Sri Shankar Pradhan, Asansol V. ITO, Ward-2(3), Asansol, Asansol

ITA 2270/KOL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4963 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 29-12-2014
• Court: TRIBUNAL
• Department Lawyers: MD GAYAS UDDIN
• Assessee Lawyers: R N RAM IRSRETD
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Business income; Peak credit
• Section: 143(3); 68; 69

Judgement Text

I.T.A. NO. 2270/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 2270/KOL/ 2014 ASSESSMENT YEAR: 2008-2009 SHRI SHANKAR PRADHAN,.............................. ........................APPELLANT COURT MORE, BEHIND AGRANI CLUB, BURNPUR ROAD, ASANSOL-713 304, BURDWAN [PAN : AHZPP 5800 B] -VS.- INCOME TAX OFFICER,................................ .............................RESPONDENT WARD-2(3), ASANSOL, PARMAR BUILDING, G.T. ROAD, ASANSOL-713 304 APPEARANCES BY: SHRI R.N. RAM (I.R.S.) (RETD.), FOR THE ASSESSEE MD. GAYAS UDDIN, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : FEBRUARY 15, 2016 DATE OF PRONOUNCING THE ORDER : MARCH 02, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), ASANSOL DATED 31.10.2014 FOR THE ASSESSMENT YEAR 2008-09. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH IS APPEAL ARE AS FOLLOWS: THE ASSESSEE IS AN INDIVIDUAL, WHO IS ENGAGED IN T HE BUSINESS OF PLYING OF DUMPER AND MINI BUS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 11.08.2008 DECLAR ING TOTAL INCOME OF I.T.A. NO. 2270/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 7 RS.1,79,177/-. IN THE SAID RETURN, DUMBER HIRE CHAR GES RECEIVED FROM THE SOLITARY PARTY M/S. M.J. MOVERS WERE SHOWN BY THE A SSESSEE AT RS.20,09,538/-, WHILE BUS PLYING HIRE CHARGES WERE SHOWN AT RS.6,24,000/-. THE INQUIRY MADE BY THE ASSESSING OF FICER DIRECTLY FROM M/S. M.J. MOVERS REVEALED THAT THE DUMPER HIRE CHAR GES PAID BY THE SAID PARTY TO THE ASSESSEE WERE RS.20,09,538/- AS CORREC TLY SHOWN BY THE ASSESSEE. THE SAID PARTY, HOWEVER, HAD SHOWN THE SU M OF RS.1,95,880/- AS PAYABLE TO THE ASSESSEE AS ON 31.03.2008, WHEREAS N O SUCH AMOUNT WAS REFLECTED ON THE ASSETS SIDE OF THE ASSESSEES BALA NCE-SHEET. SINCE NO SATISFACTORY EXPLANATION COULD BE OFFERED BY THE AS SESSEE IN THIS REGARD, THE AMOUNT OF RS.1,95,818/- WAS TREATED BY THE ASSE SSING OFFICER AS UNDISCLOSED INVESTMENT OF THE ASSESSEE AND THE SAME WAS ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE. 3. IN THE BALANCE-SHEET FILED ALONG WITH THE RETURN OF INCOME, A RESIDENTIAL FLAT NO. 3 IN SUCHITRA BUILDING, BURN PUR ROAD OWNED BY THE ASSESSEE WAS SHOWN ON THE ASSETS SIDE. ON ENQUIRY M ADE BY THE ASSESSING OFFICER THROUGH INSPECTOR, IT WAS REVEALED THAT THE SAID FLAT WAS GIVEN BY THE ASSESSEE ON RENT SINCE 2006 FOR MONTHLY RENT OF RS.3,500/-, BUT THE SAID RENT RECEIVED IN CASH WAS NOT OFFERED BY THE A SSESSEE TO TAX IN THE RETURN OF INCOME. WHEN THIS POSITION WAS CONFRONTED BY THE ASSESSING OFFICER TO THE ASSESSEE, LATTER ACCEPTED THE SAME B Y SUBMITTING THAT THE RENTAL INCOME FOR THE YEAR UNDER CONSIDERATION WAS NOT SHOWN IN THE RETURN OF INCOME INADVERTENTLY. ACCORDINGLY, THE AD DITION OF RS.29,400/- WAS MADE BY THE ASSESSING OFFICER TO THE TOTAL INCO ME OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AFTER A LLOWING DEDUCTION UNDER SECTION 24 OF THE ACT OF RS.12,600/- FROM THE ANNUAL RENT OF RS.42,000/-. 4. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E HAD SHOWN TO HAVE RECEIVED TWO GIFTS OF RS.50,000/- IN CASH, ONE FROM MOTHER OF RS.20,000/- AND OTHER OF RS.30,000/- FROM HIS BROTH ER. ON VERIFICATION, THE ASSESSING OFFICER FOUND THAT BOTH THE SAID DONO RS WERE NOT HAVING I.T.A. NO. 2270/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 7 SUFFICIENT MEANS TO GIVE THE GIFTS TO THE ASSESESE AND THE ASSESSEE COULD NOT EXPLAIN THE SAID GIFTS SATISFACTORILY IN TERMS OF SECTION 68. ACCORDINGLY BOTH THESE GIFTS WERE TREATED BY THE ASSESSING OFFI CER AS UNEXPLAINED CASH CREDITS AND THE AMOUNT OF RS.50,000/- WAS ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT. 5. THE INQUIRY MADE BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS REVEALED THAT THERE WAS ONE BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH AXIS BANK, ASANSOL IN HIS INDIVIDUAL NAME BUT THE SAME WAS NOT REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE ALSO COULD NOT OFFER ANY SAT ISFACTORY EXPLANATION AS REGARDS THE TOTAL DEPOSITS OF RS.4,17,163/- FOUN D TO BE MADE IN THE SAID BANK ACCOUNT AND MERELY SUBMITTED THAT KEEPING IN VIEW THE WITHDRAWALS MADE FROM THE SAID BANK ACCOUNT FROM TI ME TO TIME, ONLY PEAK CREDIT COULD BE CONSIDERED AS INCOME. THIS SUB MISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER KEEPING IN VIEW THAT THE WITHDRAWALS MADE FROM THE SAID ACCOUN T WERE MAINLY ON ACCOUNT OF CHEQUES, WHEREBY THE AMOUNTS WERE TRANSF ERRED BY THE ASSESSEE TO OTHER ACCOUNTS. HE, THEREFORE, ADDED TH E ENTIRE AMOUNT OF RS.4,17,163/- TO THE TOTAL INCOME OF THE ASSESSEE U NDER SECTION 69 BY TREATING THE DEPOSITS FOUND TO BE MADE IN THE UNDIS CLOSED BANK ACCOUNT OF THE ASSESSEE AS UNEXPLAINED INVESTMENT. ACCORDINGLY , THE TOTAL INCOME OF THE ASSESSEE WAS COMPUTED BY THE ASSESSING OFFICER AT RS.8,71,560/- IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 21.09.2010. 6. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AND PERUSING THE RELEVANT MATERIAL ON RECORD, THE L D. CIT(APPEALS) DID NOT FIND ANY MERIT IN THE SAID APPEAL. ACCORDINGLY, HE DISMISSED THE SAME AND CONFIRMED ALL THE FOUR ADDITIONS MADE BY THE ASSESS ING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF T HE LD. CIT(APPEALS), I.T.A. NO. 2270/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 7 THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE T RIBUNAL ON THE FOLLOWING GROUNDS:- (1) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS .1,95,808/- MADE BY THE AO AS AN UNEXPLAINED INVESTMENT, WHEREAS THE CLOSING BALANCE OF RS.1,95,808/- SHOWN IN THE BOOKS OF M.J. MOOVERS AS PAYABLE BECOMES RECEIVABLE ONLY IN THE SUBSEQUENT Y EAR AND WHEREAS ENTIRE SUM OF RS.1,95,808/- ALLEGEDLY NOT S HOWN AS RECEIVABLE BY THE YEAR END IS A PART OF SUM OF RS.2 0,09,538/- DISCLOSED BY THE ASSESSEE AS TURNOVER AND DULY CRED ITED IN PROFIT & LOSS ACCOUNT. 2. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A)ERRED IN CONFIRMING THE ADDITION ON ACCOUNT O F INCOME FROM HOUSE PROPERTY ADDED BY THE A.O. CALCULATED FOR 12 MONTHS @3500/- P.M. WHEREAS THE ALLEGED TENANT OCCUPIED THE PREMIS ES ONLY FOR 5 MONTHS AND THE RELEVANT DETAILS ALONG WITH WRITTEN SUBMISSION WAS SUBMITTED BEFORE THE A.O. AND ALSO BEFORE THE CIT(A ). 3. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) ERRED IN CONFIRMING AN ADDITION OF RS.20,000/- BEIN G CASH GIFT MADE BY HIS MOTHER WHO IS PENSIONER FROM MINISTRY OF DEF ENCE AND SOURCE OF WHICH IS DULY EXPLAINED TO THE A.O. AND ALSO BEF ORE THE CIT(A) AND WHEREAS THE CIT(A) FURTHER ERRED IN CONFIRMING THE ADDITION OF CASH GIFT OF RS.30000/-RECEIVED. FROM HIS OWN BROTHER WH O IS AN EMPLOYEE OF NIC LTD. AND HAVE ENOUGH SOURCE 10 MAKE SUCH SMA LL SUM OF CASH GIFT OUT OF NATURAL LOVE AND AFFECTION AND WHEREAS RELEVANT DETAILS ALONG WITH CONFIRMATIONS WERE FILED BEFORE THE A.O. AND ALSO BEFORE THE CIT(A). 4. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.4,17,163/- M ADE BY THE A.O. ON ACCOUNT OF VARIOUS SMALL DEPOSITS IN AN UNDISCLO SED BANK ACCOUNT WITH AXIS BANK LTD. WITHOUT CONSIDERING THE WITHDRA WAL OF RS.4,09,100/- ON DIFFERENT DATES AND WHEREAS THE CL OSING BALANCE AS ON 31/03/2008 IN THE SAID BANK ACCOUNT WAS ONLY RS. 6151/- AND WHEREAS THE RELEVANT BANK ACCOUNT AND DETAILS OF WI THDRAWALS WERE SUBMITTED BEFORE THE A.O. AND ALSO BEFORE CIT(A), A SANSOL. 7. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS T HE ISSUE INVOLVED IN GROUND NO. 2 RELATING TO THE ADDITION MADE ON ACCOU NT OF RENTAL INCOME, IT IS OBSERVED THAT THE FLAT NO. 3 IN SUCHITRA BUILDIN G, BURNPUR ROAD, WAS OWNED BY THE ASSESSEE THROUGHOUT THE YEAR UNDER CON SIDERATION AND INQUIRY MADE BY THE ASSESSING OFFICER THROUGH INSPE CTOR REVEALED THAT THE SAME WAS LET OUT TO ONE SHRI ABHIJIT BANERJEE DURIN G THE YEAR UNDER I.T.A. NO. 2270/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 7 CONSIDERATION WITH MONTHLY RENT OF RS.3,500/-, WHIC H WAS PAID TO THE ASSESSEE IN CASH. THIS POSITION WAS ADMITTED BY THE ASSESSEE HIMSELF BEFORE THE ASSESSING OFFICER AND ALTHOUGH IT IS NOW CLAIMED IN THE GROUND RAISED BY THE ASSESSEE THAT THE FLAT WAS LET OUT TO THE TENANT ONLY FOR FIVE MONTHS DURING THE YEAR UNDER CONSIDERATION, THERE I S NOTHING BROUGHT ON RECORD TO ESTABLISH THE SAME. I, THEREFORE, FIND NO MERIT IN GROUND NO. 2 RAISED BY THE ASSEESSEE AND DISMISS THE SAME. 8. AS REGARDS THE ISSUE RAISED IN GROUND NO. 3 RELA TING TO THE ADDITION OF RS.50,000/- MADE ON ACCOUNT OF CASH GIFTS CLAIME D TO BE RECEIVED BY THE ASSESSEE FROM HIS MOTHER AND BROTHER, IT IS OBS ERVED THAT THESE TWO GIFTS REPRESENTING CASH CREDITS WERE DULY EXAMINED BY THE ASSESSING OFFICER IN TERMS OF SECTION 68 AND ON SUCH EXAMINAT ION, HE FOUND THAT BOTH THE DONORS HAVING A VERY MEAGRE SOURCE OF INCO ME HAD NO CAPACITY OR CREDITWORTHINESS TO GIVE THE GIFTS TO THE ASSESS EE AS CLAIMED. AT THE TIME OF HEARING BEFORE ME, THE LD. COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS RECORDED BY THE ASS ESSING OFFICER IN THIS REGARD. HE HAS ALSO NOT BEEN ABLE TO BRING ANY COGE NT EVIDENCE ON RECORD TO ESTABLISH THE CAPACITY OR CREDITWORTHINESS OF TH E CONCERNED TWO DONORS TO GIVE THE GIFTS TO THE ASSESSEE AS REQUIRED IN TE RMS OF SECTION 68. I, THEREFORE, FIND NO MERIT IN GROUND NO. 3 RAISED BY THE ASSESSEE AND DISMISS THE SAME. 9. AS REGARDS THE ISSUE RAISED IN GROUNDS NO. 1 AND 4, IT IS OBSERVED THAT THE SAME ARE INEXTRICABLY CONNECTED WITH THE B USINESS INCOME OF THE ASSESSEE, INASMUCH AS, THE AMOUNT OF RS.1,95,808/- WAS RECEIVABLE BY THE ASSEESESE FROM M/S. M.J MOVERS ON ACCOUNT OF DUMPER HIRE CHARGES, WHILE THE UNDISCLOSED BANK ACCOUNT OF THE ASSESSEE WITH A XIS BANK, ASANSOL BRANCH IS REQUIRED TO BE TREATED AS REFLECTING THE BUSINESS TRANSACTION OF THE ASSESSEE GOING BY THE FACT THAT THE ASSESSEE A DMITTEDLY HAD NO OTHER SOURCE OF INCOME DURING THE YEAR UNDER CONSIDERATIO N AS WELL AS THE NATURE OF TRANSACTIONS REFLECTED THEREIN, WHICH SHO W THE PAYMENTS MADE FOR PURCHASE OF TYRES AS WELL AS CASH WITHDRAWALS M ADE FOR INCURRING THE I.T.A. NO. 2270/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 6 OF 7 EXPENDITURE BESIDES TRANSFER OF FUNDS TO SOME OTHER BANK ACCOUNT. I, THEREFORE, FIND MERIT IN THE CONTENTION RAISED BY T HE LD. COUNSEL FOR THE ASSESEE THAT THE SAME SHOULD BE CONSIDERED TOGETHER AND THE BUSINESS INCOME OF THE ASSESSEE MAY ACCORDINGLY BE ESTIMATED . IN THIS REGARD, THE LD. D.R. HAS INVITED OUR ATTENTION TO THE SPECIFIC MATERIAL DEFECTS POINTED OUT BY THE ASSESSING OFFICER IN THE BOOKS OF ACCOUN T AND OTHER RECORD MAINTAINED BY THE ASSESSEE AND AFTER CONSIDERING TH E SAME, I FIND MERIT IN THE CONTENTION OF THE LD. D.R. THAT THE BOOK RESULT S DECLARED BY THE ASSESESE ARE LIABLE TO BE REJECTED AND THE INCOME F ROM THE BUSINESS OF PLYING DUMBER AND THE MINI BUS IS REQUIRED TO BE CO MPUTED ON ESTIMATE BASIS. IN THIS REGARD, IT IS OBSERVED THAT THE DUMP ER HIRE CHARGES SHOWN BY THE ASSESSEE AT RS.20,09,538/- EXACTLY MATCHED W ITH THE BOOKS OF THE CONCERNED PARTY M/S. M.J. MOVERS. THE AMOUNT SHOWN TO BE PAYABLE BY THE SAID PARTY AS ON 31.03.2008, HOWEVER, WAS NOT R EFLECTED IN THE ASSETS SIDE OF THE ASSESSEES BALANCE-SHEET, WHICH AS SUBM ITTED BY THE LD. COUNSEL FOR THE ASSESSEE WAS ATTRIBUTABLE TO NON-MA INTENANCE OF PROPER BOOKS OF ACCOUNT AND KEEPING IN VIEW THAT THE ENTIR E AMOUNT OF DUMPER HIRE CHARGES WAS DULY SHOWN BY THE ASSESSEE, I AM O F THE VIEW THAT SEPARATE ADDITION ON ACCOUNT OF PART OF SUCH AMOUNT , WHICH HAD REMAINED PAYABLE CANNOT BE SEPARATELY MADE. THE CREDITS APPE ARING IN THE UNDISCLOSED BANK ACCOUNT OF THE ASSESSEE AMOUNTING TO RS.4,17,163/-, HOWEVER, CAN APPROPRIATELY BE CONSIDERED AS ITS BUS INESS RECEIPTS AND BY ADDING THE SAME TO THE RECEIPTS OF RS.26,33,538/- D ECLARED BY THE ASSESSEE, THE TOTAL RECEIPTS OF THE ASSESSEES BUSI NESS CAN REASONABLY BE TAKEN AT RS.30.50 LAKHS. ON THESE RECEIPTS, A NET P ROFIT RATE OF 12% CAN BE APPLIED TO DETERMINE THE INCOME OF THE ASSESSEE KEE PING IN VIEW THE NATURE OF HIS BUSINESS AND THE SAME HAS BEEN ACCEPT ED EVEN BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEF ORE ME. ACCORDINGLY, I MODIFY THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) A ND DIRECT THE ASSESSING OFFICER TO RE-COMPUTE THE BUSINESS INCOME OF THE ASSESSEE BY APPLYING NET PROFIT RATE OF 12% ON GROSS RECEIPTS OF RS.30.50 LAKHS INSTEAD OF SEPARATE ADDITIONS OF RS.1,95,818/- AND RS.4,17,163/- WHICH I.T.A. NO. 2270/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 7 OF 7 ARE DIRECTED TO BE DELETED. GROUNDS NO. 1 AND 4 ARE ACCORDINGLY TREATED AS PARTLY ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 02, 20 16. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 2 ND DAY OF MARCH, 2016 COPIES TO : (1) SHRI SHANKAR PRADHAN, COURT MORE, BEHIND AGRANI CLUB, BURNPUR ROAD, ASANSOL-713 304, BURDWAN (2) INCOME TAX OFFICER, WARD-2(3), ASANSOL, PARMAR BUILDING, G.T. ROAD, ASANSOL-713 304 (3) COMMISSIONER OF INCOME-TAX (APPEALS), ASANSOL (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.