RAVINDRA PURUSHOTTAM BIROLE(HUF), PUNE V. ITO WARD-5(5), PUNE

ITA 2014/PUN/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0628 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-07-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 15-12-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Presumptive income; Competent authority
• Section: 147; 69; 148; 271(1)(c); 44AD; 139; 69A; 271B

Judgement Text

आयकर अपीलीय अिधकरण “बी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकरअपीलसं. / ITA No’s.2013 & 2014/PUN/2019 िनधाᭅरणवषᭅ / Assessment Years : 2010- 11 &2011-12 Ravindra Purushottam Birole(HUF), 2055, Sadashiv Peth, Anant Residency, 1 st Floor, Tilak Road, Pune – 411002. PAN: AADHB 8563 J Vs The Income Tax Officer, Ward-5(5), Pune. Appellant/ Revenue Respondent /Assessee Assessee by Shri Suhas Bora – AR Revenue by Shri M.G.Jasnani – DR Date of hearing 22/07/2022 Date of pronouncement 17/10/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: These two appeal filed by the Assessee are directed against the two separate orders of ld. Commissioner of Income Tax(Appeals)-4, Pune, dated 30.10.2019for the AY 2010-11 and A.Y.2011-12. The assessee has raised the following grounds of appeal: 1.1 The assessee in ITA No.2013/PUN/2019 for A.Y.2010-11 raised the following grounds of appeal: “1. The learned CIT(A) has erred in holding that the reassessment proceedings are valid on the ground that the copy of the reasons for reopening the assessment u/s 147 of the Act was provided and the appellant has accepted that the reasons were provided in their submissions dt. 11.10.2019, which is factually incorrect. ITA No’s.2013 &2014/PUN/2019 for A.Y.2010-11 & 11-12 Ravindra Purushottam Birole (HUF) (A) 2 2. The learned CIT(A) erred in confirming the addition of Rs.86,16,00/- made by the AO u/s 69 of the Act disregarding the submissions given by the appellant. 3. The learned CIT(A) erred in confirming the addition of Rs.86,16,000/- made by the AO u/s 69 of the Act on account of unexplained investments on the ground that the appellant was unable to give any proof or substantiate with corroborative evidence that it was carrying on any business activity and regularly offering income u/s 44AD of the Act and was unable to satisfactorily explain the source of cash deposits in bank account with any corroborative evidence without considering the explanation given by the appellant that the cash deposits were out of cash sales from the business and withdrawals from banks and without taking into account that the income was disclosed by the appellant in the Return of Income. 4. The Id CIT(A) on confirming the addition made by the AO erred in not considering the following facts: i. That once the appellant opted for declaring income under presumptive taxation under section 44AD of the Act, it is not required to maintain books of accounts. ii. That the appellant has substantiated the cash deposits in the bank are out of gross sale proceeds, which are less than the cash deposits in the bank, then the appellant is not under any obligation to explain individual entry of cash deposit in bank account unless such entry has no nexus with gross receipts. 5. The Id CIT (A) erred in not considering the contention of the ITA No’s.2013 &2014/PUN/2019 for A.Y.2010-11 & 11-12 Ravindra Purushottam Birole (HUF) (A) 3 appellant that the deposits were made out of withdrawals from bank on the earlier dates only on the ground that cash withdrawal and subsequent cash deposits were not substantiated with any corroborative evidence. 6. The Id C1T(A) further erred in not considering the fact, that only one account out of the two bank accounts as mentioned in the assessment order was in the name of appellant while the other account of M/s Nandan Engineers belonged to Mr. Ravindra Purushottam Birole (Individual) only on the ground that the said claim of having only one bank account was not substantiated by the appellant without considering the explanation given and evidences provided by the appellant.” 1.2 The assessee in ITA No.2014/PUN/2019 for A.Y. 2011-12 raised the following grounds of appeal: “1. The learned CIT(A) erred in confirming the addition of Rs.3,09,47,105/- made by the AO u/s 69A of the Act disregarding the submissions given by the appellant. 2. The learned CIT(A) erred in confirming the addition of Rs.3,09,47,105/- made by the AO u/s 69A of the Act on account of unexplained money on the ground that the appellant was unable to give any proof of substantiate with corroborative evidence that it was carrying on any business activity and regularly offering income u/s 44AD of the Act, was unable to satisfactorily explain the source of cash deposits in bank account with any corroborative evidence. Depositing of cash in the bank account and making payment to the company on the ITA No’s.2013 &2014/PUN/2019 for A.Y.2010-11 & 11-12 Ravindra Purushottam Birole (HUF) (A) 4 same day in which Karta of the appellant HUF is a director is the modus operandi of the appellant to divert cash to the company. Thus the appellant tried to camouflage the source of the deposits under the provisions of section 44AD of the Act and therefore cash deposits of Rs.3,09,47,105/- (Rs.3,34,54,285/- minus Rs.25,07,180/-) is treated as unexplained money without considering the explanation and evidences given by the appellant. 3. The ld CIT(A) on confirming the addition made by the AO erred in not considering the following facts: i. That once the appellant opted for declaring income under presumptive taxation under section 44AD of the Act, it is not required to maintain books of accounts. ii. That the appellant has substantiated the cash deposits in the bank are out of gross sale proceeds, which are less than the cash deposits in the bank, then the appellant is not under any obligation to explain individual entry of cash deposit in bank account unless such entry has no nexus with gross receipts.” 2. Both these appeal have identical facts, hence both these appeals were heard together and disposed by common order. For the sake of convenience, the appeal number ITA No.2014/PUN/2019 of A.Y. 2011-12 is taken as lead case and facts are discussed here under. 3. Brief facts of the case as emanating from the Assessment Order, order of Ld.CIT(A), and submission of the assessee are that ITA No’s.2013 &2014/PUN/2019 for A.Y.2010-11 & 11-12 Ravindra Purushottam Birole (HUF) (A) 5 the assessee had not filed return of Income for AY 2011-12 within the time mentioned u/s 139 of the Act. The Assessing officer (AO) issued notice u/s 148 on 21/03/2018 to the assessee, after recording reasons and after obtaining approval from the competent authority. However, the assessee failed to file return of Income in response to notice u/s 148. Therefore, the AO issued notices on 29/08/2018 and 19/11/2018. Then the assessee filed Return of Income on 19/12/2018 declaring income of Rs.25,10,520/-. The reason for issuing notice u/s 148 was that the assessee had deposited cash of Rs.5,55,10,567/- in Bank. During the assessment proceedings the AO heard the Assessee’s representative. The relevant paragraphs of the assessment order is reproduced here as under: Quote “ It is submitted by the AR that in the year under assessment, the assessee has deposited cash of Rs. 3,34,54,285/- in Janaseva Sahakari Bank Ltd, Pune. Dhankawadi Branch. It is further submitted that the receipts of the assessee are in cash and the said cash deposits are deposited in the bank accounts of the assessee held in Janseva Sahakari Bank Ltd.................... An analysis of the above trend of cash deposits reveals that the assessee has deposited cash and immediately on the same day diverted it to Utech Engg Works where the Karta of assessee HUF, is a director. The assessee has not provided any cogent evidence regarding the business activity carried out. The assessee has failed to produce the details of sales made, name party to whom sales made. Although the assessee has opted option of provisions of section 44AS of the Income Tax Act, 1961, assessee failed to ITA No’s.2013 &2014/PUN/2019 for A.Y.2010-11 & 11-12 Ravindra Purushottam Birole (HUF) (A) 6 produce the cogent evidence regarding business activity carried out and the gross receipts. The generation of cash itself raises a strong suspicion that the entire business of the assessee is sham and it is a means of diverting cash to the companies viz. Utech Engg Worls. Vide this office show cause notice dated 24.12.2018, assessee was asked to explain the diversion of funds to Utech Engg Works. In response the AR of the assessee has stated that theses amounts were given as loans to the said company. Thus, it is seen that assessee has given loan to the company and no purchases were made from the company by assessee. It reveals that there were no purchases made from this company. The assessee, in all these bank accounts, has deposited the amounts in cash only and same day payments were made to company in which karta of assessee HUF, is director. Thus, the modus operandi of assessee is diversion of cash to the company. The assessee, has, failed to submit satisfactory evidence in regard to the actual business activity carried out by it. Mere submission that the assessee is in retail business of MS plate, angles would not suffice as the transactions runs into lakhs of rupees on a single day. This obviously is ingenuine and is hard to believe. The assessee, has tried to camouflage these deposits under the provisions of section 44AD of the Income-tax Act, 1961, by offering 8% of the gross receipts of Rs. 3,13,39,749/-, which is totally unacceptable. Therefore, the cash deposits of Rs.3,34,54,285/- is treated as unexplained money and added to income of assessee. I am satisfied that assessee has furnished inaccurate particulars of income. Accordingly, penalty proceedings u/s 271(1)(c) is initiated for furnishing inaccurate particulars of income. It is noticed that assessee has shown business income of Rs.25,07,180/- under section 44AD of Act. As per discussion in above paras it is established that assessee was not carrying on the assessee activity and entire cash deposit is added to income. ITA No’s.2013 &2014/PUN/2019 for A.Y.2010-11 & 11-12 Ravindra Purushottam Birole (HUF) (A) 7 Accordingly, a sum of Rs.25,07,180/- is reduced from addition as it was already offered for income by way profit. The total addition thus, works out to Rs.3,09,47,105/- (3,34,54,285/- minus Rs.25,07,180/-). Further, penalty proceedings under section 271B are separately initiated for non auditing of books since the turnover exceeded the maximum limit of Rs.60 laks in the relevant assessment year. ”Unquote. 4. The Ld.CIT(A) have confirmed the addition. Aggrieved by the order of the Ld.CIT(A), the assessee filed appeal before this tribunal. 5. The Ld.AR filed a paper book containing 24 pages. The paper book contained : Copy of return of Income for AY 2011-12 Copy of Notice u/s 148 Copy of reason for 148 Copy of submission made before CIT(A) containing 6 pages. Copy of submission made before AO containing 7 pages. Copy of Bank statement. The Ld.AR submitted that assessee was in the business of MS Plates, angles etc. The cash was from trading. The Ld.AR retreated the submission made before the lower authorities. 6. The Ld.DR relied on the order of the lower authorities. The Ld.DR submitted that the assessee had not filed the return of income u/s.139 and also did not file the return of income within the time allowed by notice u/s148. The return was filed much afterwards. ITA No’s.2013 &2014/PUN/2019 for A.Y.2010-11 & 11-12 Ravindra Purushottam Birole (HUF) (A) 8 7. We have heard both the parties and perused the records. It is a fact that assessee had not filed the return in time. The assessee claimed that assessee is in the business of trading of MS plates angles etc. However, the assessee had not filed a single document before the lower authorities to prove the same. The assessee had not filed any documents before us to prove that the assessee was in the trading. The assessee had not shown the VAT return, Licence for trading, bills for purchase, bills for sales, Transport receipts etc. The assessee without submitting any evidence merely claimed that cash deposits are from the trading activity. In the absence of any evidence, the claim of the assessee is unbelievable. Also, the assessee had claimed turnover more than 3 crores, as per Income Tax Act, the books needs to be audited above Rs.60 lacs turnover. No such audit report filed. Hon’ble SC in the case of Sumati Dayal 214 ITR 801 and Durga Prasad More 82 ITR 540 have settled the law long back that any evidence filed in Income tax proceedings has to be considered in the light of human probabilities. However, in this case there are no documentary evidences filed other than claiming trading activity without any supportive documents. The assessee failed to prove the trading activity. Therefore, in the facts and circumstances of the case we uphold the additions made by the AO. Accordingly Ground No.1 to 4are dismissed. Accordingly, appeal of the assessee for ITA No.2014/PUN/2019 is dismissed. ITA No’s.2013 &2014/PUN/2019 for A.Y.2010-11 & 11-12 Ravindra Purushottam Birole (HUF) (A) 9 7.1 It may not be out of place to mention here that Mrs.Ashwini Ravindra Birole for AY 2015-16 had deposited cash in bank and claimed trading in MS plates without any evidence. The ITAT Pune in ITA No.2015/PUN/2019 had dismissed the appeal of Mrs.Ashwini Ravindra Birole. ITA No.2013/PUN/2019 for AY 2010-11: 8. The facts of the said appeal are identical to the appeal for A.Y.2011-12. In A.Y.2010-11 the addition was of Rs.86,16,000/- on account of cash deposits. Since, the facts are identical to the facts of AY 2011-12, our decision of AY 2011-12 in ITA No.2014/Pune/2019 will apply mutatis mutandis to the ITA 2013/Pune/2019. Thus, the Ground No.2 to 6 of ITA 2013/Pune/2019 are dismissed. The Ground No.1 of ITA 2013/Pune/2019 is regarding reopening, it is observed that the Assessee had not filed return u/s.139, the AO on receipt of information regarding cash deposits, recorded elaborate reasons and issued 148 after obtaining approval. We have perused the reasons and we are satisfied about it. The assessee had admitted that the AO provided reasons to the assessee. Thus, the AO had followed all the steps. The Assessee had not proved that AO had not followed the steps for reopening. Therefore, we uphold the reopening. Thus, the Ground No.1 of the assessee is dismissed. ITA No’s.2013 &2014/PUN/2019 for A.Y.2010-11 & 11-12 Ravindra Purushottam Birole (HUF) (A) 10 9. In the result, both the appeals of the assessee are dismissed. Order pronounced in the open Court on 17 th October, 2022. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 17 th Oct, 2022/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “बी” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.