Ankur Nohria, Rajpura V. ITO, Rajpura

ITA 219/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86160 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-11-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: VIKAS AGGARWAL
• Keywords: Business income
• Section: 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 219/CHD/2014 ASSESSMENT YEAR : 2008-09 ANKUR NOHRIA, VS. THE INCOME TAX OFFICER, PROP.DIAMOND INCORPORATE, WARD RAJPURA RAJPURA. PAN: ADCPN1112A (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI ASHOK GOYAL & VIKAS AGGARWAL RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 04.02.2015 DATE OF PRONOUNCEMENT : 10.02.2015 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 24.12.2013 FOR ASSESSMENT YEAR 2008-09. 2. ON GROUND NO.1 AND 2 THE ASSESSEE CHALLENGED THE ADDITION OF RS.17,35,200/- UNDER SECTION 69A OF THE ACT ON ACCO UNT OF CASH DEPOSITS IN THE BANK ACCOUNT. 3. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE FILED R ETURN OF INCOME AT RS.1,40,950/-. THE MAIN SOURCE OF INCOM E OF THE 2 ASSESSEE IS INCOME FROM PROFIT AND GAINS FROM BUSI NESS. THE ASSESSEE IS A WHOLESALE TRADER OF BALL BEARINGS AND MACHINERY PARTS. THE ASSESSEE HAS DECLARED NET PR OFIT OF RS.2,00,944/- FROM SALES OF RS.39,00,875/-. AS P ER THE BALANCE SHEET, THE ASSESSEE IS MAINTAINING A CASH C REDIT ACCOUNT WITH ORIENTAL BANK OF COMMERCE, RAJPURA. T HE ASSESSEE WAS TO FURNISH DETAILS OF THE BANK ACCOUNT MAINTAINED BY HIM EITHER INDIVIDUALLY OR JOINTLY WI TH ANY OTHER PERSON. THE ASSESSEE FURNISHED COPIES OF THREE BA NK ACCOUNTS MAINTAINED BY HIM; I) CASH CREDIT BANK ACC OUNT MAINTAINED WITH ORIENTAL BANK OF COMMERCE, RAJPURA; II) SAVING BANK ACCOUNT WITH HDFC BANK, RAJPURA; III) C URRENT BANK ACCOUNT WITH ICICI, RAJPURA. AS PER ANNUAL IN FORMATION REPORT (AIR), THE ASSESSEE HAD MADE CASH DEPOSITS O F RS.17,35,200/- IN HIS SAVING BANK ACCOUNT NO.028401 0003170 MAINTAINED WITH KOTAK MAHINDRA BANK, RAJPURA. THE ASSESSEE HAS NOT DISCLOSED THIS ACCOUNT THROUGH OUT THE ASSESSMENT PROCEEDINGS. THE ASSESSEE IN THE RETUR N OF INCOME STATED THAT THE INCOME IS FILED ON ESTIMATE BASIS BEING NO ACCOUNTS CASE. THE ASSESSEE EXPLAINED BEFORE TH E ASSESSING OFFICER THAT HE HAS MADE TOTAL SALES OF RS.39,00,875/- AND EARNED NET PROFIT AFTER DEDUCTIN G ALL EXPENSES. THE NET PROFIT IS ABOUT 5.15% APPROXIMA TELY, WHICH IS HIGHER THAN THE PRESCRIBED PERCENTAGE UNDE R SECTION 44AF OF THE ACT FOR THE REQUIREMENT OF BOOKS. IT IS EXPLAINED THAT THE ASSESSEE MAINTAINED ONLY CASH BOOK AND LED GER. THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT OR AN Y OTHER DOCUMENT OTHER THAN COPIES OF DEBTORS AND CREDITORS ACCOUNT. 3 THE ASSESSING OFFICER OBTAINED COPY OF THE BANK ACC OUNT OF THE ASSESSEE WITH KOTAK MAHJINDRA BANK, RAJPURA FRO M THE BANK AND EXPLANATION OF THE ASSESSEE WAS SOUGHT TO FURNISH ALL THE ENTRIES CONTAINED THEREIN. THE ASSESSEE EX PLAINED THAT THE BANK ACCOUNT WITH KOTAK MAHJINDRA BANK, RAJPURA HAS BEEN SHOWN IN THE BOOKS OF ACCOUNT BUT DUE TO MIST AKE THE BALANCE WAS TRANSFERRED TO EXPENSES ACCOUNT INSTEAD OF THE BALANCE BEING TAKEN TO BALANCE SHEET. THE PRINTOU T OF COMPUTERIZED CASH BOOK AND LEDGER WAS ALSO PRODUCED . THE ASSESSING OFFICER NOTED THAT THE PERUSAL OF THE SAM E SHOWS THAT THERE IS CREDIT ENTRY OF RS.3010/- ON 31.3.200 8 IN THE MISCELLANEOUS INCOME ACCOUNT WITH THE NARRATION IND ICATING TRANSFER OF THE AMOUNT FROM KOTAK MAHJINDRA BANK, R AJPURA. AS PER BANK STATEMENT OBTAINED FROM THE BANK, THERE IS CREDIT CLOSING BALANCE OF RS.5,988/-, AGAINST WHICH THERE HAS TO BE DEBIT BALANCE AS PER ASSESSEES BOOKS OF ACCOUNT. THE ASSESSING OFFICER FOUND THAT THERE ARE VARIOUS CASH DEPOSITS TOTALING RS.17,35,200/- IN THIS BANK ACCOUNT IN THE YEAR UNDER CONSIDERATION. EACH DEPOSIT IS LESS THAN RS .50,000/-. SAME AMOUNT AS DEPOSITED IN CASH HAS BEEN WITHDRAWN IMMEDIATELY THEREAFTER EITHER ON THE SAME DAY OR TH E NEXT DAY. ALL THE ENTRIES APPEARING IN THE BANK STATEMENT HAV E BEEN PUT BY THE ASSESSEE IN THE CASH BOOK ALSO. THE ASSES SING OFFICER FOUND IT TO BE ABNORMAL FOR MAKING CASH DEPOSITS AN D WITHDRAWING THE CASH ON THE SAME DAY. FURTHER IN FORMATION WAS ALSO GATHERED TO SHOW THAT THE CASH HAS BEEN DE POSITED AT RAJPURA BUT HAD BEEN WITHDRAWN AT DELHI. THE ASSE SSING OFFICER FOUND THAT THE ENTRIES PUT IN THE CASH BOOK ARE ONLY 4 AFTER THOUGHT AND THE ASSESSEE COULD NOT EXPLAIN TH E DEPOSITS IN THE BANK ACCOUNT WITH KOTAK MAHJINDRA BANK, RAJP URA AND ACCORDINGLY, TREATED THE SAID MONEY AS FROM UN-DISC LOSED SOURCES UNDER SECTION 69A OF THE ACT AND ADDITION O F RS.17,35,200/- WAS MADE AGAINST THE ASSESSEE. 4. THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT (A PPEALS) THAT HE WAS LOOKING AFTER HIS AILING FATHER. HIS EMPLOYEE WOULD DEPOSIT THE CASH IN HAND IN BANK WHICH HE WOU LD WITHDRAW AND CARRY FROM DELHI ON HIS WAY BACK AS THE EMPLOYEES WERE NEW THEY WERE UNDER INSTRUCTIONS TO DEPOSIT THE AMOUNT IN THE BANK AT THE END OF THE DAY. THI S WAY, IT WAS THE SAME AMOUNT WHICH WAS ROTATING IN THE BANK AS WELL AS IN THE BOOKS OF ACCOUNT AND ADDITIONS IF AT ALL SHOULD BE OF PEAK AMOUNT. THE ASSESSING OFFICER IN COUNTER COM MENT STATED THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF THE BANK DEPOSITS. THEREFORE, THE ADDITION MAY BE M AINTAINED. 5. THE LEARNED CIT (APPEALS) OBSERVED THAT THE ASSE SSEE HAS NOT DISCLOSED THIS BANK ACCOUNT TO THE REVENUE DEPA RTMENT AND REJECTED THE CONTENTION OF THE ASSESSEE AND CON FIRMED THE ADDITION. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. THE LEARNED COUNSEL FOR ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT COP Y OF KOTAK MAHINDRA BANK ACCOUNT, RAJPURA WOULD SHOW THAT THE AMOUNTS WERE DEPOSITED IN THE BANK ACCOUNT AND ALSO 5 WITHDRAWN THE SAME WERE SHOWN IN THE CASH BOOK ALSO . THEREFORE, IT WAS THE ROTATION OF MONEY OF THE ASSE SSEE ONLY AND SINCE THE ASSESSEE DID NOT MAINTAIN ANY REGULAR BOOKS OF ACCOUNT AND INCOME WAS OFFERED IN THE RETURN OF INC OME UNDER SECTION 44AF OF THE ACT. THEREFORE, THE ASSESSEE NEED NOT TO MAINTAIN BOOKS OF ACCOUNT AND ADDITION IS, THEREFOR E, WHOLLY UNJUSTIFIED. HE HAS RELIED UPON THE DECISION OF T HE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE CIT VS. SUR INDER PAL ANAND, 242 CTR 61 IN WHICH IT WAS HELD AS UNDER : ASSESSMENT BEING UNDER S. 44AD, THE ASSESSEE WAS N OT UNDER OBLIGATION TO EXPLAIN INDIVIDUAL ENTRY OF CAS H DEPOSIT IN THE BANK UNLESS SUCH ENTRY HAD NO NEXUS WITH THE GROSS RECEIPTS AND THEREFORE NO ADDITION UNDER S. 68 WAS CALLED FOR. 7. ON THE OTHER HAND, THE LEARNED D.R FOR THE REVEN UE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE FAILED TO DISCLOSE THE BANK ACCOU NT MAINTAINED WITH KOTAK MAHINDRA BANK, RAJPURA AND TH E SOURCE OF DEPOSITS WAS ALSO NOT EXPLAINED. THEREF ORE, THE ADDITION IS JUSTIFIED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT I S NOT IN DISPUTE THAT THE TOTAL SALES OF THE ASSESSEE WERE O F RS.39,00,875/-. THE ASSESSEE IS THE TRADER OF BAL L BEARINGS AND MACHINERY PARTS AND EXPLAINED BEFORE THE ASSESS ING OFFICER THAT THE RETURN OF INCOME WAS FILED UNDER S PECIAL PROVISIONS CONTAINED UNDER SECTION 44AF OF THE ACT. THEREFORE, THE ASSESSEE IS NOT REQUIRED TO MAINTAIN THE BOOKS 6 OF ACCOUNT. EVEN THEN ACCORDING TO THE SUBMISSION OF THE ASSESSEE, THE ASSESSEE MAINTAINED ONLY CASH BOOK AN D LEDGER. THE PRINTOUT OF COMPUTERIZED CASH BOOK AND LEDGER W ERE ALSO PRODUCED BEFORE THE ASSESSING OFFICER. IT WAS ALS O EXPLAINED THAT THE BANK ACCOUNT OF KOTAK MAHINDRA BANK, RAJPU RA HAS BEEN SHOWN IN THE BOOKS OF ACCOUNT BUT DUE TO MISTA KE THE BALANCE WAS TRANSFERRED TO EXPENSES ACCOUNT INSTEAD OF THE BALANCE BEING TAKEN TO BALANCE SHEET. THE ASSESSI NG OFFICER ALSO NOTED THE FACT THAT THE AMOUNT DEPOSITED IN CA SH IN THIS BANK ACCOUNT HAS SMALL DEPOSITS AS WELL AS WITHDRAW AL OF THE CASH IMMEDIATELY EITHER ON THE SAME DAY OR THE NEXT DAY OF THE DEPOSITS. THE ASSESSING OFFICER ALSO NOTED TH AT ALL THE ENTRIES APPEARING IN THE BANK STATEMENT HAVE BEEN P UT BY THE ASSESSEE IN CASH BOOK ALSO, THOUGH THE ASSESSING OF FICER DISBELIEVED THE ENTRIES CONTAINED IN THE CASH BOOK AND CONSIDERED IT TO BE AN AFTER THOUGHT. IN THIS BACK GROUND, IT IS CLEAR THAT THE ASSESSEE IS A RETAILER AND FILED RET URN OF INCOME WITH THE AID OF SECTION 44AF OF THE ACT. THEREFORE , THE ASSESSEE NEED NOT TO MAINTAIN ANY REGULAR BOOKS OF ACCOUNT. IT IS A FACT THAT IN THE ASSESSMENT YEAR UNDER APPE AL THE ASSESSEE MADE VARIOUS CASH DEPOSITS IN THE BANK ACC OUNT MAINTAINED WITH KOTAK MAHINDRA BANK, RAJPURA BUT TH E DETAILS OF THE SAME SHOWS THAT THESE WERE SMALL DEP OSITS IN THIS BANK ACCOUNT. SAME AMOUNT AS DEPOSITED IN CAS H IN THIS BANK ACCOUNT HAS BEEN WITHDRAWN IMMEDIATELY EITHER ON THE SAME DAY OR THE NEXT DAY. THE ASSESSEE HAS FAILED TO RECONCILE WHETHER THE SAME DEPOSITS WERE FROM THE S ALE PROCEEDS OF THE ASSESSEE. IT IS ALSO FACT THAT INI TIALLY THE 7 ASSESSEE DID NOT DISCLOSE THE BANK ACCOUNT MAINTAIN ED WITH KOTAK MAHINDRA BANK, RAJPURA TO THE REVENUE AUTHORI TIES AND THE ASSESSING OFFICER ALSO CALLED FOR THE INFORMATI ON FROM THE CONCERNED BANK AS WELL AS INFORMATION WAS RECEIVED FROM AIR THAT THERE ARE CASH DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE WITH KOTAK MAHINDRA BANK, RAJPURA. THERE FORE, THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE SURINDER PAL ANAND (SUPRA) WOULD NOT SUPPORT T HE CASE OF THE ASSESSEE BECAUSE THE ASSESSEE HAS NOT PROVED NE XUS OF THE CASH DEPOSITED IN THE BANK WITH THE GROSS DEPOSITS. HOWEVER, CONSIDERING THE FACT THAT THE ASSESSEE MADE SMALL D EPOSITS IN THE BANK ACCOUNT WITH KOTAK MAHINDRA BANK, RAJPURA ON VARIOUS DATES AND AFTER DEPOSITING THE CASH TO THIS ACCOUNT, THE ASSESSEE ALSO WITHDRAWN THE SAME AMOUNT EITHER ON THE SAME DAY OR ON THE NEXT DAY, WOULD DISCLOSE THAT TH E ASSESSEE WAS HAVING AVAILABILITY OF THE CASH FOR FURTHER DEP OSIT IN THE SAME BANK ACCOUNT MAINTAINED WITH KOTAK MAHINDRA BA NK, RAJPURA. THE A.O. HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO PROVE THAT THE ASSESSEE HAS SPENT THE AMO UNT WITHDRAWN SOMEWHERE ELSE. THE THEORY OF PEAK CRED IT IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE BECAUSE THE ASSESSEE NEVER ACCEPTED IT TO BE UNEXPLAINED MONEY. THEREF ORE, IN THE ABSENCE OF COMPLETE DETAILS AND CONSIDERING THE FAC T THAT THE AMOUNT OF CASH WAS ROTATING IN THE BANK ACCOUNT OF THE ASSESSEE WITH KOTAK MAHINDRA BANK, RAJPURA BY MAKIN G CASH DEPOSITS AND IMMEDIATELY WITHDRAWING THE SAME WOULD SHOW THAT THE ENTIRE CASH DEPOSITS IN THE BANK ACCOUNT M AY NOT BE UNEXPLAINED AMOUNT OF THE ASSESSEE. THEREFORE, CO NSIDERING 8 THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, IT WOU LD BE REASONABLE AND PROPER TO GIVE SOME SUBSTANTIAL BENE FIT TO THE ASSESSEE FOR THE PURPOSE OF DELETING PART OF ADDITI ON ON THIS ISSUE. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT ENDS OF JUSTICE WOULD MEET IF THE ADDITION OF RS.10 LACS IS DELETED. THE ADDITION MAY BE RESTRICTED TO RS.7,3 5,200/- ONLY. WE ACCORDINGLY, MODIFY THE ORDERS OF THE AU THORITIES BELOW AND DELETE THE ADDITION OF RS.10 LACS, THE AD DITION WOULD NOW BE RESTRICTED TO RS.7,35,000/-. THE GRO UND NOS. 1 AND 2 OF THE APPEAL OF THE ASSESSEE ARE PARTLY ALL OWED. 9. ON GROUND NOS.3 THE ASSESSEE CHALLENGED THE ADDI TION OF RS.3,07,790/- ON ACCOUNT OF HIGHER CLOSING STOCK. THE ASSESSING OFFICER AS PER COLUMN 6-C (NO ACCOUNT CAS E) ON PAGE 3 OF ITR-4 FILED BY THE ASSESSEE NOTED THE CLOSING STOCK AT RS.13,10,524/-. HOWEVER, IN THE TRADING ACCOUNT E NDING 31.3.2008 AND BALANCE SHEET ENDING 31.3.2008, THE C LOSING STOCK WAS SHOWN AT RS.10.02.734/-. THE ASSESSING OFFICER IN VIEW OF THIS DIFFERENCE MADE ADDITION OF RS.3,07,79 0/-. THE LEARNED CIT (APPEALS) ALSO CONFIRMED THE ADDITION. 10. ON CONSIDERATION OF THE FACTS OF THE CASE, WE A RE OF THE VIEW THAT THE ADDITION IS WHOLLY UNJUSTIFIED. SIN CE THE RETURN IS FILED UNDER SECTION 44AF OF THE ACT, THE ASSESSE E NEED NOT TO MAINTAIN ANY BOOKS OF ACCOUNT. WHATSOEVER CASH BOOK OR LEDGER WAS PREPARED BY THE ASSESSEE, WAS NOT BELIEV ED BY THE ASSESSING OFFICER WHILE MAKING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH WITH KOTAK MAHINDRA BANK, RAJPURA. IN THE BALANCE SHEET FILED WITH THE RETURN OF INCOME, LESSER 9 CLOSING STOCK WAS SHOWN BUT IT APPEARS THAT INADVER TENTLY THE ASSESSEE HAS MAINTAINED WRONG FIGURE IN THE INCOME TAX RETURN OF THE CLOSING STOCK. THEREFORE, ON SUCH BASIS, THE ADDITION NEED NOT TO BE MADE AGAINST THE ASSESSEE. FURTHER WHEN INCOME IS DECLARED ON PRESUMPTIVE BASIS UNDER SECTION 44AF OF THE ACT, NO FURTHER TRADING ADDITION SHOUL D BE MADE AGAINST THE ASSESSEE. WE ACCORDINGLY, SET ASIDE T HE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS .3,07,790/- THE GROUND NO.3 OF THE APPEAL OF THE ASSESSEE IS, T HEREFORE, ALLOWED. 11. ON GROUND NO.4 THE ASSESSEE CHALLENGED CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT, WHICH IS MA NDATORY AND CONSEQUENTIAL IN NATURE. THIS GROUND OF APPEA L OF THE ASSESSEE IS, THEREFORE, DISMISSED. 12. ON GROUND NO.5 THE ASSESSEE CHALLENGED THE ORDE RS OF THE AUTHORITIES BELOW IN NOT CANCELING PENALTY UNDER SE CTION 271D OF THE ACT. THE ASSESSING OFFICER IN THE ASSESSME NT ORDER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271D OF THE ACT SEPARATELY. 13. THE LEARNED CIT (APPEALS) HAS NOT DISCUSSED THI S ISSUE IN THE APPELLATE ORDER AS NO SUCH GROUND WAS RAISED BE FORE HIM. SINCE THE ASSESSING OFFICER HAS NOT LEVIED PENALTY AGAINST THE ASSESSEE AND MERELY INITIATED PENALTY PROCEEDINGS W OULD SHOW THIS GROUND IS PREMATURE AND IS LIABLE TO BE DISMIS SED. THE PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE, WHIC H IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THEREFORE, 10 NO FURTHER INTERFERENCE IS CALLED FOR IN THE MATTER . THIS GROUND OF APPEAL OF THE ASSESSEE IS, THEREFORE, DIS MISSED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF FEBRUARY, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 10 TH FEBRURAY, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH