Kamal Nemichand Bhansali, Surat V. The Income Tax Officer, Ward-1(2)(2), Surat

ITA 2430/AHD/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6158 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 26-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAYANK
• Keywords: Reopening of assessment; Business income; Income from undisclosed sources; Peak credit; Reason to believe
• Section: 147; 131; 148; 144

Judgement Text

1 KAMAL NEMICHAND BHANSALI V. ITO-1(2)(2)SURAT /T.A.NO.2430/ AHD/2016/A.Y. 2008-09 , , IN THE INCOME TAX APPELLATE TRIBUNAL-SURAT-BENCH-SURAT BEFORE SHRI AMARJIT SINGH, JUDICIAL MEMBER & SHRI O.P. MEENA, ACCOUTANT MEMBER . . /. I.T.A NO.2430/AHD/2016 / ASSESSMENT YEAR:2008-09 SHRI KAMAL N EMICHAND BHANSALI, B-598,UPPAR GROUND FLOOR, KOHINOOR TEXTILE MARKET RING ROAD SURAT PAN: AFWPB 8217R VS. INCOME TAX OFFICER, WARD- 1(2)(2) SURAT APPELLANT / RESPONDENT /ASSESSEE BY SHRI MANOJ JAIN, CA /REVENUE BY SHRI MAYANK PANDEY, SR. D.R. / DATE OF HEARING: 01.10.2019 /PRONOUNCEMENT ON 03.10.2019 /O R D E R PER O. P. MEENA, AM: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, (IN SHORT THE CIT (A)) DATED 13.06.2016 FOR THE ASSESSMENT YEAR 2008-09. 2. THE ORIGINAL GROUNDS OF APPEAL AND REVISED GROUNDS OF APPEAL ARE AGAINST THE SUSTAINING ADDITION OF RS. 13,34,060 AS UNACCOUNTED INCOME BY REOPENING OF ASSESSMENT UNDER SECTION 148 OF THE ACT. THUS, ALL THE GROUNDS OF APPEAL ARE REVOLVED AROUND SINGLE ISSUE HENCE, HENCE, THESE BEING CONSIDERED TOGETHER. 3. SUCCINCT FACTS ARE THAT THE ASSESSMENT REOPENED AND ASSESSMENT BASED ON INFORMATION RECEIVED AND THE ASSESSMENT WAS MADE UNDER SECTION 144 READ WITH SECTION 147 OF THE ACT BY MAKING ADDITION OF RS.13,34,060 WITHOUT CHECKING BANK ACCOUNT THAT THERE WAS DEBIT SIDE ALSO WHICH RELATES PAYMENTS. THE AO NOTED THAT THE ASSESSEE HAS MAINTAINED A BANK ACCOUNT WITH PRIM CO-OPERATIVE BANK LTD. IN THE NAME OF M/S. S K TRADING CO. A PROPRIETARY CONCERN OF THE ASSESSEE. THIS BANK ACCOUNT WAS NOT DISCLOSED IN BOOKS OF ACCOUNTS BY THE ASSESSEE. THE AO EXAMINED 2 KAMAL NEMICHAND BHANSALI V. ITO-1(2)(2)SURAT /T.A.NO.2430/ AHD/2016/A.Y. 2008-09 THE ASSESSEE UNDER SECTION 131 OF THE ACT IN WHICH THE ASSESSEE HAS STATED THAT M/S. SK TRADING CO. IS UNACCOUNTED CONCERN OF THE ASSESSEE APART FROM PROPRIETOR CONCERN OF M/S. MARUTI SALES AND M/S. ANUPAM SAREES. THE AO THEREFORE, TREATED THESE UNACCOUNTED CREDITS AS UNDISCLOSED INCOME AND MADE ADDITION OF RS.13,34,060. 4. BEING, AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). IT WAS CONTENDED THAT THE ASSESSEE HAS FURNISHED EVIDENCE WHICH THE AO REFUSED TO ADMIT. THERE WAS NO BASIS TO MAKE ADDITION BASED ON CASH DEPOSITS IN BANK ACCOUNT NOR THE AO HAS EXAMINED THE PAYMENTS SIDE. THEREFORE, THE ASSESSMENT WAS PASSED EX-PARTE UNDER SECTION 144 OF THE ACT. HOWEVER, CIT (A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT (A) HAS NOT LOOKED INTO FACTS OF THE CASE NOR EXAMINED THE DEBIT SIDE OF BANK ENTRIES. THE AO HAS EXAMINED THE ASSESSEE WHEREIN IT WAS STATED THE CASH DEPOSITS IN THIS BANK ACCOUNT WAS UNEXPLAINED BUT THERE WERE DEBIT ENTRIES IN SAID BANK ACCOUNT. THE ASSESSEE HAS BEEN DOING BUSINESS IN THE NAME OF THREE PROPRIETORS CONCERNS. THEREFORE, THE BANK DEPOSITS WERE VERY MUCH RELATED TO BUSINESS INCOME AND FORMING PART OF TURNOVER. 6. PER CONTRA, THE LD. DR RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE AO MADE ADDITION OF ENTIRE CASH DEPOSITS OF RS.13,34,060 AS APPEARING IN BANK ACCOUNT WHEREAS THE BANK ACCOUNT ALSO HAD DEBIT SIDE ENTRIES. THIS MEANS THAT THE ASSESSEE HAS BEEN DOING TRADING BUSINESS EVEN THOUGH IT WAS UNACCOUNTED. THEREFORE, ENTIRE CASH DEPOSITS CANNOT BE CONSIDERED AS UNDISCLOSED INCOME. THE LEARNED COUNSEL RELIED IN THE CASE OF MUNNI DEVI V. ITO 3 KAMAL NEMICHAND BHANSALI V. ITO-1(2)(2)SURAT /T.A.NO.2430/ AHD/2016/A.Y. 2008-09 WARD -2 REWARI IN WHICH IT WAS HELD THAT THERE WAS NO NEXUS BETWEEN PRIMA-FACIE INFERENCE ARRIVE AT AND THE INFORMATION WAS RESTRICTED TO CASH DEPOSITS IN BANK ACCOUNT MUCH LESS THAN ANY TANGIBLE COGENT MATERIAL TO FORM A REASON TO BELIEVE. ON A QUERY BY BENCH, IT WAS STATED THAT THE ASSESSEE HAS BEEN DOING TEXTILE BUSINESS IN WHICH GROSS PROFIT RATE RANGES BETWEEN 4 TO 6 %. WHEN BANK ACCOUNT HAVE SHOWN CREDITS AS WELL AS DEBITS BY WAY OF WITHDRAWAL AND BOOKS OF ACCOUNTS ARE NOT MAINTAINED, THEN IN SUCH A SITUATION EITHER PEAK CREDIT OF BANK ACCOUNT OR NET PROFIT AS PER PROVISIONS OF SECTION 44AB CAN BE ESTIMATED BY TREATING THE SAME AS TURNOVER OF BUSINESS, AND ENTIRE CREDITS CANNOT BE TREATED AS UNDISCLOSED INCOME. WE OBSERVE THAT CASH DEPOSITS IN BANK ACCOUNT SEEMS TO BE RELATED UNACCOUNTED BUSINESS OF TEXTILE AND WITHDRAWAL HAS BEEN NOT EXAMINED BY THE AO. IN VIEW OF THIS MATTER, WE ARE OF THE CONSIDERED OPINION, THAT IT WOULD MEET THE END OF JUSTICE TO ESTIMATE NET PROFIT RATE @ 8% ON CASH DEPOSITS OF RS.13,34,060 AS UNACCOUNTED INCOME AS PER PROVISIONS OF SECTION 44AB OF THE ACT, WHICH WORKED OUT TO RS.1,06,725. ACCORDINGLY, ADDITION OF RS.1,06,725 IS CONFIRMED AND BALANCE ADDITION IS DELETED. THIS GROUND OF APPEAL IS THEREFORE, PARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 03.10.2019. SD/- SD/- (AMARJIT SINGH) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED: 3 RD OCTOBER, 2019/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT