Shri Ajay Desai, Vadodara V. The Income Tax Officer, Ward-1(2)(3), Vadodara

ITA 1861/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3727 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 13-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Keywords: Peak credit
• Section: 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ I.T.A. NO.1861/AHD/2016 ( / ASSESSMENT YEAR : 2007-08) SHRI AJAY DESAI GF-1, SAI VILLA COMPLEX OPP. PITAMBER SOC., OLD PADRA ROAD VADODA 390 015 / VS. INCOME TAX OFFICER WARD-1(2)(3) VADODARA 390 007 ./ ./ PAN/GIR NO. : ABGPD 2903 E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUNIL TALATI, AR / RESPONDENT BY : SHRI S.K. DEV, SR.DR / DATE OF HEARING 14/02/2019 !'# / DATE OF PRONOUNCEMENT 15/02/2019 / O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER : THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD.COMMISSIONER OF INCOME TAX(APPEALS)-5, VADODARA [CIT(A) IN SHORT] DATED 12/04/2016 PASSED FOR ASSESSMENT YEAR (AY) 2007-08. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS.1,73,515/- IMPOSED BY THE ASSESSING ITA NO.1861/AHD /2016 SHRI AJAY DESAI VS. ITO ASST.YEAR 2007-08 - 2 - OFFICER U/S.271(1)(C)OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS 'THE ACT'). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF SALE AND PURCHASE OF SEC OND HAND CARS. HE HAS FILED HIS RETURN OF INCOME ON 29/09/2007 DECLARING TOTAL INCOME OF RS.1,04,010/-. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY ASSESSMENT AND NOTICE U/S.143(2) OF THE ACT WAS ISS UED AND SERVED UPON HIM. ON SCRUTINY OF ACCOUNTS, IT REVEALED TO THE A SSESSING OFFICER THAT ASSESSEE HAS DEPOSITED CASH WITH ABN AMRO BANK. TH E LD.AO MADE A DETAILED ANALYSIS OF DIFFERENT DEPOSITS MADE IN THE BANK ACCOUNT AND THE EXPLANATION OF THE ASSESSEE. HE ACCORDINGLY MADE A N ADDITION OF RS.78,21,308/- ON ACCOUNT OF UNEXPLAINED CASH CREDI T IN THE BANK. 4. THE DISPUTE TRAVELLED UPTO THE TRIBUNAL BY WAY O F ITA NO.716/AHD/2011 FOR AY 2007-08 AND THE TRIBUNAL SCA LED IT DOWN TO RS.7,35,045/-. THE FINDING RECORDED BY THE TRIBUNA L IN PARA-10 READS AS UNDER: 10. WE FIND THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT RS.39,45,580/- WAS INVESTED BY THE ASSESSEE IN THE AFORESAID BUSINESS AT ANY GIVEN POINT OF TIME. THU S, THE ADDITION OF RS.39,45,580/- MADE BY THE COMMISSIONER OF INCOME T AX (APPEALS) IS WITHOUT ANY BASIS. FURTHER, THE COMMISSIONER OF IN COME TAX (APPEALS) OBSERVED IN HIS ORDER THAT DEPOSIT OF RS.78,21,308/ - INCLUDES RS.9,43,000/- WHICH WAS PERSONAL LOAN RECEIVED BY T HE ASSESSEE FROM ITA NO.1861/AHD /2016 SHRI AJAY DESAI VS. ITO ASST.YEAR 2007-08 - 3 - THE BANK. HOWEVER, WHILE CALCULATING THE PROFIT OF BUSINESS, THE COMMISSIONER OF INCOME TAX (APPEALS) TOOK THE ENTIR E DEPOSIT OF RS.78,21,308/- AS SALES PROCEEDS OF THE BUSINESS. IN OUR CONSIDERED VIEW, THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN TAKING RS.9,43,000/- AS SALE PROCEEDS OF THE BUSINE SS OF THE ASSESSEE. THUS, ON REDUCING THE ABOVE AMOUNT OF RS.9,43,000/- FROM THE PROFIT OF RS.12,45,340/- CONSIDERED BY THE COMMISSIONER OF IN COME TAX (APPEALS), THE AMOUNT OF PROFIT COMES TO RS.3,02,34 0/-. KEEPING IN VIEW THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IN THE AFORESAID BANK ACCOUNT, THE PEAK CREDIT WAS RS.6,60 ,045/- WAS ON 31- 01-2007. THEREFORE, IT WILL BE FAIR AND REASONABLE TO ADD RS.6,60,045/- AND PROFIT EARNED BY THE ASSESSEE AFTER THAT DATE W HICH HAS BEEN ESTIMATED AT RS.75,000/- TO THE INCOME OF THE ASSES SEE IN RESPECT OF AFORESAID BANK ACCOUNT. WE THEREFORE, CONFIRM THE ADDITION TO THE EXTENT OF RS.7,35,045/- OUT OF THE ADDITION OF RS.4 5,33,324/- CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND DEL ETE THE BALANCE AMOUNT OF RS.37,98,279/-. THUS, THE GROUND OF APPE AL OF THE ASSESSEE IS PARTLY ALLOWED. 5. THE LD.AO HAS INITIATED THE PENALTY PROCEEDINGS ON THE GROUND THAT ADDITION OF RS.78,21,308/- WAS MADE TO THE TOT AL INCOME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED BANK DEPOSITS. HE IMPOSED THE PENALTY ON ACCOUNT OF CONCEALMENT OF INCOME. APPEA L TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 6. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVE OF THE ASSESSEE, WE HAVE GONE THROUGH THE RECORD CAREFULLY. LD.COUNSE L FOR THE ASSESSEE, AT THE VERY OUTSET, SUBMITTED THAT 90% OF THE ADDITION S MADE BY THE ASSESSING OFFICER STAND DELETED AT THE END OF THE T RIBUNAL. THE BALANCE ADDITION WAS CONFIRMED ON AN ESTIMATE BASIS. ITA NO.1861/AHD /2016 SHRI AJAY DESAI VS. ITO ASST.YEAR 2007-08 - 4 - 7. ON THE OTHER HAND LD.DR CONTENDED THAT ESTIMATIO N OF INCOME AT RS.7,35,045/- IS MODE OF COMPUTATION. HENCE, TO TH IS EXTENT, ASSESSEE HAS CONCEALED THE INCOME AND DESERVES TO BE VISITED WIT H PENALTY. 8. ON DUE CONSIDERATION OB ABOVE FACTS AND IN THE L IGHT OF ITATS ORDER, IT REVEALED THAT THIS ACCOUNT WAS USED BY TH E ASSESSEE FOR THE PURPOSE OF BUSINESS AND THAT IS WHY A PEAK CREDIT O F RS.6,60,045/- AS ON 31/01/2017 WAS CONSIDERED FOR ADDITION. IT WAS NOT A SIMPLICITER UNEXPLAINED DEPOSITS. THE ASSESSEE USED TO DEPOSIT THE MONEY AS WELL AS TO WITHDRAW FROM THIS ACCOUNT FOR THE PURPOSE OF HI S BUSINESS. THUS, HE HAS MADE AN EXPLANATION ABOUT THE NATURE OF DEPOSIT WITH THIS BANK ACCOUNT AND THAT EXPLANATION WAS NOT FOUND TO BE FA LSE. IT WAS NOT ACCEPTED BY THE ASSESSING OFFICER. IT IS A DIFFERE NCE OF OPINION. HENCE, ASSESSEE DOES NOT DESERVE TO BE VISITED WITH PENALT Y. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 15 TH FEBRUARY-2019 AT AHMEDABAD. SD/- SD/- ( AMARJIT SINGH ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15/ 02 /2019 &.., .(../ T.C. NAIR, SR. PS ITA NO.1861/AHD /2016 SHRI AJAY DESAI VS. ITO ASST.YEAR 2007-08 - 5 - !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-5, VADODARA 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 14.2.19(DICTATION-PAD 7- PAGE S ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..14.2.19 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.15.2.19 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 15.2.19 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER