ITO, New Delhi V. Sh. Subhash Sachdeva, Delhi

ITA 2694/DEL/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6787 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 15-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 06-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Peak credit
• Section: 68

Judgement Text

I.T.A .NO.-2225 & 2694/DEL/2015 SUBHASH SACHDEVA VS ITO IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-II NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO.-2225/DEL/2015 (ASSESSMENT YEAR-2010-11) SUBHASH SACHDEVA, SHOP NO.18(72A), OLD LAJPAT RAI MARKET, CHANDNI CHOWK, DELHI-110006. PAN-ALIPS6427J ( APPELLANT) VS ITO, WARD-48(4), ERSTWHILE WARD- 30(4), NEW DELHI. (RESPONDENT) I.T.A .NO.-2694/DEL/2015 (ASSESSMENT YEAR-2010-11) ITO, WARD-48(4), NEW DELHI. ( APPELLANT) VS SUBHASH SACHDEVA, SHOP NO.18(72A), OLD LAJPAT RAI MARKET, CHANDNI CHOWK, DELHI-110006. PAN-ALIPS6427J (RESPONDENT) ASSESSEE BY SH. SANJAY GUPTA, CA REVENUE BY SH. NEERAJ KUMAR, SR.DR DATE OF HEARING 15 . 11 .2016 DATE OF PRONOUNCEMENT 01 . 0 2 .201 7 ORDER THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE ASSAILING THE CORRECTNESS OF THE ORDER DATED 02.02.2015 OF CIT(A) -16, NEW DELHI PERTAINING TO 201011 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- ITA NO.2225/DEL/2015 1. ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN TREATING THE CASH DEPOSIT AS RECEIPTS FROM UNDISCLOSED BUSINESS. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN ASSESSING THE INCOME AT 15% OF THE GROSS RECEIPTS INSTEAD OF 5% AS PROVIDED U/S 44AF OF THE ACT. 3. ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN NOT APPLYING THE PEAK CREDIT BASIS WHICH IS A SETTLED PRINCIPLE OF LAW FOR DETERMINE THE INCOME I N SUCH CASES. ITA NO.-2694/DEL/2015 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN DIRECTING THE AO TO ADOPT GROSS PROFIT @ 1 5 OF RS.39,15,I50/- INSTEAD OF TREATING THE CASH DEPOSITS OF RS.39,15,150/- IN THE ICICI BANK AS UNEXPLAINED INCOME. 2. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN TREATING IT AS BUSINESS INCOME AND IGNORIN G THE FACT THAT THE ASSESSEE HAS NOT SHOWN ANY INCOME UNDER THE HEAD OF INCOME FROM BUSINESS AND PROFESSION EXCEPT SHARE OF PROFIT.' 3. 'THE ORDER OF THE CIT (A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS.' 4. THE APPELLANT CRAVES TO AMEND, ALTER OR MODIFY ANY GROUND OF APPEAL. PAGE 2 OF 4 I.T.A .NO.-2225 & 2694/DEL/2015 SUBHASH SACHDEVA VS ITO 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSE SSEE IN THE YEAR UNDER CONSIDERATION WAS A PARTNER IN THE FIRM M/S MARSHAL ELECTRONICS A T SHOP NO.18(72A), LAJPAT RAI MARKET, CHANDNI CHOWK, DELHI. THE ASSESSEES RETURN WAS PI CKED UP FOR SCRUTINY WHEREIN THE ASSESSEE WAS REQUIRED TO EXPLAIN THE CASH DEPOSIT O F RS.25,25,250/- IN HIS ICICI BANK, CHANDNI CHOWK, DELHI. AS PER EXPLANATION DATED 22. 12.2012 BEFORE THE AO IT WAS STATED THAT THE ASSESSEE TRADES IN SMALL ELECTRONICS LIKE LEADS, WIRES, SOCKETS, SWITCHES, EMERGENCY LIGHTS ETC. THE ASSESSEE APART FROM TRAD ING IN PARTNERSHIP IN THE NAME OF M/S MARSHALL WAS ALSO TRADING IN THE NAME AND STYLE OF SACHDEVA ENTERPRISES AND SINCE IT IS COVERED U/S 44AF OF THE I.T.ACT AS A LAYMAN UNGUIDE D BY ANY PROFESSIONAL HE RETURNED THE ACTUAL PROFIT. IN CROSS QUESTIONING, THE ASSESSEE WAS FOUND TO BE CONTRADICTING HIMSELF AS A RESULT THEREOF THE ADDITION OF RS.29,15,150/- AND A NOTHER ADDITION OF RS.10,53,600/- FOUND DEPOSITED IN ICICI BANK, A/C NO.629201509384 AND 62 9201509107 WAS MADE BY THE AO. AGGRIEVED, THE ISSUE WAS TAKEN IN APPEAL BEFORE THE CIT(A). AS PER RECORD, THE ASSESSEE RE-ITERATED AT PAGE 6 OF THE IMPUGNED ORDER THAT IT CARRIES ON A SMALL TRADING BUSINESS OF ELECTRONIC ITEMS. THE PURCHASE OF THE GOODS, IT HAS BEEN STATED WAS MADE FROM THE LOCAL MARKET (DELHI) IN SMALL QUANTITIES AND IT HAS BEEN SOLD TO CUSTOMERS WHO MAINLY COME FROM OUTSIDE DELHI. THE PAYMENT OF THE GOODS IT IS STAT ED IS RECEIVED IN CASH AND DIRECTLY DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE BY TH EM FROM OUTSIDE DELHI. THE ASSESSEES CASE IT IS STATED IS COVERED U/S 44AF AS A RESULT THEREOF HE HAS NOT MAINTAINED ANY REGULAR BOOKS OF ACCOUNTS. IT HAS BEEN SUBMITTE D THAT THE ASSESSEE IS NOT REGISTERED UNDER SALES TAX AND HAS PRODUCED COPIES OF SALE INV OICES FOR VERIFICATION BEFORE THE AO COPIES OF BOTH THE BANK ACCOUNTS. THE CASH IT WAS STATED IS DEPOSITED IN SMALL AMOUNTS AND IS WITHDRAWN IMMEDIATELY (EVEN ON THE SAME DAY IT IS BEING DEPOSITED BY THE CUSTOMER) FOR MAKING THE PURCHASES. IT WAS ARGUED T HAT THERE IS COMPLETE CIRCULATION OF THE SAME MONEY IN THE BANK ACCOUNT WHICH CAN BE VERIFIE D FROM THE BANK STATEMENT. IT WAS SUBMITTED THAT THE CASH DEPOSITED IN THE BANK ACCOU NT IS NOTHING BUT THE SALE PROCEEDS DEPOSITED BY THE CUSTOMERS WHICH IS WITHDRAWN FROM THESE ACCOUNTS FOR PURCHASING THE PAGE 3 OF 4 I.T.A .NO.-2225 & 2694/DEL/2015 SUBHASH SACHDEVA VS ITO GOODS. IN SUPPORT OF THE FRESH EVIDENCES WERE FILE D BEFORE THE CIT(A). THE EVIDENCES WERE FORWARDED TO THE AO REQUIRING HIM TO ISSUE NOTICE T O THE CONCERNED PARTIES. IN VIEW OF THE FACT SINCE ONLY SOME REPLIES WERE NOT RECEIVED THE REPLY WAS FOUND TO BE INSUFFICIENT. CONSIDERING THE SAME, THE CIT(A) GRANTED PART RELIE F. 5. AGGRIEVED BY THIS, BOTH THE ASSESSEE AND THE REV ENUE ARE IN APPEAL BEFORE THE ITAT. 5.1. THE LD.AR SUBMITTED THAT THE ORIGINAL CLAIM OF THE ASSESSEE WHICH IS ADDRESSED IN GROUND NO.-2 IN THE PRESENT PROCEEDINGS, HAS NOT BE EN DECIDED OR ADDRESSED BY THE CIT(A). 5.2. ACCORDINGLY, IT WAS HIS SUBMISSION THAT THE IS SUE HAS NOT BEEN ADDRESSED. THE LD.SR.DR ON THE OTHER HAND SUBMITTED THAT THE PART RELIEF GRANTED BY THE CIT(A) ON FACTS IS NOT JUSTIFIED. EVEN OTHERWISE, IT WAS ARGUED IN OR DER TO ADDRESS GROUND NO.2 OF THE ASSESSEE, IT WOULD BE NECESSARY TO HOLD THAT THERE WAS A GENUINE LEGITIMATE BUSINESS OF THE ASSESSEE WHICH ON FACTS HAS BEEN FOUND TO BE WA NTING. 5.3. THE LD.AR IN REPLY SUBMITTED THAT THE ARGUMENT IS DEVOID OF FACTS AS EVEN TODAY, THE ASSESSEE CONTINUES TO RUN THE SAME BUSINESS FROM TH E VERY SAME PREMISES WHICH IS THE ELECTRONICS MARKET HUB OF NORTH INDIA. ADDRESSING THE EVIDENCE FILED BY NEW NEPAL ELECTRONICS, AKARSHAN GALI BANK ROAD, RAXAUL, BIHAR WHEREIN REPLY HAS BEEN RECEIVED FROM THE PARTIES, COPY OF WHICH IS PLACED AT PAGE 23 WHI CH HAS BEEN ADDRESSED BY THE LD.SR.DR. IT WAS HIS SUBMISSION THAT THE SAID ACKNOWLEDGEMENT OF BUSINESS TRANSACTION HAS BEEN SENT FROM BIHAR-NEPAL BORDER AND ALL PETTY SHOP KEE PERS ARE NOT AWARE ABOUT THE MANNER IN WHICH FORMAT THE INFORMATION SOUGHT WAS REQUIRED TO BE FILED. THE ISSUE IT WAS SUBMITTED WAS WHETHER THE ASSESSEE HAS DONE BUSINESS FROM THE SAID PREMISES. RELYING UPON THE ORDER DATED 31.08.2016 IN ITA NO.6281/DEL/2015 IN T HE CASE OF ITO, WARD-61(1), NEW DELHI VS SMT. SEEMA KHANA WHEREIN THE ADDITIONS MA DE U/S 68 HAD BEEN TREATED AS BUSINESS RECEIPT APPLYING THE PROVISION OF SECTION 44AD, SIMILAR RELIEF ON FACTS IS PRAYED FOR. LD. SR. DR IN PRINCIPLE AGREED THAT IF THE ASSESSEE DEMONSTRATES THAT IT WAS A GENUINE PAGE 4 OF 4 I.T.A .NO.-2225 & 2694/DEL/2015 SUBHASH SACHDEVA VS ITO BUSINESS THEN IT HAS TO BE CONSIDERED U/S 44AF, REL IEF ALLOWABLE HAS TO BE ALLOWED. ACCORDINGLY AFTER CONSIDERING THE SUBMISSIONS OF TH E PARTIES BEFORE THE BENCH, I FIND THAT THE PRAYER OF THE PARTIES TO SET ASIDE THE ISSUE DE SERVES TO BE ALLOWED AS THE PRIMARY ISSUE BEFORE THE TAX AUTHORITIES, IT IS SEEN REMAINS UNDE CIDED. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE IS RESTORED BACK TO THE FIL E OF THE AO TO CONSIDER THE APPLICABILITY OF SECTION 44AF WHICH IS THE PRIMARY CLAIM OF THE ASSE SSEE ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE WOULD HAVE LIBER TY TO MOVE FRESH EVIDENCE TO DEMONSTRATE IF NEED BE THERE THAT IT IS STILL CARRY ING ON THE SAME BUSINESS FROM THE VERY SAME PREMISES. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEE AND T HE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 01 ST OF FEBRUARY 2017. SD/- (DIVA SINGH) JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI