Smt. Anita Kailash Kharpude, Ahmednagar V. Income-tax Officer, Ward - 1, Ahmednagar

ITA 2407/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6737 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-01-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 13-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income
• Section: 143(3)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / ITA NO. 2407 /P U N/201 7 / ASSESSMENT YEAR : 20 08 - 09 SMT. ANITA KAILASH KHARPUDE, PAR LANE, MALIWADA, AHMEDNAGAR 414001 . / APPELLANT PAN: A GBPK9460D VS. THE INCOME TAX OFFICER, WAD 1, AHMEDNAGAR . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI RAJESH GAWALI / DATE OF HEARING : 02 . 0 1 .201 9 / DATE OF PRONOUNCEMENT: 21 . 0 1 .201 9 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - 2 , PUNE , DATED 2 0 . 07 .201 7 RELATING TO ASSESSMENT YEAR 20 08 - 09 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. THE MATTER WAS FIXED FOR HEARING ON ITA N O. 2407 /P U N/201 7 ANITA KAILASH KHARPUDE 2 23.10.2018, 19.11.2018 AND THEREAFTER ON 02.01.2019. FOR ALL THE DATES, NOTICES WERE SENT THROUGH REGISTERED POST WITH ACK.D UE AND THE ACKNOWLEDGEMENTS ARE AVAILABLE ON RECORD. HENCE, WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) - 2, PUNE ERRED IN CONFIRMING/ENHANCING THE ADDITION TO RS.27,10,802/ - (RUPEES TWENTY SEVEN LACS TEN THOUSAND EIGHT HUNDRED AND TWO ONLY) UNDER THE PROVISIONS OF THE INCOME TAX ACT 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) - 2, PUNE ERRED IN CONFIRMING AND ENHANCING THE ADDITION WITHOUT CONSIDERING THE PROVISIONS OF THE INCOME TAX ACT, 1961 AS WELL AS FACTS OF THE CASE AND NATURE OF THE TRANSACTION A ND HENCE NOT GOOD IN LAW. 3. THE APPELLANT PRAYS FOR THE RELIEF BY DELETING THE ADDITION / ENHANCEMENT OF RS.27,10,802/ - (RUPEES TWENTY SEVEN LACS TEN THOUSAND EIGHT HUNDRED AND TWO ONLY). 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS AN INDIVID UAL AND FOR THE YEAR UNDER CONSIDERATION HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF 1,40,950/ - . THE CASE OF ASSESSEE WAS PICKED UP FOR SCRUTINY. AS PER AIR INFORMATION, THE ASSESSEE HAD DEPOSITED CASH OF 21,82,100/ - IN AXIS BANK, TILAK ROAD, AHMEDNAGAR. THE ASSESSEE WAS ASKED TO FURNISH THE SOURCES OF CASH DEPOSIT IN SAVING ACCOUNT. THE ASSESSEE SUBMITTED THAT SHE HAD TAKEN LOAN FROM BANK, HOWEVER, FAILED TO FURNISH ANY INFORMATION. THE ASSESSING OFFICER OBTAINED THE ACCOUNT EXTRACT F ROM AXIS BANK, AHMEDNAGAR BRANCH. ON GOING THOUGH THE SAVING ACCOUNT, IT WAS SEEN THAT THE ASSESSEE HAD DEPOSITED CASH OF 18,75,651/ - FROM TIME TO TIME. THE ASSESSING OFFICER NOTED THAT THERE WAS MAXIMUM CASH DEPOSIT OF 5 LAKHS AND MAXIMUM CASH ITA N O. 2407 /P U N/201 7 ANITA KAILASH KHARPUDE 3 BALANCE OF 5,06,023/ - ON 28.06.2007. AFTER VERIFICATION OF OLD RECORD, IT WAS SEEN THAT THERE WAS SMALL CASH BALANCE. FURTHE R, THE ASSESSEE HAD NEVER DISCLOSED THIS ACCOUNT TO THE INCOME TAX DEPARTMENT. ACCORDINGLY, ADDITION OF 5,06,033/ - WAS MADE IN THE HANDS OF ASSESSEE ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 5. THE ASSESSING OFFICER ALSO NOTED VIDE PARA 9 THAT THE ASSESSE E HAD MADE REGULAR PAYMENTS TO CERTAIN PARTIES. THE SAID PARTIES WERE MANUFACTURERS AND WHOLESALERS OF CRACKERS AND SINCE THE ASSESSEE HAD ONLY SHOWN RENT AL INCOME FROM UTENSILS, THE ASSESSING OFFICER ESTIMATED INCOME FROM CRACKERS IN THE HANDS OF ASSESSE E @ 20% OF 10 LAKHS AND MADE ADDITION OF 4 LAKHS. ANOTHER ADDITION WAS MADE ON ACCOUNT OF CASH CREDITS OF 5 LAKHS IN THE HANDS OF ASSESSEE. 6 . BEFORE THE CIT(A), THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS WHICH ARE REPRODUCED IN THE ORDER OF CIT(A). THE SAID WRITTEN SUBMISSIONS WERE CONFRONTED TO THE ASSESSING OFFICER, WHO IN TURN, FILED REMAND REPORT. THE CIT(A) AFTER REMAND REPORT, ISSUED NOTICE FOR ENHANCEMENT, IN RESPONSE TO WHICH THE ASSESSEE AGAIN EXPLAINED THE SOURCES OF CASH DEPOSITS. THE CIT(A) DEL ETED THE ADDITION MADE BY THE ASSESSING OFFICER OF 5 LAKHS AS THE SAID AMOUNT REPRESENT S LOAN TAKEN FROM MAHATMA PHULE NAGARI SAHAKARI BANK LTD. IN RESPECT OF SECOND ISSUE RAISED BY ASSESSEE THAT THE BALANCE DEPOSITS WERE OUT OF HIS BUSINESS RECEIPTS AND SINCE THE TOTAL RECEIPTS WERE LESS THAN THE PRESC RIBED LIMIT, SHE HAD SHOWN INCOME UNDER SECTION 44AF OF THE ACT @ 5% OF TOTAL TURNOVER. THIS WAS NOT ACCEPTED AND THE CIT(A) ESTIMATED INCOME @ 20% AND CONFIRMED THE ADDITION OF 5 LAKHS. ITA N O. 2407 /P U N/201 7 ANITA KAILASH KHARPUDE 4 7 . COMING TO CASH CREDIT OF 5,06,033/ - I.E. CASH DEPOSIT IN THE BANK ACCOUNT. THE CIT(A) NOTED THAT TOTAL CASH DEPOSITS WERE TO THE TUNE OF 27,10,802/ - AND SINCE THE ASSESSEE HAD NOT CORROBORATED THE SOURCE OF CASH DEPOSITS AND HAD ONLY SHOWN INCOME OF 1,40,950/ - , THEN ADDITION OF 23,10,802/ - WAS MADE IN THE H ANDS OF ASSESSEE AS AGAINST 4 LAKHS MADE BY ASSESSING OFFICER. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN RESPECT OF ADDITION OF 23,10,802/ - . 9. THOUGH THE ASSESSEE HAS FAILED TO APPEAR BEFORE THE TRIBUNAL, THE PERUSAL OF ORDER OF CI T(A) REFLECTS THE SUBMISSIONS MADE BY ASSESSEE EXPLAINING THE SOURCE OF CASH DEPOSITS IN THE FOLLOWING BANK ACCOUNTS : - I. AXIS BANK SAVINGS ACCOUNT RS.18,75,658/ - II. THE AMBIKA MAHILA SAHAKARI BANK LTD. RS. 3,06,694/ - III. MAHATMA PHULE NAGARI SAH AKARI BANK LTD. RS. 5,28,450/ - TOTAL RS.27,10,802/ - 10. IN RESPECT OF LAST ENTRY OF MAHATMA PHULE NAGARI SAHAKARI BANK LTD., THE CIT(A) HAS DELETED THE ADDITION AS THE ASSESSEE HAD EXPLAINED THAT SHE HAD OBTAINED LOAN FROM THE SAID BANK AND HEN CE, THE SAME WAS TREATED AS EXPLAINED. 11. SECOND ASPECT OF BANK ACCOUNTS I.E. AS AGAINST CASH DEPOSITS, THERE ARE CHEQUE PAYMENTS FOR PURCHASING FIRE CRACKERS. THE ASSESSEE HAD SUBMITTED DATE - WISE DETAILS TOTALING 22,26,909/ - , WHICH ARE AVAILABLE AT P AGES 15 TO 17 OF THE APPELLATE ORDER. THE ASSESSEE EXPLAINED THAT IT HAD SHOWN NET PROFIT IN RETAIL TRADE UNDER SECTION 44AF OF THE ACT @ 5%, HENCE THE CASH RECEIPTS FROM ITA N O. 2407 /P U N/201 7 ANITA KAILASH KHARPUDE 5 FIRE CRACKER BUSINESS AMOUNTED TO 22,26,909/ - + @ 5% PROFIT = 23,38,254/ - . THER EFORE, THE SOURCE OF TOTAL RECEIPTS FROM FIRE CRACKERS BUSINESS WERE 23,38,254/ - INSTEAD OF 20,00,000/ - . 12. ANOTHER POINT WHICH WAS RAISED BY ASSESSEE WAS THAT SHE HAD SAVINGS OF 1,60,000/ - WHICH WAS DEPOSITED IN HER BANK ACCOUNT. BOTH THE AUTHOR ITIES BELOW HAVE BRUSHED ASIDE SUBMISSIONS OF ASSESSEE AND MADE ADDITIONS IN THE HANDS OF ASSESSEE, WHICH WERE ENHANCED BY THE CIT(A). IF WE LOOK AT THE TOTAL OF CASH DEPOSITS, THEN THE SAME ARE AS UNDER: - I. AXIS BANK SAVINGS ACCOUNT RS.18,75,658/ - II. THE AMBIKA MAHILA SAHAKARI BANK LTD. RS. 3,06,694/ - III. MAHATMA PHULE NAGARI SAHAKARI BANK LTD. RS. 5,28,450/ - TOTAL RS.27,10,802/ - 13. FIRST, LET US EXCLUDE CASH DEPOSIT IN MAHATMA PHULE NAGARI SAHAKARI BANK LTD. I.E. 5,28,450/ - . THE N, LET US COMING TO OTHER DEPOSITS TOTALING ABOUT 22 LAKHS, OUT OF WHICH THE ASSESSEE EXPLAINED THAT SHE IS CARRYING ON FIRE CRACKERS BUSINESS. THE FACTUM OF SAID BUSINESS STANDS ESTABLISHED BY THE FACT THAT BOTH THE ASSESSING OFFICER AND CIT(A) REFERS TO THE WITHDRAWALS FROM THE SAME BANK ACCOUNT , IN WHICH CASH HAS BEEN DEPOSITED I.E. THE PAYMENTS MADE TO VARIOUS FIRE CRACKER SELLERS. SO, ONCE THE AMOUNT HAS BEEN PAID BY WAY OF CHEQUES TO THE PARTIES, THEN SOURCE OF CASH DEPOSITS STANDS ESTABLISHED FRO M THE BUSINESS RECEIPTS OF FIRE CRACKERS BUSINESS CARRIED ON BY THE ASSESSEE. THE ASSESSEE CLAIMS TO HAVE DECLARED PROFITS AS PER SECTION 44AF OF THE ACT @ 5%, WHICH WORKS OUT TO 23,38,254/ - . FURTHER, THE ASSESSEE EXPLAINED THAT SHE HAD SAVINGS OF ABOU T 1,60,000/ - WHICH HAS BEEN DEPOSITED IN HER BANK ACCOUNT. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE FIND NO MERIT IN THE AFORESAID ADDITIONS MADE IN THE HANDS OF ASSESSEE. SO, WE DELETE THE ADDITION ITA N O. 2407 /P U N/201 7 ANITA KAILASH KHARPUDE 6 MADE BY CIT(A) AT ENHANCED INCOM E OF 27,10,802/ - IN PLACE OF 5,06,033/ - MADE BY ASSESSING OFFICER AND THE ASSESSEE IS EXIGIBLE TO TAX ON THE INCOME FROM FIRE CRACKERS BUSINESS TO THE EXTENT OF 22,26,909/ - + @ 5% PROFIT = 23,38,254/ - . NO SEPARATE ADDITION OF CASH CREDIT IS WARRAN TED. ACCORDINGLY, WE ALLOW THE CLAIM OF ASSESSEE. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, ALLOWED. 14 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 21 ST DAY OF JANUARY , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWL A ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 21 ST JANUARY , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2, PUNE ; 4. THE PR. CIT - 1 , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE