Saraswati Gupta, Howrah V. ITO, Ward-47(1), Kolkata

ITA 190/KOL/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9621 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 13-02-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: M D SHAH
• Keywords: Unexplained cash credit; Peak credit
• Section: 68; 148

Judgement Text

ITA NO. 190/KOL/2020 ASS ESSMENT YEAR: 2012-2013 SARASWATI GUPTA 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C(SMC) BENCH, KOLKATA [VIRTUAL COURT HEARING] BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT I.T.A. NO. 190/KOL/2020 ASSESSMENT YEAR: 2012-2013 SARASWATI GUPTA,................................... ...................................APPELLANT RADHA KUNJ, 4D, DHARAMTALA ROAD, SALKIA, HOWRAH-711106 [PAN: ADAPG1993M] -VS.- INCOME TAX OFFICER,................................ ...................................RESPONDENT WARD-47(1), KOLKATA, 3, GOVERNMENT PLACE (WEST), KOLKATA-700001 APPEARANCES BY: SHRI M.D. SHAH, A.R., FOR THE APPELLANT SHRI SUPRIYO PAL, ADDL. CIT, D.R., FOR THE RESPONDE N T DATE OF CONCLUDING THE HEARING : JULY 06, 2020 DATE OF PRONOUNCING THE ORDER : JULY 06, 2020 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-14, KOLKATA DA TED 09.12.2019, WHEREBY HE CONFIRMED THE ADDITION OF RS.19,14,400/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROFIT ALLEGEDLY EA RNED BY THE ASSESSEE ON UNACCOUNTED SALES. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO FILED HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 31.03.2013 DECLARING TOTAL INCOME OF RS.2,34,620/-. THE SAID R ETURN WAS INITIALLY PROCESSED BY THE ASSESSING OFFICER UNDER SECTION 14 3(1) OF THE INCOME TAX ACT, 1961 ON 11.02.2014. THEREAFTER HE RECEIVED INFORMATION ABOUT THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH BA NK OF INDIA, SALKIA BRANCH, HOWRAH, WHEREIN HUGE TRANSACTIONS WERE REFL ECTED. ON THE BASIS ITA NO. 190/KOL/2020 ASS ESSMENT YEAR: 2012-2013 SARASWATI GUPTA 2 OF THE SAID INFORMATION, THE ASSESSING OFFICER REOP ENED THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION AND ISSUED A NOTIC E UNDER SECTION 148 TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSEE WAS CALLED UPON BY THE ASSESSING OFFICER TO EXPLAIN THE NATURE AND SOURCE OF TOTAL CREDITS/DEPOSITS FOUND TO BE MADE IN HER B ANK ACCOUNT WITH BANK OF INDIA, SALKIA BRANCH, HOWRAH AGGREGATING TO RS.2 ,39,30,000/-. IN REPLY, IT WAS EXPLAINED BY THE ASSESSEE THAT THE SAID CRED ITS/DEPOSITS REPRESENTED SALE PROCEEDS OF HER TRADING BUSINESS. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT PROFIT CALCULATED @ 2% IN RESP ECT OF THE SAID SALE COULD BE TREATED AS HER INCOME FROM THE TRANSACTION S REFLECTED IN THE BANK ACCOUNT WITH BANK OF INDIA, SALKIA BRANCH, HOW RAH SINCE THE PROFIT DECLARED BY HER FROM THE TRADING BUSINESS FOR THE Y EAR UNDER CONSIDERATION AS WELL AS FOR THE EARLIER YEARS WAS AROUND 2%. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND FULLY ACC EPTABLE BY THE ASSESSING OFFICER. HE TREATED THE PEAK CREDIT APPEA RING IN THE BANK ACCOUNT OF THE ASSESSEE CALCULATED ON INCREMENTAL B ASIS AT RS.25,30,000/- AS THE UNEXPLAINED CASH CREDIT AND AN ADDITION TO T HAT EXTENT WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTI ON 68. HE ALSO MADE A FURTHER ADDITION OF RS.19,14,400/- TO THE TOTAL INC OME OF THE ASSESSEE ON ACCOUNT OF PROFIT @ 8% ON THE UNACCOUNTED TURNOVER OF RS.2,39,30,000/- AS REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE WI TH BANK OF INDIA, SALKIA BRANCH, HOWRAH. ACCORDINGLY A TOTAL ADDITION OF RS. 44,44,400/- WAS MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3)/147 OF TH E ACT VIDE AN ORDER DATED 20.12.2018. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3)/147 OF THE ACT, AN APPEAL WAS PREFERRED BY T HE ASSESSEE BEFORE THE LD. CIT(APPEALS). AFTER CONSIDERING THE SUBMISS IONS MADE ON BEHALF OF THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON R ECORD, THE LD. CIT(APPEALS) FOUND MERIT IN THE CONTENTION RAISED O N BEHALF OF THE ASSESSEE THAT THE PEAK CREDIT IN THE BANK ACCOUNT O F THE ASSESSEE AS ITA NO. 190/KOL/2020 ASS ESSMENT YEAR: 2012-2013 SARASWATI GUPTA 3 WORKED OUT BY THE ASSESSING OFFICER ON INCREMENTAL BASIS AT RS.25,30,000/- COULD NOT BE ADDED UNDER SECTION 68 AS THE BANK ACCOUNT OF THE ASSESSEE WITH BANK OF INDIA, SALKIA BRANCH, HOWRAH DID NOT CONSTITUTE BOOKS OF ACCOUNT OF THE ASSESSEE. TO ARR IVE AT THIS CONCLUSION, HE RELIED ON THE VARIOUS JUDICIAL PRONOUNCEMENTS AS DISCUSSED IN HIS IMPUGNED ORDER. HE ACCORDINGLY DELETED THE ADDITION OF RS.25,30,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INCREME NTAL PEAK CREDIT IN THE BANK ACCOUNT OF THE ASSESSEE BY INVOKING THE PR OVISIONS OF SECTION 68. HE, HOWEVER, CONFIRMED THE ADDITION OF RS.19,14,400 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROFIT FROM THE UNA CCOUNTED PROFIT @ 8% ALLEGEDLY EARNED BY THE ASSESSEE FROM THE UNACCOUNT ED SALE OF RS.2,39,30,000/- OBSERVING THAT EVEN THOUGH THE PRO FIT OF 2% WAS DECLARED BY THE ASSESSEE IN RESPECT OF DISCLOSED SA LES, NO EVIDENCE COULD BE PROVIDED BY THE ASSESSEE TO SHOW THAT THE PROFIT ON UNDISCLOSED SALES WAS THE SAME AS DECLARED IN RESPECT OF SALES RECORD ED IN THE BOOKS OF ACCOUNT. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPE ALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE PROFIT FROM THE DISCLOSED SALES A S DECLARED/RECORDED BY THE ASSESSEE IN HER BOOKS OF ACCOUNT FOR THE YEAR U NDER CONSIDERATION AS WELL AS FOR THE IMMEDIATELY PRECEDING YEARS BEING A ROUND 2%, THE PRESUMPTION COULD JUSTIFIABLY BE DRAWN THAT THE PRO FIT EARNED BY THE ASSESSEE FROM THE UNACCOUNTED SALES SHOULD BE AROUN D 2%, ESPECIALLY WHEN THERE WAS NOTHING BROUGHT ON RECORD BY THE ASS ESSING OFFICER THAT THE PROFIT ACTUALLY EARNED BY THE ASSESSEE FROM THE UNDISCLOSED SALES WAS ABNORMALLY HIGHER THAN THE PROFIT DECLARED BY THE A SSESSEE IN RESPECT OF DISCLOSED SALES. THE LD. D.R., ON THE OTHER HAND, H AS SUBMITTED THAT SINCE THE HUGE AMOUNT OF SALES AS REFLECTED IN THE BANK A CCOUNT OF THE ASSESSEE WITH BANK OF INDIA, SALKIA BRANCH, HOWRAH WAS NOT D ECLARED BY THE ASSESSEE AND THE SAME WAS ALSO NOT RECORDED IN THE BOOKS OF ACCOUNT, THE ITA NO. 190/KOL/2020 ASS ESSMENT YEAR: 2012-2013 SARASWATI GUPTA 4 ACTUAL PROFIT EARNED BY THE ASSESSEE FROM SUCH UNAC COUNTED SALES WAS UNVERIFIABLE AND THERE BEING NO EVIDENCE PRODUCED B Y THE ASSESSEE TO SHOW THAT ANY EXPENDITURE OTHER THAN PURCHASES WAS ACTUALLY INCURRED BY THE ASSESSEE FOR MAKING SUCH UNACCOUNTED SALES SEPA RATELY, THE APPLICATION OF HIGHER PROFIT RATE TO ESTIMATE THE I NCOME OF THE ASSESSEE FROM THE UNACCOUNTED SALES IS FULLY JUSTIFIED. KEEP ING IN VIEW THE SUBMISSIONS MADE BY THE LD. REPRESENTATIVES OF BOTH THE SIDES AND HAVING REGARD TO THE FACTS OF THE CASE, I AM OF THE VIEW T HAT IT WOULD BE FAIR AND REASONABLE TO APPLY A PROFIT RATE OF 4% TO ESTIMATE THE INCOME OF THE ASSESSEE FROM THE UNACCOUNTED SALES OF RS.2,39,30,0 00/-. I ACCORDINGLY MODIFY THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) O N THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITI ON ON THIS ISSUE BY APPLYING A PROFIT RATE OF 4% TO THE UNDISCLOSED SAL ES OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 06, 2020 . SD/- (P.M. JAGTAP) VICE-PRESIDENT) KOLKATA, THE 6 TH DAY OF JULY, 2020 COPIES TO : (1) MRS. SARASWATI GUPTA, RADHA KUNJ, 4D, DHARAMTALA ROAD, SALKIA, HOWRAH-711106 (2) INCOME TAX OFFICER, WARD-47(1), KOLKATA, 3, GOVERNMENT PLACE (WEST), KOLKATA-700001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-14, K OLKATA; (4) COMMISSIONER OF INCOME TAX- , KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.