Kartik Chandra Roy, Kolkata V. I.T.O Wd - 2(4),kolkata, Burdwan

ITA 2030/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9476 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V N PUROHIT
• Keywords: Business income; Peak credit
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI A.T.VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 2030 / KOL / 2013 ASSESSMENT YEAR :2009-10 KARTICK CHANDRA ROY VILL. ARIN P.O. SEHARABAZAR, DIST. BURDWAN, WEST BENGAL [ PAN NO. ACQPR 5543 K ] V/S . INCOME TAX OFFICER, WARD-2(4), AAYAKAR BHAWAN, COURT COMPLEX, BRDWAN 713 101 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI V. N. PUROHIT, FCA /BY RESPONDENT NONE /DATE OF HEARING 26-12-2016 /DATE OF PRONOUNCEMENT 08-02-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-DURGAPUR DATED 19.03.2013. ASSESSMENT WAS FRAMED BY ITO WARD-2(4), BURDWAN U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED 27.12.2011 FOR ASSESSMENT YEAR 2009-10. 2. AT THE OUTSET, IT IS NOTICED THAT NONE APPEARED FOR AND ON BEHALF OF REVENUE / RESPONDENT WHEN ITS APPEAL WAS CALLED OUT FOR HEARING, NOR ANY ADJOURNMENT APPLICATION STANDS RECEIVED. THEREFORE, WE HAVE HEARD EX PARTE ITA NO.2030/KOL/2013 A.Y. 2009-10 KATICK CH. ROY VS. ITO WD-2(4) BWN PAGE 2 QUA REVENUE IN PRESENCE OF SHRI V.N. PUROHIT, LD. AUTH ORIZED REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE. 3. THE FACTS IN BRIEF ARE THAT ASSESSEE IN THE PRES ENT CASE IS AN INDIVIDUAL AND ENGAGED IN PADDY AND POTATO BUSINESS. THE ASSES SEE, FOR THE YEAR UNDER CONSIDERATION HAS FILED HIS RETURN OF INCOME U/S. 4 4AF OF THE ACT DECLARING TOTAL INCOME OF 3,00,660/- ON THE TURNOVER OF 21,44,625/-. SUBSEQUENTLY CASE WAS SELECTED FOR SCRUTINY UNDER CASS MODULE AND NOT ICES U/S 143(2)/142(1) WERE ISSUED UPON THE ASSESSEE. THE ASSESSMENT WAS F RAMED U/S. 143(3) OF THE ACT AT A TOTAL INCOME OF 29,73,096/- AFTER MAKING CERTAIN ADDITIONS / DISALLOWANCES. 4. ONLY ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER BY SUSTAI NING THE ADDITION OF 26.50 LACS ON ACCOUNT OF UNDISCLOSED INCOME OF ASSESSEE. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS S HOWN THE TURNOVER OF 21,44,625/- BUT THE CASH WAS DEPOSITED IN HIS SAVIN GS BANK ACCOUNT FOR 60 LACS. THEREFORE, AO CALLED UPON ASSESSEE TO EXPLAIN THE SOURCE OF SAID CASH DEPOSITS. IN COMPLIANCE THERETO, ASSESSEE SUBMITTED THAT THE AFORESAID DEPOSITS OF CASH REPRESENTED THE SALE PROCEED OF RA W PADDY TO VARIOUS RICE MILLS. HOWEVER, ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM ON THE BASIS OF BILLS, VOUCHERS AND SALE REGISTER. ACCORDINGLY, AO DISREGA RDED THE PLEA OF ASSESSEE. THE AO FURTHER OBSERVED THAT ON MANY OCCA SION CASH HAVE BEEN DEPOSITED AND SUBSEQUENTLY WITHDRAWN. THEREFORE, TH E PEAK CREDIT THEORY SHOULD BE APPLIED FOR DETERMINING THE INCOME FROM T HE AFORESAID TRANSACTIONS. THEREFORE, AO DETERMINED THE PEAK BALANCE EXCLUSIVE OF OPENING BALANCE OF 26.50 LACS AND TREATED THE SAME AS UNDISCLOSED INCO ME. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D CIT(A) WHEREAS ASSESSEE SUBMITTED THAT NO BOOKS OF ACCOUNT ARE BEI NG MAINTAINED, THEREFORE, SAME WAS NOT PRODUCED BEFORE AO WHILE FRAMING ASSES SMENT. ASSESSEE FURTHER SUBMITTED THAT CASH DEPOSITED REPRESENTS TH E SALE PROCEED OF RAW ITA NO.2030/KOL/2013 A.Y. 2009-10 KATICK CH. ROY VS. ITO WD-2(4) BWN PAGE 3 PADDY. HOWEVER, LD. CIT(A) DISREGARDED THE CLAIM OF ASSESSEE BY OBSERVING AS UNDER:- THERE IS, HOWEVER, CONTRADICTION IN THE APPELL ANTS STAND. IF RS.60,00,000/- IS TAKEN, AS PER THE APPELLANTS EXP LANATION, TO BE THE SALE PROCEEDS THEN STATUTORILY THE APPELLANT CANNOT CLAIM HIS CASE TO BE A NO BOOKS CASE. MOREOVER, I FIND THAT THE APPELLAN TS EXPLANATION BEFORE ME THAT BEING REGULAR IN THESE ACTIVITIES FOR LAST MANY Y EARS HE AS GENERATED SUFFICIENT CASH AS CAPITAL WHICH WAS U SED IN THESE ACTIVITIES AND HENCE YOUR HONOUR WILL FIND THAT PE AK AMOUNT OF THE YEAR EXCEEDED THE TOTAL SALE ON WHICH HIS INCOME WAS RET URNED U/S. 44AF AS IT INCLUDE HIS CAPITAL USED IN THESE ACTIVITIES. TO BE AT VARIANCE WITH WHAT WAS STATED BEFORE THE AO. IT APPEARS FROM THE TENOR OF THE APPELLANTS EXPLANATION SUBMITTED BEFORE ME THAT THE APPELLANT IS TRYING TO EXPLAIN THE DEPOSITS AS A MIXTURE OF SALES AND INFUSION OF FRESH CAPITAL. HOWEVER, NO EVIDENCE FOR SUCH ACCUMULATION OF CAPIT AL HAS BEEN PROVIDED. IN VIEW OF THAT, I DO NOT THINK ANY INTER FERENCE WITH THE AO'S ACTION IS REQUIRED. THE ADDITION MADE IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. AGGRIEVED BY THIS, ASSESSEE HAS COME UP IN APPEAL O N THE FOLLOWING GROUND. 6. BEFORE US LD. AR FOR THE ASSESSEE FILED PAPER BO OK WHICH IS RUNNING FROM PAGES 1 TO 12 AND REITERATED SAME SUBMISSIONS AS MADE BEFORE LD. CIT(A). 7. HEARD LD. AR AND PERUSED AND CAREFULLY CONSIDERE D THE MATERIALS ON RECORD. IN THE INSTANT CASE, ISSUE RELATES TO CASH DEPOSIT AND WITHDRAWN BY ASSESSEE WHICH WAS NOT CORROBORATIVELY EXPLAINED BE FORE AUTHORITIES BELOW. THEREFORE, AO HAS TREATED THE PEAK BALANCE AS UNDIS CLOSED INCOME OF ASSESSEE WHICH WAS SUBSEQUENTLY CONFIRMED BY LD. CI T(A). ADMITTEDLY, CASH WAS DEPOSITED IN ASSESSEES BANK ACCOUNT FOR 60 LACS DURING THE YEAR UNDER CONSIDERATION. IT IS THE DUTY OF ASSESSEE TO EXPLAI N THE SOURCE OF SUCH CASH. BOTH AUTHORITIES BELOW HAVE GIVEN SUFFICIENT OPPORT UNITY TO ASSESSEE TO EXPLAIN THE SOURCE BUT HE FAILED TO SUBSTANTIATE THE SAME. IN CASE, THE CASH DEPOSITED IS THE BUSINESS RECEIPT THEN ASSESSEE HAS TO JUSTIF Y THAT IT WAS THE BUSINESS RECEIPT OR INFUSION OF CAPITAL OUT OF THE EARLIER Y EARS SAVINGS. BUT THE ASSESSEE FAILED TO SUBMIT THE EVIDENCE IN SUPPORT OF HIS CLA IM. THERE IS NO EVIDENCE ABOUT THE SOURCE OF CASH DEPOSIT WHETHER THE BUSINE SS RECEIPT OR EARLIER YEARS ITA NO.2030/KOL/2013 A.Y. 2009-10 KATICK CH. ROY VS. ITO WD-2(4) BWN PAGE 4 SAVINGS. INDEED, ASSESSEE HAS FILED ITS ITR U/S. 44 AF OF THE ACT DECLARING TOTAL TURNOVER OF 21,44,625/- AND NET PROFIT AT 3,00,660/- BUT FAILED TO FILE THE EVIDENCE IN SUPPORT OF HIS TURNOVER. IT IS CLEAR AS SESSEE WHO KNOWS HIS BUSINESS AFFAIRS TO THE BEST OF HIS KNOWLEDGE BUT S IMPLY VERBAL EXPLANATION CANNOT BE ACCEPTED UNLESS IT IS SUBSTANTIATED. NO D OUBT, AS PER THE PROVISION OF SEC. 44AF OF THE ACT, THERE IS NO NEED TO MAINTA IN THE BOOKS OF ACCOUNT BUT ASSESSEE HAS TO JUSTIFY THE NATURE OF HIS BUSINESS AND ALL THE ENTRIES REFLECTING IN HIS BANK STATEMENT. HOWEVER, WE FIND FORCE IN TH E ARGUMENT PLACED BEFORE US BY LD. AR THAT ASSESSEE HAS ALREADY SHOWN TURNOV ER OF 21,44,625/- WHICH HAS BEEN ACCEPTED ALONG WITH NET PROFIT BY AUTHORIT IES BELOW. IN THIS CONNECTION, WE FIND THAT AUTHORITIES BELOW HAD ACCE PTED THE PROFIT AS DECLARED BY ASSESSEE OUT OF THE TURNOVER OF RS. 21,44,625/-. ONCE THE TURNOVER AND THE PROFIT ON SUCH TURNOVER HAS BEEN ACCEPTED THEN FURT HER ADDING PEAK CREDIT WILL AMOUNT TO DOUBLE TAXATION IN THE HANDS OF ASSESSEE. ONCE, AO HAS APPLIED THE PEAK CREDIT THEORY ON THE BASIS OF NON-AVAILABI LITY OF DOCUMENTS THEN THE PROFIT ALONE ON PEAK CREDIT THEORY CAN BE APPLIED I N THE CASE IN HAND. IN THIS CASE, THE DECLARED INCOME HAS BEEN ACCEPTED WHICH J USTIFY THE TURNOVER OF 21,44,625/-. THEREFORE, AT THE MOST THE DIFFERENCE BETWEEN PEAK CREDIT BALANCE AND TURNOVER DECLARED BY ASSESSEE CAN ALONE BE ADDED TO THE TOTAL INCOME OF ASSESSEE I.E 5,05,375/- (26,50.000.00 21,44,625.00). ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO SUS TAIN THE ADDITION FOR THE UNDISCLOSED INCOME OF 5,05,375/-. AO IS DIRECTED ACCORDINGLY. HENCE, THI S GROUND OF ASSESSEES APPEAL IS PARTLY ALLOWED. 8. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED PAR TLY. ORDER PRONOUNCED IN THE OPEN COURT 08/ 02/2017 SD/- SD/- ( !') ( !') (A.T.VARKEY) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S $!% &- 08 / 02 /201 7 ITA NO.2030/KOL/2013 A.Y. 2009-10 KATICK CH. ROY VS. ITO WD-2(4) BWN PAGE 5 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-KARTICK CHANDRA. ROY, VILL. ARIN P.O. SE HARABAZAR, DIST. BURDWAN, PIN. 713 423, WEST BENGAL 2. /RESPONDENT-ITO, WARD-2(4), AAYAAKAR BHAWAN, COURT COMPLEX, BURDWAN-731101 3. %.%/0 1 1 2 / CONCERNED CIT KOLKATA 4. 1 1 2- / CIT (A) DURGAPUR 5. 567 /0, 1 /0 , / DR, ITAT, KOLKATA 6. 7:; <= / GUARD FILE. BY ORDER/ 1! , /TRUE COPY/ / % 1 /0 ,