ITO, Ward - 38(4), Kolkata, Kolkata V. Sudhir Malhotra, Kolkata

ITA 306/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100272 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 24-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

I.T.A. NO. 306/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 306/KOL/ 2012 ASSESSMENT YEAR : 2008-2009 INCOME TAX OFFICER,................................ ................................APPELLANT WARD-38(4), KOLKATA, 18, RABINDRA SARANI, PODDAR COURT, 8 TH FLOOR, KOLKATA-700 001 -VS.- SUDHIR MALHOTRA,................................... ...............................RESPONDENT AIKYA APARTMENT, GROUND FLOOR, SURER MATH (NEAR PURBITA), 63/24, DUM DUM ROAD, KOLKATA-700 014 [PAN : AIAPM 1067 D] APPEARANCES BY: N O N E, FOR THE DEPARTMENT SHRI K.M. ROY, FCA, FOR THE ASSESSEE NATE OF CONCLUDING THE HEARING : DECEMBER 03, 2015 DATE OF PRONOUNCING THE ORDER : DECEMBER 09, 2015 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIV, KOLKATA D ATED 14.12.2011 AND IN THE SOLITARY GROUND RAISED THEREIN, THE REVE NUE HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN DELETING THE ADDI TION OF RS.29,23,500/- MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME O F THE ASSESSEE ON ACCOUNT OF CASH DEPOSITS FOUND TO BE MADE IN THE BA NK ACCOUNT TREATING THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF METALLIC SCRAPS AS DEALER AS WELL A S BROKER. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y HIM ON 03.06.2008 I.T.A. NO. 306/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 6 DECLARING TOTAL INCOME OF RS.1,19,704/-. AS PER THE INFORMATION RECEIVED BY THE ASSESSING OFFICER, THERE WERE CASH DEPOSITS OF RS.29,23,500/- MADE IN THE BANK ACCOUNT OF THE ASSESSEE WITH AXIS BANK. HE, THEREFORE, REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCE OF THE SAID DEPOSITS. IN REPLY, IT WAS EXPLAINED BY THE ASSESESE THAT CASH RECEIVED ON SALE OF SCRAPS AS WELL AS CASH RECEIVED FROM THE PARTIES FOR PROCURIN G SCRAPS ON COMMISSION BASIS WAS DEPOSITED IN THE BANK ACCOUNT FROM TIME TO TIME. THE LIST OF BUYERS FROM WHOM THE CASH WAS STATED TO BE RECEIVED WAS ALSO FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. THE INSPECTOR, WHO WAS DEPUTED BY THE ASSESSING OFFICER TO VERIFY THE CLAI M OF THE ASSESSEE, HOWEVER, REPORTED THAT THE CONCERNED BUYERS WERE NO T AVAILABLE AT THE ADDRESSES GIVEN. THE ASSESSING OFFICER, THEREFORE, TREATED THE ENTIRE CASH DEPOSITS OF RS.29,23,500/- AS UNDISCLOSED INCOME OF THE ASSESSEE AND THE SAME WAS ADDED BY HIM TO THE TOTAL INCOME OF THE AS SESSEE IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN O RDER DATED 16.12.2010. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AND MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEA LS) DELETED THE ADDITION OF RS.29,23,500/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF CASH DEPOSITS FOUND TO BE MADE IN THE BANK ACCOUNT OF THE ASSESSEE FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPHS NO. 2.5, 2.5.1, 2.5.2 & 2.5.3 OF HIS IMPUGNED ORDER:- 2.5. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. A.R. OF THE APPELLANT AND ALSO GONE THROUGH THE ASSESSMENT ORDER AND REMAND REPORT OF THE AO. DURING THE YEAR, THE APPELLANT HAS WITHDRAWN THE TOTAL AMOUNT OF RS.27,56,825/- FROM ITS AXIS BANK, SHYAMBAZAR BRANC H BEARING A/C. NO. 084010100172185 AND AXIS BANK, DUM DUM BRANCH BEARING NO. 284010100041654. THE STATEMENT OF SALE DURING THE YEAR IS GIVEN AS UNDER :- 1. STATEMENT OF SALE FOR THE YEAR ENDED 31 ST MARCH, 2008 (A) CASH SALE RS.15,62,510/- I.T.A. NO. 306/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 6 (B) CREDIT SALE (TIRUPATI SALES CORPORATION)......RS.5,10,000/- _______________________ TOTAL SALE : RS.20,72,510/- _______________________ THE APPELLANT HAS FURNISHED THE FOLLOWING STATEMENT OF CASH DEPOSITED INTO THE BANKS FOR THE YEAR ENDED 31 ST MARCH, 2008: '2. STATEMENT OF CASH DEPOSITED INTO THE BANKS FOR THE YEAR ENDED 31 ST MARCH, 2008 A) AXIS BANK, SHYAMBAZAR BRANCH............. RS.15, 23,000 A/C. NO. 084010100172165 B) AXIS BANK, DUM DUM BRANCH................ RS.14, 00,500 A/C. NO. 284010100041654 ------------------ ----- TOTAL CASH DEPOSITED: RS.29,23,500/-' THE APPELLANT HAS FURNISHED THE FOLLOWING BREAK-UP OF CASH DEPOSITED INTO BANKS: '3. BREAK-UP OF CASH DEPOSITED TO BANKS A) AMOUNT RECEIVED FROM CASH SALE.............RS.15,62 ,510/- (B)CASH RECEIVED FROM PARTIES TO PURCHASE THEIR GOODS AGAINST BROKERAGE.....RS.13,6 0,990/- ____________________ TOTAL CASH DEPOSITED TO BANKS ............RS.29,23, 500/- ____________________ 2.5.1. THE APPELLANT HAS EXPLAINED THAT HIS BUSINES S ACTIVITIES INVOLVED MOSTLY CASH TRANSACTIONS IN SMA LL AMOUNTS IN RESPECT OF THE PURCHASE OF SCRAPS FROM S TREET SCRAP COLLECTORS AND SALE OF SCRAPS. IT HAS BEEN AL SO EXPLAINED THAT HE HAD TO UNDERTAKE; TRANSACTIONS IN CASH IN RESPECT TO HIS BUSINESS ACTIVITIES ON THE SPOT FOR PURCHASES AS WELL AS FOR SALES WITH THE PARTIES WHO WERE CASU AL IN STATUS AND NATURE AND WHEREABOUTS OF THEM ARE VAGUE . THE APPELLANT HAS SUBMITTED A COPY OF THE TRADE LICENSE . HE HAS ALSO CLAIMED THAT HIS CASE IS COVERED U/S 44AF OF T HE INCOME TAX ACT, 1961. THE APPELLANT HAS ALSO EXPLAINED THA T HE HAD OFFERED APPROXIMATELY AT SIX PERCENT OF THE TURNOVE R SHOWING INCOME AT RS.124,310/- ON THE TURNOVER OF RS.20,72,510/-. THE APPELLANT HAS ALSO SHOWN BROKER AGE INCOME OF RS.95,000/- IN RESPECT OF PURCHASE OF GOO DS FOR OTHER PARTIES AGAINST BROKERAGE. THE APPELLANT HAS ALSO I.T.A. NO. 306/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 6 SHOWN INTEREST INCOME OF RS.394/-. HE HAS INVESTED A SUM OF RS.1,25,000/- IN DIFFERENT TAX SAVINGS SCHEMES AND CLAIMED DEDUCTION OF RS.1,00,000/- U/S 80C. THUS, THE APPEL LANT HAS SHOWN THE TOTAL INCOME AT RS.1,19,704/ - IN HIS RET URN OF INCOME . 2.5.2. IN THE INSTANT CASE, THE MAIN ISSUE WAS THE CASH DEPOSITS OF RS.29,23,500/- IN HIS TWO SAVINGS BANK ACCOUNTS WITH THE AXIS BANK. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT EXPLAINED THAT THE CASH DEPOSIT CONSISTED OF (I) CASH SALES OF RS.15,62,510/- AND ( II) CASH OF RS.13,60,990/- RECEIVED FROM PARTIES TO PURCHASE GO ODS AGAINST BROKERAGE. THE ASSESSING OFFICER DEPUTED HI S INSPECTOR TO VERIFY THE EXISTENCE OF BUYERS. IN HER REPORT, THE INSPECTOR REPORTED THAT THERE WAS NO BUYER AT THE G IVEN ADDRESSES. UNDER THIS CIRCUMSTANCES, THE ASSESSING OFFICER HAS ADDED THE CASH DEPOSIT OF RS.29,23,500/- AS UNE XPLAINED CASH CREDIT U/S. 68 OF THE ACT. 2.5.3. ON PERUSAL OF THE SAVINGS BANK ACCOUNT BEAR ING ACCOUNT NUMBER 084010100172185 WITH THE AXIS BANK, SHYAMBAZAR BRANCH, IT IS FOUND THAT THERE WAS OPENI NG BALANCE OF RS.2,50,360/-. THIS ACCOUNT WAS CLOSED O N 21.01.2008. ANOTHER NEW ACCOUNT BEARING ACCOUNT NUM BER 284010100041654 WAS OPENED ON 20.11.2007. THE CLOSI NG BALANCE IN THE BANK ACCOUNT WAS RS.5,394/-. ON PERU SAL OF HIS BALANCE SHEET, IT IS FOUND THAT THE APPELLANT H AS TAKEN LOAN OF RS.1,50,000/-. HE HAS GIVEN ADVANCE OF RS.4 ,00,000/- FOR BOOKING A FLAT. HE HAS INVESTED RS.1,25,000/- I N VARIOUS SCHEME TO CLAIM DEDUCTION U/S 80C. DURING THE YEAR, HE HAS MADE CASH WITHDRAWALS OF RS.27,56,825/-- FROM HIS B ANK ACCOUNTS AND CASH DEPOSITS OF RS.29,23,500/- INTO H IS BANK ACCOUNTS. THE APPELLANT HAS ALSO EXPLAINED THAT HIS BUSINESS ACTIVITIES INVOLVED ON THE SPOT PURCHASE AND SALE O F SCRAPS WITH THE PARTIES WHO WERE CASUAL IN STATUS & NATURE AND WHEREABOUTS OF THEM WERE VAGUE. IT CANNOT BE EXPECT ED THAT THE PARTIES WHO HAD BOUGHT SCRAPS IN CASH FROM THE APPELLANT DURING F.Y. 2007-08 WOULD CONTINUE TO REM AIN AT THE SAME PLACE AFTER A GAP OF 32 MONTHS AS MOST OF THEM WERE LIKE STREET SCRAP COLLECTORS. THE CASH WITHDRA WAL OF RS.27,56,825/- FROM THE BANK ACCOUNTS AND THE CASH DEPOSIT OF RS.29,23,500/- INTO THE BANK ACCOUNTS CLEARLY SH OW THAT THE APPELLANT HAS WITHDRAWN THE CASH FROM TIME TO T IME AT THE TIME OF PURCHASE OF SCRAPS AND HAS DEPOSITED TH E CASH AFTER THE SALE OF SCRAPS. CONSIDERING THE NATURE OF HIS BUSINESS, THE CONTENTION OF THE APPELLANT THAT THE CASH DEPOSIT OF RS.29,23,500/- IS THE AGGREGATE TOTAL OF (I) THE AMOUNT OF RS.15,62,510/- RECEIVED FROM CASH SALE AN D (II) I.T.A. NO. 306/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 6 THE AMOUNT OF RS.13,60,990/- RECEIVED FROM PARTIES IN CASH FOR PURCHASE OF SCRAPS AGAINST BROKERAGE APPEARS TO BE CORRECT. IN VIEW OF THE ABOVE CLARIFICATION, I AM O F THE OPINION THAT THE CASH DEPOSIT OF RS.29,23,500/- CAN NOT BE ADDED U/S 68 AS UNEXPLAINED CASH CREDIT. THE ASSESS ING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS.29 ,23,500/- U/S. 68 AS UNEXPLAINED CASH CREDIT. THE APPELLANT G ETS RELIEF OF RS.29,23,500/-. THIS GROUND OF APPEAL IS ALLOWED . RELIEF RS.29,23,500/-. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US, NONE APPEARED ON BEHALF OF THE REVENUE. THIS APPEAL OF THE REVENUE IS, THEREFORE, BEING DISPOSED OF EX- PARTE AFTER CONSIDERING THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE AND PERUSING THE RELEVANT MATERIAL AVAILABLE ON REC ORD. 5. IT IS OBSERVED THAT THE CLAIM OF THE ASSESESE OF HAVING MADE THE CASH DEPOSITS IN HIS BANK ACCOUNT FROM THE CASH RECEIPT OF HIS BUSINESS IN THE FORM OF SALE PROCEEDS OF SCRAP AS WELL AS AMOUNTS R ECEIVED FOR PROCURING THE SCRAP MATERIAL ON COMMISSION BASIS, WAS NOT ACC EPTED BY THE ASSESSING OFFICER MAINLY ON THE BASIS OF REPORT OF THE INSPECTOR THAT THE CONCERNED PARTIES WERE NOT FOUND AT THE ADDRESSES G IVEN BY THE ASSESSEE. AS RIGHTLY OBSERVED BY THE LD. CIT(APPEALS) IN THIS REGARD, THE ASSESSEE IS A DEALER OF SCRAPS AND TAKING INTO CONSIDERATION TH E NATURE OF HIS BUSINESS, IT CANNOT BE EXPECTED THAT THE PARTIES WH O HAD PURCHASED SCRAPS FROM HIM IN CASH WOULD CONTINUE TO REMAIN AT THE SA ME PLACE EVEN AFTER A GAP OF MORE THAN TWO YEARS. MOREOVER, THE TRANSACTI ONS IN SCRAP BUSINESS INVOLVING PETTY AMOUNTS ARE NORMALLY MADE IN CASH A ND SINCE THE TOTAL CASH SALE OF THE ASSESSEE AMOUNTING TO RS.15,62,510 /- AND CASH RECEIVED BY HIM FROM THE PARTIES FOR PROCUREMENT OF SCRAP ON COMMISSION BASIS WERE SUFFICIENT TO EXPLAIN THE CASH DEPOSITS FOUND TO BE MADE IN HIS BANK ACCOUNT, WE ARE OF THE VIEW THAT CASH DEPOSITS OF R S.29,23,500/- COULD NOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE ES PECIALLY WHEN THERE I.T.A. NO. 306/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 6 OF 6 WERE CORRESPONDING CASH WITHDRAWALS FROM THE SAID A CCOUNT AMOUNTING TO RS.27,26,825/-. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) DELETING THE ADDITION OF RS.29 ,23,500/- MADE BY THE ASSESSING OFFICER ON THIS ISSUE AND UPHOLDING THE S AME, WE DISMISS THIS APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 09, 2015. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 9 TH DAY OF DECEMBER, 2015 COPIES TO : (1) INCOME TAX OFFICER, WARD-38(4), KOLKATA, 18, RABINDRA SARANI, PODDAR COURT, 8 TH FLOOR, KOLKATA-700 001 (2) SUDHIR MALHOTRA, AIKYA APARTMENT, GROUND FLOOR, SURER MATH (NEAR PURBITA), 63/24, DUM DUM ROAD, KOLKATA-700 014 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-XXIV, KOL KATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.