R.Prakash, CHENNAI V. ITO, CHENNAI

ITA 2080/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1119 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-03-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 19-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM JT
• Assessee Lawyers: G BASKAR
• Keywords: Business expenditure; Peak credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER] I.T.A.NO.2080/MDS/2012 ASSESSMENT YEAR : 2008-09 SHRI R. PRAKASH NO.3/336, CEE DEE YES, SAPTHESWARA ROAD VIJAYA NAGAR VELACHERY, CHENNAI - 42 VS THE INCOME TAX OFFICER BUSINESS WARD IV(3) CHENNAI [PAN AHXPP 2409 C] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G BASKAR, ADVOCATE RESPONDENT BY : SHRI GURU BHASHYAM, JT. CIT DATE OF HEARING : 18-03-2013 DATE OF PRONOUNCEMENT : 21-03-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE AS SESSEE AGAINST THE ORDER OF THE LD. CIT(A)-VIII, CHENNAI, DATED 28.08.2012. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THE COMMISSIONER OF INCOME-TAX (APPEALS) WENT WRONG IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN TREATING RS . 12 , 49,300 , BEING THE CASH DEPOSITED BY THE ASSESSEE IN THE BANK ACCOUNT AS INCOME . 2. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED I N OBSERVING THAT THERE IS NO CORRELATION BETWEEN THE CASH WITHDRAWALS AND CASH DEPOSITS. I.T.A.NO.2080/12 :- 2 -: 3. THE COMMISSIONER OF INCOME-TAX (APPEALS) EQUALLY WENT WRONG IN OBSERV I NG THAT THERE IS NO LINK THAT CAN BE ESTABLISHED TO THE WITHDRAWAL OF CASH BY THE APPELLANT'S WIFE, THE DATE ON WHICH SHE HAD WITHDRA WN AND THE DATE ON WHICH SHE HANDED OVER THE CASH TO T HE APPELLANT. 4. THE COMMISSIONER OF INCOME-TAX (APPEALS) WENT WRONG IN DISPOSING THE APPEAL IN A SUMMARY MANNER WITHOUT ADVERTING TO THE FACTS OF THE CASE AND THE SUBMISSIONS MADE IN THE COURSE OF APPEAL PROCEEDING S IN THE PROPER PERSPECTIVE . 5. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IS LIABLE TO BE REVERSED. 3. THE SOLE ISSUE INVOLVED IN THE PRESENT APPEAL IS T HAT THE CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSI NG OFFICER IN TREATING ` 12,49,300/- BEING CASH DEPOSIT BY THE ASSESSEE IN THE BANK ACCOUNT AS INCOME. 4. THE BRIEF FACTS OF THE CASE ARE THAT FROM THE AIR I NFORMATION, THE ASSESSING OFFICER CAME TO KNOW THAT THE ASSESSE E HAS PAID CREDIT CARD BILLS FOR ` 11,48,300/-, THEREFORE, THE CASE WAS SELECTED FOR SCRUTINY. ON VERIFYING THE BANK STATEMENT OF THE A SSESSEE, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MAD E CASH DEPOSIT OF ` 13,98,800/- IN ABN AMRO BANK DURING THE YEAR UNDER CONSIDERATION. THE LD. AR OF THE ASSESSEE EXPRESSED HIS INABILITY TO SUBSTANTIATE THE DEPOSITS MADE DURING THE COURSE OF ASSESSMENT PROCE EDINGS. THEREFORE, THE ASSESSING OFFICER TREATED THE ENTIRE CASH DEPOSIT OF I.T.A.NO.2080/12 :- 3 -: ` 13,98,800/- AS THE UNDISCLOSED INCOME OF THE ASSES SEE U/S 68 OF THE ACT. 5. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE CASH DEPOSIT OF ` 12,49,300/- IN THE ABN AMRO BANK DURING THE YEAR UNDER CONSIDERATION WAS ONLY CONSIDERED BY THE ASSESSING OFFICER WITHOUT CONSIDERING THE CASH WITH DRAWALS. IT WAS FURTHER SUBMITTED THAT IT WAS NORMAL TO DRAW CASH T O MEET THE BUSINESS EXPENDITURE AND ONCE BUSINESS ENTITIES REI MBURSES THE AMOUNTS SPENT, THE SAME WOULD BE DEPOSITED INTO THE BANK ACCOUNT. THUS, THE CASH AMOUNT WITHDRAWN MAY NOT BE UTILIZED IN SOME CASES AND HENCE, THE EXCESS CASH BALANCE IN HAND WOULD AL SO BE DEPOSITED INTO THE BANK ACCOUNT. THE CASH WITHDRAWALS DURIN G THE YEAR WAS ` 7,38,000/- WHICH GOT DEPOSITED IN THE BANK. FURTHE R, MRS.VIJAYAPRIYA, WIFE OF THE ASSESSEE HAD WITHDRAWN CASH OF ` 2,50,000/- FROM HER BANK ACCOUNT DURING THE YEAR AND GIVEN THE MONEY TO HER HUSBAND TO DEPOSIT INTO THE BANK ACCOUNT. THUS, IT WAS EXPLA INED THAT THE SOURCE OF CASH DEPOSITS WAS EXPLAINED AND THEREFORE, THE A SSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE CASH DEPOSIT IN B ANK ACCOUNT AS UNEXPLAINED INCOME OF THE ASSESSEE AND ADDING THE S AME U/S 68 OF THE ACT. I.T.A.NO.2080/12 :- 4 -: 6. THE LD.CIT(A), AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, HELD THAT THE EXPLANATION OFFERED BY THE ASSESSEE THAT CASH OF ` 2,50,000/- WAS RECEIVED FROM HIS WIFE WHICH WAS DE POSITED IN THE BANK WAS NOT TENABLE AS THE LD. AR OF THE ASSESSEE COULD NOT RECONCILE THE SOURCES OF DEPOSITING CASH INTO ASSESSEES BAN K ON ANY PARTICULAR DATE AND HOW HE WAS HAVING THOSE CASH BALANCES IN H IS HAND TO MAKE SUCH DEPOSITS. FURTHER, THERE IS NO LINK THAT CAN BE ESTABLISHED TO THE WITHDRAWAL OF CASH BY THE ASSESSEES WIFE THE DATE ON WHICH SHE HAS WITHDRAWN AND THE DATE ON WHICH THE WIFE HAS HANDED OVER THE CASH TO HER HUSBAND FOR MAKING DEPOSITS INTO ASSESSEES BANK ACCOUNT. THERE WAS NO CO-RELATION BETWEEN THE CASH WITHDRAWA LS, CASH DEPOSITS WITH ONE ANOTHER ON DAY TO DAY THAT CAN BE MADE OUT FROM CASH DEPOSITS AND WITHDRAWALS FROM ABN AMRO BANK AND IND IAN OVERSEAS BANK WHICH BELONGS TO THE WIFE OF THE ASSESSEE. N O RECONCILIATION OF DAY TODAY WITHDRAWAL OF CASH AND CORRESPONDING DEPO SITS OF THE SAME CASH CAN BE INFERRED FROM THE DETAILS FILED BY THE LD. AR OF THE ASSESSEE. SINCE NO LINK CAN BE ESTABLISHED BETWEE N THE SOURCE OF DEPOSITS AND WITHDRAWAL, THE EXPLANATION OFFERED BY THE ASSESSEE WAS REJECTED AND THE ADDITION MADE BY THE ASSESSING OFF ICER OF ` 13,98,800/- AS CASH DEPOSITS INTO THE BANK ACCOUNT OF THE ASSESSEE AS UNDISCLOSED INCOME U/S 68 WAS CONFIRMED. I.T.A.NO.2080/12 :- 5 -: 7. THE LD. AR OF THE ASSESSEE SUBMITTED THAT IT WILL BE SEEN FROM PAGE 4 OF THE PAPER BOOK THAT THE ASSESSEE H AD AN OPENING BALANCE OF ` 4,50,000/- AND THAT ` 2,50,000/- WAS CASH RECEIVED FROM HIS WIFE COMPRISING OF ` 1,50,000/- ON 28.7.2007 AND ` 1,00,000/- ON 2.1.2008. THUS, ` 7 LAKHS DEPOSITED IN THE BANK ACCOUNT WAS EXPLAINED. THE BALANCE AMOUNT WAS THE CASH WITHDRA WN FROM THE BANK ACCOUNT WHICH WAS NOT UTILIZED IN THE BUSINESS OF THE ASSESSEE. HENCE, IT WAS HIS PRAYER THAT THE ADDITION OF ` 12,49,300/- CONFIRMED BY THE LD.CIT(A) SHOULD BE DELETED. 8. ON THE OTHER HAND, THE LD.D.R FULLY JUSTIFIED THE O RDER OF THE LD. CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED FROM T HE ABN AMRO BANK ACCOUNT OF THE ASSESSEE THAT THE ASSESSEE HAS MADE CASH DEPOSITS OF ` 13,98,800/- DURING THE YEAR UNDER CONSIDERATION. A CCORDING TO THE ASSESSING OFFICER THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF DEPOSIT AND THEREFORE, HE ADDED THE ENTIRE DEPOS IT OF ` 13,98,800/- TO THE INCOME OF THE ASSESSEE. I.T.A.NO.2080/12 :- 6 -: 10. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF T HE ASSESSING OFFICER. 11. BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THA T THE ASSESSEE HAD ` .4,50,000/- AS OPENING CASH BALANCE IN HAND. WHEN QUESTIONED FROM THE BENCH THAT WHETHER THIS ` 4,50,000/- CASH IN HAND WAS SHOWN IN THE BALANCE SHEET FILED BY THE ASSESSE E WITH THE INCOME- TAX DEPARTMENT IN THE IMMEDIATELY PRECEDING YEAR, T HE LD. AR OF THE ASSESSEE VERY FAIRLY CONCEDED THAT THIS WAS NOT DON E. WHEN QUESTIONED FURTHER, WHAT WAS THE EVIDENCE TO SHOW T HAT ` 4,50,000/- WAS THE OPENING CASH IN HAND, HE EXPRESSED HIS INAB ILITY TO PRODUCE ANY EVIDENCE AND SUBMITTED THAT AT BEST, THE ADDITI ON OF ` 4,50,000/- CAN BE SUSTAINED IN THE HANDS OF THE ASSESSEE OUT O F THE TOTAL ADDITION MADE BY THE ASSESSING OFFICER. HE SUBMITTED THAT T HE SUBSEQUENT DEPOSITS IN THE BANK WERE MADE FROM EARLIER WITHDRA WALS FROM THE VERY SAME BANK AND ` 2,50,000/- WAS WITHDRAWN FROM INDIAN OVERSEAS BANK ACCOUNT OF THE ASSESSEES WIFE. 12. THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORI TIES. 13. WE FIND THAT THE ASSESSEE COULD NOT PRODUCE ANY EVI DENCE TO SHOW THAT ` 2,50,000/- WITHDRAWN BY HIS WIFE WAS GIVEN TO HIM F OR MAKING DEPOSIT IN HIS BANK ACCOUNT. FURTHER, THIS EXPLANATION WAS NOT I.T.A.NO.2080/12 :- 7 -: OFFERED BEFORE THE ASSESSING OFFICER. WE, THEREFOR E, DECLINE TO ACCEPT THIS EXPLANATION OF THE ASSESSEE. THE ASSESSEE FIL ED A CASH FLOW STATEMENT, PLACED AT PAGE 4 OF THE PAPER BOOK, SHOW ING DATE-WISE CASH DEPOSIT AND CASH WITHDRAWAL FROM THE BANK. AS PER THE SAID CASH FLOW STATEMENT, THE PEAK BALANCE OF CASH DEPOSIT IN THE BANK ACCOUNT WAS ON 2.1.2008 OF ` 4,96,700/-. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE EARLIER CASH WITHDRAWALS FROM THE VERY SAME BANK COULD NOT HAVE BEEN AVAILABLE WI TH THE ASSESSEE FOR MAKING SUBSEQUENT CASH DEPOSITS IN THE VERY SAM E BANK ACCOUNT. IN OUR CONSIDERED OPINION, A PLAUSIBLE EXPLANATION GIVEN BY THE ASSESSEE CANNOT BE BRUSHED ASIDE WITHOUT BRINGING A NY MATERIAL ON RECORD TO REBUT THE SAME. THEREFORE, IN THE INSTAN T CASE, IN OUR CONSIDERED OPINION, THE ASSESSEE COULD NOT DISCLOSE THE SUM OF PEAK CASH DEPOSIT OF ` 4,96,700/-. EVEN WHEN IT IS ASSUMED THAT THE ASSESSEE WAS ENGAGED IN SOME UNDISCLOSED BUSINESS, THEN ALSO, THE ENTIRE SALE PROCEEDS OF THE BUSINESS CANNOT BE TREA TED AS INCOME OF THE ASSESSEE. AS THE DEPOSIT OF WHICH SOURCE COULD NOT BE EXPLAINED BY THE ASSESSEE DURING THE YEAR WAS OF ` 13,98,800/- AND IF THE PROFIT OF THE SAID BUSINESS IS ESTIMATED @ 8%, THE SAME WO RKS OUT TO ` 1,11,904/-. THE PEAK DEPOSIT AMOUNT OF ` 4,96,700/- COVERS THE SAID ESTIMATED INCOME FROM UNDISCLOSED BUSINESS. THEREF ORE, IT SHALL BE FAIR AND REASONABLE TO SUSTAIN THE ADDITION TO THE EXTEN T OF PEAK CASH I.T.A.NO.2080/12 :- 8 -: DEPOSIT OF ` 4,96,700/- ONLY. WE, THEREFORE, CONFIRM THE ADDITI ON TO THE EXTENT OF ` 4,96,700/- AND DELETE THE BALANCE ADDITION OF ` 7,52,600/-. THUS, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE PAR TLY ALLOWED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 21 ST OF MARCH, 2013, AT CHENNAI. SD/- SD/- (V. DURGA RAO) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 21 ST MARCH, 2013, RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR