Smt. Shah Nazma Izharul Hasan, Ratnagiri V. Income-tax Officer,

ITA 246/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9298 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-12-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 10-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Additional evidence; Revised return
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 246 /P U N/201 5 / ASSESSMENT YEAR : 20 11 - 12 SMT. SHAH NAZMA IZHARUL HASAN, D - 45, MIRJOLE, RATNAGIRI - 415639 PAN : APZPS1356K ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 2, RATNAGIRI / RESPONDENT ASSESSEE BY : S HRI M.K. KULKARNI REVENUE BY : SHRI ACHAL SHARMA / DATE OF HEARING : 04 - 12 - 2017 / DATE OF PRONOUNCEMENT : 21 - 0 2 - 201 8 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) , KOLHAPUR DATED 04 - 12 - 2014 FOR THE ASSESSMENT YEAR 2011 - 12. 2 ITA NO . 246/PUN/2015, A.Y. 2011 - 12 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE : THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF SCRAP AND PLYING TRUCKS. THE ASSESSEE FILED HER RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 28 - 03 - 2012 DECLARING TOTAL INCOME OF RS.7,90,270/ - . HUGE AMOUNTS WERE DEPOSITED IN THE SAVING BANK ACCOUNTS OF ASSESSEE, THUS, ON THE BASIS OF AIR INFORMATION THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS. ACCORDINGLY, INITIAL STATUTORY NOTICE U/S. 143(2)/142(1) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS ISSUED T O THE ASSESSEE ON 11 - 09 - 2012. THEREAFTER, THE ASSESSEE FILED ANOTHER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011 - 12 ON 30 - 01 - 2013 DECLARING TOTAL INCOME OF RS.16,97,160/ - . DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS ASSESSING OFFICER OBSERVED THAT SINCE ORIGINAL RETURN OF INCOME FILED ON 28 - 03 - 2012 WAS FILED BEYOND THE PERIOD AS MANDATED U/S. 139(1) OF THE ACT, THEREFORE, THE ASSESSEE CANNOT FILE REVISED RETURN OF INCOME. THE SECOND RETURN OF INCOME FILED BY THE ASSESSEE ON 30 - 01 - 2013 DECLARIN G INCOME OF RS.16,97,160/ - WAS TREATED BY THE ASSESSING OFFICER AS NON - EST THOUGH THE ASSESSEE HAD PAID TAXES AS PER SECOND RETURN OF INCOME FILED ON 30 - 01 - 2013. THE ASSESSING OFFICER MADE ADDITION OF RS.6,27,238/ - ON ACCOUNT OF NET PROFIT ESTIMATED @ 5% ON TOTAL TURNOVER OF RS.1,25,44,753/ - . APART FROM ABOVE THE ASSESSING OFFICER MADE ADDITION OF RS.58,72,000/ - ON ACCOUNT OF PEAK CASH CREDITS U/S. 69 AND RS.77,515 ON ACCOUNT OF INTEREST INCOME. AGGRIEVED BY ASSESSMENT ORDER DATED 27 - 03 - 2014, THE ASSESSE E FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) CHALLENGING THE ADDITIONS MADE BY ASSESSING OFFICER. THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION OF RS.6,27,238/ - ON ACCOUNT OF NET PROFIT 3 ITA NO . 246/PUN/2015, A.Y. 2011 - 12 ESTIMATED @ 5% ON TOTAL TURNOVER . HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION OF RS.58,72,000/ - ON ACCOUNT OF WORKING OF PEAK CASH CREDITS AND RS.77,515/ - ON ACCOUNT OF INTEREST INCOME. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE FI NDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). ON FACTS AND IN LAW, 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.58,72,000/ - MADE BY THE LEARNED A.O. U/S. 69 OF THE ACT . 2] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HAD MADE UNEXPLAINED CASH DEPOSITS IN FOUR BANK ACCOUNTS AND THEREBY TAXING THE PEAK CASH DEPOSITS OF RS.58 , 72,000/ - AS INCOME OF THE AS SESSEE U/S 69 WITHOUT APPRECIATING THE FACTS OF THE CASE. 3] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE CASH DEPOSITS IN THE BANK ACCOUNTS REPRESENTED BUSINESS TURNOVER OF THE ASSESSEE AND HENCE, ONLY A REASONABLE PERCENTAGE OF PROFIT THERE ON CO ULD HAVE BEEN CONSIDERED AS INCOME OF THE ASSESSEE. 4] THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT IN THE ASST. ORDER, THE LEARNED A.O. HAD HIMSELF HELD THAT THE CASH DEPOSITS IN BANK ACCOUNTS REPRESENTED BUSINESS TURNOVER OF THE ASSESSEE AND HAD ALSO ESTIMATED THE PROFITS THEREON @ 5% AND HENCE, THERE WAS NO REASON TO TAX THE ENTIRE CASH DEPOS ITS ON PEAK BASIS IN THIS YEAR. 5] THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.77 ,515/ - ON ACCOUNT OF INTEREST INCOME ON BONDS AND BANK DEPOSITS WITHOUT APPRECIATING THAT NO ADDITION WAS JUSTIFIED ON FACTS OF THE CASE. 6] T HE APPELLANT CRAVES LEAVE TO ADDUCE ADDITIONAL EVIDENCES IN CASE, IT IS REQUIRED TO SUPPORT THE CLAIM OF THE ASSESSEE. 7] THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 4. SHRI M.K. KULKARNI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A SCRAP DEALER AND HAS NOT MAINTAINED BOOKS OF 4 ITA NO . 246/PUN/2015, A.Y. 2011 - 12 ACCOUNT. THE AU THORITIES BELOW HAVE ERRED IN MAKING ADDITION OF RS.58,72,000/ - U/S. 69 ON ACCOUNT OF PEAK CASH CREDITS. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT THE ASSESSING OFFICER IN HIS ORDER HAS CATEGORICALLY OBSERVED THAT DEPOSITS IN THE SAVING BANK ACCOUNT OF ASSESSEE ARE THE TOTAL TURNOVER/GROSS RECEIPTS/SALES OUT OF BUSINESS ACTIVITY CARRIED OUT DURING THE PERIOD 01 - 04 - 2010 TO 31 - 03 - 2011. AFTER HOLDING THE DEPOSITS IN THE BANK ACCOUNTS AS TOTAL TURNOVER/SALES ARISING OUT OF BUSINE SS ACTIVITY , THE ASSESSING OFFICER ERRED IN MAKING ADDITION IN RESPECT OF SAVING BANK ACCOUNT U/S. 69 AS PEAK CASH CREDITS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE CARRIED TRADING IN SCRAP IN THE SUBSEQUENT ASSESSMENT YEARS , AS WELL AS IN THE EARLIER ASSESSMENT YEARS IN SIMILAR MANNER. THE RECEIPTS FROM SALE OF SCRAP ARE DEPOSITED IN THE BANK ACCOUNT OF ASSESSEE, NO ADDITIONS WERE MADE BY DEPARTMENT EITHER IN THE EARLIER ASSESSMENT YEARS OR IN THE SUBSEQUENT ASSESSMENT YEARS BY TREATING THE CASH DEPOSITS AS UNEXPLAINED CASH CREDITS . 4.1 IN RESPECT OF ADDITION OF RS.77,515/ - ON ACCOUNT OF INTEREST INCOME , THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD ALREADY DECLARED INTEREST INCOME OF RS.6,49,011/ - IN T HE ORIGINAL RETURN OF INCOME, THEREFORE, NO FURTHER ADDITION IS WARRANTED. 5. ON THE OTHER HAND SHRI ACHAL SHARMA REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE ADDITIONS ON ACCOU NT OF PEAK CASH CREDITS AND INTEREST INCOME. 5 ITA NO . 246/PUN/2015, A.Y. 2011 - 12 6. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE GROUND NOS. 1 TO 4 RAISED IN APPEAL BY ASSESSEE ARE AGAINST THE ADDITION OF RS.58,72,000/ - ON THE BASIS OF PEAK CASH DEPOSITS. A PERUSAL OF ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS TAKEN PEAK CASH CREDITS IN RESPECT OF CASH DEPOSITS OF RS.1,79,86,007/ - DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE ASSESSEE IS MAINTAINING FOUR BANK ACCOUNTS. TWO BANK ACCOUNTS ARE WITH VIJAYA BANK AND TWO IN HDFC BANK LTD. THE DETAILS OF THE BANKS, PERIOD OF DEPOSITS AND AMOUNT OF DEPOSITS ARE AS UNDER : SR. NO. NAME OF THE BANK PERIOD TYPE OF ACCOUNT & NUMBER TOTAL AMOUNT OF CASH DEPOSITED 1 VIJAYA BANK LTD; RATNAGIRI 01.04.2010 TO 31.03.2011 SAVING 50600101000275 RS.74,49,336/ - 2 H.D.F.C. BANK LTD; RATNAGIRI - DO - SAVING 04301000050213 RS.362/ - 3 H.D.F.C. BANK LTD; RATNAGIRI - DO - SAVING 04301930001862 RS.10,29,526/ - 4 VIJAYA BANK LTD; MUMBAI - 400001 01.04.2010 TO 31.03.2011 SAVING 500701011001504 RS.95,06,783/ - TOTAL RS.1,79,86,007/ - 7. THE ASSESSING OFFICER IN PARA 9 OF THE ASSESSMENT ORDER HAS CATEGORICALLY OBSERVED THAT THE CASH DEPOSIT S RS.1,79,86,007/ - DURING THE PERIOD 01 - 04 - 2010 TO 31 - 03 - 2011 IN THE ABOVE MENTIONED SAVING BANK ACCOUNTS ARE ASSESSEES TOTAL TURNOVER/GROSS RECEIPTS/S ALES OUT OF HER BUSINESS ACTIVITY. HAVING HELD S O NO ADDITION ON ACCOUNT OF PEAK CASH CREDITS IN THE BANK ACCOUNTS WAS WARRANTED . WE OBSERVE THAT THE ASSESSING OFFICER IN THE ABSENCE OF BOOKS OF ACCOUNT HAS ESTIMATED NET 6 ITA NO . 246/PUN/2015, A.Y. 2011 - 12 PROFIT @ 5% OF THE GROSS RECEIPTS /SALES/TOTAL TURNOVER. AFTER CONSIDERING THE TOTALITY OF FACTS WE ARE OF CONSIDERED VIEW THAT THE ADDITION OF RS.58,72,000/ - ON ACCOUNT OF PEAK CASH DEPOSITS IN THE SAVING BANK ACCOUNTS IS NOT SUSTAINABLE. THE ASSESSEE AND THE ASSESSING OFFICER BOTH ARE UNANIMOUS IN ACCEPTING THAT AMOUNT DEPOSITED IN BANK ACCOUNTS OF ASSESSEE AGGREGATING TO RS.1,79,86,007/ - REPRESENT TOTAL TURNOVER/SALES FROM BUSINESS ACTIVITY. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE NET PROFIT @ 5% OF SUCH TOTAL TURNOVER. ACCORDINGLY, GROUND NOS. 1 AND 2 RAISED IN THE APPEAL BY ASSESSEE ARE ALLOWED AND GROUND NOS. 3 AND 4 ARE ALLOWED FOR STATISTICAL PURPOSE. 8. IN GROUND NO. 5 OF APPEAL THE ASSESSEE HAS ASSAILED ADDITION OF RS.77,515/ - ON ACCOUNT O F INTEREST INCOME ON BONDS AND BANK DEPOSITS. THE AUTHORITIES BELOW HAVE HELD THAT THIS AMOUNT OF RS.77,515/ - EARNED BY ASSESSEE IS OVER AND ABOVE THE INTEREST INCOME OF RS.6,49,011/ - DECLARED BY ASSESSEE IN ORIGINAL RETURN OF INCOME. DURING THE COURSE O F SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAD MADE INVESTMENT IN BONDS AND EARNED INTEREST INCOME OF RS.68,750/ - ON SUCH INVESTMENTS. APART FROM THAT THE ASSESSEE HA S ALSO EARNED INTEREST INCOME OF RS.8,764/ - O N CASH DEPOSITS IN VARIOUS BANKS. THE INTEREST INCOME EARNED BY ASSESSEE ON BONDS AND CASH DEPOSITS AGGREGATING TO RS.77,515/ - HAS NOT BEEN DISCLOSED BY ASSESSEE IN RETURN OF INCOME , THUS, DOES NOT FORM PART OF INTEREST INCOME RS.6,49,011/ - DECLARED IN TH E RETURN OF INCOME. THE LD. COUNSEL HAS NOT BEEN ABLE TO CONTROVERT THESE FINDINGS OF THE AUTHORITIES BELOW. THUS, WE FIND NO MERIT IN GROUND NO. 5 RAISED IN APPEAL BY ASSESSEE. ACCORDINGLY, THE SAME IS DISMISSED. 7 ITA NO . 246/PUN/2015, A.Y. 2011 - 12 9. GROUND NOS. 6 AND 7 ARE GENERAL I N NATURE, HENCE REQUIRE NO ADJUDICATION. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED IN THE TERMS AFORESAID. ORDER PRONOUNCED ON WEDNESDAY, THE 21 ST DAY OF FEBRUARY, 201 8 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 21 ST FEBRUARY, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) , KOLHAPUR 4. / THE CIT - I /II, KOLHAPUR/CIT (CENTRAL), PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE