Shri Bhavesh Indravadan Gandhi, Surat V. The Income tax Officer,Ward-6(1), Surat

ITA 2997/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89606 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Salary income; Peak credit
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND S.S. GODARA JUDICIAL MEMBER ./ ITA NO.2997/AHD/2011 / ASSTT. YEAR: 2007-08 SHRI BHAVESH I.GANDHI AT & POST ARETH. TAL. MANDVI, DIST. SURAT. PAN AGEPG 7406 N VS INCOME TAX OFFICER, WARD 6(1), AAYAKAR BHAVAN, MAJURA GATE, SURAT. / (APPELLANT) / (RESPONDENT) ASSESSEE BY NONE. REVENUE BY MR.DINESH SINGH, SR. D.R. / DATE OF HEARING : 15-6-2015 / DATE OF PRONOUNCEMENT: 19-6-2015 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS AN APPEAL FILED BY THE ASSESSEE AGAINST ORDER OF THE CIT (A)-IV, SURAT , DATED 12-7-2011. FOR ASSESSMENT YEAR 2007-08. 2. THE ONLY GROUND OF APPEAL TAKEN BY THE ASSESSEE IN THIS APPEAL READS AS UNDER:- THE A.O. HAS ERRED IN LAW AND ON FACTS TO MAKE ADD ITION U/S. 69A OF THE ACT FOR PEAK CREDIT OF RS.9,62,184/- IN BANK ACCOUNT NO.2041 WITH BANK OF BARODA, ARETH, THOUGH HE, ALRE ADY ACCEPTED TRADING ACTIVITIES FOR WHICH 5% NP WAS ASSESSED ON TOTAL CREDIT OF ITA NO. 2997/AHD/2011 ASSESSMENT YEAR 2007-08 2 RS.17,45,468/- OF THE SAME BANK ACCOUNT AS GROSS TU RNOVER OF APPELLANTS BUSINESS. LD. CIT (A)-IV, SURAT HAS ALS O ERRED IN CONFIRMING ADDITION OF PEAK CREDIT AS AGAINST BUSIN ESS PROFITS OF APPELLANTS BUSINESS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS MAINTAINING A BANK ACCOUNT WITH BANK OF BARODA, ARETH BEING ACC OUNT NO.2041. TE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CREDIT IN THE BANK ACCOUNT BUT NO EXPLANATION WAS FURNISHED. THE A.O. ISSUED SHOW CAUSE NOTICE ON 19-11-2009 REQUIRING THE ASSESSEE TO SHOW CAUSE WHY THE CREDIT OF RS.17,45,468/- IN THE SAID BANK ACCOUNT BE NOT TREA TED AS UNEXPLAINED MONEY U/S. 69A OF THE ACT. IT WAS SUBMITTED THAT T HE ASSESSEE WAS DOING BUSINESS OF SALE AND PURCHASE OF FOOD-GRAINS IN THE MARKET YARD AND WAS UNDER THE IMPRESSION THAT THIS WAS AGRICULT URAL INCOME AND EXEMPT FROM TAX. IT WAS ACCEPTED THAT THE TRANSACTI ONS IN THE BANK ACCOUNT PERTAINED TO TRADING AND IT WAS OFFERED THA T 3% OF SUCH TURNOVER BE CONSIDERED AS INCOME. THIS EXPLANATION OF THE ASSESSEE DID NOT FOUND FAVOUR WITH THE A.O. AS THE ASSESSEE PREV IOUS HEARINGS SUBMITTED THAT HE DOES NOT MAINTAIN BOOKS AS HE HAD INCOME FROM SALARY, INTEREST AND SHARE OF PROFIT ONLY WHEREAS A FTER DISCOVERY OF BANK ACCOUNT AND ISSUE OF SHOW CAUSE, BOOKS OF ACCOUNTS SHOWING CASH SALES AND PURCHASES WERE PRODUCED WHICH COULD BE NOTHING BUT AN AFTERTHOUGHT. THE ASSESSEE HAD NOT MENTIONED THE E XISTENCE OF ANY AGRICULTURAL INCOME IN THE RETURN OR TRADING IN AGR ICULTURAL PRODUCTS TILL THE ISSUE OF SHOW CAUSE. THE BOOKS PRODUCED SHOWED SALES MADE ON ALL 365 DAYS FROM SEPTEMBER TO JANUARY, THERE WERE DEPO SITS IN THE BANK ACCOUNT OF RS.7,79,000/- WITH NEGLIGIBLE WITHDRAWAL S OF RS.2,000/- WHICH SHOWS THAT THE BUSINESS WAS NOT GENUINE. A.O. THEREFORE, HELD THAT THE ASSESSEE FAILED TO PROVIDE EXPLANATION ABO UT THE SOURCE AND NATURE OF DEPOSIT IN THE UNDISCLOSED BANK ACCOUNT. HE THEREFORE, MADE ADDITION OF PEAK CREDIT IN THE BANK ACCOUNT APPEARI NG ON 22-3-2007 WHICH WAS RS.9,62,184/- AS UNEXPLAINED MONEY U/S. 6 9A. A.O. ALSO ITA NO. 2997/AHD/2011 ASSESSMENT YEAR 2007-08 3 MADE ADDITION OF RS.87,273/- ON ACCOUNT OF PROFITS CALCULATED AT 5% OF TOTAL DEPOSITS IN THE BANK DURING THE YEAR AMOUNTIN G TO RS.17,45,468/- TREATING THE DEPOSITS AS TURNOVER. 4. ON APPEAL, THE CIT (A) OBSERVED THAT THE ASSESSE E HAD NOT DISCLOSED THE BANK ACCOUNT NO.2041 WITH BANK OF BAR ODA, ARETH ETHER IN THE RETURN OF INCOME OR DURING THE ASSESSMENT PROCE EDINGS TILL THE TIME IT WAS DISCOVERED BY THE DEPARTMENT AND SHOW CAUSE NOTICE WAS ISSUED. IN THE RETURN OF INCOME ASSESSEE HAD NOT SOWN ANY A GRICULTURAL INCOME FOR RATE PURPOSE. THIS SHOWS THAT THE CLAIM OF BELI EF OF EXEMPTED INCOME AND PRODUCTION OF RELATED BOOKS OF ACCOUNTS INCORPORATING THE SAID BANK ACCOUNTS WAS AN AFTERTHOUGHT. THE ACCOUN T WAS NEVER INTENDED TO BE DISCLOSED WAS CLEAR FROM THE FACT TH AT THE INTEREST EARNED IN THE BANK ACCOUNT WAS NOT OFFERED FOR TAXATION. T HE A.O. ANALYSED THE BANK ACCOUNT AND HAS SHOWN THAT THE TRANSACTIONS TH EREIN DID NOT APPEAR TO BE GENUINE BECAUSE OF HEAVY DEPOSITS AND NEGLIGIBLE WITHDRAWALS DURING SEPTEMBER AND JANUARY PERIOD SIN CE THE BANK ACCOUNT WAS UNDISCLOSED AND THE GENUINENESS OF THE TRADING ACTIVITY WAS NOT ESTABLISHED BEYOND REASONABLE DOUBT, THE AC COUNT IS HELD AS UNEXPLAINED. THE ACTION OF THE A.O., IN CONSIDERING THE PEAK CREDIT AS UNEXPLAINED INCOME OF THE APPELLANT U/S. 69A IS UPH ELD. HOWEVER, THE CIT (A) DELETED THE ADDITION ON ACCOUNT OF ESTIMATE OF PROFIT OF RS.87,273/- TREATING THE DEPOSITS AS TURNOVER BECAU SE THE EXISTENCE OF BUSINESS WAS NOT ACCEPTED BY THE A.O. WHILE MAKING THE ADDITION ON ACCOUNT OF PEAK CREDIT. 5. BEFORE US, ASSESSEE FILED AN ADJOURNMENT APPLICA TION SEEKING ADJOURNMENT OF THE HEARING FIXED ON THE GROUND THAT A.R. OF THE ASSESSEE WAS OUT OF STATION AND IT WAS NOT POSSIBLE TO REPRESENT THE CASE FOR HIM. ITA NO. 2997/AHD/2011 ASSESSMENT YEAR 2007-08 4 6. WE FIND THAT THE REASON GIVEN IN THE ADJOURNMENT APPLICATION BY THE ASSESSEE IS NOT PLAUSIBLE AND THEREFORE, THE AD JOURNMENT WAS REJECTED AND THE APPEAL WAS HEARD EX-PARTE QUA THE ASSESSEE AND DISPOSED OF AFTER CONSIDERING THE SUBMISSIONS OF TH E DEPARTMENTAL REPRESENTATIVE AND THE MATERIAL AVAILABLE ON RECORD . 7. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT T HE ASSESSEE HAD NOT DISCLOSED THE BANK ACCOUNT MAINTAINED BY IT WITH BANK OF BARODA, ARETH BEING ACCOUNT NO.2041. THE SAME WAS D ETECTED BY THE DEPARTMENT. THE ASSESSEE HAD ALSO NOW SHOWN ANY AGR ICULTURAL INCOME FOR RATE PURPOSES. THEREFORE, THE EXPLANATION OF TH E ASSESSEE THAT THE DEPOSIT OF RS.17,45,468/- IN THE BANK ACCOUNT WAS T HE RECEIPTS IOF BUSINESS OF FOOD GRAINS DON E BY THE ASSESSEE DURIN G THE YEAR WAS AN AFTERTHOUGHT AND THE BOOKS OF ACCOUNTS PRODUCED BEF ORE THE A.O. WERE ALSO AN AFTERTHOUGHT. 8. THEREFORE, THE A.O. WAS JUSTIFIED IN MAKING ADDI TION ON PEAK DEPOSITS OF RS.9,62,184/- TO THE INCOME OF THE ASSE SSEE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON REC ORD. IN THE INSTANT CASE THE A.O. FOUND THAT THE ASSESSEE WAS HAVING A BANK ACCOUNT WITH BANK OF BARODA, ARETH BEING ACCOUNT NO.2041 WHICH W AS NOT DISCLOSED IN THE RETURN OF INCOME FILED BY THE ASSESSEE. THE A.O. FOUND THAT TOTAL DEPOSIT IN THIS BANK ACCOUNT WAS RS.17,45,468/- AND THEREFORE HE MADE ADDITION OF THE PEAK BALANCE IN THE ACCOUNT AMOUNTI NG TO RS.9,62,184/- AS UNEXPLAINED INCOME U/S. 69A OF THE ACT. 10. THE ASSESSEE HAD EXPLAINED BEFORE THE A.O. BY F ILING THE BOOKS OF ACCOUNTS THAT THE AMOUNTS DEPOSITED IN THE SAID BAN K ACCOUNT REPRESENTS SALE PROCEEDS OF FOOD-GRAIN AS THE ASSES SEE WAS DOING THE BUSINESS OF SALE AND PURCHASE OF FOOD-GRAIN IN THE MARKET YARD AND THAT THE ASSESSEE UNDER THE IMPRESSION THAT THIS WAS AGR ICULTURAL INCOME AND EXEMPT FROM TAX HAD NOT DISCLOSED THE SAME IN THE R ETURN OF INCOME. ITA NO. 2997/AHD/2011 ASSESSMENT YEAR 2007-08 5 THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATIO N BY OBSERVING THAT IT WAS AN AFTERTHOUGHT. 11. ON APPEAL, THE CIT (A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 12. IN THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER WAS NOT JUSTIFIE D IN REJECTING THE EXPLANATION OF THE ASSESSEE WHO HAD PRESENTED THE B OOKS OF ACCOUNTS SHOWING THE RECEIPTS OF UNDISCLOSED BANK ACCOUNT FR OM SALE OF FOOD- GRAIN MERELY ON THE GROUND THAT IT BEING AN AFTERTH OUGHT. IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO EXAMINE THE BOOKS OF ACCOUNTS WITH THE RELATED EVIDENCES AND DOCUMENTS AND THEREA FTER SHOULD HAVE ARRIVED AT A DECISION. WITHOUT VERIFICATION OF BOOK S OF ACCOUNTS PRODUCED BEFORE HIM AND BRINGING ANY MATERIAL ON RECORD, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT S OF THE ASSESSEE AS AN AFTERTHOUGHT AND THE CIT (A) WAS NOT JUSTIFIED I N CONFIRMING THE SAME. WE THEREFORE SET ASIDE THE ORDERS OF THE LOW ER AUTHORITIES AND REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO DECIDE THE ISSUE AFRESH AFTER EXAMINING THE BOOKS OF ACCOUNTS AND RELATED DOCUMENTS AS PER LAW. NEEDLESS TO MENTI ON THAT HE SHALL ALLOW REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE ADJUDICATING THE ISSUE. THUS THE GROUND OF A PPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 13. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICA L PURPOSE. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 1 9 TH DAY OF JUNE 2015 AT AHMEDABAD. SD/- SD/- (S.S. GODARA) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER ITA NO. 2997/AHD/2011 ASSESSMENT YEAR 2007-08 6 PATKI ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! () / THE CIT(A)IV, SURAT. 5. $%& '', , )*++ / DR, ITAT, AHMEDABAD 6. &,- . / GUARD FILE. ' / BY ORDER, #/$ % ( DY./ASSTT.REGISTRAR) & ', $)* / ITAT, AHMEDABAD 1. DATE OF DICTATION- 16 / 17-06-2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER :16/17-06-2015 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S. 18-6-2015 4 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 19-6-2015 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 19 -6-2015 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 8. DATE OF DESPATCH OF THE ORDER