ITO, Ward - 25(1), Kolkata, Kolkata V. Shri Rajesh Kumar Dhariwal, Howrah

ITA 1779/KOL/2010

• Counselvise Citation: 177923514 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 15-09-2010
• Court: TRIBUNAL
• Department Lawyers: K R MONDAL
• Assessee Lawyers: V N PUROHIT

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 1779/KOL/2010 %& '(/ ASSESSMENT YEAR : 2007-08 (*+ / APPELLANT ) I.T.O., WARD-25 (1), KOLKATA - % - - VERSUS - . (-.*+/ RESPONDENT ) SHRI RAJESH KUMAR DHARIWAL, KOLKATA (PAN:ADDPD 4953 H) *+ / 0 '/ FOR THE APPELLANT: SHRI K.R.MONDAL -.*+ / 0 '/ FOR THE RESPONDENT: SHRI V.N.PUROHIT 1%2 / !# /DATE OF HEARING : 17.10.2011. 3' / !# /DATE OF PRONOUNCEMENT : 17.10.2011 '4 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY REVENUE AGAINST THE ORDER DATED 18.06.2010 OF THE LD. CIT(A)-CENTRAL-XIV, KOLKATA. 2. THE REVENUE HAS RAISED TWO ISSUES IN GROUNDS OF APPEAL. THE FIRST ISSUE IS RELATING TO DELETION OF ADDITION AMOUNTING TO RS.32 ,35,100/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS AND THE SECOND ISSUE IS RELATING TO D ELETION OF ADDITION OF RS.27,931/- ON ACCOUNT OF INCOME FROM COMMISSION. 3. THE RELEVANT OBSERVATION OF LD. CIT(A) ON THE F IRST ISSUE IS AS UNDER :- 6. UNEXPLAINED CASH DEPOSIT : I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSION OF THE LD. AR AND THE DOCUMENTS SUBMITTED WITH IT. IT CAN BE SEEN THAT THE ASSESSE HAS BANK ACCOUNTS IN THREE DIFFERENT BANKS. IN THE BANK ACCOUNT IN FEDERAL BANK CASH 2 AMOUNT IS DEPOSITED ON DIFFERENT DATES. SIMILARLY, SOME AMOUNT OF CASH IS ALSO DEPOSITED IN THE OTHER TWO BANK ACCOUNTS IN SYNDICA TE BANK AND ABN AMRO BANK. THE ASSESSEE HAS CLAIMED THAT THE CASH DEPOSITED IN THE FEDERAL BANK IS DEPOSITED OUT OF THE CASH WHICH WAS WITHDRAWN FROM THE SAME BANK. IT IS FURTHER CLAIMED THAT IN THIS BANK ACCOUNT MONEY IS ALSO BEING DEPOSITED BY CHEQU E AND THE SAME IS COMING FROM M/S. PRIYA ENTERPRISES WHICH IS A PROPRIETORY CONCE RN OF THE ASSESSEES WIFE SMT. SWATI DHARIWAL WHO IS HERSELF ASSESSED TO TAX. FROM THE BANK STATEMENTS OF THE ASSESEE IT IS NOTED THAT THE FIRST AMOUNT OF CASH O F RS.40,000/- IN THIS BANK ACCOUNT IS DESPOSITED ON 19.04.2006. IT IS FURTHER NOTED THAT BEFORE THIS DATE, FROM 01.04.2006 TO 18.04.2006 THE ASSESSEE HAS WITHDRAWN CASH OF RS.4, 05,000/- ON FIVE DIFFERENT DATES FROM THE SAME BANK AND CASH OF RS.10,000/- WITHDRAW N FROM ABN AMRO BANK ON 11.04.2006. THIS SHOWS THAT AT THE TIME OF DEPOSIT OF CASH OF RS.40000/- CASH OF RS.4,15,000/- WAS AVAILABLE IN THE HANDS OF THE ASS ESSEE. IF WE CONSIDER THE NEXT DATE OF CASH DEPOSIT OF RS.3,00,000/- ON 16.05.2006 WE F IND THAT BEFORE THIS DATE THE ASSESSEE HAD FURTHER WITHDRAWN CASH OF RS.9,00,000/ -ON THREE DIFFERENT DATES AND THE CASH IN HAND WITH HIM WAS RS.12,75,000/-. ON EXAMIN ATION OF THE CASH FLOW STATEMENT SUBMITTED BY THE A/R IT IS SEEN THAT THE POSITION O N THE OTHER DATES OF CASH DEPOSITS IS ALSO SIMILAR. ON ALL OCCASIONS OF CASH DEPOSIT SUBS TANTIAL CASH WITHDRAWN FROM THESE THREE BANK ACCOUNTS IS AVAILABLE IN THE HANDS OF TH E ASSESSEE AND FINALLY AS ON 31.03.2007 THE CASH BALANCE IN THE HANDS OF THE ASS ESSEE IS RS.36,00,967/-. THUS THERE IS NO DENYING THE FACT THAT THE SOURCE OF THE CASH DEPOSITED IN THE THREE BANK ACCOUNTS OF THE ASSESSEE IS GETTING EXPLAINED. HOWEVER, THIS ACTION OF THE ASSESSEE IN CONTINUOUSL Y WITHDRAWING THE CASH FROM THE BANK ACCOUNT IS A LITTLE UNUSUAL. HE HAS T RIED TO EXPLAIN THIS BY SAYING THAT THE CASH WAS USED BY HIM IN STRIKING DEALS FOR PURCHASE OF AGRICULTURAL LAND WHICH FINALLY DID NOT MATERIALIZE. THE ASSESSEE COULD NOT FURNISH MUCH DETAILS ABOUT SUCH UTILIZATION OF THE CASH AND THEREFORE, THE AO DID N OT BELIEVE HIS EXPLANATION AND TREATED IT AS A FABRICATED STORY. THE AO HAS HELD T HE SOURCE OF THE CASH DEPOSITED IN THE THREE BANK ACCOUNTS AS UNEXPLAINED BY MERELY REJECT ING THE THEORY OF PURCHASE OF AGRICULTURAL LAND PUT FORWARD BY THE ASSESSEE. HOW EVER, I FEEL THAT EVEN IF WE DO NOT FIND THE EXPLANATION ABOUT THE USE OF MONEY GIVEN B Y THE ASSESSEE BELIEVABLE WE CANNOT HOLD THAT THE SOURCE OF THE CASH DEPOSITED I N THE BANK ACCOUNT IS UNEXPLAINED UNLESS WE ARE ABLE TO SHOW THAT THE CASH WITHDRAWN FROM THE BANK WAS UTILIZED FOR SOME OTHER PURPOSES. THE AO HAS NOT BROUGHT ANY MAT ERIAL ON RECORD TO SHOW THAT THIS CASH WAS ACTUALLY USED FOR SOME OTHER PURPOSES AND WAS NOT AVAILABLE TO THE ASSESSEE FOR RE-DEPOSITING IN THE BANK ACCOUNTS. IN VIEW OF THE ABOVE DISCUSSION I FEEL THAT IT WAS WRONG ON THE PART OF THE AO TO TREAT THE AMOUNT OF RS.32,35,100/- AS UNEXPLAINED. HENCE I DELETE THE ADDITION OF RS.32,3 5,100/- MADE BY HER. 4. AT THE TIME OF HEARING, THE LD. DR APPEARING ON BEHALF OF THE REVENUE THOUGH RELIED ON THE ORDERS OF AO COULD NOT CONTRADICT T HE OBSERVATIONS MADE BY LD. CIT(A). 5. ON THE OTHER HAND, THE LD. COUNSEL APPEARING ON BEHALF OF ASSESSEE RELIED ON THE ORDERS OF LD. CIT(A). 3 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF MATERIALS AVAILABLE ON RECORD, WE ARE IN AGREEMENT WITH LD. C IT(A) IN RESPECT OF DELETION OF RS.32,35,100/- THAT ASSESSING OFFICER HAS NOT BROUG HT ANY MATERIAL ON RECORD TO SHOW THAT THIS CASH WAS ACTUALLY USED. THE CASH DRAWN FR OM ONE BANK IS ACTUALLY USED FOR SOME OTHER PURPOSES AND WAS NOT AVAILABLE TO THE AS SESSEE FOR RE-DEPOSITING IN THE BANK ACCOUNTS . WE FURTHER OBSERVE THAT LD. CIT(A) HAS RIGHTLY DELE TED THE SAME BY OBSERVING THAT EXPLANATION OFFERED BY ASSESSEE IS U NEXPLAINED UNLESS WE ARE ABLE TO SHOW THAT CASH WITHDRAWN WAS UTILIZED FOR SOME OTHE R PURPOSES. WE FIND NO INFIRMITY IN THE ORDERS OF LD. CIT(A). THEREFORE, WE CONFIRM THE ACTION OF LD. CIT(A) AND DISMISS GROUND. NO.1 OF THE REVENUES APPEAL. 7. IN RESPECT OF THE SECOND ISSUE WHICH RELATES TO INCOME FROM COMMISSION THE ASSESSING OFFICER HAS DISALLOWED AN AMOUNT OF RS.27 ,931/- BY OBSERVING AS UNDER :- INCOME FROM COMMISSION IN THE RETURN FILES U/S 139(1) OF I.T.ACT61 THE AS SESSEE DID NOT DISCLOSE ANY INCOME FROM COMMISSION. HOWEVE R, DURING THE COURSE OF SCRUTINY HE SUBMITTED A COMPUTATION ON 10 TH OCTOBER, 2009 WHEREIN HE ACCEPTED THAT HE HAD RECEIVED RS.27,391/- TOWARDS COMMISSION RECEIPT WHI CH HE DID NOT DISCLOSE AND CLAIMED EXPENSES OF RS.12,863/- FROM IT. THE COMMIS SION RECEIVED BY HIM WAS FROM ICICI PRUDENTIAL INSURANCE SINCE THIS INCOME IS NON REGULAR IN NATURE IT CAN BE TREATED AS INCOME FROM OTHER SOURCE AND ALSO FROM EXPENSE C LAIMED U/S 57 OF I.T.ACT61 ARE DISALLOWED FOR WANT OF EVIDENCE. HENCE THE ENTIRE A MOUNT RECEIVED FROM ICICI PRUDENTIAL INSURANCE IS ADDED TO THE TOTAL INCOME U NDER THE HEAD OTHER SOURCE. 7.1. ON APPEAL LD. CIT(A) HAS RESTRICTED THE DISALL OWANCE OF EXPENDITURE OF RS.12,863/- AS CLAIMED BY THE ASSESSEE TO RS.7,000/ - BY OBSERVING AS UNDER : THE AO MADE AN ADDITION OF RS.27,931/- FOR THE COM MISSION EARNED BY THE ASSESSEE FROM ICICI PRUDENTIAL INSURANCE WHICH WAS NOT DISCL OSED BY HIM. IN THE GROUNDS OF APPEAL THE ASSESSEE HAS CLAIMED THAT FOR EARNING TH IS COMMISSION INCOME HE HAD TO INCUR EXPENDITURE OF RS.12,863/- WHICH SHOULD HAVE BEEN ALLOWED AS A DEDUCTION. IN THIS RESPECT THE AR OF THE ASSESSEE SUBMITTED TH AT IN ORDER TO EARN THIS COMMISSION THE ASSESSEE HAD TO VISIT NUMEROUS CLIENTS, SEND TH EM PROMOTIONAL MAILS AND ARRANGE TO SEND AND COLLECT DOCUMENTS, CHEQUES, RECEIPTS ET C. ALL OF WHICH RESULTED IN INCURRENCE OF THE FOLLOWING EXPENSES : S.NO. PARTICULARS RS. A) TRAVELLING & CONVEYANCE 3222/- B) PRINTING, STATIONERY, TELEPHONE ETC. 1719/- C) SALARY, EMOLUMENTS ETC. 7922/- TOTAL 12863 /- 4 IT WAS CLAIMED THAT THESE EXPENSES ARE VERY NOMINAL AND REALISTIC AND THEREFORE THEY SHOULD BE ALLOWED TO THE ASSESSEE. I HAVE CONSIDERED THIS SUBMISSION OF THE ASSESSEE. IT IS SEEN THAT THE ASSESSEE HAS EARNED THIS COMMISSION ON INSURANCE POLICIES AR RANGED BY HIM FOR AN INSURANCE COMPANY. IT CANNOT BE DENIED THAT FOR ARRANGING THE SE POLICIES THE ASSSESSEE HAS TO MEET CLIENTS AND PURSUE THE MATTER WITH THEM. FOR T HIS THE ASSESSEE HAS TO TRAVEL, MAKE CALLS ETC. ON SUCH ACTIVITIES THE EXPENSES ARE BOUN D TO BE INCURRED. HOWEVER, EXPENSES OF RS.7922/- ON THE ENGAGEMENT OF AN ASSISTANT IS D IFFICULT TO BELIEVE. I FEEL THAT IT WILL BE REASONABLE TO ALLOW EXPENSES OF RS.7000/- OUT OF RS.12,863/- CLAIMED BY THE ASSESSEE. THEREFORE, THE AO IS DIRECTED TO ALLOW A DEDUCTION OF RS.7000/- OUT OF THE COMMISSION INCOME OF THE ASSESSEE. 7.2. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEF ORE US. 8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF MATERIAL AVAILABLE ON RECORD WE ARE IN CONFORMITY WITH THE LD. CIT(A) S OBSERVATIONS THAT THE ASSESSEE HAS EARNED THIS COMMISSION ON INSURANCE POLICIES AR RANGED BY HIM FOR AN INSURANCE COMPANY. IT CANNOT BE DENIED THAT FOR ARRANGING THE SE POLICIES THE ASSSESSEE HAS TO MEET CLIENTS AND PURSUE THE MATTER WITH THEM. FOR T HIS THE ASSESSEE HAS TO TRAVEL, MAKE CALLS ETC. ON SUCH ACTIVITIES THE EXPENSES ARE BOUN D TO BE INCURRED. THEREFORE WE FIND NO INFIRMITY IN THE ORDERS OF LD. CIT(A). THEREFORE , WE CONFIRM THE ACTION OF LD. CIT(A) AND DISMISS GROUND. NO.2 OF THE REVENUES AP PEAL. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.10.2011. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , , , , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 17.10.2011. R.G.(.P.S.) 5 '4 / -5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1. SHRI RAJESH KUMAR DHARIWAL, 31, JELIA PARA, 1 ST BY LANE, P.O.RAMKRISTOPUR, HOWRAH-711101. 2 THE ITO. WARD-25(1), KOLKATA. 3. THE CIT, 4. THE CIT(A)-XIV, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA .5 -/ TRUE COPY, '4%1/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES