Amrik Singh, Ludhiana V. ITO, Ludhiana

ITA 295/CHANDI/2015

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9793 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 20-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Assessee Lawyers: S K MAINGI
• Keywords: Principle of natural justice; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NO. 295/CHD/2015 (ASSESSMENT YEAR: 2009-10) AMRIK SINGH VS. THE INCOME TAX OFFICER, C/O AMRIK CYCLE INDUSTRIES, WARD IV(1), 1828-29, KALSIAN STREET, LUDHIANA. GILL ROAD, LUDHIANA. PAN NO. AIZPS1547H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MAINGI RESPONDENT BY : DR.AMARVEER SINGH, DR DATE OF HEARING : 29.06.2015 DATE OF PRONOUNCEMENT : 08.07.2015 O R D E R PER H.L.KARWA, VP : THIS APPEAL FILED BY THE ASSESSEE IS DIR ECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, LUDHIANA DATED 21.1.2015 RELATING TO A SSESSMENT YEAR 2009-10. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOL LOWING GROUNDS : 2 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADD ITIONS MADE BY THE A.O. WHILE THE SAME CIT(A) IN THIS CAS E ITSELF IN THE A.Y. 2008-09 ACCEPTED THE PLEA OF THE ASSESSEE AND DELETED ONE ADDITION SO MADE IN THE SAID ASSESSMENT YEAR. 2. THAT THE LD. CIT(A) ERRED WHILE DECIDING THE APPE AL THAT THE SAME DEPOSITS INTO THE BANK AND THE ADDITIONS HAVE BEEN MADE ON THESE DEPOSITS FOR TWO TIMES I.E. A) BY TAK ING PEAK CREDITS OF THE DEPOSITS AND B) ON THE OTHER HAND BY CONSIDERING IT AS SALE AND APPLYING SECTION 44AF. 3. SURRENDER- ON ACCOUNT OF PEAK CREDITS OF RS. 93670/ - AS MENTIONED BY THE CIT(A) IN ITS ORDER (PARA 3.4) WAS MADE FOR THE PURPOSE OF PEACE WITH THE DEPARTMENT, AS SUCH ADDITI ON ON THIS POINT WAS NOT TAKEN IN GROUNDS OF APPEAL BEFORE CIT (A). BUT THE LD. CIT(A) TOOK IT OTHERWISE. 4. ADDITION OF RS.146000/- WAS MADE BY THE A.O. FOR WH ICH GROUNDS OF APPEAL BEFORE CIT(A) WAS MADE FOR THE PU RPOSE THAT THIS ADDITION HAS BEEN MADE BY THE A.O. FOR TH E SECOND TIME ON THE SAME DEPOSITS. 5. THAT THE APPELLANT CRAVES TO ADD OTHER GROUNDS AS M AY BE URGED AT THE TIME OF HEARING AND IT IS PRAYED THAT ADDITION MADE OF RS. 146000/- IS ARBITRARY AND IT IS AGAINST NATURAL JUSTICE WHICH NEEDS TO BE DELETED. 3. IN NUTSHELL, THE FACTS OF THE CASE ARE THAT THE RETURN DECLARING INCOME OF RS.3,40,060/- WAS FILED BY THE ASSESSEE. THE ASSESSEE HAS SHOWN INCOME FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD MADE CASH DEPOSITS OF RS.29,15,976/- IN HIS BANK ACCOUNT. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THESE DE POSITS SHOULD NOT BE TREATED AS SALES OUT OF THE BOOKS OF ACCOUNT AND GP RATE SHOULD NOT BE APPLIED @ 5%. THE ASSESSIN G OFFICER 3 FURTHER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY PEA K CREDIT IN HIS BANK ACCOUNT, AMOUNTING TO RS.93,670/-, SHOULD NOT BE ADDED TO THE TOTAL INCOME. IN RESPONSE TO THE ABO VE QUERY, THE ASSESSEE SUBMITTED THAT THE INCOME @ 2% ON THE DEPOSITS MADE IN THE ACCOUNT MAY BE ADDED AS INCOME. THE A SSESSING OFFICER WAS NOT SATISFIED WITH THE ABOVE SUBMISSION OF THE ASSESSEE. THE ASSESSING OFFICER HELD THAT THE DEP OSITS REMAINED UNEXPLAINED AND ACCORDINGLY, ESTIMATED THE INCOME @ 5% INSTEAD OF 2% OFFERED BY THE ASSESSEE. CONSE QUENTLY, THE ASSESSING OFFICER MADE ADDITION OF RS.1,46,000/ -. THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE H AD SURRENDERED PEAK CREDIT BALANCE OF RS.93,670/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LE ARNED CIT (APPEALS) AND THE LEARNED CIT (APPEALS) DISMISSED T HE APPEAL OF THE ASSESSEE VIDE HIS ORDER DATED 21.1.2015. 5. I HAVE HEARD SHRI S.K.MAINGI, LEARNED COUNSEL F OR THE ASSESSEE AND DR.AMARVEER SINGH, LEARNED D.R AT LENGTH. IN THE INSTANT CASE, THE RETURN WAS PROCESSED UNDE R SECTION 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT). SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AN D STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. TH E ASSESSEE DERIVES INCOME FROM INTEREST ON CAPITAL AND SALARY FROM FIRM, IN WHICH HE IS A PARTNER. THE ASSESSEE MAINTAINED SAVING BANK ACCOUNT WITH ICICI BANK, LUDHIANA, IN WHICH HE MADE CASH DEPOSITS OF RS.29,15,976/- DURING APRIL, 2008 TO 31 ST 4 MARCH, 2009. THESE CASH DEPOSITS WERE NOT ACCOUNT ED FOR BY THE ASSESSEE IN HIS RETURN OF INCOME. THE ASSESSI NG OFFICER OBSERVED THAT VIDE LETTER DATED 27.7.2011, THE ASSE SSEE ADMITTED THAT HE EARNED AN INCOME @ 2% ON TOTAL DEP OSITS OF RS.29,15,976/- MADE BY HIM IN HIS SAVING BANK ACCOU NT WITH ICICI BANK. HOWEVER, THE ASSESSING OFFICER APPLIE D GP RATE OF 5% INSTEAD OF 2% OFFERED BY THE ASSESSEE. CONS EQUENTLY, THE ASSESSING OFFICER ADDED A SUM OF RS.1,46,000/-. THE ASSESSING OFFICER MADE A SEPARATE ADDITION OF RS.93 ,670/- BEING PEAK CREDIT BALANCE AS ON 20.10.2008. THUS THE ASSESSING OFFICER HAS MADE TWO ADDITIONS ON THE BAS IS OF SAME BANK ACCOUNT. IN MY CONSIDERED OPINION, THE ADDIT ION CAN BE MADE ONLY ONCE IN THE FACTS AND CIRCUMSTANCES OF TH E PRESENT CASE. IT IS OBSERVED THAT THE ASSESSEE VIDE HIS L ETTER DATED 25.7.2011 FILED ON 27.7.2011 AGREED THAT HE HAD EAR NED AN INCOME @ 2% ON TOTAL DEPOSITS OF RS.29,15,976/- MAD E BY HIM IN HIS SAVING BANK ACCOUNT WITH ICICI BANK. HOWEV ER, THE ASSESSING OFFICER HAS APPLIED 5%, WHICH WAS NOT AT ALL AGREED BY THE ASSESSEE IN THE PRESENT CASE. THE ASSESSEE ADMITTED THAT THE CASH DEPOSITS PERTAINED TO HIS RETAIL BUSI NESS BUT THE DETAILS AND NATURE OF BUSINESS WERE NOT FORTHCOMING FROM RECORDS, CONSIDERING THE TOTAL TURNOVER OF THE ASSE SSEE, NET INCOME HAD TO BE DETERMINED UNDER SECTION 44AF OF T HE ACT. THE DEPOSITS MADE IN THE BANK ACCOUNT ARE TO BE TRE ATED AS SALES MADE BY THE ASSESSEE OUTSIDE THE BOOKS OF ACC OUNT. IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO ESTIMAT E THE PROFIT ON THE ABOVE INCOME. THE ASSESSEE HIMSELF H AS STATED THAT THE INCOME MAY BE ESTIMATED AT 2%. HOWEVER, NO BASIS OF 5 ESTIMATION OF 2% WAS SUBMITTED BY THE ASSESSEE. I N MY OPINION, THE ASSESSING OFFICER WAS FULLY JUSTIFIED IN ESTIMATING THE INCOME @ 5% ON CASH DEPOSITS. AS REGARDS THE ADDITION OF RS.93,670/- BEING THE PEAK CREDIT BALANCE IN THE SAVING BANK ACCOUNT, I HOLD THAT THE ADDITION WAS NOT JUS TIFIED IN VIEW OF THE FACT THAT THE ADDITION OF RS.1,46,000/- HAD ALREADY BEEN MADE BY THE ASSESSING OFFICER BY APPLYING THE RATE OF 5% OF THE TOTAL SALES. AS I HAVE ALREADY OBSERVED HE REINABOVE THAT TWO ADDITIONS WERE MADE I.E. ONE ON THE POINT OF UNDISCLOSED INCOME FOR WHICH THE PEAK WAS APPLIED A ND OTHER ADDITION WAS MADE BY APPLYING RATE OF 5% ON THE TOT AL SALES AS PROVIDED IN SECTION 44AF OF THE ACT. IN MY CONSID ERED OPINION, THE ADDITION ON THE SAME FIGURES IS NOT AT TRACTED FOR TWO TIMES. ACCORDINGLY, I DELETE THE ADDITION OF RS.93,670/- AND CONFIRM THE ADDITION OF RS.1,46,000/-. THUS, TH E ASSESSEE GETS A RELIEF OF RS.93,670/-. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED PARTLY. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF JULY, 2015. SD/- (H.L.KARWA) VICE PRESIDENT DATED : 8 TH JULY, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, 6 ITAT, CHANDIGARH