Vengalathur Kumar, CHENNAI V. ITO, CHENNAI

ITA 204/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6373 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 23-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS TRIPURASUNDARI
• Assessee Lawyers: K MEENAKSHISUNDARAM ITP
• Keywords: Corroborative evidences

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , , # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.204/MDS/2017 $ $ /ASSESSMENT YEAR: 2011-12 SHRI VENGALATHUR KUMAR, 6/6, BHARATHI NAGAR, 1 ST STREET, T.NAGAR, CHENNAI-600 017. [PAN: AHXPK 8066 A] VS. THE INCOME TAX OFFICER, NON-CORPORATE WARD 1(4), CHENNAI. ( ' /APPELLANT) ( ()' /RESPONDENT) ' * / APPELLANT BY : MR.K.MEENAKSHISUNDARAM, ITP ()' * /RESPONDENT BY : MRS.TRIPURASUNDARI, JCIT * /DATE OF HEARING : 24.05.2017 * /DATE OF PRONOUNCEMENT : 23.08.2017 / O R D E R PER S. JAYARAMAN , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, CHENNAI, IN ITA NO.118/CIT(A)- 2/2014-15 DATED 29.11.2016 FOR THE AY 2011-12. 2. THE ASSESSING OFFICER (A O), BASED ON AIR INFORM ATION THAT THE ASSESSEE HAD CASH DEPOSITS OF RS.61,00,965/- IN ICI CI BANK, CALLED FOR ITA NO.204/MDS/2017 :- 2 -: DETAILS FROM THE ASSESSEE. SINCE THE ASSESSEE DENIE D HAVING ANY BANK ACCOUNT WITH ICICI BANK, BOMBAY, THE A O MADE FURT HER ENQUIRIES WITH THE BANK AND ASCERTAINED THAT THE ASSESSEE WAS OPER ATING A SAVINGS BANK ACCOUNT, NUNGAMBAKKAM BRANCH, CHENNAI INTO WHICH CA SH TOTALING RS.61,00,965/- HAD BEEN DEPOSITED ON VARIOUS DATES. THE ASSESSEE SUBMITTED AN EXPLANATION STATING THAT THIS ACCOUNT WAS OPENED FOR THE EXCLUSIVE PURPOSE OF DEPOSIT OF RECEIPTS FROM INTEN DED PURCHASERS OF OILS THROUGH CASH OR TRANSFER THE ADVANCES AND THE SAME WERE WITHDRAWN EITHER AT THE TIME OF PURCHASE DIRECTLY FROM SELLER S OR TAKING BACK OF THEIR ADVANCES, THESE AMOUNTS ARE NEITHER HIS INCOME NOR HIS MONEY AND HENCE THE SAME HAS NOT BEEN ACCOUNTED IN THE ACCOUNTS OF HIS SOLE PROPRIETORSHIP CONCERN AND FURTHER, THAT THE ACCOUN T WAS CLOSED LONG TIME BACK AS NO SUCH ADVANCES WERE RECEIVED SUBSEQUENTLY ON ACCOUNT OF DEEP FALL IN OUTSIDE PURCHASES. THE ASSESSEE ALSO CLAIME D THAT THESE FACTS WERE BROUGHT TO THE NOTICE OF THE ITO, MEDIA WARD III, C HENNAI BY HIM, THROUGH HIS LETTER DT.20.4.2012. HOWEVER, THE AO OBSERVED THAT THE AMOUNTS CREDITED HAVE BEEN IMMEDIATELY WITHDRAWN BY ATM CAR D AND THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO-PROVE THAT THESE WITHDRAWALS WERE DONE BY A THIRD PARTY. NOT EVEN A SINGLE CONFIRMATION FR OM EITHER THE BUYER OR SELLER WAS FURNISHED BY THE ASSESSEE TO EXPLAIN THE TRANSACTIONS AS DESCRIBED/CLAIMED BY THE ASSESSEE. IN VIEW OF THIS, THE A O BROUGHT TO TAX THE ENTIRE AMOUNT OF RS.61,00,965/-, AS UNEXPLAINED MONEY U/S. 69A. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). THE CIT (A) CALLED FOR A REMAND REPORT FROM THE AO AND AFTER CO NSIDERING THE REMAND ITA NO.204/MDS/2017 :- 3 -: REPORT, DISMISSED THE APPEAL. AGGRIEVED, THE ASSESS EE FILED THIS APPEAL WITH FOLLOWING GROUNDS : THE COMMISSIONER (APPEALS) ERRED IN HOLDING THAT T HE TOTAL CASH DEPOSITS IN THE BANK ACCOUNT WERE THE APPELLANTS U NEXPLAINED INVESTMENTS. THE LEARNED COMMISSIONER (APPEALS) OUGHT TO HAVE AP PRECIATED THE FACT, THAT THE APPELLANT WAS ONLY A BROKER ENTITLED TO A COMMISSION FOR PROCURING EDIBLE OIL ON COMMISSION BASIS AND TH AT THE MONEY DEPOSITED IN THE BANK ACCOUNT, REPRESENTED THE ADVA NCES GIVEN BY THE PURCHASERS TO BE PASSED ON TO THE ULTIMATE SELL ERS THROUGH THE APPELLANT AFTER TAKING HIS COMMISSION. THE LEARNED COMMISSIONER (APPEALS) OUGHT TO HAVE AP PRECIATED THE FACT, THAT ALL THE CUSTOMERS WHO HAD RESPONDED TO T HE SUMMONS ISSUED BY THE ASSESSING OFFICER HAD CONFIRMED THAT THEIR RELATIONSHIP WITH THE ASSESSEE HAD BEEN ONLY A COMMISSION TRADER ARRANGING SUPPLY OF OIL FOR A COMMISSION FROM DIFFERENT OIL D EALERS IN CHENNAI. THE LEARNED COMMISSIONER (APPEALS) OUGHT TO HAVE AP PRECIATED THE FACT, EACH CASH DEPOSIT IN THE BANK ACCOUNT REPRESE NTED THE ADVANCE RECEIVED FROM THE BUYER AND EACH FOLLOWING WITHDRAW AL REPRESENTED THE PAYMENT MADE TO THE ULTIMATE SELLER. ITA NO.204/MDS/2017 :- 4 -: THE LEARNED COMMISSIONER (APPEALS) OUGHT TO HAVE AP PRECIATED THE FACT, THAT THE APPELLANT WAS ENTITLED TO COMMISSION ONLY WHICH WAS ADMITTED IN THE RETURN, AS INCOME FROM HIS BUSINESS AND SUCH ADMISSION WAS MORE THAN THE PEAK OF THE CASH DEPOSI T IN THE BANK ACCOUNT. EVEN ASSUMING, BUT NOT ADMITTING, THE DEPOSITS NOTI CED IN THE BANK STATEMENT WAS THE APPELLANTS MONEY, IT IS SUBMITTE D THAT, THE LEARNED COMMISSIONER (APPEALS) OUGHT TO HAVE APPREC IATED THE FACT THAT EVERY CASH DEPOSIT ENTRY IN THE BANK ACCOUNT I S IMMEDIATELY FOLLOWED BY A WITHDRAWAL ENTRY AND HENCE THE THEORY OF PEAK DEPOSIT AND ROLL ON EFFECT OUGHT TO HAVE BEEN TAKEN INTO AC COUNT INSTEAD OF ADDING THE SUM TOTAL OF ALL THE CASH DEPOSITS AS UN EXPLAINED INCOME. 3. THE AR SUBMITTED THAT THE ASSESSEE HAD BEEN A COMMISSION TRADER RIGHT FROM THE BEGINNING AND INVITED OUR ATT ENTION TO THE COPY OF FIRST RETURN FILED FOR 2001-2002 ON 16.6.2001 WHERE IN HE HAS REPORTED THAT HE IS CARRYING ON BROKERAGE & COMMISSION BUSINESS I N PURCHASE & SALE OF EDIBLE AND NON-EDIBLE OIL ETC AND ALSO ON LORRY HIR E BUSINESS ON LEASED LORRY. SEEKING OUR ATTENTION TO THE CBDT CIRCULAR N O.452 DATED 17.3.1986, THE AR SUBMITTED AS PER THE CBDT CIRCULAR, IN THE C ASE OF A COMMISSION TRADER IT IS ENOUGH IF THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET ARE PREPARED BASED UPON COMMISSION INCOME ALONE. THE CO NSIDERATION ITA NO.204/MDS/2017 :- 5 -: RECEIVED AND PAID RESPECTIVELY FROM PURCHASERS AND SELLERS NEED NOT BE REFLECTED IN THE ACCOUNTS. HE SUBMITTED THAT THE CA SH DEPOSITS FOUND IN THE BANK ACCOUNT ARE CASH RECEIVED FROM PURCHASERS AND CASH WITHDRAWALS ARE CASH PAID TO SELLERS OF OIL RESPECTIVELY. ALL THE C ONSTITUENTS TO WHOM SUMMONS HAD BEEN ISSUED BY THE INCOME TAX OFFICER H AD ALL CONFIRMED THIS INFORMATION AND THE ASSESSING OFFICER AND THE COMMISSIONER (APPEALS) HAD NOT DISPUTED THE SAME. THE CASH DEPOS ITS FOUND IN THE BANK ACCOUNT IN THE CIRCUMSTANCES OUGHT NOT TO HAVE BEEN ADDED TO THE TOTAL INCOME BUT THE COMMISSION IMBEDDED IN THEM ONLY SHOULD BE ASSESSED AS INCOME. THE DIFFERENCE BETWEEN THE CASH DEPOSITS AND THE CASH WITHDRAWALS WHICH REPRESENTS THE ASSESSEES COMM ISSION HAD BEEN TRULY REFLECTED IN THE ACCOUNTS AND THERE IS NO OMISSION OF ANY COMMISSION. THERE IS NO ADVERSE MATERIAL ON THIS FACT IN THE OR DER OF THE INCOME TAX OFFICER AND THE COMMISSIONER (APPEALS). AT THE TIME OF HEARING, THE TRIBUNAL WANTED TO KNOW WHETHER ANY INVOICES WERE D RAWN FOR THE TRANSACTIONS DONE BY THE ASSESSEE AS A COMMISSION TRADER. IN THIS REGARD, IT IS SUBMITTED THAT THE TRANSACTIONS DONE BY THE ASSESSEE DID NOT ATTRACT ANY VAT AND HENCE THERE WAS NO NECES SITY TO DRAW ANY INVOICES IN CASES WHERE THERE IS NO PAYMENT OF ANY VAT TAX. HENCE, THERE ARE NO INVOICES FOR THE COMMISSION TRANSACTIONS DON E BY THE ASSESSEE. THE AR SUBMITTED THAT DURING THE ENQUIRY DONE BY THE AS SESSING OFFICER WITH THE CUSTOMERS, THEY HAVE ALL CONFIRMED THEIR RELA TIONSHIP WITH THE APPELLANT HAD BEEN IN THE NATURE OF A COMMISSION TR ADER ONLY. IN THIS REGARD, HE INVITED OUR ATTENTION TO THE COPY OF THE SWORN STATEMENT ITA NO.204/MDS/2017 :- 6 -: RECORDED BY THE A O WITH THE PARTNER OF JPN ENTERPR ISES AND ALSO A COPY OF CONFIRMATION LETTER ISSUED BY JPN ENTERPRISES. THE DEPARTMENT HAD BEEN FOLLOWING THE CBDT CIRCULAR NO.452 DATED 17.3.1986 IN LETTER AND SPIRIT IN ALL CASES OF COMMISSION TRADERS. WHEREVER THE ASSES SES EXPLAIN THAT THE CASH DEPOSITS IN THE BANK ACCOUNT REPRESENTED RECEI PTS IN THE COURSE OF A COMMISSION TRADE IN COMMODITIES ETC., THE DEPARTMEN T IS ADOPTING ONLY THE PROFIT ELEMENT INVOLVED IN THE COMMISSION TRANS ACTIONS AND THE CASH DEPOSITS ARE NOT TREATED AS UNEXPLAINED MONEY UNDER SECTION 69A. TO PROVE HIS STAND, THE AR FILED COPIES THE ORDERS PAS SED IN THE CASE OF N. THANGAVEL BY INCOME TAX OFFICER WARD-I(2), POLLACHI WHEREIN THE CASH DEPOSITS WERE TREATED ONLY AS TURNOVER IN A COMMISS ION BUSINESS IN COCONUTS AND COCONUT PITH AND IN CASE OF SULTHAN LB RAHIM BY INCOME TAX OFFICER WARD-2, RAMANATHAPURAM WHERE THE CASH DEP OSITS IN THE BANK ACCOUNT WERE ACCEPTED AS RECEIPTS IN THE COURSE OF BUSINESS IN RUNNING A PETROL PUMP FOR A COMMISSION ONLY. THUS, THE AR SU BMITTED THAT THE ITOS ACROSS TAMIL NADU ACCEPTED THIS PRACTICE AND ASSESSED IN ACCORDANCE WITH THE BOARD CIRCULAR. FURTHER, THE AR SUBMITTED INVITING OUR ATTENTION TO THIS TRIBUNAL ORDER IN ITA NO 410/MDS/ 2013 DT 26.3.2015 THAT THIS TRIBUNAL WHILE DEALING WITH SECTION 40(A) (IA) HAD ENDORSED THE PRACTICE OF ADMITTING ONLY COMMISSION IN THE PROFIT AND LOSS ACCOUNT WHERE THE NATURE OF BUSINESS IS COMMISSION TRADE. THE RET URNS OF INCOME FILED BY THE ASSESSE FROM THE VERY FIRST YEAR HAD STATED CLE ARLY THAT THE ASSESSEES SOURCE OF INCOME HAD BEEN FROM COMMISSION TRADE ONL Y. THE AR FURTHER SUBMITTED THAT TO HOLD OTHERWISE, THE DEPARTM ENT HAS TO COLLECT ITA NO.204/MDS/2017 :- 7 -: CORROBORATIVE EVIDENCES THAT THE EXPLANATION OF TH E ASSESSEE IS NOT CORRECT . IN THE ABSENCE OF ANY SPECIFIC INFORMATIO N AGAINST THE ASSESSEE, THE ADDITION MADE REQUIRES DELETION. ALTERNATIVELY , THE AR PLEADED THAT EVERY CASH DEPOSIT IS FOLLOWED BY AN IMMEDIATE CASH WITHDRAWAL IN THE BANK STATEMENT. THE ASSESSING OFFICER IN THE NATURE OF TRANSACTIONS FOUND IN THE BANK ACCOUNT OUGHT TO HAVE WORKED OUT ONLY T HE PEAK DEPOSIT ALLOWING SET OFF OF EACH PREVIOUS WITHDRAWAL AGAINS T EACH FOLLOWING CASH DEPOSIT. DOING SO, THE PEAK DEPOSIT COMES TO ONLY R S.1,99,000/- ON 28.11.2010. THE INCOME OFFERED BY THE ASSESSE E IS MORE THAN THE PEAK DEPOSIT AND HENCE THE ADDITION MADE IS NOT COR RECT. PER CONTRA, THE DR SUPPORTED THE ORDERS OF THE AO & THE CIT (A). 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE ORDERS AND RELEVANT MATERIAL. THE ASSESSEE CLAIMS THAT ON THE IMPUGNED TRANSACTIONS HE WAS REQUIRED TO EXPLAIN BY THE ITO, MEDIA WARD III , CHENNAI AND HE EXPLAINED BY HIS LETTER DT 20.4.2012 . SUBSEQUENTLY, WHEN THE AO REQUIRED HIM TO EXPLAIN, THE ASSESSEE CLAIMED THAT THE IMPUGNED TRANSACTIONS ARE FROM THE INTENDED PURCHAS ERS FOR OILS THROUGH CASH OR TRANSFER AS ADVANCES, AMOUNTS WITHDRAWN ARE EITHER AT THE TIME OF PURCHASE DIRECTLY FROM SELLERS OR TO PAY BACK THE A DVANCES. THE MAXIMUM CASH DEPOSIT ON ANY DAY IS NOT MORE THAN RS.49,000/ -. SUCH CASH DEPOSITS ARE ALMOST WITHDRAWN EITHER IN THE SAME DAY OR IM MEDIATELY THEREAFTER EITHER THROUGH ATM OR BY A DESCRIPTION VAT/CASH WDL / DATE OF TRANSACTION, AS IS SEEN FROM THE BANK STATEMENT. THE ENCLOSE D STATEMENT INDICATE ITA NO.204/MDS/2017 :- 8 -: THAT HE WAS A BROKER IN THAT LINE OF TRADE. THE ASSESSEE HAD BEEN A COMMISSION TRADER RIGHT FROM THE BEGINNING AS SE EN FROM THE COPY OF FIRST RETURN FILED FOR 2001-2002 ON 16.6.2001 WHERE IN HE HAS REPORTED THAT HE IS CARRYING ON BROKERAGE & COMMISSION BUSINESS I N PURCHASE & SALE OF EDIBLE AND NON-EDIBLE OIL ETC. WITH THESE MATERIA L, THE ASSESSEE PLEADS , AS CANVASSED SUPRA, THAT HIS ASSESSMENT HA S TO BE DONE ON THE LINES ON WHICH SIMILAR CASES WERE DONE BY THE OTHER AOS IN ACCORDANCE WITH THE CBDT CIRCULAR NO.452 DATED 17.3.1986. IT I S SEEN THAT CIT (A) DECIDED THE CASE MAINLY FOR THE REASON THAT THE LET TERS OF 3 CONFIRMING PARTIES WERE IDENTICALLY WORDED AND FOR AN APPARENT CONTRADICTION BETWEEN THE TRANSACTION IN THE ASSESSEES BANK STATEMENT V IS A VIS THE ACCOUNTS WITH M/S JPN ENTERPRISES. ON THE OTHER HAND , THE A SSESSEE PLEADS THAT ALL OF THEM CONFIRMED THAT HE IS A BROKER. THE IMPUGNED TRANSACTIONS ARE FROM THE INTENDED PURCHASERS FOR OILS THROUGH CASH OR TRANSFER AS ADVANCES, AMOUNTS WITHDRAWN ARE EITHER AT THE TIME OF PURCHASE DIRECTLY FROM SELLERS OR TO PAY BACK THE ADVANCES, THE FRE QUENCY OF CASH DEPOSITS AND WITHDRAWL OF SUCH DEPOSITS EITHER IN THE SAME DAY OR IMMEDIATELY THEREAFTER AND ADEQUACY OF WITHDRAWALS ETC EVIDENCES HIS PLEA IN HIS FAVOUR. FURTHER, THE ASSESSEE PLEADS T HAT AS PER CBDT CIRCULAR HE WAS NOT REQUIRED TO MAINTAIN BOOKS AND ACCORDING LY HE DID NOT MAINTAIN . IN SUCH CIRCUMSTANCES, HIS PLEA SHOULD N OT BE REJECTED BASED ON THE ENTRIES IN OTHERS BOOK . TO HOLD OTHERWISE, THE DEPARTMENT HAS TO COLLECT CORROBORATIVE EVIDENCES THAT HIS EXPLANATIO N IS NOT CORRECT . IN THE ABSENCE OF ANY SPECIFIC INFORMATION AGAINST THE ASS ESSEE, THE ADDITION ITA NO.204/MDS/2017 :- 9 -: SHOULD NOT BE SUSTAINED. IN THE FACTS AND CIRCUMSTA NCES, WE DEEM IT FIT TO SET ASIDE THE ORDER OF THE CIT (A) AND REMIT THE IS SUE TO THE AO FOR A FRESH EXAMINATION, DE NOVO. THE AO , AFTER GIVING ADEQUA TE OPPORTUNITY, SHALL PASS A SPEAKING ORDER. 5. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD AUGUST, 2017, AT CHENNAI. SD/- ( . .. . . .. . . . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 23 RD AUGUST, 2017 /COPY TO: 1. / APPELLANT 2. /RESPONDENT 3. /CIT(A) 4. /CIT 5. /DR 6. /GF