SONU KUMAR, SARAN V. ITO, WARD-2(2), CHAPRA

ITA 183/PAT/2019

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0756 (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: 2012-2013
• Appeal Filed On: 26-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Peak credit; Set aside
• Section: 148; 271(1)(c); 44AD; 142(1); 250

Judgement Text

1 ITA No. 183/PAT/2019 Shri Sonu Kumar AY 2012-13 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. 183/PAT/2019 Assessment Year: 2012-13 Shri Sonu Kumar 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. 183/PAT/2019 Shri Sonu Kumar AY 2012-13 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. 10,00,028/- 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 did not file its return of income for the assessment year 2012-13. However, the assessee had entered into a financial transaction and made cash deposits amounting to Rs. 66,18,000/- in various bank accounts. The AO was believed that such income chargeable to income tax accordingly the AO issued notice u/s 148 and u/s 142(1) of the Income-tax Act, 1961upon the assessee. However no compliance had been made by the assessee in response to such notice issued by AO, ultimately the AO had no other option but to pass an ex-parte order where he assessed the income of the assessee as under: “A. Income from business & profession: (i) On perusal of bank statement of the assessee it is seen that during the F.Y. 2011-12 relevant to A.Y. 2012-13 assessee had made cash deposits amounting to Rs. 66,11,000/- (in cash) with Axis Bank with A/c No. 911010038381553 and ICICI Bank with A/c No. 92501501904 in his name and using the name of Murari Prasad on the same PAN. Return of income was not filed. Notice issued u/s 148 of the Act calling for return of income was not complied for. Neither any compliance was made nor return was filed in response to said notice, assessee was asked to explain vide show-cause notice dated 13.05.2014 & 25.06.2014 as to why your total income from business or profession should not be determined at Rs. 5,29,440/- i.e. 8% of total deposits in the above mentioned bank accounts treated as gross turnover during the year no reply has been received till date. I have therefore no option but to estimate from the business at Rs. 5,29,440/- u/s 44AD of the Income-tax Act, 1961 as discussed above. (ii) Further on examination of the above bank account, it has been observed that assessee had made cash deposits throughout the year in FY 2011-12 relevant to AY 2012-13 amounting to Rs. 66,18,000/-. In this context I am to say that for earning business income assessee must have placed capital for getting the turnover and the 3 ITA No. 183/PAT/2019 Shri Sonu Kumar AY 2012-13 amount deposited in the above mentioned bank account. Therefore, peak credit balance is taken for undisclosed circulating capital investment in bank account. Peak credit balance of Axis bank A/c. No. 92501501904 of ICICI Bank comes to Rs. 8,00,000/- on 29.02.2012. Taking a reasonable view, peak deposit of Rs. 1,60,028/- i.e. explained investment by the assessee and therefore added to total income. Total income of the assessee is thus calculated as under: 1 Income from business: as discussed in para A(i) above: Rs. 5,29,440/- Add: as discussed in para (A)(ii) above Rs. 1,60,028/- Gross total income Rs. 21,29,468/- Net taxable income Rs. 21,29,468/- Or rounded off; u/s 288A Rs. 21,29,470/- Assessee has not discussed true and full disclosure of all material facts necessary for assessment, penalty proceeding u/s 271(1)(c) is therefore initiated for furnishing in accurate particulars of income as discussed in para (A)((i) & A(ii) above. Assessed u/s 147/144 at total income of Rs. 21,29,470/-. Charge interest u/s 234A & 234B & 234C as per rules. Issue demand notice and challan accordingly. Computation of Tax: Total income Rs. 21,29,470/- Tax on total income Rs. 4,90,841/- Add: Education cess & SHEC Rs. 14,725/- Total tax payable Rs. 5,05,566/- Add: interest u/s 234A:1/14 to 8/14=20m (8m x 5056x1) Rs. 40,448/- Add: interest u/s 234B: 4/12 to 8/14 = 29m (29m x 5056x1) Rs. 1,46,624/- Add: interest u/s 234C Rs. 18,706/- Total tax & interest payable Rs. 7,11,344/- Or rounded off u/s 288B Rs. 7,11,340/- 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 vide order dated 06.03.2019. 5. Aggrieved by the said order of the ld. CIT(A), the assessee is in appeal before us. 6. At the time of hearing 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 and as such we have no other option but to decide the appeal with the assistance of ld. DR. 4 ITA No. 183/PAT/2019 Shri Sonu Kumar AY 2012-13 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 interfere with the order of 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. 66,18,000/-. In the instant case, AO had treated total cash deposits of Rs. 66,18,000/- 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 on 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. 66,18,000/- 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. 16,00,028/- (8,00,028 + 8,00,000) on account of peak credits, being undisclosed 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. 6,00,000/- as capital to be genuine, i.e. out of accumulated past savings. Thus, the remaining amount of Rs. 10,00,028/- is confirmed as undisclosed capital. That means, the addition of Rs. 6,00,000/- , out of total addition of Rs. 16,00,028/- is deleted and the remaining amount of Rs. 10,00,028/- is confirmed. As a result, this ground of appeal is partly allowed. 3.2 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. In the result, the appeal is partly allowed.” 8. We after going through the findings of ld. CIT(A) and wherein the ld. CIT(A) allowed Rs. 6,00,000/- as genuine capital arises from past accumulated savings of assessee and remaining Rs. 10,00,028/- 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. 16,00,028/- on account of peak 5 ITA No. 183/PAT/2019 Shri Sonu Kumar AY 2012-13 credit being undisclosed capital in bank a/c’s of the assessee where the ld. CIT(A) viewed that sum of Rs. 6,00,000/- as genuine capital i.e. out of accumulated past savings and remaining amount of Rs. 10,00,028/- was confirmed as undisclosed capital i.e. total addition of Rs. 16,00,028/- - Rs. 6,00,000/- = Rs. 10,00,028/- 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 Sonu Kumar. 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