The Income Tax Officer, Jammu V. Sh. Sudershan Kumar Sharma, Jammu

ITA 194/ASR/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3264 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 20-04-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-04-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 08-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PARVEEN JAIN
• Keywords: Unexplained cash credit; Business income; Depreciation
• 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. 194/ASR/2016 ASSES SMENT YEAR: 2011-12 INCOME TAX OFFICER, WARD-2(3), AAYKAR BHAWAN, PANAMA CHOWK, JAMMU VS. SUDERSHAN KUMAR SHARMA VIKAS LANE, TALAB TILLO, JAMMU [PAN: AHCPS 0059E] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. CHARAN DASS (SR. D.R.) RESPONDENT BY: SH. PARVEEN JAIN (ADV.) DATE OF HEARING: 16.04.2019 DATE OF PRONOUNCEMENT: 30.05.2019 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS), JAMMU (CIT(A ) FOR SHORT) DATED 23.12.2015, ALLOWING THE ASSESSEES APPEAL CONTESTI NG HIS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) DA TED 27.03.2014 FOR ASSESSMENT YEAR (AY) 2011-12. 2. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE-INDIVIDUAL, A TRANSPORTER, FILED HIS RETURN OF INCOME FOR THE YEAR ON 06.6.201 1 DECLARING AN INCOME OF RS.5,03,420/-, I.E., PRIOR TO THE CLAIM OF DEDUCTIO N UNDER CHAPTER VI-A AT RS.78,900/-. IN THE COURSE OF THE ASSESSMENT PROCEE DINGS, THE ASSESSEE WAS QUESTIONED IN RESPECT OF HIS SAVINGS BANK ACCOUNT W ITH JAMMU & KASHMIR BANK ITA NO. 194/ASR/2016 (AY 2011-12) ITO V. SUDERSHAN KUMAR SHARMA 2 LTD. (NEW UNIVERSITY CAMPUS, JAMMU BRANCH) (HEREINA FTER ACCOUNT #1), NOT DISCLOSED IN HIS REGULAR ACCOUNTS, AND IN WHICH THE RE WERE CASH DEPOSITS OF RS.10,54,150/- (INCLUDING RS.96000/-, STATED TO BE ON ACCOUNT OF TWO EXCESS LOAN INSTALLMENT WHATEVER THAT MAY MEAN) DURING THE YE AR. THE ASSESSEE COULD NOT FURNISH ANY SATISFACTORY ANSWER, AND NEITHER COULD HE EXPLAIN THE CASH DEPOSITS IN HIS DISCLOSED BANK ACCOUNT WITH J&K BANK (SHALIMAR ROAD, JAMMU BRANCH) (ACCOUNT #2) AT RS.92,63,133/- FOR THE YEAR; THE GR OSS RECEIPT PER HIS FINAL ACCOUNTS BEING ONLY AT RS.28,49,360/-. THE ASSESSING OFFICER (AO), ACCORDINGLY, BROUGHT THESE DIFFERENCES TO TAX AS UNEXPLAINED CREDITS, AN D THE ASSESSED THE INCOME AT RS.77,96,440 INCOME, AS UNDER: (A) INCOME RETURNED : RS. 4,24,520/- (5,03,4 20 78,900) (B) UNEXPLAINED CASH CREDITS IN A/C 1 : RS. 9,58 ,150/- (RS.10,54,150 RS.96,000) (C) UNEXPLAINED CASH CREDIT IN A/C 2 : RS.64,13, 773/- (RS.92,63,133 RS.28,49,360) IN APPEAL, THE LD. CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAVING NO OTHER SOURCE OF INCOME, THE UNDISCLOSED RECEIPTS OUGHT TO BE REG ARDED, AS CONTENDED, AS THE BUSINESS RECEIPTS OF HIS TRANSPORT BUSINESS, AND WH ICH MAY BE ASSESSED AT, AGAIN, AS CONTENDED, EIGHT PER CENT. (8%) THEREOF, EVEN AS HE LD BY THE TRIBUNAL IN SARWAN KUMAR SHARMA V. ITO (IN ITA NO. 2302/AHD/2011). 3. BEFORE US, IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE, SH. JAIN, RELYING CIT V. PRESIDENT INDUSTRIES [2002] 258 ITR 654 (GUJ) AND CIT V. BALCHAND AJIT KUMAR [2003] 263 ITR 610 (MP) THAT THE ENTIRE RECEIPT CO ULD NOT BE REGARDED AS UNDISCLOSED INCOME, AND THAT IT IS ONLY THE PROFIT EMBEDDED IN THE SALE RECEIPT WHICH COULD BE REGARDED AS INCOME AND SUBJECT TO TA X, AND TOWARD WHICH THE FIRST ITA NO. 194/ASR/2016 (AY 2011-12) ITO V. SUDERSHAN KUMAR SHARMA 3 APPELLATE AUTHORITY HAD MADE A REASONABLE ESTIMATE AT 8%. THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE (SR. DR) WOULD, ON THE OTHER HAND, PLACE RELIANCE ON THE DECISION IN PR. CIT V. KHUSHIRAM & SONS FOODS PVT. LTD. [2016]-TIOL-1594- SC-P&H-IT TO ADVANCE THE PROPOSITION THAT MERELY BE CAUSE THE ASSESSEE CARRIES ON SOME BUSINESS, IT DOES NOT FOLLOW THAT THE INCOME O FFERED (TO TAX) IS HIS BUSINESS INCOME. INCOME CANNOT BE ASSESSED UNDER A PARTICULA R HEAD UNLESS THE ASSESSEE FURNISHES EVIDENCE IN ITS RESPECT. SH. JAIN, ON BEING QUESTIONED BY THE BENCH AS TO I F HE COULD EXPLAIN THE DEBITS AND THE CREDITS IN THE TWO BANK ACCOUNTS, WO ULD ANSWER IN THE AFFIRMATIVE, FURNISHING A COPY OF THE TWO BANK ACCOUNTS (AT PB P GS. 6-23) AS WELL AS THE CALCULATION CHART WORKING THE ADDITIONAL INCOME (I. E., APART FROM THAT RETURNED) AT RS.7.10 LACS, I.E., AS AGAINST RS.5.90 LACS (AT THE RATE OF 8% OF RS.73.72 LACS) IN TERMS OF THE IMPUGNED ORDER (PB PG. 24). THE SAME, HE WOULD URGE, CORRECTLY WORKS OUT THE INCOME ASSESSABLE AT THE STATED RATE OF 8%. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE PRINCIPAL ISSUE THAT ARISES IN THE INSTANT CAS E, AS APPARENT, IS THE CORRECT HEAD OF INCOME UNDER WHICH THE ASSESSEES RECEIPT BY WAY OF CASH OR BANK TRANSFER, IN HIS TWO BANK ACCOUNTS, TO THE EXTENT U NACCOUNTED (IN HIS REGULAR ACCOUNTS), OUGHT TO BE ASSESSED. THE SECONDARY QUES TION IS AS REGARDS THE QUANTUM OF INCOME ASSESSABLE, I.E., QUA THE SAID RECEIPT. THE FIRST QUESTION THAT ARISES QUA THE FIRST ISSUE IS AS TO WHETHER THE ASSESSEE HAS DISCHARGED THE ONUS ON IT TO SATISFACTORILY EXP LAIN THE NATURE AND SOURCE OF THE DEPOSITS IN HIS TWO BANK ACCOUNTS, I.E., TO THE EXT ENT NOT FORMING PART OF HIS REGULAR ACCOUNTS. CLEARLY, THE ISSUE OF THE NATURE OF THE R ECEIPT AND, THUS, THE CORRECT HEAD/S OF INCOME UNDER WHICH THE SAME IS ASSESSABLE, ARE I NEXTRICABLY RELATED THERETO, I.E., ASSESSEES EXPLANATION AS WELL AS THE ACCEPTABILITY THEREOF. THE FACTS OF HIS CASE ITA NO. 194/ASR/2016 (AY 2011-12) ITO V. SUDERSHAN KUMAR SHARMA 4 BEING IN HIS KNOWLEDGE, THE BURDEN CANNOT BE TRANSF ERRED TO THE AO, AS DOES THE LD. CIT(A). THE APEX COURT HAS PER ITS DECISIONS, AS I N CIT V. DEVI PRASAD VISHVANATH PRASAD [1969] 72 ITR 194 (SC) AND ROSHAN DI HATTI V. CIT [1977] 107 ITR 938 (SC) ABUNDANTLY CLARIFIED THAT WHERE TH ERE IS AN UNEXPLAINED CREDIT, IT IS OPEN TO THE INCOME-TAX OFFICER TO HOLD THAT IT I S THE INCOME OF THE ASSESSEE, AND NO FURTHER BURDEN LIES ON HIM TO SHOW THAT THE INCO ME IS FROM ANY PARTICULAR SOURCE. IT IS FOR THE ASSESSEE TO PROVE THAT, EVEN IF THE CASH CREDIT REPRESENTS INCOME, IT IS FROM THE SOURCE WHICH HAS ALREADY BEE N TAXED. THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN KHUSHIRAM & SONS FOODS PVT. LTD . (SUPRA) IS IN TANDEM WITH THE SAID DECISIONS, SUPPORTING THE R EVENUES CASE. THE DECISIONS RELIED UPON BY THE ASSESSEE DO NOT DETRACT THEREFRO M OR SUPPORT THE ASSESSEES CASE IN-AS-MUCH AS THEY ARE PREMISED ON THE FACT THAT TH E SALES CANNOT BE REGARDED AS INCOME, AND WHICH IS ONLY AXIOMATIC. WHETHER, HOWEV ER, THE SAME, IN FACT, REPRESENT SALES, IS THE QUESTION A MATTER OF FACT , THE ONUS TO SHOW WHICH IS ON THE ASSESSEE. COMING TO THE ASSESSEES EXPLANATION; THE MATTER B EING PRINCIPALLY FACTUAL, THERE IS NO DEFINITE EXPLANATION. VIDE LETTER DATED 10.3.2014 (REFER PARA 5 OF THE ASSESSMENT ORDER), HE AGREES TO BEING ASSESSED AT T HE PEAK AMOUNT (IN THE BANK ACCOUNT), WHICH IS NOT ACCEPTED BY THE AO AS THERE WAS NOTHING TO EXHIBIT THE ROTATION OF THE FUNDS; THE ASSESSEE NOT DEALING IN ANY GOODS, WHICH COULD BE REGARDED AS BEING BOUGHT AND SOLD, BUT IN PLYING VE HICLES, RECEIVING HIRE CHARGES. IN ANSWER TO QUESTION (Q.) 13 (OF THE STATEMENT U/S . 131(1)(D) DATED 18.3.2014), THE ASSESSEE STATES THE RECEIPTS TO BE A PART OF HIS TR ANSPORT BUSINESS. HOWEVER, IN ANSWER Q. 14, WHEN ASKED TO EXPLAIN THE DIFFERENCE IN THE DISCLOSED GROSS RECEIPT (AMOUNTING TO RS.86,86,650), AND, AGAIN, AT Q.19, H E EXPRESSES HIS INABILITY TO EXPLAIN THE SAID DIFFERENCES. ITA NO. 194/ASR/2016 (AY 2011-12) ITO V. SUDERSHAN KUMAR SHARMA 5 BE THAT AS IT MAY, THE ASSESSEE HAS STATED THE UNA CCOUNTED CREDITS TO BE THE RECEIPTS OF HIS TRANSPORT BUSINESS, WITH THE WITHDR AWALS THERE-FROM BEING TOWARD VARIOUS OUTGOINGS ON CAPITAL (VIZ. PAYMENT OF MAR GIN MONEY OR LOAN INSTALLMENT) OR REVENUE ACCOUNT, BESIDES PERSONAL INVESTMENT, WI THDRAWALS, ETC. AS IT APPEARS, IN ANSWERS TO QS. 14 AND 19, THE ASSESSEE HAS EXPRESSE D HIS INABILITY TO RECONCILE THESE DIFFERENCES, BEING ADMITTEDLY NOT ACCOUNTED FOR. TH E ASSESSEE ADMITTEDLY HAS A FLEET OF BUSES, WITH ROUTE PERMITS, ASKED FOR BY THE AO, AND WHICH WERE TO BE PRODUCED ON 19/3/2014 (IN ANSWER OF Q. 17). AS SUCH, IN OUR CLEAR VIEW, IN THE ABSENCE OF ANYTHING TO THE CONTRARY, THERE IS NO REASON THAT T HE ASSESSEES EXPLANATION BE NOT ACCEPTED AND THE RECEIPTS REGARDED AS OF HIS BUSINE SS. WE ARE, THUS, IN PRINCIPLE, IN AGREEMENT WITH THE IMPUGNED ORDER IN THIS REGARD. THERE IS, HOWEVER, NO BASIS FOR THE ESTIMATION OF T HE INCOME AT 8%, CONTRADICTED IN FACT BY THE ASSESSEES OWN OPERATIN G STATEMENT (PB PG. 4) WHICH DISCLOSES A PROFIT OF RS.2.40 LACS AGAINST THE RECE IPT 28.49 LACS EVEN AS THE SAME PROVIDES FOR DEPRECIATION ON ALL THE VEHICLES, EVEN AS, ADMITTEDLY, REPRESENTS ONLY A FRACTION OF THE GROSS REVENUE RECEIPT OF THE (TRANS PORT) BUSINESS. WHY, THE CALCULATION SHEET BY THE ASSESSEE ITSELF WORKS TO A HIGHER AMOUNT (PB PG. 24). HERE IT NEEDS TO BE CLARIFIED THAT THE ASSSESSEE ADMITTE DLY HAVING AND RUNNING ONLY ONE BUSINESS, COULD NOT POSSIBLY BE ASSESSED AT TWO DIF FERENT PROFIT RATES IN ITS RESPECT, I.E., ONE FOR THE DISCLOSED, AND THE OTHER FOR THE UNDISCLOSED, RECEIPTS, BOTH BEING OF, AND FORMING PART OF, THE SAME, INTEGRAL, ONE BUSINE SS. NOT APPRECIATING AND FACTORING THIS WHILE QUANTIFYING THE INCOME IS THE PRINCIPAL FLAW IN THE IMPUGNED ORDER, WITH WHICH WE ARE OTHERWISE IN AGREEMENT. TH E VERY FACT THAT THE ASSESSEE HAS CLAIMED SOME EXPENDITURE, VIZ. DEPRECIATION, BA NK INTEREST, INSURANCE, ETC., IN RESPECT OF ALL THE ASSETS, WHILE DISCLOSING ONLY A FRACTION OF THE TOTAL RECEIPT OF HIS BUSINESS, EXHIBITS, IF ONE WAS NECESSARY, THAT THE DISCLOSED PROFIT DOES NOT REFLECT THE INCOME OF HIS BUSINESS CORRECTLY, IN WHICH CASE THE DISCLOSED PROFIT RATE COULD ITA NO. 194/ASR/2016 (AY 2011-12) ITO V. SUDERSHAN KUMAR SHARMA 6 BE APPLIED TO THE TOTAL RECEIPT. NEEDLESS TO ADD, THE BUSINESS INCOME HAS TO BE ASSESSED AT A SINGLE SUM FOR THE SAID BUSINESS, AND TOWARD WHICH ESTIMATION, THE ASSESSEE ONLY WHO IS IN THE KNOW OF HIS AFFAIRS, SHALL EXTEND FULL COOPERATION TO THE AO. THE MATTER, ACCORDINGLY, TOWARD THIS ASPECT, I.E., QUANTIFICATION OF THE INCOME QUA THE UNDISCLOSED RECEIPT IN THE TWO BANK ACCOUNTS, FORMING PART OF THE ASSESSEES CASH FLOW FOR THE RELEVANT YEAR, IS REST ORED TO THE FILE OF THE AO, WHO SHALL DECIDE THE SAME ADDRESSING THE VARIOUS DIFFER ENCES BORNE OUT BY THE RECORD, TO SOME OF WHICH WE MAY REFER, AND IN TERMS OF OUR FOL LOWING OBSERVATIONS: (A) THE INCOME FROM THE PARTNERSHIP BUSINESS WOULD BE IN TERMS OF HIS RETURN AND THAT ASSESSED, OF COURSE SUBJECT TO ANY CHANGES IN THE INCOME OF THE PARTNERSHIP AS ASSESSED; (B) THE ENTIRE RECEIPT IN THE TWO BANK ACCOUNTS, NU MBERED 1 & 2, STATED TO BE AT RS.92,63,133 AND RS.22,72,877, I.E., IRRESPECTIVE O F WHETHER IT IS BY WAY OF CASH OR BANK TRANSFER, BE CATEGORIZED EITHER AS A CAPITAL O R A REVENUE RECEIPT; (C) THE WITHDRAWALS IN THESE TWO ACCOUNTS SHALL, SI MILARLY, BE CATEGORIZED AS FOLLOWS: - REVENUE EXPENSES (OF THE BUSINESS); - CAPITAL EXPENSES (OF THE BUSINESS); - PERSONAL INVESTMENTS; - PERSONAL WITHDRAWALS, AS TOWARD HOUSEHOLD, RENT, ETC. (D) ALLOWANCE OF DEPRECIATION ON FIXED ASSETS TO BE ON ALL THE VEHICLES, IN ACCORDANCE WITH LAW, I.E., SUBJECT TO THE ASSESSEE EXHIBITING THE USER (BY WAY OF PERMIT) FOR THAT ACQUIRED DURING THE YEAR; (E) ASSESSMENT OF INCOME BY WAY OF COMMISSION, CRED ITED DIRECTLY TO THE CAPITAL ACCOUNT, AT THE SUM RETURNED, WHICH APPEARS TO BE A SSESSED AS SUCH, AND UNDER THE HEAD OF INCOME IT IS; THE SAME HAVING A DIRECT BEAR ING ON THE ASSESSEES CASH FLOW, AND BANK INTEREST (CREDITED IN THE BANK ACCOUNTS) A S INCOME FROM OTHER SOURCES. OF COURSE, THE DEDUCTION U/C. VI-A, IF ANY, WHERE EXIG IBLE, IS TO BE ALLOWED. ITA NO. 194/ASR/2016 (AY 2011-12) ITO V. SUDERSHAN KUMAR SHARMA 7 BEFORE PARTING, IT MAY BE ADDED THAT THE AO SHALL ADOPT A REALISTIC APPROACH IN THE MATTER, AS IT MAY BE THAT THE ASSESSEE DOES NOT HAVE OR HAS NOT RETAINED THE VOUCHERS FOR ALL THE EXPENSES, NOTABLY DIESEL EXPEN SES, CLAIMED AT RS.4.28 LACS ON A RECEIPT OF RS.28.49 LACS, IN WHICH CASE THE ASSESSE E SHALL CLARIFY A REASONABLE BASIS FOR THE SAME. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 30, 2019 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 30.05.2019 /GP/SR/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: INCOME TAX OFFICER, WARD-2(3 ), AAYKAR BHAWAN, PANAMA CHOWK, JAMMU (2) THE RESPONDENT: SUDERSHAN KUMAR SHARMA, VIK AS LANE, TALAB TILLO, JAMMU (3) THE CIT(APPEALS), JAMMU (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER