The Income-tax Officer, Amritsar. V. Sh. Nagendra Prashad, Amritsar.

ITA 200/ASR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85889 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Peak credit
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.200(ASR)/2014 ASSESSMENT YEAR:2009-10 PAN :AEGPP0790Q INCOME TAX OFFICER, VS. SH. NAGENDRA PRASHAD PROP. WARD 3(3), AMRITSAR. M/S.A.B.C. TRADING COMPANY, 7-A, SHOPPING CENTRE, EAST MOHAN NAGAR, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. TARUNDEEP KAUR, DR RESPONDENT BY:SH.P.N.ARORA, ADVOCATE DATE OF HEARING:19/01/2015 DATE OF PRONOUNCEMENT:28/01/2015 ORDER PER B.P. JAIN: THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A), AMRITSAR, DATED 07.02.2014 FOR THE ASSESSMENT YEAR 2009-10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN LAW IN DELETING ADDITION OF RS.17,32,7 50/-( CORRECT FIGURE RS.11,49,520/-) MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN SAVING BANK ACCOUNT. 2. THAT THE LD. CIT(A) HAS NOT APPRECIATED THE FACT S THAT THE ASSESSEE FAILED TO DISCLOSE THE BANK A/C MAINTAINED WITH AXIS BANK IN HIS BOOKS OF A/C AND ALSO FAILED TO EXPLAIN THE PURPOSE ITA NO.200(ASR)/2014 2 OF CASH DEPOSITS MADE ON DIFFERENT DATES FROM CASH WITHDRAWN FROM THE SAME SAVING BANK ACCOUNT ON EARLIER DATES. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY O R MORE GROUND(S) OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E DERIVES INCOME FROM TRADING OF SCREW, NAIL ETC. DUE TO NON-COMPLIANCE O F ASSESSMENT PROCEEDINGS AND NON-FURNISHING OF INFORMATION, NOTICE U/S 133(6 ) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) WAS ISSUED TO THE MANAGE R, AXIS BANK, MUZAFFARPUR TO FURNISH THE BANK STATEMENT OF THE AS SESSEE, WHICH WAS RECEIVED ON 05.12.2011. THE ASSESSEE WAS FOUND TO H AVE CASH DEPOSITS OF RS.15,38,300/- ON DIFFERENT DATES, DETAILS OF WHICH ARE AVAILABLE AT PAGE 2 & 3 OF AOS ORDER. A SHOW CAUSE NOTICE DATED 23.12.20 11 WAS ISSUED TO THE ASSESSEE FOR EXPLAINING THE SOURCE OF SAID DEPOSIT BUT NONE ATTENDED. FURTHER, OPPORTUNITIES WERE GIVEN FROM TIME TO TIME BUT NO O NE ATTENDED. ACCORDINGLY, THE AO TREATED ALL THE CASH DEPOSITS I N THE AXIS BANK AS UNDISCLOSED INCOME OF THE ASSESSEE. 3. BEFORE THE LD. CIT(A), THE LD. COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE ASSESSEE HAS VENTURED THE WORK ON DAY TO DAY BA SIS BETWEEN THE PERIOD 01.04.2008 TO 31.03.2009 AND CASH FLOW STATEMENT WA S ALSO SUBMITTED FOR THE PERIOD FROM 01.04.2008 TO 31.03.2009. THE AO HA S NOT GIVEN ANY SET OFF TO THE CORRESPONDING DEBIT ENTRIES/WITHDRAWALS AS W ELL AS CASH IN HAND AVAILABLE WITH THE ASSESSEE IN THE BUSINESS CASH FL OW OF THE SOLE ITA NO.200(ASR)/2014 3 PROPRIETORSHIP CONCERN. THE ASSESSEE WORKED OUT THE PEAK AMOUNT AT RS.2,48,000/- ON 22.04.2008 OUT OF WHICH ASSESSEE CLAIMED CASH IN HAND ALREADY AVAILABLE AT RS.49,095/- AND REQUESTED THE LD. CIT(A) TO WORK OUT THE PEAK AT RS.1,98,905/-. THE LD. COUNSEL SUBMITTED BE FORE THE LD. CIT(A) THAT IT IS THE PEAK AMOUNT WHICH AT THE BEST CAN BE ADD ED AFTER GIVING SET OFF TO THE WITHDRAWALS MADE FROM THE ACCOUNT. HE RELIED UP ON THE DECISIONS OF VARIOUS COURTS OF LAW AS UNDER: A) IN THE CASE OF M/S. MANSROVER ENTERPRISES VS. I TO WARD 5(3)/ASR IN ITA NO.108(ASR)/2005, THE HONORABLE ITAT ASR BEN CH AT PARA 9 & 10 OF THE ORDER HAS HELD AS UNDER: AS REGARDS THE SECOND GROUND, IT IS CLEAR FROM PAG E 10 OF THE PAPER BOOK THAT THERE WERE CREDITS AND DEBITS IN TH E ACCOUNTS OF TWO EMPLOYEES DURING THE PERIOD FROM 11.04.2000 TO 19.02.2001. EVEN IF IT IS ASSUMED THAT IT WAS ASSES SEES OWN MONEY, THE SAME WAS IN CIRCULATION AND, THEREFORE, FOR THE PURPOSE OF MAKING AN ADDITION ON THIS ACCOUNT ONLY PEAK CREDIT WAS REQUIRED TO BE CONSIDERED. SUCH PEAK CREDIT AM OUNTED TO RS. 33,315/- ON 6.7.2000. THEREFORE, ADDITION IF AN Y, COULD HAVE BEEN MADE ONLY TO THE EXTENT OF RS. 33,315/-. WE HA VE ALREADY UPHELD THE TRADING ADDITION OF RS. 1,40,000/- IN TR ADING ACCOUNT. THE ADDITION OF RS. 33,315/- WOULD GET COV ERED UNDER THE TRADING ADDITION BY ALLOWING THE BENEFIT OF TEL ESCOPING. THEREFORE, NO ADDITION IN THIS RESPECT WOULD AT ALL BE CALLED FOR. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE ENTIRE ADDITION OF RS. 1,32,621/- SU STAINED BY THE CIT(A).THIS GROUND OF APPEAL IS ALLOWED. B) FURTHER, IN THE CASE OF SH. ASHWANI AGGARWAL VS. ACIT CIRCLE 2(2)/JALANDHAR IN ITA NO.228(ASR)/1997, THE CASE WA S HELD AS UNDER: THE ASSESSEE IS IN APPEAL AGAINST THE SUSTENANCE O F THE BALANCE ADDITION WHEREAS THE REVENUE IS AGGRIEVED A GAINST THE ITA NO.200(ASR)/2014 4 DELETION OF PART ADDITION HAVING HEARD RIVAL SUBMIS SIONS IN EXTENSOR AND PERUSED THE RELEVANT MATERIAL ON RECOR D, IT IS PALPABLE THAT THE ASSESSEE HAD NOT SATISFACTORILY D ISCHARGED THE BURDEN SHOWING THE GENUINENESS OF THE TRANSACTIONS. INSPITE OF SEVERAL OPPORTUNITIES GRANTED BY THE AO, THE ASSES SEE COULD PRODUCE ONLY THREE PERSONS OUT OF EIGHT PICKED UP B Y THE AO. ON RECORDING OF THEIR STATEMENTS IT TRANSPIRED THAT THE VERSION OF THE ASSESSEE WAS NOT TALLYING WITH THE ASSERTION MADE BY SUCH PERSONS BEFORE THE AO. OTHER FIVE PERSONS COULD NOT BE PRODUCED AND AS SUCH THERE WAS NO OCCASION TO VERIF Y THE VERACITY OF THE ASSESSEES STAND. HAVING HELD THAT THE TRANSACTIONS IN THE ACCOUNTS OF THESE EIGHT PERSONS WERE NOT GENUINE, THE NEXT QUESTION THAT ARISES FOR CONSIDER ATION IS THE DETERMINATION OF AMOUNT UNEXPLAINED INVESTMENT. IT WAS PUT FORTH ON BEHALF OF THE ASSESSEE THAT ONLY PEAK BALA NCE DRAWN OUT OF A CONSOLIDATED ACCOUNT OF ALL THE EIGHT PERS ONS WAS REQUIRED TO BE CONSIDERED FOR MAKING SUCH ADDITION. WE ARE SATISFIED THAT THE ONLY ADDITION TO THIS EXTENT WAS CALLED FOR. THE AO MADE AN ADDITION FOR ALL THE TRANSACTIONS IGNORI NG THAT ULTIMATELY IT IS A PEAK BALANCE (AFTER TAKING INTO CONSIDERATION THE DEBITS AND CREDITS) THAT CAN BE THE SUBJECT MAT TER OF ADDITION. WE ARE SATISFIED THAT THE LD. CIT(A) RIGH TLY PROCEED BY SUSTAINING THE ADDITION TO THIS EXTENT. FURTHER, RELIANCE IS ALSO PLACED ON THE FOLLOWING C ASE LAWS: I) ITA NO.108(ASR)/2005 IN THE CASE OF M/S. MANSROVER ENTERPRISES VS. ITO WARD 5(3), AMRITSAR DECISION OF ITAT BENCH OF AMRITSAR. (COPY ATTACHED) II) ITA NO.329(ASR)/2003 IN THE CASE OF M/S. HARSIMRAN TEXTILES, BATHINDA VS. ITO WARD 1(1), BATHINDA. (CO PY ATTACHED) III) ITA NO.231(ASR)/1997 IN THE CASE OF SH. ASHWANI AGGARWAL, JALANDHAR VS. ACIT CIRCLE 2(2), JALANDHAR . IV) ITA NO.21(ASR)/2004 IN THE CASE OF SH. RAVINDER SIN GH VS. ACIT RANGE-III(ASR.) (COPY ATTACHED) V) ITAT CHANDIGARH BENCH (SMC) IN THE CASE OF GUJRATI MAL PRAN NATH VS. ACIT ITA NO.1017 AND 1018 OF 1994 (COPY ATTACHED) VI) CIT VS. CHETAN DASS 99 ITR 46 (DEL) VII) CIT VS. MOHAN ENGG. CO. 151 ITR 571 (PAT) ITA NO.200(ASR)/2014 5 VIII) CIT VS. K.S.M. GURUSWAMY NADAR & SONS 149 ITR 127 (MAD) IN THE ABOVE JUDGMENTS, IT HAS BEEN HELD THAT ONLY PEAK AMOUNT OF DEPOSIT IS TO BE ADDED AND ALSO BENEFIT OF TELES COPING IS TO BE GIVEN TO THE ASSESSEE. IN THE LIGHT OF ABOVE FACTS AND CASE LAWS IT IS SUBMITTED THAT NO ADDITION FOR ALLEGED DEPOSIT I N AXIS BANK IS REQUIRED TO BE MADE AND AS SUCH, IT IS REQUESTED TH AT ADDITION MADE BY THE LD. AO MAY PLEASE BE DELETED AND NECESS ARY RELIEF MAY KINDLY BE ALLOWED TO THE APPELLANT. 4. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CASH-FLOW PEAK STATEMENT FROM 01.04.2008 TO 31.03.2 009 ACCEPTED THE PEAK AT RS.2,48,000/- AS ON 22.04.2008, WHICH PERTAINS T O UNACCOUNTED INVESTMENT OF THE ASSESSEE. THE AO IN ADDITION WORKED OUT A GR OSS PROFIT ON THE REMAINING TURNOVER OF RS.13,68,300/- AND APPLIED A GP RATE OF 11.10% AT RS.1,40,780/-. THE SAME WAS ADDED TO THE PEAK AMOUN T AND ACCORDINGLY A TOTAL ADDITION OF RS.3,88,780/- WAS SUSTAINED AND REMAINING ADDITION MADE BY THE AO WAS DIRECTED TO BE DELETED. THE LD. CIT(A ) OBSERVED THAT THE AO HAS NOT GIVEN ANY TREATMENT TO FREQUENT CASH WITHDR AWAL AND ADDITION WAS MADE IN THE ABSENCE OF ANY PURCHASE OF UNACCOUNTED ASSETS OR INVESTMENTS AND NO EVIDENCE IN THIS REGARD HAS BEEN BROUGHT ON RECORD. IN SUCH FACTS AND CIRCUMSTANCES, THE UNACCOUNTED PEAK OF RS.2,48,000/ - IS TREATED AS INVESTMENT REQUIRED TO CARRY OUT UNACCOUNTED TRADE ACTIVITY TO WHICH GP ADDITION OF RS.1,40,780/- AS COMPUTED HEREINABOVE, HAS BEEN ADDED TO ITA NO.200(ASR)/2014 6 SUSTAIN THE TOTAL ADDITION AT RS.3,88,780/- AND RE MAINING ADDITION OF RS.11,49,520/- WAS DELETED. 5. THE LD. DR, DR. TARUNDEEP KAUR ARGUED THAT THE A SSESSEE HAS NOT EXPLAINED THE CASH FLOW DEPOSITS IN THE BANK AND TH EREFORE, THE AO HAS RIGHTLY ADDED THE CASH DEPOSITS IN THE BANK AND TH ERE WAS NO REQUIREMENT TO GIVE SET OFF OF THE WITHDRAWALS MADE IN THE BANK IN THE ABSENCE OF UNEXPLAINED CASH DEPOSITS. SHE PRAYED TO REVERSE TH E ORDER OF THE LD. CIT(A) AND CONFIRM THE ORDER OF THE ASSESSING OFFICER. 6. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N.ARORA, ADVOCATE STRONGLY RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD. CIT (A) AND THE ORDER OF THE LD. CIT(A). FURTHER, HE RELIED UPON THE ORDER OF TH E ITAT, AMRITSAR BENCH IN THE CASE OF ITO WARD 5(3), AMRITSAR VS. SH. RANBIR SINGH IN ITA NO.473(ASR)/2012 DATED 31.10.2012. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT A N EX-PARTE ASSESSMENT U/S 144 OF THE ACT WAS MADE DUE TO NON ATTENDANCE OF TH E ASSESSEE ON DIFFERENT DATES. THE AO TREATED ALL THE CASH DEPOSITS OF RS.1 5,38,300/- AS UNDISCLOSED INCOME OF THE ASSESSEE. BEFORE THE LD. CIT(A) IT WA S SUBMITTED THAT THESE ARE DEBIT ENTRIES OR THE WITHDRAWALS FROM THE SAID BANK ACCOUNT AND ALL THE DEPOSITS AND WITHDRAWALS PERTAIN TO THE BUSINESS OF THE ASSESSEE. THOUGH THE ITA NO.200(ASR)/2014 7 SAME WAS NOT DISCLOSED BY THE ASSESSEE IN THE REGUL AR BOOKS OF ACCOUNT BUT THERE HAS TO BE ON RECORD SOME INVESTMENT EQUAL TO WITHDRAWALS MADE FROM THE SAID UNDISCLOSED BANK ACCOUNT, BUT NOTHING HAS BEEN BROUGHT ON RECORD BY THE AO. NO OTHER ACTIVITY OF THE ASSESSEE HAS BE EN BROUGHT ON RECORD. BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED, WHICH IS NOT UNDER DISPUTE. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON SIMI LAR FACTS, ITAT, AMRITSAR BENCH IN THE CASE OF M/S. MANSROVER ENTERPRISES VS . ITO WARD 5(3), AMRITSAR IN ITA NO.108(ASR)/2005 HAS HELD THAT EVEN IF IT IS ASSUMED THAT IT WAS ASSESSEES OWN MONEY, THE SAME WAS IN CIRCULAT ION AND, THEREFORE, FOR THE PURPOSE OF MAKING AN ADDITION, PEAK CREDIT WAS REQUIRED TO BE CONSIDERED FOR MAKING SUCH ADDITION. IN THE CASE OF ITO, WARD 5(3), AMRITSAR VS. RANBIR SINGH IN ITA NO.473(ASR)/2012 DATED 31.10.2014, ON SIMILAR FACTS, THE ASSESSEE HAD SUBMITTED CASH FLOW STATEMENT AND IT W AS OBSERVED BY THE ITAT, AMRITSAR BENCH THAT THE BEST POSSIBLE WAY TO FIND OUT UNEXPLAINED CREDIT IS TO WORK OUT THE MAXIMUM PEAK WHEN THERE I S NOTHING ON RECORD THAT MONEY HAS BEEN USED ELSEWHERE. IN THE PRESENT CASE ALSO, THE ASSESSEE HAS SUBMITTED CASH FLOW STATEMENT AND SUBMITTED SOURCES OF CASH DEPOSITS AS BUSINESS RECEIPTS AND ACCORDINGLY IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY WORKED OUT THE PEAK AT RS.2,48,000/- AND MOREOVER, THE LD. CIT(A) HAS ADDED ITA NO.200(ASR)/2014 8 11.10% OF GP ON THE TURNOVER OF RS.13,68,300/- APA RT FROM ADDITION OF RS.2,48,000/-. IN VIEW OF THE ABOVE DISCUSSION, WE FIND NO INFIRMITY IN THE WELL REASONED ORDER OF THE LD. CIT(A). ACCORDINGLY, ALL THE GROUNDS OF THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.200(ASR)2014 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH J ANUARY, 2015. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28TH JANUARY, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.NAGENDRA PRASHAD PROP. M/S. ABC TR ADING, AMRITSAR. 2. THE ITO WARD 3(3), AMRITSAR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.