ITO, Tambaram V. Shri Sethuraman Anand, CHENNAI

ITA 207/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51728 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 10-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RANGARAJAN JUNIOR
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 207/MDS/2011 (ASSESSMENT YEAR : 2007-08) THE INCOME TAX OFFICER, BUSINESS WARD I(1), TAMBARAM. (APPELLANT) V. SHRI SETHURAMAN ANAND, C/O LAKSHMI CHEMICAL, F-2, ACCORD FLAT, 4020, RAMALINGA NADAR MAIN ROAD, MADIPAKKAM, CHENNAI 600 091. PAN : AHIPA9375R (RESPONDENT) APPELLANT BY : SHRI K.E.B. RANGARAJAN, JUNIOR STANDING COUNSEL RESPONDENT BY : NONE DATE OF HEARING : 24.08.2011 DATE OF PRONOUNCEMENT : 24.08.2011 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY REVENUE, ITS GRIEVANCE IS THAT LD. CIT(APPEALS) DELETED ADDITIONS MADE BY THE A.O. FOR UNEXPLAINED CASH DEPOSITS IN A SAVINGS BANK ACCOUNT OF ASSESSEE . I.T.A. NO. 207/MDS/11 2 2. SHORT FACTS APROPOS ARE THAT ASSESSEE, DEALING I N CHEMICAL, HAD FILED RETURN FOR IMPUGNED ASSESSMENT YEAR DECLARING AN INCOME OF ` 1,45,250/-. THE A.O. NOTED THAT ASSESSEE HAD TRANS ACTION IN THREE BANK ACCOUNTS, NAMELY, TWO ACCOUNTS WITH AXIS BANK AND ONE ACCOUNT WITH LAKSHMI VILAS BANK, ALL IN VELACHERY. ASSESSING OFFICER NOTED THAT THERE WERE CASH DEPOSITS MADE IN THE ABO VE ACCOUNTS WHICH HE REQUIRED ASSESSEE TO EXPLAIN. EXPLANATION OF THE ASSESSEE WAS THAT HE HAD CANVASSED BUSINESS FOR HIS PRINCIPA L SUPPLIERS OF CHEMICAL AND MONEY COLLECTED ON SUCH TRANSACTIONS W ERE DEPOSITED IN HIS PERSONAL ACCOUNT AND THEN REMITTED TO THE SU PPLIERS AFTER DEDUCTING HIS COMMISSION .05% TO 1%. ASSESSEE SUBM ITTED THAT IN THIS BUSINESS, HE HAD COLLECTED ` 1,81,22,379/- FROM VARIOUS CUSTOMERS, DEPOSITED SUCH MONEY IN HIS PERSONAL BAN K ACCOUNT AND THEREAFTER TRANSFERRED THE SAME TO THE PRINCIPAL SU PPLIERS AFTER DEDUCING COMMISSION OF ` 1,59,171/-. ASSESSEE ALSO OFFERED THIS INCOME OF ` 1,59,171/- IN ADDITION TO WHAT WAS RETURNED IN THE RETURN OF INCOME. HOWEVER, THE A.O. WAS OF THE OPINION TH AT THE ASSESSEE COULD NOT PRODUCE ANY BOOKS OF ACCOUNTS TO SUPPORT HIS CLAIM THAT THE AMOUNTS WERE DEPOSITED OUT OF PROCEEDS FROM THE CUS TOMERS FOR CANVASSING ORDERS FOR SUPPLY OF CHEMICAL AND PASSED ON TO THE I.T.A. NO. 207/MDS/11 3 SUPPLIERS LATER ON. AS PER THE A.O., IN THE ABSENC E OF BOOKS, THE EXPLANATION GIVEN BY THE ASSESSEE COULD ONLY BE CON SIDERED AS AFTERTHOUGHT AND WAS NOT ACCEPTABLE. HE, THEREFORE , TOOK THE AMOUNT DEPOSITED IN THE ACCOUNT OF AXIS BANK, VELACHERY, T O BE INCOME FROM OTHER SOURCES UNDER SECTION 69 OF THE ACT AND MADE ADDITION ACCORDINGLY. 3. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT THOUGH THE AMOUNTS RECEIVED FROM CUSTOMERS WERE IN CASH, PAYMENTS MADE TO THE PRINCIPAL SUPPLIERS FOR SUPPLY OF CHEMICALS WERE BY ACCOUNT PAYEE CHEQUES. ASSESSEE ALSO SEEMS TO HAVE FILED FURTHER DETAILS BEFORE THE LD. CIT(APPEALS) INCLUDI NG THE DETAILS OF CHEQUES ISSUED, NAMES OF THE CUSTOMERS AND DATE-WIS E AMOUNTS RECEIVED FROM THEM FOR SUPPLY OF CHEMICALS, WHICH W ERE DEPOSITED IN HIS BANK ACCOUNT. LD. CIT(APPEALS) SOUGHT A REMAND REPORT FROM THE A.O. WHO REPLIED AS UNDER:- THE DATE WISE DETAILS OF THE CHEQUES ISSUED FOR ` 1,76,63,208 TO THE SUPPLIES VIZ., M/S ULTIMATE CHEMICALS INDIA PVT. LTD. ` 1,51,66,129 DURGA CHEMICALS ` 18,93,700 DHURUVAL ENTERPRISES ` 3,56,550 PIONEER CHEMICALS ` 2,15,000 RAGHAV CHEMICALS ` 95,000 I.T.A. NO. 207/MDS/11 4 DOSHI ENTERPRISES ` 78,000 SHREE ROYALASEEMA ` 20,000 MITTOLLA CHEMICALS ` 18,000 SUNDRY PARTIES ` 1,20,829 TOTAL PAYMENTS ` ` ` ` 1,79,63,208 FILED ARE VERIFIED WITH REFERENCE TO THE CASH RECEI PTS DEPOSITED INTO THE SAVINGS BANK A/C NO.39312. THE CHEQUES WERE DRAWN ON ACCOUNT PAYEE ONLY. THE DATE WISE CASH RECE IPTS WITH CUSTOMERS NAME AND DATE WISE PAYMENTS BY CHEQUES TO T HE SUPPLIERS FILED ARE VERIFIED WITH THE BANK STATEMEN T. FROM THE VERIFICATION OF THE ABOVE DETAILS, THE ASS ESSEES CLAIM OF THE AGENCY BUSINESS FOR SUPPLY OF CHEMICALS TO THE CUSTOMERS FOR ` 1,79,63,208. THE COMMISSION INCOME WAS OMITTED TO BE OFFERED FOR ASSESSMENT FOR THE ASSESSMENT YEAR 2007-08. THE COM MISSION INCOME OF ` 1,59,720 MAY BE ADDED TO THE TOTAL INCOME RETURNED OF ` 1,45,250. BASED ON THIS REMAND REPORT, LD. CIT(APPEALS) HELD THAT THE ADDITION AT THE BEST COULD BE ` 1,59,171/- OR IN OTHER WORDS, HE DELETED THE BALANCE AMOUNT OF ` 1,79,63,208/-. 4. NOW BEFORE US, LEARNED D.R., ASSAILING THE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT IF THE AMOUNTS DEPOSIT ED IN THE BANK ACCOUNT PERTAINED TO TURNOVER OF COMMISSION OF THE ASSESSEE, THEN ACCOUNTS OF THE ASSESSEE SHOULD HAVE BEEN SUBJECTED TO TAX AUDIT UNDER SECTION 44AB OF THE ACT. ACCORDING TO HIM, T HE DETAILS FURNISHED BY THE ASSESSEE DURING APPEAL PROCEEDINGS AND REMAND I.T.A. NO. 207/MDS/11 5 PROCEEDINGS PERTAINED ONLY TO THE WITHDRAWALS FROM BANK ACCOUNT, BUT, NOT WITHDRAWALS OF CASH. THE DEPOSITS WERE AL L MADE BY CASH AND ASSESSEE COULD NOT FURNISH DETAILS BEFORE A.O. THEREFORE, LEARNED D.R. ARGUED THAT DELETION OF ADDITION WAS N OT CALLED FOR. 5. NOBODY APPEARED ON BEHALF OF THE ASSESSEE. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. THE ADDITION WAS MADE ON ACCOUNT OF DEPOSITS MADE I N AXIS BANK ACCOUNT HELD IN THE PERSONAL NAME OF ASSESSEE. THE SE DEPOSITS WERE MADE IN CASH. AS PER THE ASSESSEE, SUCH AMOUN TS DEPOSITED WERE GIVEN BY THE CUSTOMERS, FOR SUPPLY OF CHEMICAL S AND THE AMOUNTS WERE PASSED ON BY CHEQUES TO THE SUPPLIERS LESS HIS COMMISSION. OR, IN OTHER WORDS, WHAT WAS LEFT WITH THE ASSESSEE WAS ONLY COMMISSION. ASSESSEE HAD ALSO FURNISHED BEFOR E LD. CIT(APPEALS) NAMES OF THE CUSTOMERS FROM WHOM AMOUN TS WERE RECEIVED AS ALSO THE DETAILS OF CHEQUES ISSUED TO V ARIOUS SUPPLIERS. SUCH INFORMATION WAS PUT BY LD. CIT(APPEALS) TO THE A.O. FOR A REMAND REPORT. IN THE REMAND REPORT, IT WAS ACCEPT ED BY THE A.O. THAT WHAT WAS ASSESSABLE WAS ONLY COMMISSION INCOME. IT WAS ALSO ACCEPTED BY THE A.O. THAT DATE-WISE CASH RECEIPTS W ITH CUSTOMERS I.T.A. NO. 207/MDS/11 6 NAME, DATE-WISE PAYMENTS BY CHEQUES WERE ALL VERIFI ABLE AND HE HAD VERIFIED THESE WITH THE BANK STATEMENT. IN SUCH CIR CUMSTANCES, LD. CIT(APPEALS) WAS OF THE VIEW THAT ONLY ` 1,59,171/- COULD BE CONSIDERED AS INCOME OF THE ASSESSEE IN ADDITION TO WHAT WAS RETURNED BY HIM AND NOT THE TOTAL DEPOSITS ` 1,81,22,379/-. LD. CIT(APPEALS) HAVING RELIED ON THE REMAND REPORT OF THE A.O., WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(APPEALS). THE APPEAL FILED BY REVENUE IS DEVOID OF MERITS. 7. IN THE RESULT, THE APPEAL FILED BY REVENUE STAND S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THE TWENTY FOURTH DAY OF AUGUST, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 24 TH AUGUST, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-IX, CHENNAI-34 (4) CIT-VII, CHENNAI-34 (5) D.R. (6) GUARD FILE