SHRI KATHIRAVAN PONRAJ NADAR, MUMBAI V. INCOME TAX OFFICER WD-21(2)(1), MUMBAI

ITA 2324/MUM/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8524 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Assessee Lawyers: MADAN DEDHIYA
• Keywords: Unexplained cash credit; Business income
• Section: 142(1); 147; 148

Judgement Text

1 ITA 2324/MUM/2018 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO 2324/MUM/2018 (ASSESSMENT YEAR 2010-11) SHRI KATHIRAVAN PONRAJ NADAR B/2/80, ANNA NAGAR DHARAVI CROSS ROAD DHARAVI, MUMBAI 400 017 PAN : ACVPN5208J VS ITO WD.21(2)(1), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI MADAN DEDHIYA RESPONDENT BY SHRI CHAUDHARY ARUNKUMAR SINGH DATE OF HEARING 20-12-2018 DATE OF PRONOUNCEMENT 31-12-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE CIT(A)- 33, MUMBAI DATED 17-01-2018 AND IT PERTAINS TO AY 2 010-11. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF SALES OF FARSAN, FILED HIS RETURN OF IN COME FOR AY 2010-11 ON 30-03- 2012 DECLARING TOTAL INCOME AT RS.1,77,820. THE CA SE HAS BEEN REOPENED U/S 147 OF THE ACT ON THE BASIS OF AIR INFORMATION AS P ER WHICH, THE ASSESSEE HAS 2 ITA 2324/MUM/2018 DEPOSITED MORE THAN RS.10 LAKHS CASH IN THE SAVINGS BANK ACCOUNT. THEREFORE, THE AO WAS OF THE OPINION THAT INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMENT. IN RESPONSE TO NOTICE, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE FILED LETTER DATED 15-05-2013 STATING THAT THE ASSESSEE HAS ALREADY FILED HIS RETURN OF INCOME ON 30-03-2012 AND THE SA ID RETURN MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE A CT. NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTI CE, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED AND FILED V ARIOUS DETAILS, AS CALLED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS DEPOSITED A SUM OF RS.31,78,250 IN HIS SAVINGS BANK ACCOUNT, THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH DEPOSIT FOUND IN SAVINGS BANK ACCOUNT. IN RESPONSE, THE ASSESSEE FILED DETAILS INCLUDING HIS FINANCIAL STATEMENTS AND STATED THAT HE IS IN THE B USINESS OF SALE OF FARSAN IN CASH AND EVERY DAY SALES COLLECTION HAS BEEN DEPOSI TED IN BANK ACCOUNT SO AS TO MAKE PAYMENT FOR PURCHASES. THE AO, AFTER CONSI DERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT WHEN ASSESSEES GROSS SALES AS PER HIS FINANCIAL STATEMENT FOR THE YEAR UNDER CONSIDERATION IS AT RS .17,90,545, CASH DEPOSITS OF RS.31,78,250 OUT OF SUCH SALES IS INCORRECT. THERE FORE, HE MADE ADDITION OF RS.31,78,250 AS UNEXPLAINED CASH CREDIT TO THE TOTA L INCOME OF THE ASSESSEE. 3 ITA 2324/MUM/2018 3. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS FI LED WRITTEN SUBMISSION WHICH HAS BEEN REPRODUCED BY THE CIT(A) AT PARA 7 ON PAGE S 3 TO 5. THE SUM AND SUBSTANCE OF ARGUMENTS OF ASSESSEE ARE THAT CASH DE POSITS IN SAVINGS BANK ACCOUNT IS OUT OF DAILY SALE PROCEEDS OF FARSAN FOR WHICH NECESSARY BANK STATEMENTS HAVE BEEN FILED BEFORE THE AO. THE AO, IGNORING ALL EVIDENCES, MADE ADDITION WHICH IS INCORRECT. THE LD.CIT(A), A FTER CONSIDERING SUBMISSIONS OF THE ASSESSEE AND ALSO BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ARUNKUMAR J MUCHALA VS CIT 201 7 (8) TMI 1137 HELD THAT THE BURDEN LIES ON THE ASSESSEE TO SHOW FROM WHERE HE HAS RECEIVED THE AMOUNT AND WHAT IS THE NATURE OF CREDIT. THOUGH AS SESSEE CLAIMS TO HAVE RECEIVED CASH FROM DAILY SALES, BUT ON PERUSAL OF H IS TOTAL TURNOVER IT IS LESS THAN THE AMOUNT OF CASH DEPOSIT FOUND IN BANK ACCOU NT. THEREFORE, HE OPINED THAT THE ASSESSEE FAILED TO EXPLAIN CREDIT FOUND IN SAVINGS BANK ACCOUNT AND ACCORDINGLY CONFIRMED ADDITION MADE BY THE AO. AG GRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE AS SESSEE IS A SMALL TIME TRADER ENGAGED IN THE BUSINESS OF TRADING IN FARSAN IN CASH AND DAILY COLLECTION FROM SALES HAS BEEN DEPOSITED IN SAVINGS BANK ACCOU NT. THE AO, WITHOUT APPRECIATING THESE FACTS, MADE ADDITION TOWARDS TOT AL CASH DEPOSITS AS 4 ITA 2324/MUM/2018 UNEXPLAINED CASH CREDIT. THE LD.AR FILED COPIES OF BANK STATEMENTS AND ARGUED THAT IF SEEN THE AMOUNT OF CASH DEPOSITS IN THE BAN K ACCOUNT, IT WOULD CLEARLY SHOW THAT CASH DEPOSIT IS OUT OF SALE PROCEEDS, BUT THE AO IGNORED ALL EVIDENCES FILED BY THE ASSESSEE ONLY FOR THE REASON THAT HE HAS DECLARED SALES WHICH IS LESS THAN AMOUNT OF TURNOVER DECLARED FOR THE YEAR UNDER CONSIDERATION. 5. ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDER OF THE LD.CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT THE ASSESSEE H AS SHOWN SALES TURNOVER OF RS.17,90,545, WHEREAS CASH DEPOSITS FOUND IN SAVING S BANK ACCOUNT IS AT RS.31,78,250. THOUGH, THE ASSESSEE CLAIMS TO HAVE DEPOSITED DAILY CASH COLLECTIONS FROM SALE TO SAVINGS BANK ACCOUNT, BUT WHEN WE COMPARE THE SALES TURNOVER DECLARED FOR THE YEAR, CASH DEPOSITS FOUND IN BANK ACCOUNT IS FAR MORE THAN THE AMOUNT OF SALES DECLARED BY THE ASSESSEE. AT THE SAME TIME, WE NOTICE THAT THE ASSESSEE HAS DEPOSITED CASH IN HIS SAVINGS BANK ACCOUNT EACH DAY, WHICH IS BETWEEN RS.5,000 TO RS.20,000. WE FU RTHER NOTICE THAT THE ASSESSEE HAS ISSUED CHEQUES AND CLAIMED THAT SUCH C HEQUES HAVE BEEN ISSUED AGAINST PURCHASE OF FARSAN. ON PERUSAL OF BANK STA TEMENT FILED BY THE ASSESSEE AND CASH DEPOSIT FOUND IN SAID BANK ACCOUNT, IT APP EARS THAT THE ASSESSEE HAS DEPOSITED SALES COLLECTIONS IN SAVING BANK ACCOUNT, BUT ONLY DIFFERENCE IS, HE 5 ITA 2324/MUM/2018 HAS NOT DECLARED TOTAL SALES MADE IN THE YEAR, BUT DECLARED ONLY A PART OF SALES TURNOVER IN HIS FINANCIAL STATEMENTS FOR THE INCOME -TAX PURPOSE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT TOTAL CASH DEPOSITS FOUND IN HIS SAVINGS BANK ACCOUNT NEEDS TO BE CONSIDERED AS HIS BUSINESS TURN OVER FOR THE YEAR UNDER CONSIDERATION AND A SUITABLE PERCENTAGE OF PROFIT R EQUIRES TO BE ESTIMATED. THE ASSESSEE IS IN THE BUSINESS OF RETAIL SALES OF FARSAN. THE STATUTE PROVIDES FOR ESTIMATION OF PROFIT IN CASE OF RETAIL TRADERS WHERE THE TURNOVER IN THE BUSINESS IS LESS THAN THE SPECIFIED LIMIT. THEREFO RE, KEEPING IN VIEW THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO KEEPIN G IN MIND THE PROVISIONS OF SECTION 44AF OF THE INCOME-TAX ACT, 1961, WE DIRECT THE AO TO ESTIMATE NET PROFIT OF 10% ON TOTAL CASH DEPOSITS FOUND IN SAVIN GS BANK ACCOUNT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 -12-2018 . SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 31 ST DECEMBER, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ ASSTT. REGISTRAR, ITAT, MUMBAI