VINODKUMAR S JAIN, MUMBAI V. ITO-21(3)(2), MUMBAI

ITA 2534/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0877 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 25-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN KU MAR BEERLA
• Assessee Lawyers: VINOD KUMAR JAIN
• Keywords: Unexplained cash credit
• Section: 143(3); 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE MS. SUSHMA CH O WLA , JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 2534 & 2535/MUM/2013 ( / ASSESSMENT YEAR : 2009 - 10 SHRI VINODKUMAR S. JAIN, CHAWL NO. 34, R. NO. 10, KHOT CHAWL, SARESHWAR MANDIR MARG, KURLA (W), MUMBAI - 400 070 / VS. ITO - WARD 21(3), R. NO. 508, C - 11 BLDG., BKC - IT OFFICES, BANDRA (E), MUMBAI - 400 051 ./ ./ PAN/GIR NO. : AGUPJ 7132N ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI VINODKUMAR JAIN / RESPONDENT BY : SHRI PAWAN KUMAR BEERLA / DATE OF HEARING : 29 . 0 7 .2015 / DATE OF PRONOUNCEMENT : 31 .0 7 .2015 / O R D E R PER N.K. BILLAIYA, AM: TH ESE TWO APPEAL S BY THE ASSESSEE ARE PREFERRED AGAINST TWO SEPARATE ORDERS OF THE LD. CIT(A) - 32 , MUMBAI DT. 24.01.2013 PERTAINING TO ASSESSMENT YEAR 200 9 - 1 0. 2. ITA NO. 2534/M/2013 IS AGAINST THE QUANTUM ADDITION OF RS. 14,54,247/ - AND ITA NO. 2535/M/13 IS AGAINST THE LEVY OF PENALTY OF RS. ITA. NO S . 2534 & 2535/M/13 2 10,000/ - U/S. 271(1)(B) OF THE ACT. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE IS AN INDIVIDUAL AND HAS DECLARED IN COME FROM SALARY , BUSINESS & OTHER SOURCES. AS PER THE AIR INFORMATION, THE ASSESSING OFFICER CAME TO KNOW THAT THE ASSESSEE HAS DEPOSITED CASH DEPOSIT OF RS. 11,31,073/ - IN ICICI BANK. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO FURTHER FOU ND THAT A SUM OF RS. 2,35,598/ - WAS ALSO DEPOSITED THROUGH CHEQUE IN THE SAME BANK ACCOUNT WITH ICICI BANK. THE AO FURTHER FOUND THAT CASH OF RS. 42,500/ - AND CHEQUE OF RS. 2,19,269/ - WERE FOUND DEPOSITED IN ACCOUNT WITH NEW INDIA CO. OP. BANK LTD. IT WAS EXPLAINED THAT THE SOURCE OF CASH DEPOSIT WAS OUT OF SALES AND COMMISSION RECEIVED DURING THE YEAR. THE AO OBSERVED THAT THE TOTAL DEPOSITS THROUGH CHEQUE AMOUNTED TO RS. 4,54,867/ - WHICH IS ABOUT EQUIVALENT TO THE SALES OF RS. 4,34,815/ - MADE BY THE ASSESSEE DURING THE YEAR. THE ASSESSEE WAS ASKED TO EXPLAIN THE CASH DEPOSIT OF RS. 11,31,073/ - + RS. 42,500/ - IN ICICI BANK LTD AND NEW INDIA CO.OP. BANK LTD. AND CHEQUE DEPOSITS OF RS. 2,80,674/ - . 3.1. IT WAS EXPLAINED THAT THE CASH DEPOSIT IN BANK ACC OUNT IS OUT OF CASH WITHDRAWALS FROM BANK AND SALES AND THEREFORE IT IS NOT THE INCOME OF THE ASSESSEE. THE ASSESSEE ALSO FILED A CASH FLOW STATEMENT. ON GOING THROUGH THE CASH FLOW STATEMENT, THE AO NOTICED THAT THE ASSESSEE IS WITHDRAWING CASH EVEN THOU GH HE IS HAVING SUFFICIENT CASH IN HAND. THE ASSESSEE WAS ASKED TO EXPLAIN. 3.2. THE ASSESSEE EXPLAINED THAT CASH DEPOSITED IN BANK ARE OUT OF CASH RECEIVED AS ADVANCES FROM THE CUSTOMERS AND THE SAME WAS WITHDRAWN FROM BANK FOR MAKING PAYMENTS TO PART IES ON BEHALF OF CUSTOMERS ON ITA. NO S . 2534 & 2535/M/13 3 WHICH THE ASSESSEE IS EARNING COMMISSION. BIFURCATION OF CASH AND CHEQUE, SALES & COMMISSION AND PURCHASE & EXPENSES MADE IN CASH WERE ALSO FILED. 3.3. AFTER VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE, THE AO CAME TO THE CONCLUSION THAT THE CASH DEPOSIT ON BOTH THE BANK ACCOUNT REMAIN UNEXPLAINED. THE AO WAS CONVINCED THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF CASH DEPOSIT IN ITS BANK DEPOSIT WITH ICICI BANK AND NEW INDIA CO.OP. BANK LTD. THE AO F URTHER OBSERVED THAT THE ASSESSEE HAS ALSO FAILED TO EXPLAIN THE CHEQUE DEPOSITED IN ICICI BANK AND NEW INDIA CO.OP. BANK LTD. RS. 2,80,674/ - . THE AO ACCORDINGLY MADE THE ADDITION OF RS. 14,54,247/ - AS UNEXPLAINED CASH CREDIT. 4. THE ASSESSEE CARRIED TH E MATTER BEFORE THE LD. CIT(A). THE LD. CIT(A) ON THE STRENGTH OF THE FACTS MENTIONED IN THE ASSESSMENT ORDER CONFIRMED THE ADDITION BY AN EX PARTE ORDER. 5. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. THE ASSESSEE HIMSELF ATTENDED THE PROCEEDINGS BE FORE US. IN HIS WRITTEN STATEMENT AND ALSO DURING HIS ORAL SUBMISSIONS, THE ASSESSEE STATED THAT HIS CONSULTANT IS NOT CO - OPERATING SINCE HE COULD NOT PAY HIS PROFESSIONAL FEES AND THAT IS THE REASON WHY THE LD. CIT(A) HAD TO PASS AN EX PARTE ORDER. THE ASSESSEE STATED THAT HE IS A VERY SMALL DEALER OF ELECTRICAL HARDWARE ITEMS. HE FURTHER STATED THAT HE DOES NOT HAVE ANY RESIDENCE NEITHER IN MUMBAI NOR AT HIS NATIVE PLACE. HE IS STAYING WITH HIS FATHER AND DOES NOT HAVE ANY MOVEABLE PROPERTY EXCEPT T HE HOUSEHOLD UTENSILS AND TV, FRID G E ETC. THE ASSESSEE FURTHER STATED THAT HIS INCOME WAS VERY MEAGER AND BELOW THE TAXABLE LIMIT THEREFORE HE DID NOT FILE RETURN OF INCOME. WHEN ASKED THE SOURCE OF CASH DEPOSIT IN THE BANK ACCOUNT, THE ASSESSEE STATED THAT THE DEPOSITS ARE EITHER OUT OF THE WITHDRAWAL OF THE SAME BANK ACCOUNT OR OUT ITA. NO S . 2534 & 2535/M/13 4 OF HIS RETAIL SALE AND SOMETIMES ON ADVANCES RECEIVED FROM THE CUSTOMERS. THE ASSESSEE PRAYED THAT THE ADDITIONS MADE BY THE AO SHOULD BE DELETED. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPOR TED THE FINDINGS OF THE REVENUE AUTHORITIES. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE CASH DEPOSIT STATEMENT FILED BEFORE US. A PERUSAL OF THE DAILY SUMMARY OF CASH IN ICICI BANK CONCLUSIVELY SHOWS THAT THERE IS A FREQUENT MOVEMENT OF DEPOSITS AND WITHDRAWALS CONTINUOUSLY. THEREFORE, IT WOULD BE INCORRECT TO TREAT THE ENTIRE CASH DEPOSIT AS UNDISCLOSED INCOME OF THE ASSESSEE KEEPING IN MIND THE PRESENT STATUS OF THE ASSESEE. A CAREFUL ANALYSIS OF THE DAILY SUMMARY OF CASH IN ICICI BANK SHOWS THAT THE MAXIMUM OUTSTANDING BALANCE COMES TO RS. 3,19,229/ - , AT THE MOST THIS AMOUNT CAN ONLY BE CONSIDERED AS PEAK CASH CREDIT , A DDING TO THIS RS. 42,500/ - OF NEW INDIA CO.OP. BANK LTD., THE T OTAL COMES TO R S. 3,61,729/ - . 7.1. CONSIDERING THE NATURE OF THE BUSINESS OF THE ASSESSEE QUA HIS PRESENT CONDITION, IN OUR CONSIDERED OPINION, EVEN IF PROFIT @ 20% IS TAKEN INTO CONSIDERATION, THE NET ESTIMATED PROFIT COMES TO RS. 72,345/ - . WE, ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE AO TO RESTRICT THE ADDITION TO RS. 72,345/ - WHICH SHOULD MEET THE ENDS OF JUSTICE. 8. HERE WE WOULD LIKE TO MAKE IT CLEAR THAT THIS DECISION WILL NOT BE ACCEPTED AS PRECEDENT IN ANY OTHER CASE AS WE HAVE DECIDED ON THE PECULIAR FACTS OF THE PRESENT CASE ONLY QUA THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA. NO S . 2534 & 2535/M/13 5 ITA NO. 2535/MUM/2013 10. THE SOLE GRIEVANCE OF THE ASSESSEE READS AS UNDER: THE LD. CIT(A) ERRED IN NOT ADMITTING THE APPEAL AND THUS NOT JUSTIFIED BY NOT ACCEPTING THE CAUSE OF DELAY OF ABOUT 4 MONTHS IN FILING THE APPEAL. THEREFORE, THE ORDER MAY PLEASE BE SET ASIDE TO THE FILE OF CIT(A) FOR RECONSIDERATION OR ALTERNATIVELY THE PENALTY LEVIED BY RESPONDENT OF RS. 10,000/ - MAY PLEASE BE DELETED. 11. THE ASSESSEE IS AGGRIEVED BY THE LEVY OF PENALTY U/S. 271(1)(B) OF THE ACT. 12. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF THE ASSESSM ENT PROCEEDINGS, THE AO FOUND THAT THERE WAS NO COMPLIANCE TO THE NOTICE ISSUED ON 6.9.2010 FIXING THE DATE OF HEARING ON 22.9.2010. THE AO FURTHER OBSERVED THAT A SECOND NOTICE DT. 18.7.2011 WAS ALSO WENT UNCOMPLIED, THEREFORE, THE AO FOUND TO BE A FIT C ASE FOR THE LEVY OF PENALTY U/S. 271(1)(B) OF THE ACT. 13. THE LD. CIT(A) CONFIRMED THE PENALTY ON THE STREN GTH OF THE FACTS MENTIONED IN THE PENALTY ORDER BY A N EX PARTE ORDER HOLDING THAT THE APPEAL FILED BY THE ASSESSEE IS BARRED BY LIMITATION BY 4 MO NTHS AND TREATED THE APPEAL FILED BY THE ASSESSEE A S INVALID. 14. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 15. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTUAL MATRIX AS MENTIONED IN THE PENALTY ORDER DATED 9.8.2011. SURPRISINGLY, THE ASSESSMENT IS MADE U/S. 143(3) OF THE ACT BY ORDER DATED 29.11.2011. FOR SOME REASON, THE ASSESSEE MAY NOT HAVE COMPLIED WI TH THE EARLIER NOTICE OF THE AO BUT THEN THE AO HAS NOT MADE THE ASSESSMENT ORDER U/S. 144 OF ITA. NO S . 2534 & 2535/M/13 6 THE ACT BUT HAS MADE U/S. 143(3) OF THE ACT AFTER CONSIDERING THE DETAILS FURNISHED BY THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. IN ITA NO. 25 34/M/2013, WE HAVE ELABORATELY MENTIONED THE CONDITION OF THE ASSESSEE. IN THAT APPEAL, WE HAVE ALSO CONSIDERED THE PLEA OF THE ASSESSEE THAT HE IS NOT IN A POSITION TO AFFORD THE SERVICE OF A COUNSEL BECAUSE OF WHICH THE QUANTUM APPEAL COULD NOT BE ATTEN DED BEFORE THE FIRST APPELLATE AUTHORITY. FOR SIMILAR REASON, THE APPEAL WAS ALSO NOT FILED ON TIME AGAINST THE PENALTY ORDER. CONSIDERING THE PECULIARITY OF THE CASE, IN OUR CONSIDERED VIEW, THE LD. CIT(A) SHOULD DECIDE THE APPEAL ON MERITS OF THE CASE. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE LD. CIT(A) WITH THE DIRECTION THAT THE APPEAL SHOULD BE ADMITTED, THE DELAY SHOULD BE CONDONED AND THE APPEAL SHOULD BE DECIDED ON MERITS OF THE CASE AFTER GIVING A REASONABLE AND FAIR OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. OR DER PRONOUNCED IN THE OPEN COURT ON 31 ST JU LY , 2015 SD/ - SD/ - ( SUSHMA CH O WLA ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 31 ST JU LY , 2015 . . ./ RJ , SR. PS ITA. NO S . 2534 & 2535/M/13 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI