I.T.O.-4(2), Agra V. Sri Kamal Kumar, Agra

ITA 3/AGR/2014

• Counselvise Citation: 320314 RSA 2014
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANURADHA
• Assessee Lawyers: RAJENDRA SHARMA
• Section: 147; 69; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMB ER ITA NO. 02 & 03/AGRA/2014 ASST. YEAR : 2007-08 & 2009-10 INCOME-TAX OFFICER, VS. SHRI KAMAL KUMAR, 4(2), AGRA. 36, KRISHNA KUNJ, PHASE-4, BRIJ BIHAR, KAMLA NAGAR, AGRA.(PAN:ACRPK1760A) C.O. NO. 02/AGRA/2014 (IN ITA NO. 03/AGRA/2014) ASST. YEAR : 2009-10 SHRI KAMAL KUMAR, VS. INCOME-TAX OFFICER, 36, KRISHNA KUNJ, PHASE-4, 4(2), AGRA. BRIJ BIHAR, KAMLA NAGAR, AGRA. (APPELLANT) (RESPONDENT) REVENUE BY : SMT. ANURADHA, JR. DR ASSESSEE BY` : SHRI RAJENDRA SHARMA, ADVOCATE DATE OF HEARING : 26.02.2014 DATE OF PRONOUNCEMENT : 28.02.2014 ORDER PER BHAVNESH SAINI, J.M.: THIS ORDER SHALL DISPOSE OF ALL THE DEPARTMENTAL A PPEALS AND CROSS OBJECTION FILED BY THE ASSESSEE. SINCE IDENTICAL ISSUE IS INV OLVED, THEREFORE, ALL THE APPEALS AND CROSS OBJECTION ARE DISPOSED OF THROUGH THIS CO MMON / CONSOLIDATED ORDER. ITA NOS.02 & 03 AND C.O. NO. 02/AGRA/14 2 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. ITA NO. 02/AGRA/2014 (A.Y. 2007-08): 3. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF LD. CIT(A)-II, AGRA DATED 06.09.2013 FOR THE ASSESSMENT YEAR 2007- 08, CHALLENGING THE ORDER OF LD. CIT(A) IN APPLYING NET PROFIT RATE OF 5% ON THE TOTAL CASH DEPOSIT IN THE BANK ACCOUNT AND RESTRICTING THE ADDITION TO RS.25,370/- . 4. IN THIS CASE, THE ASSESSMENT ORDER HAS BEEN PASS ED U/S. 143(3) READ WITH SECTION 147 VIDE ORDER DATED 23.11.2011 DETERMINING THE ASSESSED INCOME AT RS.5,98,410/- AS AGAINST RETURNED INCOME OF RS.83,8 08/-. THE ASSESSMENT WAS REOPENED ON THE BASIS OF FINDINGS GIVEN IN ASSESSME NT YEAR 2008-09, IN WHICH IT HAS BEEN FOUND THAT CERTAIN AMOUNTS DEPOSITED BY THE AS SESSEE IN THE BANK ACCOUNT MAINTAINED WITH ING VAISHYA BANK LTD. WERE FOUND TO BE UNEXPLAINED AND SIMILAR DEPOSITS IN THIS BANK ACCOUNT HAS BEEN FOUND TO BE MADE IN THIS ASSESSMENT YEAR ALSO. THE AO MADE ADDITION OF RS.5,14,600/- AFTER H E FOUND DEPOSIT WITH AFORESAID BANK WAS UNEXPLAINED AS WAS ALSO FOUND UNEXPLAINED IN ASSESSMENT YEAR 2008-09. THEREFORE, SIMILAR ADDITION WAS MADE AS WAS MADE IN THE ASSESSMENT YEAR 2008-09. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) AND APART FROM OTHER ITA NOS.02 & 03 AND C.O. NO. 02/AGRA/14 3 SUBMISSIONS ON MERITS, THE ASSESSEE SUBMITTED THAT THE SIMILAR ISSUE HAS BEEN CONSIDERED BY THE ITAT, AGRA BENCH IN THE CASE OF S AME ASSESSEE IN ASSESSMENT YEAR 2008-09 VIDE ORDER DATED 19.10.2012 IN ITA NO. 24/AGRA/2012 AND IT WAS FOUND THAT ENTRIES IN THE BANK ACCOUNT ARE ON ACCOU NT OF TRADING IN SAREES AND ACCORDINGLY, NET PROFIT RATE OF 5% WAS APPLIED AGAI NST THE TOTAL DEPOSITS AND INCOME WAS ACCORDINGLY COMPUTED. THE LD. CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL MENTIONED ABOVE DIRECTED TO APPLY PROFIT RATE OF 5% ON THE TOTAL TURNOVER AND CONFIRMED THE ADDITION OF RS.25,730/- AND DELETED T HE REMAINING ADDITION. THE APPEAL OF THE ASSESSEE WAS, THEREFORE, PARTLY ALLOW ED. 5. THE LD. REPRESENTATIVES OF BOTH THE PARTIES CLEA RLY STATED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF ITAT, AGRA BENCH IN THE CASE OF SAME ASSESSEE IN ASSESSMENT YEAR 2008-09 VIDE ORDER DATED 19.10.2012 (SUPRA), THE APPEAL OF THE ASSESSEE WAS ACCORDINGLY ALLOWED. THE FINDINGS IN THIS ORDER IN PARA 5 ARE REPRODUCED AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDERS OF THE AUTHORITIES BELOW. IT IS ADMITTED FACT THAT THE ASSESSEE OPENED THE BANK ACCOUNT IN QUESTION, IN WHICH SEVER AL CASH DEPOSITS WERE MADE ON DIFFERENT DATES TOTALING TO RS.31,62,3 00/-. COPY OF THE BANK ACCOUNT IS FILED AT PAGE 1 TO 11 OF THE PAPER BOOK. THE STATEMENT OF ASSESSEE ON OATH WAS RECORDED AT THE ASSESSMENT STAGE, IN WHICH IN ANSWER TO QUESTION NO. 8, THE ASSESSEE EXPLAINED TH AT DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER AP PEAL, HE HAD DEPOSITED CASH IN THE BANK ACCOUNT ON DIFFERENT DAT ES, WHICH PERTAINS TO HIS SMALL BUSINESS. WHATEVER AMOUNTS WERE RECEIV ED FROM THE ITA NOS.02 & 03 AND C.O. NO. 02/AGRA/14 4 BUSINESS PERSONS WERE DEPOSITED IN THE SAID BANK AC COUNT AND SAME AMOUNT WAS PAID THROUGH CHEQUES TO DIFFERENT BUSINE SSMEN FROM WHOM HE HAD PURCHASED THE GOODS ON CREDIT. HE HAS F URTHER EXPLAINED IN ANSWER TO QUESTION NO.9 THAT SINCE THERE WAS LOS S IN THIS RETAIL BUSINESS, SOURCE OF INCOME FROM SUCH BUSINESS WAS N OT SHOWN. HE HAD ALSO AGREED TO GIVE NAMES AND ADDRESSES OF THE PERS ONS WITH WHOM SUCH BUSINESS WAS CONDUCTED. THE ASSESSEE ALSO MOVE D BEFORE THE LD. ADDL. CIT U/S. 144A OF THE ACT AND SUBMITTED BEFORE HIM THAT THE AMOUNT, WHICH THE ASSESSEE DEPOSITED IN HIS BANK AC COUNT REPRESENTS SALE PROCEEDS OF THE GOODS BROUGHT FROM SURAT FOR S ELLING THEM AGAINST COMMISSION / DALALI. THE AMOUNT DEPOSITED I N THE BANK ACCOUNT WAS LATER ON PAID TO DIFFERENT SHOP KEEPERS THROUGH CHEQUE FROM WHOM THE ASSESSEE HAD BROUGHT THE GOODS FROM S URAT ON CREDIT. THE ASSESSEE ALSO EXPLAINED BEFORE THE ADDL. CIT TH AT IF HE WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, CON CERNED PERSONS MAY BE SUMMONED TO VERIFY THE BUSINESS OF ASSESSEE ON D ALALI IN RESPECT OF PURCHASE AND SALE OF LADIES SUITS AGAINST WHICH THE ASSESSEE WAS ENTITLED FOR COMMISSIONER/DALALI ONLY. THE ADDL. CI T INSTEAD OF ISSUING SUMMONS TO CONCERNED PARTIES, DIRECTED THE ASSESSEE TO PRODUCE 10 PARTIES ALONG WITH THEIR BOOKS OF ACCOUN T AND CONFIRMATION. THE STATEMENT OF ASSESSEE ON OATH BEF ORE THE AO AND THE STATEMENT BEFORE THE ADDL. CIT FIND SUPPORT FROM TH E DETAILS NOTED IN THE BANK ACCOUNT OF THE ASSESSEE. ON PERUSAL OF THE DETAILS CONTAINED IN THE AFORESAID BANK ACCOUNT, WE FIND THAT ON CRED IT SIDE THERE ARE CASH DEPOSITS ON VARIOUS DATES IN THE FINANCIAL YEA R AND ON THE DEBIT SIDE, THE PAYMENTS HAVE BEEN MADE TO DIFFERENT PART IES THROUGH BANKING CHANNEL. NAMES OF THE PARTIES AND CONCERNED BANK THROUGH WHOM THE PAYMENTS HAVE BEEN CLEARED ARE MENTIONED. THUS, THE PARTIES ARE IDENTIFIABLE TO WHOM THE ASSESSEE MADE PAYMENTS FROM SAME BANK ACCOUNT. FURTHER, THE AMOUNTS HAVE BEEN D EPOSITED TIME TO TOME AND PAYMENTS HAVE BEEN MADE TO DIFFERENT PARTI ES TIME TO TIME. THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT OF THIS BUSINESS. THE DETAILS CONTAINED IN THE BANK ACCOUNT WOULD CLE ARLY SUPPORT THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE WAS IN VOLVED IN DALALI BUSINESS OF SELLING LADIES SUITS AND WHATEVER AMOUN T WAS RECEIVED AGAINST THE SALE OF LADIES SUITS, THE ASSESSEE DEPO SITED THE AMOUNT IN THE BANK ACCOUNT AND THEREAFTER, THE AMOUNTS WERE T RANSFERRED TO THE CONCERNED PARTIES/BUSINESSMEN/TRADERS FROM WHOM THE GOODS WERE TAKEN BY THE ASSESSEE ON CREDIT. THE DETAILS NOTED IN THE BANK ACCOUNT ITSELF SUPPORT THE CASE OF THE ASSESSEE THAT THIS A CTIVITY HAS BEEN DONE ITA NOS.02 & 03 AND C.O. NO. 02/AGRA/14 5 BY THE ASSESSEE MERELY ON COMMISSION. THE ASSESSEE FILED CERTAIN CONFIRMATIONS BEFORE THE AUTHORITIES BELOW, COPIES OF WHICH ARE ALSO FILED IN THE PAPER BOOK TO SUPPORT THE CONTENTION O F THE ASSESSEE THAT THE ASSESSEE WAS DEALING ON COMMISSION BASIS FOR SE LLING LADIES SUITS. THE DETAILS CONTAINED IN THE BANK ACCOUNT SHOULD HA VE BEEN VERIFIED BY THE AO AND THE ADDL. CIT BEFORE ARRIVING AT THE DECISION IN THE MATTER. WHEN THE ASSESSEE MADE SPECIFIC REQUEST TO THE ADDL. CIT THAT THE CONCERNED PARTIES MAY BE SUMMONED TO VERIFY THE COMMISSION BUSINESS OF ASSESSEE, BUT THE ADDL. CIT DID NOT DO SO IN ORDER TO VERIFY THE FACTS. MEAGER OPENING AND CLOSING BALANCE SHOWN IN THE BANK ACCOUNT CLEARLY PROVE THAT MONEY SO DEPOSITED IN TH E BANK ACCOUNT WERE ONLY THE SALE PROCEEDS OF GOODS SOLD BY THE AS SESSEE AGAINST WHOM PERIODICALLY AND CONSISTENTLY PAYMENTS HAVE BE EN MADE TO THE TRADERS THROUGH BANKING CHANNEL. THEREFORE, THE AMO UNTS DEPOSITED IN THE BANK ACCOUNT SHOULD NOT HAVE BEEN TREATED AS UN EXPLAINED INVESTMENT IN THE BANK ACCOUNT OF THE ASSESSEE. CON SIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES NOTED ABOVE AND THE STAND OF ASSESSEE SINCE INITIAL STAGE OF ASSESSMENT CLEARLY PROVE THAT THE AMOUNT DEPOSITED IN THE BANK ACCOUNT WAS IN FACT SA LE PROCEEDS OF THE GOODS, WHICH WERE SOLD BY THE ASSESSEE FROM TIME TO TIME AGAINST WHOM THE ASSESSEE ISSUED CHEQUES TO VARIOUS DEALERS AND EARNED COMMISSION. THEREFORE, THE ADDITION U/S. 69 OF THE IT ACT IS WHOLLY UNWARRANTED AND UNJUSTIFIED IN THE CASE OF THE ASSE SSEE. OUR FINDINGS ARE ALSO SUPPORTED BY THE FACT THAT THE ASSESSEE HA S SHOWN MEAGER INCOME IN THE RETURN OF INCOME AS INCOME FROM SALAR Y AND INTEREST. THE AUTHORITIES BELOW, THEREFORE, SHOULD HAVE CONSI DERED THE TRUE NATURE OF THE TRANSACTION CARRIED OUT BY THE ASSESS EE. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN MAKING ADDIT ION U/S. 69 OF THE IT ACT AGAINST THE ASSESSEE IN SUM OF RS.31,62,300/-. WHEN WE HAVE HELD ABOVE THAT TOTAL DEPOSITS IN THE BANK ACCOUNT ARE T HE SALE PROCEEDS OF THE ASSESSEE, THE PROFIT RATE SHOULD HAVE BEEN APPL IED INSTEAD OF CONSIDERING THE ENTIRE SALES OF INCOME OF THE ASSES SEE. WE ARE FORTIFIED IN OUR VIEW BY THE JUDGMENTS OF HONBLE GUJRAT HIGH COURT IN THE CASE OF PRESIDENT INDUSTRIES (SUPRA) AND M.P. HIGH COURT IN THE CASE OF CIT VS. BALCHAND AJIT KUMAR (SUPRA) AND MANMOHAN SADANI VS. CIT (SUPRA). SINCE THE TOTAL DEPOSIT BEING THE TOTA L SALES OF THE ASSESSEE ARE ONLY RS.31,62,300/-, THUS, THE TURNOVE R OF THE ASSESSEE DID NOT EXCEED THE AMOUNT OF RS.40,00,000/- AND AS SUCH, THE PROVISIONS OF SECTION 40AF OF THE ACT WOULD APPLY I N THE CASE OF ITA NOS.02 & 03 AND C.O. NO. 02/AGRA/14 6 ASSESSEE FOR THE PURPOSE OF COMPUTING THE PROFIT AN D GAINS OF RETAIL BUSINESS, WHICH PROVIDES THAT SUM EQUAL TO 5% OF TH E TOTAL TURNOVER IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BUSINESS SHALL BE DEEMED TO BE THE PROFIT AND GAINS OF SUCH BUSINESS. WE ACCORDING LY APPLY 5% OF THE PROFIT RATE AGAINST RS.31,62,300/- AND DIRECT THAT ADDITION OF RS.1,58,115/- MAY BE MADE AGAINST THE ASSESSEE INST EAD OF ADDITION OF RS.31,62,300/-. THE ORDERS OF THE AUTHORITIES BELOW ARE ACCORDINGLY MODIFIED TO THE ABOVE EXTENT AND ADDITION IS RESTRI CTED TO RS.1,58,115/- . 6. SINCE IN THIS CASE, THE AO MADE ADDITION MAINLY ON THE BASIS OF FINDING GIVEN IN ASSESSMENT YEAR 2008-09 IN RESPECT OF THE SAME BANK ACCOUNT, THEREFORE, THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE. THE LD. CIT(A) CORRECTLY FOLLOWED THE ORDER OF THE TRIBUNAL. THERE IS, THUS, NO INFIRMITY IN THE ORDER OF LD. CIT(A). THE DEPARTMENTAL APPEAL IS, ACCORDINGLY DISMISSED. ITA NO. 03/AGRA/2014 & C.O. NO. 02/AGRA/2014: 7. THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJECTI ON BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A)-II, AGRA D ATED 06.09.2013 FOR THE ASSESSMENT YEAR 2009-10, CHALLENGING THE ORDER OF L D. CIT(A) IN APPLYING THE NET PROFIT RATE OF 6% AGAINST BANK DEPOSITS AND CONFIRM ING THE ADDITION TO THE EXTENT OF RS.3,96,974/- ONLY. THE ASSESSEE IN THE CROSS OBJEC TION STATED THAT THE LD. CIT(A) IGNORED THE ORDER OF THE TRIBUNAL FOR THE ASSESSMEN T YEAR 2008-09. THEREFORE, INSTEAD OF APPLYING NET PROFIT RATE OF 6%, THE LD. CIT(A) SHOULD HAVE APPLIED THE PROFIT RATE OF 5% AS IS APPLIED BY THE TRIBUNAL. ITA NOS.02 & 03 AND C.O. NO. 02/AGRA/14 7 8. THE FACTS IN THIS CASE ARE SAME AS HAVE BEEN CON SIDERED IN THE ASSESSMENT YEAR 2007-08 ABOVE EXCEPT THAT IN THIS CASE APART F ROM THE ASSESSEE MAINTAINED BANK ACCOUNT WITH ING VAISHYA BANK, OTHER BANK ACCO UNTS WITH KOTAK MAHENDRA, HDFC BANK WERE ALSO CONSIDERED. THE AO ON THE BASIS OF FINDINGS GIVEN IN ASSESSMENT YEAR 2008-09 FOUND THE DEPOSITS IN THESE ACCOUNTS TO BE UNEXPLAINED AND ADDED THE TOTAL AMOUNT OF BANK DEPOSITS OF RS.6 6,16,235/- AND MADE THE ADDITION ACCORDINGLY. THE LD. CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2008-09 DATED 19.10.2012 (SUPRA) DI RECTED TO APPLY PROFIT RATE OF 6% AGAINST TOTAL TURNOVER AND RESTRICTED THE ADDITI ON OF RS.3,96,974/-. BOTH THE PARTIES STATED THAT ISSUE IS SAME AS WAS CONSIDERED IN ASSESSMENT YEAR 2007-08 AND ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL DATED 19.10.2012 IN THE CASE OF SAME ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. 9. ON CONSIDERATION OF THE ABOVE FACTS, WE FIND THA T THE ISSUE IS SAME AS WAS CONSIDERED IN THE ASSESSMENT YEARS 2007-08 AND 2008 -09. THEREFORE, FOLLOWING THE REASONS FOR DECISION IN THESE YEARS, THE ORDER OF T HE LD. CIT(A) IS CONFIRMED ON MERITS FOR APPLYING THE PROFIT RATE BUT THE SAME IS MODIFIED AND IT IS DIRECTED THAT INSTEAD OF APPLYING NET PROFIT RATE OF 6%, THE AUTH ORITIES BELOW SHALL APPLY PROFIT RATE OF 5% FOR THE PURPOSE OF COMPUTING PART ADDITI ON AS WAS DIRECTED IN ITA NOS.02 & 03 AND C.O. NO. 02/AGRA/14 8 ASSESSMENT YEAR 2008-09. IN THE RESULT, THE DEPARTM ENTAL APPEAL STANDS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, BOTH THE DEPARTMENTAL APPEALS AR E DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRAMOD KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY