MURARI PRASAD, SARAN V. ITO, WARD-2(2), CHAPRA

ITA 181/PAT/2019

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0758 (ITAT-PATNA)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 26-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Peak credit; Set aside
• Section: 148; 44AD; 142(1); 250

Judgement Text

1 ITA No. 181/PAT/2019 Murari Prasad AY 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, (VIRTUAL HEARING AT KOLKATA) [BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER & SHRI SONJOY SARMA, JUDICIAL MEMBER] I.T.A. No. 181/PAT/2019 Assessment Year: 2011-12 Shri Murari Prasad Sahebganj, Sonarpatti, Chapra (Saran) – 841301. (PAN: ALUPP 0744 P) Vs. ITO, Ward-2(2), Chapra Appellant Respondent Date of Hearing 19.07.2022 Date of Pronouncement 03.08.2022 For the Appellant None For the Respondent Shri Rupesh Agrawal, Sr. DR ORDER PER SONJOY SARMA, JM: The present appeal has been preferred by the assessee against the order of ld. CIT(A), Jamshedpur dated 06.03.2019 [hereinafter referred to as ‘CIT’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). The assessee in this appeal has taken the following grounds of appeal: “1. For that impugned order is bad in law and facts as well. 2. For that the appellant is registered businessman and they filed his return regularly. 3. For that learned assessing officer taking figure from bank and charge general rate 8% where as the appellant has not run as contract business so that the assessment order of the assessing officer is not correct or as per law. 4. For that the LAO pick up all the transaction deposit and withdrawal there is no evidence from the transaction represent sale. 5. For that without prejudice to above, the estimate of income @ 8% of the deposit is wrong, illegal, unjustified and beyond the law. 6. For that the LAO added amounting to Rs. 8,01,210/- as capital is wrong, it is simple transaction. 7. For that the LAO without passing any order and they charged interest u/s 234A & 234B and u/s 234C upon assessed tax is illegal and beyond the law. 2 ITA No. 181/PAT/2019 Murari Prasad AY 2011-12 8. For that any grounds which is applicable at the time of hearing to be urged. 9. For that any view of the matter, the impugned order is no sustainable in the eye of law as well as facts and fit to be set aside.” 2. From the perusal of the grounds raised by the assessee, we find that the solitary grievance of the assessee is that the impugned order passed by the ld. CIT(A) not sustainable in the eye of law as well as facts and to be set aside. However, perusal of the record, it is noticed that the sole grievance of the assessee is confirmation of addition of Rs. 4,01,210/- made by ld. CIT(A) on account of peak credit, being undisclosed capital in the bank accounts of the assessee. 3. Brief facts of the case are that the assessee filed its return of income on 09.11.2012 showing total income of Rs. 1,52,177/-. However, the assessee was found to have made a cash deposit of Rs. 1,25,67,000/- in his bank account. Accordingly, a notice u/s 148 was issued upon the assessee on 11.04.2014 and asked to file the return of income for the assessment year in question. However, the assessee did not make any endeavour to file any return of income in response to notice u/s 148 of the Act. Besides that the notice u/s 142(1) were issued but the assessee did not turn up for compliance, ultimately the AO had no other option but to pass an ex-parte order where he assessed the total income of the assessee at Rs. 18,06,570/- as under: “Income from business has been determined at Rs. 10,05,360/- presuming all the deposits in bank accounts as sales for want of evidence to substantiate the credits. Net profit rate @ 8% has been estimated on resumed sales as provided u/s 44AD of the Income-tax Act, 1961. The Assessing Officer has deducted Rs. 1,52,177/- as business income shown by the appellant in the original return. The addition of Rs. 8,53,183/- after deducting the income shown has been made to the returned income. Further, addition of Rs. 8,01,210/- has been made as undisclosed circulating capital in absence of evidence of filing of the returns of income of previous years to substantite the running capital.” 4. Being aggrieved by the above order the assessee preferred an appeal before the ld. CIT(A) and the appeal of the assessee was partly allowed. 5. Aggrieved by the said order of the ld. CIT(A), the assessee is in appeal before us. 3 ITA No. 181/PAT/2019 Murari Prasad AY 2011-12 6. At the time of hearing of the matter, none appeared on behalf of the assessee. Although, the notices were issued to the assessee by the registry from time to time by informing about the hearing of the appeal. The conduct of the assessee shows that the assessee has no interest to peruse the appeal as such we have no other option but to decide the appeal with the assistance of the ld. DR. 7. The ld. DR submitted that the ld. CIT(A) had given substantive relief to the assessee and as such there is no scope for interference with the order passed by the ld. CIT(A) and discussion to this effect reads as under: “3. The first issue is that AO had estimated income of the appellant-assessee @ 8% of the turnover of Rs. 1,25,67,000/-. In the instant case, AO had treated total cash deposits of Rs. 1,25,67,000/- in the bank accounts as Gross Turnover of the business of the appellant-assessee. I have gone through the arguments of the appellant and the facts of the case. I find the appellant’s contention to be correct. Upon analysis of the transactions recorded in bank accounts, it appears that these transactions are not in the nature of business transactions. There are withdrawals and then deposits, either in the same day or the next day or after few days. The nature of the transactions is not sale/purchase. Therefore, AO was not justified in treating total deposits of Rs. 1,25,67,000/- as gross turnover of the business and the same is found to be unsustainable. Hence, addition made by AO on this ground is deleted. As a result, this ground of appeal is allowed. 3.1 The second issue is regarding addition of Rs. 8,01,210/- on account of peak credit, being undisclosed circulating capital in bank accounts of the appellant- assessee. On this issue, the appellant filed submission. I have gone through contentions of the appellant and the facts of the case. I find AO’s action to be correct. However, the appellant-assessee might have had some accumulated past savings in hands. No credit for the same has been given by AO. In the interest of justice, I consider a sum of Rs. 4,00,000/- as circulating capital to be genuine, i.e. out of accumulated past savings. Thus, the remaining amount of Rs. 4,01,210/- is confirmed as undisclosed circulating capital. That means, the addition of Rs. 4,00,000/- , out of total addition of Rs. 8,01,210/- is deleted and the remaining amount of Rs. 4,01,210/- is confirmed. As a result, this ground of appeal is partly allowed. Other grounds of appeal and contentions of the Appellant have become infructuous or are only consequential in nature. The same are, therefore, not adjudicated.” 4 ITA No. 181/PAT/2019 Murari Prasad AY 2011-12 8. We after going through the findings of ld. CIT(A) and wherein the ld. CIT(A) allowed Rs. 4,00,000/- as genuine capital arises from past accumulated savings of assessee and remaining Rs. 4,01,210/- confirmed as undisclosed capital of the assessee. 9. We after hearing the submission made by the ld. DR and perusing the material available on record, we do not see any reasons to disagree with the ld. CIT(A)’s findings where the ld. CIT(A) regarding addition made by AO of Rs. 8,01,210/- on account of peak credit being undisclosed capital in bank a/c’s of the assessee where the ld. CIT(A) viewed that sum of Rs. 4,00,000/- as genuine capital i.e. out of accumulated past savings and remaining amount of Rs. 4,01,210/- was confirmed as undisclosed capital i.e. total addition of Rs. 8,01,210/- - Rs. 4,00,000/- = Rs. 4,01,210/- as undisclosed capital and it was a reasonable order passed under the provisions of law and accordingly we sustained the order passed by the CIT(A). 10. In the result, the appeal of the assessee is dismissed. Order is pronounced in the open court on 03.08.2022 Sd/- Sd/- (Manish Borad) (Sonjoy Sarma) Accountant Member Judicial Member Dated: 03.08.2022 Biswajit, Sr. PS Copy of the order forwarded to: 1. Appellant– Shri Murari Prasad. 2. Respondent – ITO, Ward-2(2), Chapra. 3. CIT(A), 4. CIT , 5. DR, ITAT, True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata