCH QUANTUM IS NOT DISCLOSED IN THE RETURN OF INCOME OR IGINALLY FILED BUT EARN HUGE CASH DEPOSIT OF RS.16,59,640/- WAS FOUND IN THE BANK A/C. HE CAM E UP WITH THE STORY OF MAKING SUCH DEPOSIT OUT OF HIS RETAIL BUSINESS OF POTATO SALE I N WHICH TOTAL TURNOVER WAS DECLARED AT RS.37,59,640/- AND NET PROFIT DECLARED WAS AT RS.5, 26,350/- WHAT IS THE BASIS FOR DECLARING TURNOVER AT RS.37,59,640/- IS NOT KNOWN. HOWEVER, T HERE IS NO DENYING FACT THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF POTATO SALE AS EVIDENT FROM THE SUPPORTING MATERIAL FILED IN THE FORM OF PANCHAYAT CERTIFICATE AND COLD STORAGE ETC, BUT IT CAN NOT BE SAID THAT HE WAS RETAILER AND HIS CASE IS COVERED U/S. 44AF OF T HE IT ACT. ITA NO.1753/KOL/2008 A.Y.2005-06 PARTHA MAJUMDAR V. DCIT CIR-49 KOL PAGE 4 IT HAS BEEN CLAIMED THAT THE ENTIRE BUSINESS OF SAL E OF POTATO IS ROUTED THROUGH THE BANK A/C. OF AXIS BANK IN WHICH THE TOTAL DEPOSIT OF RS. 16,42,500/- WAS FOUND. IF THE CLAIM OF THE APPELLANT IS ACCEPTED AS TRUE THAN FOR MAKING SALE OF RS.37 LAKHS, THERE SHOULD HAVE BEEN DEPOSITED OF ENTIRE AMOUNT OF SALE PROCEEDS IN THE BANK A/C. AND FOR MAKING PURCHASES, THERE SHOULD BE HAVE BEEN PERIODICAL WITHDRAWAL FRO M THE SAID BANK A/C. BUT THE BANK A/C. REVEAL THAT THERE IS ONLY DEPOSITED OF RS.16,42,500 /- AND THERE IS NO WITHDRAWAL FOR MAKING PURCHASES FOR GOODS TRADED. IN THAT CASE, THE ONLY LOGICAL CONCLUSION IS THAT THE APPELLANT IS CARRYING ON BUSINESS IN CASH WITHOUT MAINTENANCE OF ANY BOOKS OF A/CS., AND ALL TRANSACTIONS OF SALE AND PURCHASES ARE NOT ROUTED T HROUGH THE AFORESAID BANK A/C., BUT ONLY PROFIT EARNED FROM THIS BUSINESS WAS RECORDED IN TH IS BANK A/C. AS EVIDENT FROM THE BANK A/C. THE FIRST DEPOSIT IN THE BANK A/C. WAS MADE ON 26..05.04 AT RS.3,30,000/- AND THERE IS NO WITHDRAWAL PRIOR TO THIS DATE OR IMMEDIATELY AFT ER THIS DATE. THEREAFTER, THE APPELLANT HAS DEPOSITED MONEY IN THE MONTH OF DECEMBER, 2004 AND JANUARY, 2005 ONLY ON 5 OCCASIONS NAMELY. 1. 07.12.2004 RS. 2,48,500/- 2. 20.12.2004 RS. 3,89,500/- 3. 28.12.2004 RS. 1,94,500/- 4. 05.01.2005 RS. 2,50,000/- 5. 08.01.2005 RS. 2,30,000/- RS.13,12,500/- THE A/R OF THE APPELLANT FURTHER CLAIMED THAT AFTER FIXED DEPOSIT OF RS.5,50,000/- ON 28.12.04 AND RS.3,30,000/- ON 03.01.05, THE SAID DE POSIT WAS MATURED WITHIN THE 31,.03.05 AND ON 03.04.05 THE APPELLANT HAS WITHDRAWN RS.9,30 ,000/- FROM THE SAID BANK A/C. FOR REPAYMENT OF SUNDRY CREDITORS ARISING OUT OF THE RE TAIL BUSINESS OF POTATO AND OTHER VEGETABLES. BUT NO DETAILS OF SUCH CREDITORS ARE FU RNISHED ENABLING TO VERIFY THE CLAIM OF THE APPELLANT. MOREOVER, EVEN IF IT IS ACCEPTED FOR THE SAKE OF ARGUMENT THAT THERE IS OUTSTANDING LIABILITY OF RS.9,30,000/-, NO PRUDENT BUSINESSMAN WILL PREFER TO KEEP SUCH HUGE LIABILITY OUTSTANDING FOR SUCH A LONG PERIOD A ND INSTEAD INVEST SUCH FUND IN THE FIXED DEPOSITS. THUS, THE ONLY LOGICAL CONCLUSION THAT CA N BE DRAWN IS THAT THE APPELLANT WAS ENGAGED IN SALE OF POTATO ON LARGE SCALE BY UTILIZI NG THE FACILITY OF COLD STORAGE AND HAS EARNED TOTAL PROFIT OF RS.16,42,500/- AND OBVIOUSLY , THE TURNOVER WAS IN PROPORTION OF THE NET PROFIT RATE PREVAILING IN THE SAID LINE OF BUSI NESS (OBVIOUSLY NOT RECORDED BY THE APPELLANT) BUT IN ORDER TO ESCAPE THE ACTUAL LIABIL ITY OF INCOME TAX WHEN CAUGHT ON WRONG FOOTING THE APPELLANT CAME UP WITH THE PLEA THAT HE IS RETAIL TRADER OF POTATO AND HIS TURNOVER IS LESS THAN RS.40 LAKHS AND HAS EARNED PR OFIT OF RS.5,26,350/- ONLY WHICH FACT IS NOT BORNE OUT FROM THE TRANSACTIONS FOUND RECORDED IN THE AXIS BANK IN WHICH THERE IS TOTAL DEPOSIT OF RS.16,42,500/-. THUS, THERE IS NO INFIRM ITY IN THE ACTION OF AO IN HOLDING THAT THE APPELLANT HAS EARNED INCOME OF RS.16,42,500/- IN HI S BUSINESS OF POTATO AND SUCH INCOME WAS NOT RECORDED WHILE FILING ORIGINAL RETURN OF IN COME FILED ON 30.03..06 BUT ONLY TO ESCAPE FROM THE GROUNDS OF THE ACTUAL IT. INABILITY EACH WITH THE EXPLANATION OF EARNING RS.5,26,350/- IN A TURNOVER OF RS,17 LAKHS FROM THE POTATO WHICH PLEA HAS NO BASIS AT ALL. AGGRIEVED, ASSESSEE CAME IN SECOND APPEAL BEFORE US . ITA NO.1753/KOL/2008 A.Y.2005-06 PARTHA MAJUMDAR V. DCIT CIR-49 KOL PAGE 5 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US LD. COUNSEL FO R THE ASSESSEE REITERATED THE SAME SUBMISSIONS THAT THE DEPOSITS IN AXIS BANK ARE OUT OF SALE PROCEED OF RETAIL BUSINESS. BUT THE FACTS INDICATE SOMETHING DIFFEREN T. IT IS ALSO A FACT THAT DEPOSITS OF RS.16,42,500/- WITH AXIS BANK REPRESENTS UNDISCLOSE D INCOME FROM POTATO BUSINESS. YES, WE CAN AGREE TO THIS PROPOSITION, BECAUSE OUT OF THESE DEPOSITS AND WITHDRAWALS, ASSESSEE HAS MADE FDR OF RS.5,50,000/- ON 28.12.2004 AND RS.3,30,000/- ON 03.01.2005 AND DISCLOSED PROFIT FR OM BUSINESS IS AMOUNTING TO RS.5,26,350/-. EVEN OTHERWISE, THE PEAK AMOUNT STAN DING AT THE CREDIT ACCOUNT MAINTAINED WITH AXIS BANK, AIR PORT BRANCH IS AT RS .13,80,066/- AS NARRATED BY CIT(A) IN HIS APPELLATE ORDER. IT MEANS THAT, AT TH E BEST, ASSESSEE CAN BE ASSESSED AT THE AMOUNT OF PEAK CREDIT AT RS.13,80,066/- AND NO T THE ADDITION MADE BY AO AND CONFIRMED BY CIT(A) AT RS.16,42,500/-. THE ASSESSEE WILL GET RELIEF ACCORDINGLY. THE AO IS DIRECTED TO RE-COMPUTE THE INCOME BY TAKI NG THE PEAK AMOUNT OF RS.13,80,066/- AS INCOME OF THE ASSESSEE. THIS ISSU E OF ASSESSEES APPEAL IS PARTLY ALLOWED. 5. COMING TO SECOND ISSUE OF THE ASSESSEES APPEAL IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS.1,52,800/- AS UNDISCLOSED INCOME IN THE SHAPE OF DEPOSITS IN STATE BANK OF INDIA, AIRPORT B RANCH. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.2:- 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT DELETING THE ADDITION OF RS.1528001/- AS UNDISCLOSED INCOME IN S HAPE OF DEPOSITS IN SBI AIRPORT BRANCH INFLICTED UPON THE APPELLANT ON BASIS OF SURMISES A ND CONJECTURES AS SUCH THE ADDITION OF UNDISCLOSED INCOME U/S. 68 ALSO DESERVES TO BE DELE TED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSING O FFICER OBSERVED THAT THE ASSESSEE HAS DEPOSITED, THE FOLLOWING IN HIS BANK ACCOUNT:- AMOUNT DATE RS. 40,000/- 2/11/2004 ITA NO.1753/KOL/2008 A.Y.2005-06 PARTHA MAJUMDAR V. DCIT CIR-49 KOL PAGE 6 RS. 13,000/- 2/11/2004 RS. 49,900/- 22/11/2004 RS. 49,900/- 22/11/2004 RS.1,52,800/- THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPL AIN THE SOURCE. THE ASSESSEE EXPLAINED THAT THERE IS WITHDRAWALS MADE FROM UTI B ANK ON 12-10-2004 FOR A SUM OF RS.2 LAKH AND THE SAME WAS RE-DEPOSITED IN ABOVE BA NK ACCOUNT AMOUNTING TO RS.1,52,800/- AND THIS AMOUNT IS DEPOSITED WITHIN T HE PERIOD OF 20 TO 30 DAYS. THE AO WAS NOT CONVINCED WITH THE EXPLANATION OF THE AS SESSEE AND ADDED THIS AMOUNT AS UNEXPLAINED BY OBSERVING AS UNDER:- (B) IT IS QUITE UNUSUAL AND FAR FROM BELIEF THAT A PERSON HAVING BANK ACCOUNT, HAD KEPT THE CASH IN HAND FOR RS.2,00,000/- FOR MAKING CASH DEPO SIT IN HIS ANOTHER BANK ON FUTURE DATE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF ASSESSING OFFICER. 7. EXACTLY ON SAME REASONS, WE FIND THAT SOURCE OF THE DEPOSIT OF RS.1,52,800/- IS EXPLAINED FOR THE REASONS THAT THE ASSESSEE HAS MAD E THE WITHDRAWAL FROM THE UTI BANK ON 12-10-2004 AND DEPOSITED IN SBI, AIRPORT BR ANCH ON 02-11-2004 AND 22- 11-2004 I.E.,, WITHIN A GAP OF 20 DAYS TO ONE MONTH . IT MEANS THAT SOURCE IS EXPLAINED AND WE FIND NO INFIRMITY IN THE EXPLANATI ON OF THE ASSESSEE. ACCORDINGLY, WE ALLOW THIS GROUND OF ASSESSEES APPEAL AND REVER SE THE ORDER OF AUTHORITIES BELOW. 8. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED . ORDER IS PRONOUNCED IN OPEN COURT ON 21 ST JUNE, 2013 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP DATE: 21ST JUNE, 2013 !'# - ITA NO.1753/KOL/2008 A.Y.2005-06 PARTHA MAJUMDAR V. DCIT CIR-49 KOL PAGE 7 %%& %%& %%& %%& '& '& '& '& / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ''%( ) / CONCERNED CIT 4. ) - / CIT (A) 5. &*+ %%%( , %( / DR, ITAT, KOLKATA 6. +,- ./ / GUARD FILE. BY ORD ER/ , 0/2 '3 %(,