HARAK AMARSINGH RAWAT, MUMBAI V. ITO WD 19(2)(3), MUMBAI

ITA 203/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92972 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 08-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Salary income; Peak credit
• Section: 44AD; 143(3); 68; 148

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI H BENCH , , , BEFORE S/SH. JOGINDER SINGH ,JUDICIA L MEMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 203 /MUM/201 4 , / ASSESSMENT YEAR - 200 9 - 10 SHRI HARAK AMARSINGH RAWAT 11 - C, GROUND FLOOR VIVEK APARTMENT, PODAR ROAD SANTACRUZ (W)MUMBAI - 400 054. PAN: AFCPS 7828 F VS THE INCOME TAX OFFICER WARD - 19(2)(3) 4 TH FLOOR, PIRAMAL CHAMBERS, PAREL MUMBAI - 400 012. ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY : SHRI HARIDAS BHATT NONE / REVENUE BY :SHRI JITENDRA KUMAR / DATE OF HEARING : 15 - 0 6 - 2015 / DATE OF PRONOUNCEMENT : 26 - 0 6 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 14.11.2013 OF THE CIT(A) - 30 , MUMBAI ,THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, HON'BLE CIT (A) - 30,' ERRED IN CONFIRMING THE TOTAL DEPOSITS OF RS. 29,22,829/ - MADE IN THE BANK ACCOUNT WITH AXIS BANK VILE PARLE BRANCH AS INCOME IGN ORING THE SUBMISSIONS MADE BEFORE THE AO. 2: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HON'BLE CIT(A) FAILED TO APPRECIATE THAT A) THE ASSESSEE HAS PROVED THAT THE BUSINESS WAS UNDERTAKEN BY HIM, BY FILING SOME COPIES OF PU RCHASE AND SALES BILLS. B) THE ASSESSEE HAS EXPLAINED THE CIRCUMSTANCES WHICH HAS LED TO THE NON SUBMISSIONS DETAILS IN THE RETURN OF INCOME FILED AND SUBSEQUENT ASSESSEMENT PROCEEDINGS. C) THE ASSESSEE HAS OFFERED TO TAX 8% OF THE TOTAL RECEIPT S AS INCOME GOING BY THE SPIRIT OF SECTION 44AD OF THE INCOME TAX ACT. D) OUT OF THE TOTAL DEPOSITS ONLY RS.19,08,329/ - WAS IN CASH AND BALANCE WAS BY WAY OF CHEQUE DEPOSITS. 3. THE APPELLANT THEREFORE PRAYS THAT THE 8% OF THE RECEIPTS AS PER THE BAN K DEPOSITS MAY BE CONSIDERED AS THE INCOME AND THE BALANCE ADDITION MAY PLEASE BE DELETED. GROUND II WITHOUT PREJUDICE TO THE GROUND NO. I 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, HON'BLE CIT (A) , ERRED IN NOT CONSIDERING T HE PEAK WORKING GIVEN BY THE ASSESSEE DURING THE ASSESSEMENT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HON'BLE CIT (A) FAILED TO APPRECIATE THAT: A) WHERE THERE ARE NO RECORDS ARE AVAILABLE REGARDING THE EXPENDITURE ON THE BUSINESS, THE PEAK CASH BALANCE IS CONSIDERED AS INCOME AS UPHELD BY THE COURTS OF LAW. ITA/ 203 /MUM/201 4 ,AY. 0 9 - 10 - HARAK AMARSINGH 2 B) THE ASSESSEE HAS MADE THE ALTERNATE PLEA OF PEAK BALANCE TO BE CONSIDERED AS INCOME. THE SAME WAS REJECTED BY THE ASSESSEE AND CIT(A) WITHOUT ANY DISCUSSION . 3. THE APPELLANT THEREFORE PRAYS THAT THE PEAK CASH BALANCE MAY BE CONSIDERED AS INCOME AND THE BALANCE ADDITION MAY PLEASE BE DELETED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. ASSESSEE,AN INDIVIDUAL, FILED HIS RETURN ON 25.2.2010 DECLARING TOTAL INCOME AT RS.88,795/ - . THE AO COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT ON 29.3.2007 ACCEPTING THE RETUNED INCOME. LATER ON, FROM THE AIR INFORMATION, THE AO FOUND THAT THE ASSESSEE HAD DEPOSI TED CASH OF RS.19.08 LACS IN THE AXIS BANK VILE PARLE BRANCH TILL 31.3.2009, THAT HE HAD NOT DISCLOSED THE PARTICULAR BANK ACCOUNT. THE AO HELD THAT BECAUSE OF NON DISCLOSURE OF BANK ACCOUNT INCOME AMOUNTING TO RS.19.08 LACS HAD ESCAPED ASSESSMENT. HE ISSU ED A NOTICE U/S. 148 AFTER RECORDING THE REASONS .ON 5.2.2013, THE AO COMPLETED THE AS SESSMENT U/S. 143(3) R.W.S. 148, DETERMINING THE INCOME OF THE ASSESSEE AT RS.29.72 LACS. DURING THE RE - ASSESMENT PROCEEDINGS THE AO ASKED THE ASSESSEE TO EXPLAIN NATURE OF CASH DEPOSITS MADE IN ICIC I BANK LIMITED. VIDE HIS LETTER,DT. 16.12.2012, THE ASSESSEE FURNISHED BANK DETAILS AND COPY OF BANK STATEMENTS. IT WAS STATED THAT DUE TO OVERSIGHT THE TRANSACTIONS RELATING TO ICICI BANK WERE NOT CONSIDERED WHILE FILING THE ORIGI NAL RETURN, THAT ASSESSEE WAS WORKING ON COMMISSION BASIS WITH TWO ENTITIES NAMELY REAL KIDS (RK) AND D I Y A ENTERPRISES(DE) , THAT HE WAS ALSO GETTING SALARY, THAT THE ASSESSEE HAD DONE SOME TR A DING ON HIS OWN AND DEPOSITED THE AMOUNT RECOVERED INTO HIS AXIS BANK ACCOUNT, THAT HE HAD MADE ALL THE PURCHASES AND SALES IN CASH, THAT HE HAD ISSUE EITHER BEARER CHEQUES FOR SUCH WITHDRAWALS OR HAD WITHDRAWN MONEY THROUGH ATM, THAT THE AMOUNT SO WITHDRAWN WERE UTILIZED FOR PURCHASES. THE ASSESSEE FILED A REVISED COM PUTATION OF INCOME TAKING INTO CONSIDERATION THE ACCOUNTS OF RK AND DE AND OFFERED 8% OF THE TOTAL DEPOSIT AS HIS INCOME. PROFIT TO THE TUNE OF RS.2.33 LACS WAS OFFERED FOR TAXATION. BESIDES , HE ALSO OFFERED SALARY RECEIPT FROM ONE OF THE ENTITIES AS SAME WAS NOT OFFERED TO TAXATION IN EARLIER YEARS. THE AO ASKED THE ASSESSEE AS TO WHY TOTAL DEPOSIT SHOULD NOT BE TAXED INSTEAD OF 8% OFFERED BY HIM. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE THE AO HELD THAT THE ACCOUNT WITH AXIS BANK WAS NOT DISCLOSE D BY THE ASSESSEE IN THE RETURN OF INCOME FILED, THAT HE HAD FURNISHED ONLY FOUR PURCHASE BILLS, THAT IN THE SALES BILL NAME OF PARTIES PURCHASING GOODS WAS NOT GIVEN, THAT HE COULD NOT FURNISH ANY DOCUMENTARY EVIDENCE TO SUPPORT ACTUAL DELIVERY OF GOODS N OR HE COULD NOT CO - RELATE THE SALES AND PURCHASES WITH DEPOSITS AND WITHDRAWALS IN THE UNDISCLOSED BANK ACCOUNT, THAT DURING THE SCRUTINY ASSESSMENT PROCEEDINGS HE WAS ASKED TO FURNISH THE DOCUMENTARY EVIDENCE TO PROVE TRADING ACTIVITY ON MORE THAN ONE OCC ASION S, THAT EXCEPT FILING A GENERAL VAGUE EXPLANATION HE COULD NOT JUSTIFY OR SUBSTANTIATE THE TRANSACTION, THAT HE HAD NOT CO - RELATED THE DEPOSITS AND WITHDRAWALS I N THE UNDISCLOSED BANK ACCOUNT, THAT HE HAD FAILED TO DISCHARGE HIS PRIMARY ONUS, THAT THERE WAS TOTAL DEPOSIT OF 29.22 LACS (CASH DEPOSIT OF 19.21 LACS AND CHEQUE DEPOSIT OF 10.01 LACS), THAT HE HAD NOT PROVED THE SOURCES OF DEPOSIT OR PURPOSE OF THE WITHDRAWALS WITH ANY DOCUMENTARY EVIDENCES, THAT THE TOTAL DEPOSIT OF RS.29 , 22 , 829/ - IN ASSESSEE S UNDISCLOSED BANK ACCOUNT REMAINED UNEXPLAINED CREDIT U/S.68 OF THE ACT, THAT THE WITHDRAWALS WERE HIT BY THE PROVISIONS OF S.69C OF THE ACT, THAT WITHDRAWALS COULD BE TR EATED AS APPLICATION OF CREDIT. FINALLY, THE ENTIRE DEPOSIT WAS TAXED AS ASSESSEES IN COME FOR THE YEAR UNDER APPEAL FROM UNDISCLOSED SOURCES AND UNDER THE HEAD INCOME FROM OTHER SOURCES. ITA/ 203 /MUM/201 4 ,AY. 0 9 - 10 - HARAK AMARSINGH 3 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA). BEFORE HIM,IT WAS CONTENDED THAT THE ASSESS EE WAS WORKING ON COMMISSION BASIS WITH RD AND DE,THAT HE WAS WORKING PART TIME WITH D E TEXTILE AND WAS GETTING SALARY INCOME FROM THERE, THAT THE RETURN WAS PREPARED BY THE ACCOUNTANT LOOKING AFTER THE ACCOUNTS WITH RD AND DE, THAT DUE TO LACK OF KNOWLEDG E HE DID NOT REVEAL THE TRANSACTIONS OF THE AXIS BANK, THAT HE DID SOME TRADING OF HIS OWN AND DEPOSITED THE AMOUNT INTO HIS AXI S B ANK, THAT HE MADE ALL HIS PURCHASES IN CASH, ALL PURCHASES WERE LESS THAN RS. 20,000, HE WOULD EITHER WITHDRAW CASH FROM ATM O R WOULD ISSUE BEARER CHEQUES , THAT HE HAD SOME PURCHASE BILLS THAT WERE PRODUCED BEFORE THE AO, THE ASSESSEE DID NOT HAVE ANY TRANSPORTATION PROOF, THAT THE CONFIRMATION FROM THE PARTIES WAS NOT POSSIBLE, THAT HE HAD OFFERED 8% ON GROSS RECEIPT AS PROFIT O UT OF THE SAID BUSINESS , THAT ASSESSEE HAD EXPLAINED THE CIRCUMSTANCES WHICH HAD LED TO NON SUBMISSION OF DETAILS IN RETURN OF INCOME, THAT 8% OF RECEIPT AS PER BANK DEPOSIT SHOULD BE CONSIDERED AS INCOME OF THE ASSESSEE FOR THE YEAR UNDER APPEAL. ALTERNAT IVELY IT WAS ARGUED THAT PEAK WORKING OF THE BANK ACCOUNT SHOULD BE TAKEN WHICH WORKED OUT TO BE RS. 4.45 LACS. AFTER CONSIDERING THE SUBMISSION OF ASSESSEE AND THE ASSESSMENT ORDER THE FAA HELD THAT THE ASSESSEE HAD MADE THE SUBMISSION WITHOUT ANY SUPPORTI NG EVIDENCE, THAT HE HAD NOT DISPUTED THE EXISTENCE OF BANK ACCOUNT WITH AXIS BANK, DETAILS OF BANK ACCOUNT WAS NOT DISCLOSED WHILE FILING RETURN OF INCOME, THAT HE HAD ADMITTED THAT THE AMOUNTS OF CREDIT APPEARING IN THE BANK ACCOUNT HAD NOT BEEN CONSIDER ED FOR PREPARING HIS TAXABLE INCOME, THAT THERE WAS NO EVIDENCE ABOUT CARRYING OF BUSINESS BY THE ASSESSEE, THAT IN ABSENCE OF SUCH EVIDENCE ON RECORD HIS CONTENTION OF DEPOSITING/WITHDRAWING IN THE ABOVE BANK ACCOUNT RELATING TO SALE/PURCHASE COULD NOT BE ACCEPTED, THAT THE ASSESSEE AHD NOT PRODUCED ANY EVIDENCE DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS ABOUT DETAILS OF TRADING DONE BY HIM I.E. AS TO THE NATURE OF GOODS HE TRADED, THAT ASSESSEE HAD NOT CO - RELATED THOSE BILLS WITH H IS INCOME, THAT THE ARGUMENT ADVANCED BY THE ASSESSEE ABOUT ACCEPTING THE PEAK CREDIT WAS NOT BASED ON ANY LEGAL FOOTING, THAT HE HAD FAILED TO CO - RELATE THE CREDITS AND DEBITS APPEARING IN THE UNDISCLOSED BANK ACCOUNT. FINALLY, HE DISMISSED THE APPEAL FIL ED BY THE ASSESSEE. 4. DURING THE COURSE OF HEARING B EFORE US, AUTHORISED REPRESENTATIVE(AR)STATED THAT DUE TO OVERSIGHT THE TRANSACTIONS RELATING TO ICICI BANK WERE NOT CONSIDERED WHILE FILING THE ORIGINAL RETURN,THAT THE ASSESSEE LATER ON ADMITTED THAT HE WAS CARRYING OUT BUSINESS OF PURCHASE AND SALE OF GREY CLOTHS,THAT PROFIT OF THE BUSINESS WAS OFFERED FOR TAXATION,THAT FAA SHOULD HAVE TAKEN PEAK OF THE TRANSACTION ENTERED IN TO BY THE ASSESSEE,THAT ADDITION OF ENTIRE AMOUNT WAS NOT JUSTIFIED. DEPARTMENTA L REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE FAA AND STATED THAT THE ASSESSEE HAD NOT EXPLAINED THE SOURCES OF CASH DEPOSITS. 5. WE HAVE PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE ASSESSEE HAD FILED REVISED COMPUTATION OF INCOME AND HAD OFFERED ADD ITIONAL INCOME.HE ALSO HAD SHOWN ADDITIONAL BANK INTEREST OF RS.6056/ - CREDITED IN ICICI BANK ACCOUNT WHICH WAS NOT OFFERED EARLIER FOR TAXATION, THAT INTEREST ON RECURRING DEPOSIT OF RS.9707/ - WAS ALSO SHOWN IN THE REVISED COMPUTATION,THAT THE ASSESSEE HA D NOT DISCLO SED THE ACCOUNT WITH AXIS BANK, THAT HE HAD FURNISHED ONLY A FEW PURCHASE AND SALE BILLS, THAT HE HAD NOT FURNISHED ANY DOCUMENTARY EVIDENCE TO SUPPORT ACTUAL DELIVERY OF THE GOODS SPECIFIED IN ABOVE BILLS, THAT HE COULD NOT CO - RELATE THE SALES AND PURCHASE WITH THE DEPOSITS AND WITHDRAWALS FROM THE AXIS BANK ACCOUNT, THAT THE ASSESSEE HAD NOT FURNISHED DOCUMENTARY EVIDENCE TO PROVE TRADING ACTIVITY INSPITE OF SPECIFIC CHANCE GIVEN TO HIM, THAT HE ITA/ 203 /MUM/201 4 ,AY. 0 9 - 10 - HARAK AMARSINGH 4 HAD FAILED TO DISCHARGE HIS PRIMARY ONUS BY PROVI NG THE TRANSACTION AND THEIR GENUINENESS WITH ANY AUTHENTIC DOCUMENTARY EVIDENCES , THAT THE AO HELD THAT THE ENTIRE DEPOSIT APPEARING IN THE BANK ACCOUNT AMOUNTING TO RS.29.22 LAKHS (RS.19.21 LAKHS CASH + 10.01 LAKHS CHEQUE)HAD TO BE ASSESSED AS INCOME FROM UNDISCLOSED INCOME FROM OTHER SOURCES,THAT HE INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT, THAT THE FAA UPHELD THE ORDER OF THE AO,THAT THE ASSESSEE HAD NOT ESTABLISHED THE FACT THAT HE WAS CARRYING OUT ANY BUSINESS ACTIVITY DURING THE YEAR UNDER APPE AL BEFORE THE AO OR THE FAA, THAT EVIDENCE OF TRADING ACTIVITIES BY THE ASSESSEE WERE NOT PRODUCED BEFORE US.FROM THE COPIES OF A FEW BILLS WHICH DO NOT PROVE THE STAND TAKEN BY THE ASSESSEE IT CAN BE PRESUMED THAT THE ASSESSEE WAS IN TRADING OF CLOTH. AT NO STAGE HE HAD PRODUCED THE EVIDENCE THAT COULD PROVE HIS TRADING ACTIVITIES.IT IS ALSO A FACT THAT ABOUT THE CHEQUE TRANSACTION HE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE THAT COULD PROVE THE GENUINENESS OF THE TRANSACTION, IDENTITIY OF THE LENDER OR H IS CREDITWORTHINESS IN THESE CIRCUMSTANCES,WE ARE OF THE OPINION THAT AS FAR AS CHEQUE DEPOSITS OF RS.10.01 LAKHS IS CONCERNED THE ORDER OF THE FAA IS JUSTIFIED.IN ABSENCE OF SOME PLAUSIBLE EXPLANATION THE ADDITION OF RS.10.01 LAKHS IS CONFIRMED. BUT, SAME CANNOT BE HELD ABOUT THE CASH DEPOSITS.WE ARE OF THE OPINION THAT FOR CASH DEPOSITS AS SUCH SHOULD NOT BEEN ADDED TO THE INCOME OF THE ASSESSEE .AVAILABILITY OF CASH FOR DEPOSITING IN THE BANK ACCO UNT CANNOT BE RULED OUT.THEREFO R E ,IN THE INTEREST OF JUSTIC E,WE DIRECT THE AO TO WORK OUT THE PEAK OF THE CASH DEPOSIT AND RESTRICT THE ADDITION TO THAT EXTENT ONLY. THE ASSESSEE IS DIRECTED TO SUBMIT THE PEAK CALCULATION TO THE AO AND HE WOULD DETERMINE THE PEAK AMOUNT AFTER HEARING THE ASSESSEE EFFECTIVELY.FOR TH IS LIMITED PURPOSE WE ARE REMITTING BACK THE ISSUE TO THE FILE OF THE AO.EFFECTIVE GROUND OF APPEAL FILED BY THE ASSESSEE IS DECIDED IN HIS FAVOUR,IN PART. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED . . ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH , JUNE ,2015. 26 TH , 2015 SD/ - SD/ - ( / JOGINDERSINGH ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 26 .06 . 2015 . . . JV . SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERN ED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.