PRANAY BIDHYANAND HALDER , Mumbai V. ITO 18(2)(5), Mumbai

ITA 2490/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1225 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 22-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Unexplained cash credit; Business income
• Section: 44AD; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 2490 /MUM. /201 9 ( ASSESSMENT YEAR : 20 14 15 ) PRANAY RIDHYANAND HALDER 19 NUMBER BUILDING, GROUND FLOOR ROOM NO.11, PANCHAYAT WADI BHULESHWAR, MUMBAI 400 002 PAN ACXPH9393N . APPELLANT V/S INCOME TAX OFFICER WORD 18 ( 2 )( 5 ), MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : S HRI SANJAY J. SETHI DATE OF HEARING 24 .11.2020 DATE OF ORDER 08.12.2020 O R D E R CAPTIONED APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 31 ST JANUARY 2019, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 29, MUMBAI, FOR THE ASSESSMENT YEAR 2014 15. 2. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESE NT ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. THERE IS NO APPLICATION SEEKING ADJOURNMENT EITHER. CONSIDERING THE NATURE OF DISPUTE, I PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER 2 PRANAY RIDHYANAND HALDER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE A ND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 3. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE ADDITION OF AN AMOUNT OF ` 9,08,713, AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). 4. BRIEF FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 4 TH FEBRUARY 2016, DECLARING TOTAL INCOME OF ` 2,28,200. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND FROM THE MATERIAL ON RECOR D THAT THE ASSESSEE HAS DEPOSITED CASH INTO HIS SAVING S BANK ACCOUNT WHICH IS MORE THAN THE TURNOVER DISCLOSED. THEREFORE, HE CALLED U PON THE ASSESSEE TO SUBMIT THE BANK PASS BOOK AND ALSO EXPLAIN THE SOURCE OF CASH DEPOSIT. IN REPLY, IT WAS SUBMITTED BY T HE ASSESSEE THAT ACTUALLY HE HAD A TURNOVER OF ` 27,04,185, WHICH WAS INADVERTENTLY MENTIONED AS ` 7,04,185 IN THE RETURN OF INCOME. FURTHER, IT WAS SUBMITTED THAT AS AGAINST THE GROSS RECEIPTS OF ` 27,04,185, THE ASSESSEE HAD MADE CASH DEPOSIT OF ` 26,74, 000. EXPLAINING FURTHER, IT WAS SUBMITTE D THAT THE ASSESSEE WORKS AS A G OLDSMITH ON JOB WORK BASIS. FOR THIS PURPOSE, HE HAS TO DEPOSIT AND WITHDRAW CASH IN THE BANK ACCOUNT FOR BUYING GOLD AND INCURRING OTHER EXPENSES. IT WAS FURTHER SUBMITTED THAT DUE TO LOSS ACCRUING IN THE 3 PRANAY RIDHYANAND HALDER BUSINESS, HE HAS CLOSED DOWN THE BUSINESS AND GONE BACK TO HIS NATIVE PLACE IN WEST BENGAL FOR FARMING WORK. THE ASSESSING OFFICER, HOWEVER, WAS NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE. WORKING OUT THE PEAK OF DEPOSIT S MADE IN THE BANK ACCOUNT, HE TREATED AN AMOUNT OF ` 9,08,713, AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT AND ADDED BACK TO T HE INCOME OF THE ASSESSEE. L EARNED COMMISSIONER (APPEALS) ALSO SUSTAINED THE ADDITION WHILE DECIDING ASSESSEES APPEAL. 5. I HAVE CONSIDERED THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE AN D PERUSED THE MATERIAL ON RECORD. AS I FIND , THE PRIMARY REASON FOR SELECTION OF AS SESSEES CASE UNDER SCRUTINY IS BECAUSE CASH DEPOSIT S IN THE BANK ACCOUNT WERE FOUND TO BE MORE THAN THE GROSS RECEIPTS DISCLOSED IN THE RETURN OF INCOME. HOWEVER, IN THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD EXPLAINED THAT THE GROSS RECEIPT HAS BEEN INADVERTENTLY MENTIONED AS ` 7,04,185, INSTEAD OF ` 27,04,185. TO JUSTIFY THE AFORESAID CLAIM, THE ASSESSEE HAD ALSO SUBMITTED THAT THE BUSINESS INCOME SHOWN BY THE ASSESSEE IS COMPUTED AS PER THE PROVISIONS OF SECTION 44AD OF THE ACT BY ESTIMATING @ 8% OF GROSS RECEIPT S. FROM THE FACTS ON RECORD, I FIND THE AFORESAID SUBMISSIONS OF THE ASSESSEE HAVING SOME TRUTH. THE ASSESSING OFFICER HIMSELF HAS ADMITTED THAT THE AS SESSEE HAS SHOWN INCOME FROM BUSINESS AND PROFESSION AT ` 2,51,211. IT IS HIGHLY 4 PRANAY RIDHYANAND HALDER IMPROBABLE FOR THE ASSESSEE TO OFFER SUCH BUSINESS INCOME IF HIS GROSS RECEIPT WAS ONLY ` 7,04,185. RATHER , FROM THE BUSINESS INCOME SHOWN BY THE ASSESSEE, THE CONTENTION THAT ACTUALLY HE HAS COMPUTED THE PROFIT IN TERMS OF SECTION 44AD OF THE ACT ON THE GROSS RECEIPT S OF ` 27,04,185, APPEARS TO BE BELIEVABLE. FURTHER, THE FACT THAT THE ASSESSEE HAS CLOSED DOWN HIS BUSINESS AND GONE BACK TO HIS NATIVE PLAC E HAS NOT BEEN FOUND T O BE FALSE . CONSIDERING THE FACT THAT THE ASSESSEE WAS DOING JOB WORK , HIS CONTENTION THAT THE WITHDRAW AL S AND DEPOSITS IN THE BANK ACCOUNT WERE FOR THE PURPOSE OF HIS BUSINESS CAN BE ACCEPTED. MORE SO, WHEN THE TURNOVER OF THE ASSESSEE IS TO THE TUNE OF ` 27 LAKH . 6. F URTHER , THERE IS ONE MORE ASPECT TO THE ISSUE. ON A READING OF SECTION 68 OF THE ACT IT BECOMES CLEAR THAT THE PROVISION COMES INTO PLAY IF THE ASSESSEE FAILS TO EXPLAIN ANY AMOUNT IS FOUND CREDITED TO THE BOOKS MAINTAINED BY HIM. I T IS A FACT ON RECORD THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT. THE ISSUE WHICH ARISES FOR CONSIDERATION IS , WHETHER PROVISIONS OF SECTION 68 OF THE ACT CAN , AT ALL, BE APPLIED BY RELYING UPON THE ENTRIES MADE IN THE BANK PASS BOOK. THE HON'BLE JURISD ICTIONAL HIGH COURT IN CIT VS. BHAICHAND N GANDHI (141 ITR 67) HAS HELD THAT THE B ANK PASS BOOK CANNOT BE CONSIDERED AS BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. 5 PRANAY RIDHYANAND HALDER 7. THUS, ON OVERALL CONSIDERATION, I HOLD THAT THE ADDITION MADE UNDER SECTION 68 OF THE ACT IS UNSUSTAINABLE. ACCORDINGLY, I DELETE THE ADDITION. GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.12.2020 SD / - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 08.12.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI