ITO, Ward - 46(2), Kolkata, Kolkata V. Manoj Kumar Shaw, Howrah

ITA 246/KOL/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8060 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 05-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K PRAMANIK
• Assessee Lawyers: P K SANGHAI
• Keywords: Peak credit; Source of fund
• Section: 143(3)

Judgement Text

I.T.A. NO.:246/ KOL. / 2010 & CO-47-KOL-2010(IN ITA 246-KOL-2010) ASSESSMENT YEAR: 2006 -07 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER), AND SHRI MAHAVIR SINGH (JUDICIAL MEMBER) I.T.A. NO.: 246/ KOL. / 2010 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, .APPELLANT WARD-46(2), KOLKATA, 3, GOVT. PLACE(WEST), KOLKATA-700 001 -VS.- MANOJ KUMAR SHAW, .....RESPONDENT, 76/1, F. ROAD, BELGACHIA, HOWRAH-711 101 [PAN : BAHPS 4548 B] - AND C.O. NO. 47/KOL./2010 (ARISING OUT OF ITA NO. 246/KOL./2010) ASSESSMENT YEAR : 2006-07 MANOJ KUMAR SHAW,CROSS OBJECTOR BELGACHIA, HOWRAH -VS.- INCOME TAX OFFICER, ...RESPONDENT WARD-46(2), KOLKATA APPEARANCES BY: SHRI A.K. PRAMANIK, D.R., FOR THE DEPARTMENT SHRI P.K. SANGHAI, A.R., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : AUGUST 29, 2012 DATE OF PRONOUNCING THE ORDER : OCTOBER 1 2, 2012 I.T.A. NO.:246/ KOL. / 2010 & CO-47-KOL-2010(IN ITA 246-KOL-2010) ASSESSMENT YEAR: 2006 -07 PAGE 2 OF 6 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THESE APPEAL AND CROSS OBJECTION, THE ASSESSING OFFICER AS ALSO THE ASSESSEE HAVE CHALLENGED CORREC TNESS OF COMMISSIONER OF INCOME TAX (APPEALS)S ORDER DATED 27 TH NOVEMBER, 2009, IN THE MATTER OF ASSESSMENT U/S. 143(3) OF TH E INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2006-07, ON THE FOLLO WING GROUNDS :- ITA-246/KOL./2010 (REVENUES APPEAL] (1) THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.3,00,000/- AS AGAINST RS.32,34,600/- IN RESPECT OF UNDISCLOSED BANK TRANSACTIONS. (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) IS JUSTIFIED TO CONFIRM THE AD DITION OF THE UNACCOUNTED BANK TRANSACTIONS TO THE TUNE OF RS.3,00,000/- AS AGAINST THE ADDITION OF RS.32,34,6 00/- WHERE THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF FUNDS DURING THE ASSESSMENT PROCEEDING. C.O. NO. 47/KOL./2010 (ASSESSEES C.O.) (1) FOR THAT THE LD. COMMISSIONER OF INCOME TAX (AP PEAL) ERRED IN SUSTAINING THE ADDITION IN RESPECT OF THE BANK DEPOSITS AT RS.3,00,000/-. THE NET CASH DEPOSITS (P EAK DEPOSIT) DURING THE YEAR BEING RS.1,51,200/-, THERE WAS NO OBJECTION FOR THE COMMISSIONER OF INCOME TAX (APPEA L) TO SUSTAIN THE ADDITION AT RS.3,00,000/-. THE SUSTAINM ENT OF THE ADDITION AT RS.3,00,000/- IS WRONG AND ARBITRAR Y. (2) FOR THAT THE LD. COMMISSIONER OF INCOME TAX (AP PEAL) ERRED IN UPHOLDING THE SEPARATE ADDITION OF RS.50,0 00/- IN RESPECT OF FD WITH HSBC BANK ON 20.02.2006. THE SAI D DEPOSIT IS FULLY EXPLAINED BY THE INCOME ASSESSED/ ASSESSABLE FOR THE YEAR AND A SEPARATE ADDITION ON THEIR COUNT IS NOT JUSTIFIED. I.T.A. NO.:246/ KOL. / 2010 & CO-47-KOL-2010(IN ITA 246-KOL-2010) ASSESSMENT YEAR: 2006 -07 PAGE 3 OF 6 2. AS THE APPEAL AND CROSS OBJECTION INVOLVE AN INT ERCONNECTED ISSUE, PERTAIN TO THE SAME ASSESSEE AND WERE HEARD TOGETHER, WE ARE DISPOSING OF THE SAME BY WAY OF THIS COMMON ORDER. 3. THE CROSS OBJECTION IS TIME BARRED BUT THE CROSS OBJECTION HAS MOVED A CONDONATION PETITION PRAYING THAT THE DELAY BE CONDONED AS HE HAD A BONAFIDE MISUNDERSTANDING ABOUT THE ISSUES WH ICH CAN BE RAISED BY TIME AT THE TIME OF HEARING OF REVENUES APPEAL. HAVING PERUSED THIS PETITION AND HAVING HEARD THE PARTIES ON THE SAME, WE ARE INCLINED TO CONDONE THE DELAY WHICH, IN OUR CONSIDERED VIEW, IS REASONABLY EXPLAINED. THE CROSS OBJECTION IS, ACCORDINGLY, BEI NG TAKEN UP ON MERITS. 4. THE MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE I S A VEGETABLE VENDOR. HE FILED A RETURN OF INCOME DISCLOSING INCO ME OF RS.1,10,000/- ON 29.05.2006. THE CASE WAS PICKED UP FOR SCRUTINY AND THE ASSESSING OFFICER WAS IN POSSESSION OF INFORMATION THAT THE A SSESSEE HAD DEPOSITED RS.32,54,600/- IN THE HONGKONG & SHANGHAI BANKING CORPN. AS ASSESSEE COULD NOT EXPLAIN THE SAME, ENTIRE AMOU NT OF RS.32,54,600/- WAS, INTER ALIA, ADDED TO HIS RETURNED INCOME. AGGR IEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(APPEALS ) AND SUBMITTED THAT AS A VEGETABLE VENDOR, HE USED TO PURCHASE THE VEGETABLES FROM KARNATAKA AND SELL THE SAME TO RETAILERS IN KOLKATA , AND THE DEPOSITS IN HSBC BANK WERE TO FACILITATE PURCHASES, WHICH WERE MADE BY DRAWING FROM ATM MACHINES AT THE PLACE OF PURCHASES, AND PH YSICAL TRANSFER OF FUNDS. IT WAS SUBMITTED THAT DEPOSITS REPRESENTED S ALE PROCEEDS, AND I.T.A. NO.:246/ KOL. / 2010 & CO-47-KOL-2010(IN ITA 246-KOL-2010) ASSESSMENT YEAR: 2006 -07 PAGE 4 OF 6 THE ASSESSING OFFICER CLEARLY ERRED IN TREATING THE ENTIRE DEPOSITS AS UNEXPLAINED FUNDS. IMPRESSED BY THESE ARGUMENTS, LE ARNED CIT(APPEALS) RESTRICTED THE ADDITION TO RS.3,00,000 /- AND OBSERVED AS FOLLOWS :- THE APPELLANT MAINTAINED ACCOUNT WITH HSBC BANK, C ASH DEPOSITS ARE MADE IN THE BANK ACCOUNT. CASH WITHDRA WALS ARE ALSO MADE FROM THE BANK ACCOUNT. MAJORITY OF TH E TRANSACTIONS OCCURRED DURING JANUARY, FEBRUARY AND MARCH, 2006. THE WITHDRAWALS MADE FROM THIS BANK ACCOUNT A RE THROUGH ATM. THE DEPOSITS MADE ARE STATED TO BE SAL E PROCEEDS OF THE VEGETABLES. HOWEVER, THE APPELLANT HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT TO SUPPORT THE CONT ENTION OF THE APPELLANT. THIS BANK ACCOUNT IS NOT DISCLOSE D BY THE APPELLANT IN THE BALANCE SHEET FILED ALONG WITH RET URN OF INCOME. THE APPELLANT DURING THE COURSE OF APPEAL PROCEEDINGS SUBMITTED THAT THE PEAK CASH DEPOSIT IN THE ACCOUNTS WORKS OUT TO RS.1,51,200/-. THE NATURE OF THE TRANSACTION IN THE BANK ACCOUNT INDICATES THAT THE APPELLANT DEPOSITED CASH AND WITHDRAWN FUNDS THROUGH ATM. NON E OF THE DEPOSITS HAVE EXCEEDED THE AMOUNT OF RS.50,000/ -. THE APPELLANT CONTENDS THAT THE VEGETABLES ARE PURCHASE D FROM KARNATAKA AND SOLD AT KOLKATA. THE SALE PROCEEDS OF VEGETABLES RECEIVED IN CASH IS STATED TO BE DEPOSIT ED IN THE BANK AND CASH IS WITHDRAWN FROM ATM FOR MAKING PAYM ENT TO VEGETABLE SELLERS. HOWEVER, THE APPELLANT HAS NO EVIDENCE TO PROVE THAT THE SAME FUNDS ARE RECYCLED THROUGH T HE BANK ACCOUNT. IN THE ABSENCE OF BOOKS OF ACCOUNTS AND SU CH EVIDENCE TO SUPPORT THE CONTENTION OF FUNDS ROLLED OVER IN THE BANK, ASSESSING THE PEAK FUND IS NOT ACCEPTABLE . THE A.O. ARRIVED AT THE QUANTUM OF RS.32,54,600/- BY CONSIDERING BOTH DEBIT AND CREDIT IN THE BANK ACCOU NT. THE AMOUNT OF RS.32,54,600/- REPORTED BY THE HSBC BANK REPRESENTS THE TOTAL VALUE OF THE TRANSACTIONS. IT CONSIDERS THE DEPOSITS AND ALSO THE WITHDRAWALS OF THE FUNDS. THE AO IS NOT CORRECT IN ASSESSING THE WITHDRAWAL OF FUNDS . CONSIDERING THE BANK ACCOUNTS MAINTAINED BY THE APP ELLANT DISCLOSED IN THE RETURNS AS WELL AS THE HSBC BANK W HICH IS NOT DISCLOSED, THE DEPOSIT MADE IN THE BANK ACCOUNT WORKS I.T.A. NO.:246/ KOL. / 2010 & CO-47-KOL-2010(IN ITA 246-KOL-2010) ASSESSMENT YEAR: 2006 -07 PAGE 5 OF 6 OUT TO RS.17,43,100/-. THE WITHDRAWAL IN THE BANK A CCOUNTS IS RS.16,10,300/-. THE AO MADE AN ADDITION OF THE E NTIRE TRANSACTION VALUE OF RS.32,54,600/- AT HSBC BANK WH ICH REPRESENTS BOTH THE DEPOSITS AND WITHDRAWALS. CONSI DERING THE SUBMISSIONS MADE BY THE APPELLANT AND THE FACT THAT THE HSBC BANK ACCOUNT IS NOT DISCLOSED ALONG WITH THE R ETURN OF INCOME, ASSESSING THE AMOUNT OF RS.3,00,000/- U/ S. 69A AS UNEXPLAINED MONEY WOULD MEET THE ENDS OF JUSTICE . THE ADDITION TO THE EXTENT OF RS.3,00,000/- IS SUSTAINE D. THE APPELLANT GETS RELIEF OF RS.29,54,600/- (32,54,600 3,00,000). 5. NONE OF THE PARTIES IS SATISFIED. THE ASSESSEE I S AGGRIEVED THAT THE CIT(APPEALS) ERRED IN RESTRICTING THE ADDITION TO E VEN RS.3,00,000/- AND THE ASSESSING OFFICER IS AGGRIEVED OF CIT(APPEALS) S DELETING THE DISALLOWANCE TO THE EXTENT OF RS.29,54,600/-. THAT IS HOW BOTH THE PARTIES ARE IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD, AND DULY CONSIDERED FACTUAL MATRIX OF THE C ASE AS ALSO THE APPLICABLE LEGAL POSITION. 7. IN OUR CONSIDERED VIEW, RIGHT COURSE OF ACTION W AS TO COMPUTE PEAK CREDITS IN THE HSBC ACCOUNT AND THEN CONSIDER ASSESSEES EXPLANATION FOR FUNDING OF THIS PEAK CREDIT BY WAY OF AVAILABLE CAPITAL ETC. OUR REASONING IS THIS. WHEN WE PROCEED ON THE BASIS THAT HSBC ACCOUNT WAS USED TO TRANSFER FUNDS FROM ONE LOCATIO N TO ANOTHER BY USING ATM WITHDRAWALS, WHICH APPEARS TO BE A REASON ABLE APPROACH GIVEN THE PECULIAR FACTS OF THIS CASE, WHAT IS TO B E REALLY EXAMINED IS WHAT WAS THE PEAK AMOUNT IN THIS ACCOUNT AND HOW IS IT EXPLAINED. I.T.A. NO.:246/ KOL. / 2010 & CO-47-KOL-2010(IN ITA 246-KOL-2010) ASSESSMENT YEAR: 2006 -07 PAGE 6 OF 6 NONE OF THE AUTHORITIES BELOW HAS CONDUCTED THIS EX ERCISE. WHILE ASSESSING OFFICER HAD NO OCCASION TO DO SO, AS THE ASSESSEE DID NOT COMPLY WITH HIS REQUISITIONS, THE CIT(APPEALS) DID NOT CARE TO DO SO AND WAS CONTENT WITH VAGUE GENERALITIES. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE DE EM IT FIT AND PROPER TO ADJUDICATE ON THIS ISSUE DE NOVO IN THE LIGHT OF OUR ABOVE OBSERVATIONS. ORDER, ACCORDINGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSING OFFICER AS ALSO CROSS OBJECTION FILED BY THE ASSESSEE ARE ALLOWED F OR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED I N THE OPEN COURT TODAY ON 12 TH DAY OF OCTOBER, 2012. SD/- SD/- MAHAVIR SINGH PRAMOD KUMAR (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE12TH DAY OF OCTOBER, 2012 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.