Reetesh Kumar, V. I.T.O.,

ITA 26/PAT/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9647 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 28-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K M MISHRA SH
• Assessee Lawyers: T VARKEY JUDIC IA L M EMBER
• Keywords: Unexplained investment; Business income; Peak credit
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PA T N A BENCH , PATNA BEFORE SHRI ABY. T. VARKEY , JUDICIAL MEMBER AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ITA NO. 26 / PAT / 2015 ASSESSMENT YEAR: 2011 - 12 REETESH KUMAR RAJAPAKAR BAZAR, VAISHALI, HAZIPUR PIN 844 124 [ PAN NO.AJPPK 9221 R ] / V/S . ITO WARD - VAISHALI, HAZIPUR /APPELLANT .. /RESPONDENT / BY APPELLANT SHRI K.M. MISHRA, ADVOCATE / BY RESPONDENT SHRI K.K. DAS, DR / DATE OF HEARING 03 - 04 - 2017 / DATE OF PRONOUNCEMENT 05 - 04 - 2017 /O R D E R PER BENCH : - THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - I , PATNA DATED 2 5 .0 3 .201 5 . ASSESSMENT WAS FRAMED BY ITO WARD , 54(1), VAISHALI U/S 143(3) /144 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 05 . 03 .20 14 FOR ASSESSMENT YEAR 20 11 - 12 . SHRI K.M. MISHRA, LD. ADVOCATE APPEARED ON BEHALF OF ASSESSEE AND SHRI K.K. DAS, LD. DR REPRESENTED ON BEHALF OF REVENUE. 2. EFFECTIVE ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER (AO) BY SUSTAINING THE DISALL OWANCE OF RS.12,51,660/ - ON ACCOUNT OF PEAK CREDIT. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL AND DECLARED HIS INCOME UNDER THE HEAD BUSINESS AND INCOME FROM OTHER SOURCE. THE ASSESSEE WAS MAINTAINING THREE BANK ACCOUNTS, WHEREIN THE FOL LOWING CASH WERE DEPOSITED DURING THE YEAR UNDER CONSIDERATION: - ITA NO. 26/PAT/2015 A.Y. 2011 - 12 REETESH KUMAR VS. ITO WD VAISHALI PAGE 2 BANK NAME & ACCOUNT NO. PERIOD CASH IDBI BANK A/C NO. 72404000000134 , 01.04.10 TO 31.03.11 46,74,172/ - BANK OF BARODA A/C NO, 124001 00000552 , 01.04.10 TO 31.03.11 4, 31 ,000/ - BANK OF BARODA O/D 12400400010011 , 01.04.10 TO 31.03.11 2,00,000/ - ON QUESTION BY THE AO ABOUT THE SOURCE OF CASH DEPOSITS IN THE AFORESAID BANK ACCOUNTS OF ASSESSEE, IT WAS SUBMITTED THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF SEASONAL VEGETABLES AND FRUIT . THE ASSESSEE I N SUPPORT OF ITS CLAIM OF BUSINESS SUBMITTED A CERTIFICATE DATED 28.10.2013 ISSUED BY THE MUKHIYA OF GRAM PANCHAYAT ALONG WITH THE LIST OF PERSONS WITH WHOM ASSESSEE HAS DONE SALE - PURCHASE TRANSACTIONS. ACCORDINGLY, ASSESSEE SUBMITTED THAT CASH DEPOSITED IN HIS BANK ACCOUNTS REPRESENT THE SALE - PURCHASE OF THE AFORESAID BUSINESS. FURTHER, ASSESSEE ALSO SUBMITTED THAT THE BANK ACCOUNT OF BANK OF BARODA (OD) AND IDBI BANK ACCOUNT ARE JOINTLY OPERATED BY ASSESSEE AND HIS FATHER, WHO RUNS A FAIR PRICE SHOP . THE ASSESSEE ALSO CLAIMED THAT A SUM OF 23. 47 LA CS WAS DEPOSITED BY HIS FATHER IN IDBI BANK ACCOUNT AND OTHER BANKS . THE ASSESSEE IN SUPPORT OF HIS CONTENTION HAS SUBMITTED AN AFFIDAVIT WHICH WAS DULY NOTARI Z ED. HOWEVER, THE AO OBSE R VED T HAT NO LIST OF THE PERSONS WITH WHOM THE ASSESSEE HAS DONE BUSINESS TRANSACTION WAS FURNISHED . THUS THE AO DISREGARDED THE PLEA OF ASSESSEE AND MADE THE FOLLOWING ADDITIONS ON THE BASIS OF PEAK CREDIT THEORY AND CASH DEPOSITED IN THE BANK : - NAME OF BANK CA SH DEPOSIT PEAK AMOUNT (RS) IDBI -- 24,36,723 BANK OF BARODA 4 , 31 ,000 -- BANK OF BARODA OD 2 ,00,000 -- 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CI T(A) MADE VARIOUS SUBMISSION AS DETAILED UNDER : A) THERE WAS AN OPENING BALANCE OF 10,62,120/ - IN IDBI BANK AND THE SAME CANNOT FORM PART OF PEAK CREDIT; ITA NO. 26/PAT/2015 A.Y. 2011 - 12 REETESH KUMAR VS. ITO WD VAISHALI PAGE 3 B) THERE WAS INTRA TRANSFER FROM ONE BANK ACC O UNT TO ANOTHER BANK ACCOUNT FOR 7 LA CS AND SAME CANNOT BE CONSIDERED WHILE WORKING OUT THE PEAK CREDIT; C) TH E INCOME OFFERED BY THE ASSESSEE @ 8% OF THE TOTAL CASH DEPOSIT IS ALREADY INCLUDED IN THE AFORESAID PEAK CREDIT AMOUNT AND THER E FOR E THE SAME SHOULD BE REDUCED FROM THE PEAK CREDIT; D) THE ASSESSEE WAS OPERATING TWO BANK ACCOUNTS NAMELY, IDBI AND BANK OF BARODA (OD) ACCOUNT ALONG WITH HIS FATHER WHO IS RUNNING FAIR PRICE SHOP FOR THE DISTRIBUTION OF FOOD - GRAINS AND KEROSENE OIL . FROM THE IDBI BANK ACCOUNT DD WORTH OF 16,94,03/ - WERE MADE IN CONNECTION WITH THE PURCHASE FOR FAIR PRICE SHOP. THEREFORE, THE CASH DEPOSITED IN THE AFORESAID BANKS ACCOUNTS ALSO REPRESENTS THE BUSINESS RECEIPTS BELONGING TO HIS FATHER . T HUS THERE IS NO ADDITION ON ACC O UNT OF PEAK CREDIT REQUIRED TO BE MADE. HOWEVER, LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE PA RTLY GRANT ED RELIEF TO THE AS S E SSEE I.E. THE OPENING BALANCE , INTRA TRANSFER OF CASH FROM ONE ACCOUNT TO ANOTHER ACCOUNT AND 8% OF THE CASH DEPOSITED AND FOR THE BALANCE AMOUNT CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER: - 2. THE APPELLANTS CLAIM OF CASH DEPOSIT OF RS.23,47,000/ - MADE BY HIS FATHER OUT OF SALE PROCEEDS OF FAIR PRICE SHOP IS NOT ACCEPTABLE DUE TO FOLLOWING PATTERNS OF CASH DEPOSITS IN THE IDBI ACCOUNT; (A) CASH DEPOSITS MADE IN THE IDBI ACCOUNT INDICATE CASH DEPOSITS WITH NARRATION VAISHA LI, RUDRAPUR AND KOLKATA. THIS NARR A TION INDICATE THAT CASH DEPOSITS IN THE IDBI ACCOUNT WERE MADE FROM T HE P LACES LIKE RUDRAPUR AND KOLKATA (B) THE ACCOUN T S ALSO SHOWS DD ISSUED IN THE NAME OF ZYDUS WELLNESS LIMIT ED AND JK HELEN CURTIS LIMITED ON VARIOUS DAT E S MEANING THEREBY THE APPELLANTS CONTENTION OF ITS BUSINESS OF FRUIT AND VEGETABLE SALE IS DOUBTFUL AS THE APPELLANT APPE A RS TO HAVE TRADED IN FMCG ITEM OF ZYDUS WELLNESS LIMITED AND JK HELEN CURTIS LIMITED. (C) IF APPELLANTS FATHERS BUSINESS OF FAIR PRICE SHOP PUR CHASES OF RS.16,94,035/ - IS CONS IDERED, THEN TOT A L SALE CONSIDERATION CANNOT BE THE CASH OF RS.23,47,000/ - AS FAIR PRICE SHOP SALE IS AT FIXED PRICE BY THE GOVERNMENT. (D) RETURN OF INCOME OF APPELLANTS FATHER SHOWS NET PROFIT OF RS. 1,39,447/ - FROM BROKERAGE / COMMISSION / HIRE JOB. TUR N OVER D E T A ILS WERE NOT FURNISHED TO SUPPORT THE CLAIM OF CASH SALES UTILIZED IN THE DEPOSITS IN IDBI ACC O UNT. IF TURNOVER OF RS.23,47,000/ - AS S TATED NOW IS CONSIDERED, THEN APPELLANTS FATHER RETURN OF INCOME SHOULD HA VE BEEN HIGHER CONSIDERING PURCHASES OF RS.16,94,035/ - ITA NO. 26/PAT/2015 A.Y. 2011 - 12 REETESH KUMAR VS. ITO WD VAISHALI PAGE 4 (E) APPELLANTS EVASIVE REPLY ABOUT NATURE OF BUSINESS BEFORE THE AO AND EVEN THE STATED BUSINESS OF FRUIT & VEGETABLES TRADING NOT SUPPORT I NG THE TRANSACTION WITH ZYDUS WELLNESS LIMITED AND JK HELEN CURTI S LIMITED AS PER BANK STATEMENT NARRATI O N FURTHER RAISES DOUBT ABOUT TRUE NATURE OF BUSINESS. 3. THE APPELLANT HAS AVOIDED TO SUBMIT THE CORRECT NATURE OF ITS BUSINESS AT THE T I M E OF ASSESSMENT PROCEEDINGS AS WELL AS AT THE TIME OF APPELLATE PROCEEDINGS. BANK ACCOUNTS TRANSACTIONS OF THE APPELLANT INDICATE B U SINESS OTHER THAN THE ONE CLAIMED BY THE APPELLANT. 4. THE APPELLANT S CONT E NTION OF OPENING BALANCE OF RS.10,62,120/ - IN THE IDBI ACCOUNT AS ON 01.04.2010 IS FOUND CORRECT. SIMILARLY THE DEPOSIT OF RS .7 LKHS IN TH R EE IDBI ACCOUNT IS FOUND TO BE TRANSFER FROM APPELLANT S OTHER BANK ACCOUNT S IN BANK OF BARODA. BASED ON THIS FACT, THE APP ELLANTS CONTENTION OF PEAK CRE DIT OF RS.24,36,723/ - AS ON 22.02.2011 CAN BE REDUCED BY THE OPENING BALANCE AMOUNT OF R S.10,62,120/ - AND EXPLAINED SOU R CE OF DEPOSIT OF RS.7 LAKHS. IN VIEW OF THE ABOVE FACTS, THE APPELLANT CONTENTION THAT THE PORTION OF CASH DEPOSITS ARE SOURCED OUT OF APPELLANTS FATHERS BUSINESS IS NOT ACCEPTABLE. THE PEAK CREDIT CAN BE REDUCED FROM RS.2 4,36,723/ - TO RS.6,74,630 - AFTER GIVING CREDIT FOR OPENING BALANCE OF RS.10,62,120/ - AND KNOWN SOURCE OF DEPO S IT OF RS. 7 LAKHS. THUS, PEAK C R EDIT IS REDUCED FROM RS.24,36,723/ - TO RS.6,74,630/ - . THIS AMOUNT IS FURTHER REDUCED BY 8% PROFIT PORTION EMBEDDED IN THE PEAK CREDIT WHICH WORK OUT TO RS.53,970/ - ( 8% OF RS.6,74,630 ). THUS, THE FINAL PEAK CREDIT AMOUNT WHICH ARE TO BE TREATED AS UNEXPLAINED INVESTMENT WILL BE RS.6,20,660/ - . FURTHER THE SOURCE OF CASH DEPOSIT OF RS.4,31,000/ - AND RS.2 LAKHS IN THE BANK OF BARODA ACCOUNTS ARE NOT EXPLAINABLE. THIS FACT WAS ALSO ADMITTE D BY THE APPELLANT IN ITS SUBMISSION DURING THE ASSESSMENT PROCEEDINGS. THUS, THE TOTAL CASH DEPOSITS OF RS.6,31,00/ - TREATED BY THE AO AS UNEXPLAINED INVESTMENT IS HEREBY CONFIRMED. IN VIEW OF THE ABOVE FINDINGS, THE ADDITION OF RS.30,67,723/ - MADE BY TH E AO U/S 69 OF THE IT ACT IS HEREBY REDUCED TO RS.12,51,660/ - . BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSEE CAME IN SECOND APPEAL BEFORE US ON THE FOLLOWING GROUNDS: - 1. FOR THAT, THE ORDER OF ASSESSMENT IS BAD AS THE ASSESSING OFFICER HAS NOT CONSIDERED THE EVIDENCE AND DOCUMENT SUBMITTED BY THE APPELLANT HENCE ORDER IS AGAINST THE NATURAL J U STICE AS SUCH IS LIABLE TO SET ASIDE. 2. FOR, THAT THE ADDITION ON ACCOUNT OF UNEXPLAINED DEPOSIT IN BAN K IS BAD AND UNJUSTIFIED AS THE APPELLANT HAS DEPO SITED SALE PROCEED IN THE BANK ACCOUNTS AND ALSO MADE BUSINESS TR A NSACTION FROM SAME BANK HENCE THE LOWER AUT H ORITIES OUGHT TO HAVE MADE ESTIM A TE OF INCOME ON ACCOUNT OF UNEXPLAINED DEPOSIT AT CERTAIN PERCENTAGE. 3. FOR THAT, THE ADDITION ON ACCOUNT OF UN EXP LAINED INVE S TMENT IS BAD AND UNJ USTIFIED AS THE APPELLANT HAS NOT MADE ANY INVESTMENT NOR THE EVIDENCE IS ITA NO. 26/PAT/2015 A.Y. 2011 - 12 REETESH KUMAR VS. ITO WD VAISHALI PAGE 5 AVAILABLE ON RECORD TO SHOW THAT THE APPELLANT HAS MADE INVESTM E NT HENCE RS.12,51,660/ - SHOULD HAVE DELETED. 4. FOR THAT THE AO AS WELL AS THE C IT - A ERRED IN NOT ACCEPTING THE STATEMENT MADE BY THE FATHER OF THE APPELLANT TO THE EFFECT THAT HE WAS FAIR PRICE DEALER AND THE BANK ACCOUNT IS IN JOINT NAME OF ASSESSEE AND HIS FATHER AS SUCH DEPOSIT MADE IN THE BANK ACCOUNT IS PARTIALLY RELATES TO HIMS ELF. 5. FOR THAT ADDITION ON ACCOUNT OF PEAK CREDIT IS TOO UNREASONABLE AS NO CASE IS MADE OUT FOR ADDITIO N TO THIS ACCOUNT 6. FOR THAT THE ADDITION ON ACC O UNT INTEREST UNDER OTHER SOURCE IS TOO UNREASONABLE AS THE INTE R EST IS BUSINESS INCOME AND INCOME SHOULD HAVE B E EN ESTIMATED THEREON. 7. FOR THAT, THE APPELLANT CRAVE THE RIGHT TO ADD AND AMEND THE GROUND. 8. FOR THAT GROUNDS TAKEN HEREINABOVE IS NOT PREJUDICIAL TO EACH OTHER. 5. BEFORE US LD. AR FILED PAPER BOOK WHICH IS RUNNING INTO PAGES FROM 1 TO 22 AND SUBMITTED THAT THE LD. CIT - A HAS NOT CONSIDERED THE EFFECT OF THE CONTRA ENTRIES I.E. WITHDRAWAL FROM ONE BANK ACCOUNT AND DEPOSITING THE SAME IN OTHER BANK ACCOUNT. SIMILARLY T HE LD. CIT - A HAS NOT CONSIDERED THE CASH WITHDRAWN AND DEPOSIT BY THE FATHER OF THE ASSESSEE. THE AR FOR THE ASSESSEE HAS SUBMITTED THE COPIES OF ALL THE BANK STATEMENTS WHICH ARE PLACED ON PAGES 1 TO 11 OF THE PAPER BOOK AND THE AFFIDAVIT OF THE FATHER OF THE ASSESSEE IN SUPPORT OF ITS CONTENTION WHICH IS PLACED ON PAGE 16 TO 18 OF THE PAPER BOOK. THE LD. AR ALSO REQUESTED TO RESTORE THE MATTER TO THE AO FOR FRESH ADJUDICATION AFTER CONSIDERING ALL THE CASH DEPOSIT ENTRIES IN ALL THE BANK ACCOUNTS OF THE A SSESSEE IN TOTAL AS WELL AS AFTER CONSIDERING THE CASH ENTRIES BELONGING TO HIS FATHER. ON THE OTHER HAND THE LD. DR RAISED NO OBJECTION IF THE MATTER IS RESTORED TO THE AO FOR FRESH ADJUDICATION AND RELIED ON THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HE ARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. THE ISSUE IN THE INSTANT CASE RELATES TO THE ADDITION MADE BY THE AO ON ACCOUNT TWO REASONS, FIRSTLY PEAK CREDI T OF CASH BALANCE IN THE BANK ACCOUNT OF IDBI, SECONDLY, CASH DEPOSITED IN REMAINING TWO ACCOUNTS. IT WAS FOUND THAT THE ASSESSEE HAS DEPOSITED CASH DURING THE YEAR IN ITS THREE BANK ACCOUNTS AS DISCUSSED ABOVE. IT IS UNDISPUTED THAT OUT OF THREE BANK ACCO UNTS TWO WERE IN JOINT NAME OF THE ASSESSEE AND HIS FATHER. IT WAS EXPLAINED THAT THE DEPOSITS OF CASH IN THE AFORESAID BANKS REPRESENT BUSINESS TRANSACTIONS OF THE ITA NO. 26/PAT/2015 A.Y. 2011 - 12 REETESH KUMAR VS. ITO WD VAISHALI PAGE 6 ASSESSEE AND HIS FATHER. HOWEVER THE AO DISBELIEVED THE CONTENTIONS OF THE ASSESSEE AND MAD E THE ADDITION AS DISCUSSED ABOVE. HOWEVER LD. CIT - A CONFIRMED THE ORDER OF THE AO WITH REGARD TO THE CASH DEPOSIT IN BOTH THE BANK OF BARODA ACCOUNTS AND WITH REGARD TO THE PEAK CREDIT ADDITION IN IDBI BANK ACCOUNT THE LD. CIT - A HAS GIVEN RELIEF TO THE AS SESSEE IN PART ON ACCOUNT OF OPENING BALANCE, INTRA TRANSFER IN BANK ACCOUNTS AND THE PROFIT ALREADY DECLARED BY THE ASSESSEE @8% OF THE BALANCE PEAK CREDIT AMOUNT. HOWEVER ON PERUSAL OF FACTS OF THE CASE WE FIND THAT THE ADDITION HAS BEEN CONFIRMED BY TH E LD. CIT - A AFTER REJECTING THE PLEA OF THE ASSESSEE I.E. THE CASH DEPOSIT ENTRIES IN IDBI BANK ALSO BELONGS TO THE FATHER OF THE ASSESSEE. THOUGH THE ASSESSEE IN SUPPORT OF HIS CLAIM HAS DEMONSTRATED THE BUSINESS PAYMENTS MADE BY THE FATHER OF THE ASSESSE E FROM THE IDBI BANK ACCOUNT FOR WHICH THE AFFIDAVIT WAS FILED BY THE ASSESSEE. THEREFORE WE FIND THAT THERE IS FORCE IN THE ARGUMENT OF THE LD. AR WHICH HAS NOT BEEN ADJUDICATED WITHOUT ADDUCING ANY REASON THEREON. IT IS ALSO NOT DISPUTED THAT THE FATHER OF THE ASSESSEE WAS JOINT HOLDER IN IDBI BANK ACCOUNT AND FROM THIS ACCOUNT THE BUSINESS PAYMENTS WERE MADE BY THE FATHER OF THE ASSESSEE. THEREFORE IN THE INTEREST OF JUSTICE & FAIR PLAY WE ARE OF THE OPINION T HAT THE INSTANT ISSUE NEEDS TO BE RECONSIDERED IN T HE LIGHT OF THE AFFIDAVIT SUBMITTED BY THE FATHER OF THE ASSESSEE. IN OUR CONSIDERED VIEW THE AFFIDAVIT GIVEN BY THE FATHER OF THE ASSESSEE CANNOT JUST BE BRUSHED ASIDE. THEREFORE , WE ARE INCLINED TO RESTORE THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDI CATION IN ACCORDANCE WITH THE LAW DE - NOVO . THUS , THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 05 / 04 /201 7 SD/ - SD/ - ( ABY. T. VARKEY ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP , SR.P.S - 05 / 04 /201 7 PATNA ITA NO. 26/PAT/2015 A.Y. 2011 - 12 REETESH KUMAR VS. ITO WD VAISHALI PAGE 7 COPY OF ORDER FORWARDED TO: - 1 . APPELLANT - REETESH KUMAR, RAJAPAKAR BAZAR, VAISHALI, HAZIPUR, PIN - 844124 2 . RESPONDENT - ITO WARD VISHALI, HAZIPUR 3 . CONCERNED CIT 4 . CIT (A) 5 . DR, ITAT, PATNA 6 . GUARD FILE. BY ORDER/ , /TRUE COPY/ SR.PS/PS, ITAT, PATNA