Smt. Samra Raju Kaur, Amritsar. V. The Income Tax Officer, Amritsar.

ITA 193/ASR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5760 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-01-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 13-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Keywords: Business income; Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 193(ASR)/2017 AS SESSMENT YEAR: 2009-10 PAN: ALZPK5616L SMT. SAMRA RAJU KAUR, UJAGAR NAGAR, PO-SULTANWIND AMRITSAR. VS. INCOME TAX OFFICER WARD 5(3), AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ASHWANI KALIA ( C.A) RESPONDENT BY: SH. BHAWANI SHANKAR (D.R.) DATE OF HEARING: 15.01.2018 DATE OF PRONOUNCEMENT: 31.01.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AMRITSAR ('CIT(A)' FOR S HORT) DATED 03.01.2017, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING HER ASSES SMENT U/S. 143(3) OF THE INCOME TAX ACT ('THE ACT' HEREINAFTER) DATED 30.12.2011 FO R THE ASSESSMENT YEAR (AY) 2009-10. 2. THE APPEAL RAISES A SINGLE ISSUE, I.E., THE SUST AINABILITY IN LAW, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, OF AN ADDITION IN THE SU M OF RS.4,66,610/- SUSTAINED BY THE LD. CIT(A) OUT OF A TOTAL ADDITION OF RS.14,45, 800/- EFFECTED BY THE ASSESSING ITA NO.193 (ASR)/2017(AY 2009-10) SAMRA RAJU KAUR V. ITO 2 OFFICER (AO) ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT S IN THE ASSESSEES BANK ACCOUNT WITH ICICI BANK (HALL BAZAR, AMRITSAR). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E DURING THE COURSE OF ASSESSMENT PROCEEDINGS FURNISHED THE FOLLOWING CASH FLOW STATEMENT: AMOUNT (RS.) OPENING BALANCE AS ON 31.03.2008 8, 45,379 ADD: INCOME EARNED DURING THE YEAR 2,56,000 ADD: CASH WITHDRAWALS FROM SAVING A/C DURING THE YE AR 26,83,190 ADD: CASH TRANSFER FROM S/A 36141 2,35,000 LESS: H/H WITHDRAWALS DURING THE YEAR 2,00,000 LESS: AMOUNT INVESTED FOR PURCHASE OF AGRICULTURAL LAND 19,95,000 21,95,000 BALANCE ACCOUNT 18,24,569 LESS: CASH DEPOSITED IN ICICI BANK DURING THE YEAR 14,45,800 BALANCE CASH IN HAND (AS ON 31.03.2009) 3,78,369 THE AO, HOWEVER, DID NOT FIND IT ACCEPTABLE AS THE ASSESSEE WAS UNABLE TO SUPPORT HER CLAIM OF BEING ENGAGED IN CATERING BUSINESS, I. E., BY WAY OF RUNNING A PAYING GUEST HOUSE. HE, ACCORDINGLY, TREATED THE ENTIRE DE POSIT OF CASH IN THE ASSESSEES BANK ACCOUNT (WITH ICICI BANK) DURING THE YEAR AS U NEXPLAINED, AND DEEMED THE SAME AS HER UNDISCLOSED INCOME U/S. 69/69A OF THE A CT. IN APPEAL, THE ASSESSEE FOUND FAVOUR THAT THE LD. CIT(A) IN-AS-MUCH AS THE CASH WITHDRAWALS FROM HER BANK ACCOUNT BY THE ASSESSEE COULD FORM THE SOURCE OF CA SH DEPOSITS IN THE SAID ACCOUNT. THE AO HAD NOT DISTURBED THE INCOME RETURNED BY THE ASSESSEE AT RS.1,56,000/-. THE ASSESSEE, HOWEVER, HAD NOT EXPLAINED THE BASIS OF THE OPENING CASH BALANCE OF ITA NO.193 (ASR)/2017(AY 2009-10) SAMRA RAJU KAUR V. ITO 3 RS.8.45 LACS (AS ON 01.04.2008), I.E., AS AT THE BE GINNING OF THE YEAR, WHICH THEREFORE WAS TAKEN BY HIM AT NIL, LEADING TO A SHO RTFALL IN THE CASH AS AT THE RELEVANT YEAR-END AT RS.4.67 LACS, AS UNDER, WHICH WAS ACCORDINGLY CONFIRMED: PARTICULARS AMOUNT (RS.) (A) CLOSING CASH BALANCE (AS STATED) 3,78,379 (B) REDUCTION ON ACCOUNT OF OPENING BALANCE (AS ON 01/04/2008) 45,379 (C) SHORT FALL ((B)-(A)) 4,66,610 AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. OUR FIRST OBSERVATION IN THE MATTER IS THAT THE ASS ESSEE HAS NOT LED ANY EVIDENCE EVEN DURING THE FIRST APPELLATE STAGE WITH REGARD TO THE PAYING GUEST HOUSE BUSINESS, WHICH WAS THE PRIME REASON FOR THE ASSESS ING OFFICER IN NOT ACCEPTING THE ASSESSEES CASH FLOW STATEMENT, FILED IN EXPLAN ATION, EVEN AS HE DOES NOT DISTURB THE ASSESSEES INCOME FROM, AS STATED, PAYING GUEST HOUSE BUSINESS, RETURNED ON ESTIMATED BASIS, BEING SANS ANY BOOKS OF ACCOUNT. TWO, THE CASH WITHDRAWALS FR OM THE BANK, MADE ON A REGULAR BASIS, COULD FORM A VAL ID BASIS FOR THE CASH DEPOSITS IN THE BANK ACCOUNT WHERE, FOR EXAMPLE, THERE IS TRADI NG ACTIVITY OR THE EXISTENCE OF THE BUSINESS IS PROVED, SO THAT THE CASH WITHDRAWAL S FOR THE PURCHASE OF GOODS AND/OR MEETING BUSINESS EXPENSES, IS RECOUPED THROU GH THE SALES/BUSINESS RECEIPTS, WHICH ARE THEN DEPOSITED IN THE BANK ACCOUNT. AGAIN , THE CASH IN THE PRESENT CASE, TO THE EXTENT IT IS WITHDRAWN IN MINOR AMOUNTS (RS. 1000/ TO RS. 5000/-), AS FOR F.Y. 2007-08 - THE CASH FLOW STATEMENT FOR WHICH YEAR ST ANDS FURNISHED BEFORE US DURING HEARING (PB PGS. 8-9), COULD OSTENSIBLY ONLY BE FOR HOUSEHOLD PURPOSES. THERE HAS BEEN NO AGGREGATION OF SUCH WITHDRAWALS. FOURTHLY, WE ARE UNABLE TO UNDERSTAND AS TO HOW THE TRANSFER FROM ONE BANK ACCOUNT (S/A 3614 1) TO ANOTHER (ICICI BANK) ITA NO.193 (ASR)/2017(AY 2009-10) SAMRA RAJU KAUR V. ITO 4 COULD FORM PART OF THE CASH FLOW STATEMENT. THE LD. COUNSEL WOULD, ON BEING QUERIED IN THE MATTER, EXPLAIN IT TO REPRESENT THE CASH WITHDRAWALS FROM THE ASSESSEES OTHER BANK ACCOUNT, WHICH HAVE BEEN DEPO SITED IN THE ASSESSEES BANK ACCOUNT WITH ICICI BANK. SURE, CASH WITHDRAWALS FRO M HER ANY BANK ACCOUNT WOULD FORM PART OF THE ASSESSEES CASH FLOW STATEME NT FOR THE YEAR. IT IS, HOWEVER, NOT CLEAR IF THE STATED FIGURE (RS. 2.35 LACS) REPR ESENTS THE NET CASH WITHDRAWALS IN- AS-MUCH AS THERE COULD BE DEPOSITS IN THE SAID BANK ACCOUNT AS WELL. WHY, WE WONDER, THE ASSESSEE DID NOT FURNISH A CASH FLOW ST ATEMENT (CFS) TAKING INTO ACCOUNT BOTH (RATHER, ALL) HER BANK ACCOUNTS ? WE, IN ANY CASE, OBSERVE NO FINDING BY ANY AUTHORITY QUA THIS SUM WHICH, IN-SO-FAR AS IT FORMS PART OF THE CFS, IS A PART OF THE ASSESSEES EXPLANATION FOR THE CASH DEPOSITE D IN HER BANK ACCOUNT, AND WHICH WOULD THEREFORE REQUIRE BEING VERIFIED BY THE AO . HE WOULD ALSO FAIRLY CONCEDE TO AN ERROR IN THE CASH FLOW STATEMENT FOR THE YEAR (R EFER PARA 3) IN-AS-MUCH AS IT STATES THE INCOME FOR THE YEAR AT RS.2.56 LACS, I.E., AS A GAINST THE CORRECT FIGURE OF RS.1.56 LACS. THIS, AGAIN, ENDORSES OUR EARLIER OBSERVATION THAT THERE HAS BEEN NO VERIFICATION OF THE CFS WHICH IS THE ASSESSEES E XPLANATION FOR THE CASH DEPOSITED IN HER BANK ACCOUNT, BY EITHER THE ASSESSING OR THE FIRST APPELLATE AUTHORITY. THE ASSESSEE BEFORE US SOUGHT TO JUSTIFY THE OPENIN G CASH-IN-HAND BY FURNISHING A CASH FLOW STATEMENT FOR THE IMMEDIATEL Y PRECEDING YEAR (I.E., F.Y. 2007-08), AS UNDER, DRAWN, AS STATED, ON THE BASIS OF THE BANK ACCOUNT FOR THE RELEVANT PERIOD (ALSO ENCLOSING A COPY OF THE SAID ACCOUNT, AT PB PAGES 3-7), WITH THE FIGURES THEREIN EMANATING FROM THE ASSESSMENT R ECORD FOR THAT YEAR (AY 2008- 09), TOWARD WHICH THE LD. COUNSEL WOULD ADVERT OUR ATTENTION TO THE COPY OF THE ORDER BY THE FIRST APPELLATE AUTHORITY (IN ITA NO. 194/2010-11, DATED 29.03.2016/PB PAGES 11-20), STATING IT (ASSESSMENT) TO HAVE ATTAINED FINALITY: (PB PG. 10) ITA NO.193 (ASR)/2017(AY 2009-10) SAMRA RAJU KAUR V. ITO 5 SUMMARY OF CASH FLOW STATEMENT FOR THE YEAR ENDING 31/03/2008 OPENING CASH IN HAND 160000 DEPOSITS IN BANK 3346000 DURING THE YEAR WITHDRAWAL FROM BANK 1277000 AMOUNT SPENT ON CONSTRUCTION 1000000 DURING THE YEAR OF H OUSE SALE OF AGRICULTURE LAND 3615000 HOUSE HOLD EXPENSES 120000 INCOME FOR THE YEAR 141298 CASH IN HAND (CLOSING) 727298 5193298 5193298 ON BEING QUERIED THAT THE SAME REFLECTED A CLOSING BALANCE OF RS.7.27 LACS, AS AGAINST RS.8.45 LACS STATED EARLIER, HE WOULD SUBMI T THAT THE LATTER FIGURE MAY BE TAKEN AS SUBSTITUTED BY THE FORMER, AS THE BASIS FO R THE FORMERLY STATED FIGURE (RS. 8.45 LACS) IS NOT KNOWN. THE FIGURE OF THE OPENING CASH-IN-HAND (RS.1.60 LACS) WAS ADMITTED BY HIM AS UNSUBSTANTIATED, SO THAT IT COUL D BE REVISED TO A FIGURE DEEMED REASONABLE BY THE BENCH, FURTHER STATING THAT THESE ADJUSTMENTS WOULD THOUGH NOT ADVERSELY IMPACT THE ASSESSEE IN-AS-MUCH AS THE SHO RTFALL - WHICH IS THE REASON FOR THE ADDITION TO THE EXTENT CONFIRMED, STANDS NEUTRA LIZED, AND WOULD ONLY GO TO REDUCE THE CLOSING BALANCE OF THE CASH-IN-HAND AS O N 31.03.2009, ARRIVED AT RS.3.78 LACS. 5. WE, IN VIEW OF THE FOREGOING, ACCORDINGLY, HOLD AS UNDER: (A) THE AO SHALL VET THE CASH FLOW STATEMENT (SUMMA RIZED AT PB PAGE 10) FOR F.Y. 2007-08 FOR THE VERACITY OF THE VARIOUS FIGURES (W ITH REFERENCE TO THE RECORDS, VIZ- BANK STATEMENT, ASSESSED INCOME), AS WELL AS ITS CA LCULATION. NEEDLESS TO ALL, THE CFS SHALL BE FOR ALL THE BANK ACCOUNTS OF THE ASSES SEE; (B) THE OPENING CASH BALANCE AS ON 01.04.2007 SHALL , INSTEAD OF AN ARBITRARY FIGURE OF RS. 1.60 LACS, BE ADOPTED AT 1/3 OF THE B USINESS INCOME FOR THE IMMEDIATELY PRECEDING YEAR (AY 2007-08) AS RETURNED OR, AS THE CASE MAY BE, ASSESSED. THE HOUSEHOLD EXPENSES FOR F.Y. 2007-08, IN LINE WITH THAT FOR THE CURRENT YEAR, BE TAKEN AT RS. 1,80,000/-, AS FAIRLY AGREED TO BY THE LD. COUNSEL DURING HEARING; ITA NO.193 (ASR)/2017(AY 2009-10) SAMRA RAJU KAUR V. ITO 6 (C) THE CLOSING CASH BALANCE FOR A.Y. 2008-09, I.E. , AS ON 31.03.2008, SO ARRIVED AT, SHALL BE THE OPENING CASH BALANCE FOR THE CURRE NT YEAR; (D) THE A.O. SHALL VERIFY THE CFS FOR THE CURRENT Y EAR, PREPARED, SIMILARLY, AGGREGATING ALL THE BANK ACCOUNTS OF THE ASSESSEE, ADOPTING THE CORRECT FIGURES; (E) THE CASH FLOW STATEMENT FOR THE CURRENT YEAR (A Y 2009-10) BE REDRAWN ACCORDINGLY; AND (F) THE SHORTFALL IN CASH AS AT THE YEAR-END (31.03 .2009), IF ANY, WOULD STAND TO BE CONFIRMED, INSTEAD OF RS.4.67 LACS, AND THE CASH BALANCE AS ON 01/04/2009 BE TAKEN AT NIL. WHERE POSITIVE, THE ENTIRE ADDITION W OULD STAND DELETED, AND THE CASH BALANCE ARRIVED AT SHALL BE THE CASH AVAILABLE WITH THE ASSESSEE AS ON 01.04.2009. 6. IN THE RESULT, THE ASSESSEES APPEAL IS DISPOSED OF IN THE TERMS AFORE-STATED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 .01.2018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 31.01.2018 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: SAMRA RAJU KAUR (2) THE ITO, WARD 5(3), AMRITSAR (3) THE CIT(A)-2, AMRITSAR (4) THE PR. CIT-II, AMRITSAR. (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER