Dharmesh R. Chudasama, Savarkundla, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2(4), AMRELI

ITA 31/RJT/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8497 (ITAT-RAJKOT)
• Duration Of Justice: 6 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 08-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR SR D R
• Keywords: Salary income; Peak credit; Set aside
• Section: 143(3); 133(6); 69A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT , , BEFORE SHRIRAJPAL YADAV,JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ I.T.A. NO.31/RJT/2014 ( / ASSESSMENT YEAR :2009-10) DHARMESH R. CHUDASAMA C/O D.R. ADHIA, OM SHRI PADMALAYA, BESIDE TRIKAMRAIJI HAWELI, OPP. HOTEL IMPERIAL PALACE, 16 JAGNATH PLOT, DR. YAGNIK ROAD, RAJKOT / VS. I.T.O, WARD-2(4), AMRELI ./ ! ./ PAN/GIR NO. : AHU PC8 272 D ( ' / APPELLANT ) .. ( #$ ' / RESPONDENT ) '% / APPELLANT BY : WRITTEN SUBMISSION (SHRI D. R. ADHIA), A.R #$ '&% / RESPONDENTBY : SHRI ANIL KUMAR, SR. D.R ' ( )&* / DATE OF HEARING 06/12/2019 +, &* / DATE OF PRONOUNCEMENT 20/01/2020 - / O R D E R PER WASEEM AHMED ACCOUNTANTMEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANC E OF THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS)- IV, RAJKOT [LD.CIT(A) IN SHORT] DATED 23/12/2013, ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 27/12/ 2011RELEVANT TO ASSESSMENT YEARS (A.Y.) 2009-10. ITA NO.31/RJT/2 014 A.Y.2009-10 - 2 - THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL: (1) THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN C ONFIRMING ADDITION OF RS. 22,59,223/-. THE ADDITION NEEDS DE LETION. (2) THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CO NFIRMING ADDITION OF RS. 22,59,223/-. WITHOUT ACCEPTING EXP LANATION FURNISHED. THE ADDITION NEEDS DELETION. (3) THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CO NFIRMING ADDITION OF RS. 22,59,223/-. WITHOUT CONSIDERING P ROVISIONS OF SECTION 44AF. THE ADDITION NEEDS DELETION. (4) THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CO NFIRMING ADDITION OF RS. 22,59,223/-. WITHOUT CONSIDERING P EAK POSITION OF THE TRANSACTIONS. THE ADDITION NEEDS DELETION/S UITABLE REDUCTION. (5) THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CO NFIRMING ADDITION OF RS. 22,59,223/- BASED ON PRESUMPTION AN D CERMISES. THE ADDITION NEEDS DELETION. (6.1) TAKING INTO CONSIDERATION THE LEGAL, STATUTOR Y, FACTUAL AND ADMINISTRATIVE ASPECTS, NO ADDITION OF AN AMOUNT OF RS. 22,59,223/- OUGHT TO HAVE BEEN CONFIRMED. THE ADDI TION NEEDS DELETION. (6.2) TAKING INTO CONSIDERATION THE LEGAL, STATUTOR Y, FACTUAL AND ADMINISTRATIVE ASPECTS, NO ADDITION OF AN AMOUNT OF RS. 22,59,223/- OUGHT TO HAVE BEEN MADE. THE ADDITION NEEDS SUITABLE REDUCTION. (7) WITHOUT PREJUDICE, THE ASSESSMENT MADE IS BAD I N LAW AND DESERVES ANNULMENT. (8) WITHOUT PREJUDICE, NO ADEQUATE, SUFFICIENT AND REASONABLE OPPORTUNITY HAS BEEN PROVIDED WHILE PASSING ASSESSM ENT ORDER. THE ASSESSMENT NEEDS ANNULMENT. (9) WITHOUT PREJUDICE, NO ADEQUATE, SUFFICIENT AND REASONABLE OPPORTUNITY HAS BEEN PROVIDED WHILE PASSING APPEAL ORDER. THE ASSESSMENT NEEDS ANNULMENT. ITA NO.31/RJT/2 014 A.Y.2009-10 - 3 - (10) THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND AND/OR SUBSTITUTE ANY OR ALL GROUND OF APPEAL BEFORE THE A CTUAL HEARING TAKES PLACE. 2. THE INTERCONNECTED RAISED BY THE ASSESSEE IN ALL TH E GROUNDS OF APPEAL IS THAT THE LEARNED CIT (A) ERRED IN CONFIRM ING THE ADDITION OF RS. 22,59,223/- MADE UNDER SECTION 69A OF THE ACT WITHO UT CONSIDERING THE PROVISION OF THE SECTION 44AF AND EXPLANATION FURNI SHED BY HIM(THE ASSESSEE). 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL WORKING AS LIC AGENT AND EARNING COMMISSION AND SALARY FROM PR IVATE FIRM. THE ASSESSEE DECLARED TOTAL INCOME OF RS. 44,110/- IN H IS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE DURING T HE YEAR UNDER CONSIDERATION HAS MADE AGGREGATE DEPOSITS OF RS. 22 ,59,223/- IN HIS SAVING BANK ACCOUNT HELD WITH SBI. OUT OF WHICH, TH E SUM OF RS. 21,69,453/- WAS DEPOSITED IN THE FORM OF CASH. THIS ACCOUNT WAS NOT MENTIONED BY THE ASSESSEE IN HIS RETURN. ACCORDINGL Y THE AO SHOW CAUSED THE ASSESSEE FOR TREATING THE IMPUGNED DEPOS ITS AS HIS INCOME. 4. THE ASSESSEE IN RESPONSE TO THE SHOW CAUSE NOTIC E SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION HE WAS ENGAGED IN BUSINESS OF SALE & PURCHASE OF MECHANICAL IRON SCALE, AND THE CASH DEP OSITS REPRESENT ITS RECEIPT FROM SUCH BUSINESS. THE ASSESSEE ALSO SUBMI TTED THAT DUE TO SOME MISTAKE ON HIS PART THESE RECEIPT AND WITHDRAWAL WE RE TREATED AS CONTRA ENTRIES INSTEAD OF TREATING THE SAME AS SALE AND PU RCHASE TRANSACTIONS. ITA NO.31/RJT/2 014 A.Y.2009-10 - 4 - 5. ACCORDINGLY THE ASSESSEE PRAYED TO TREAT SUCH DE POSIT AND WITHDRAWAL AS SALE & PURCHASES AND OFFERED ESTIMATE D PROFIT OF RS. 1,14,624/- UNDER SECTION 44AF OF THE ACT. ALTERNATI VELY THE ASSESSEE ALSO OFFERED PEAK CASH OF RS. 1,19,324/- IF THE ABOVE PR OFIT OF RS. 1,14,624/- UNDER SECTION 44AF IS NOT ACCEPTABLE. 6. HOWEVER, THE AO DISAGREED WITH THE SUBMISSION OF THE ASSESSEE AND HELD THAT THE ASSESSEES CLAIM OF BUSINESS ACTI VITY IS A CONCOCTED STORY AS HE FAILED TO FURNISH ANY DOCUMENTARY EVIDE NCE SUCH AS TRADING & P/L ACCOUNT, BALANCE SHEET AND OTHER BOOKS OF ACCOU NT AND ALSO FAILED TO DISCLOSE THIS SAVING BANK WHILE FURNISHING THE RETU RN. ACCORDINGLY THE AO TREATED THE TOTAL DEPOSIT OF RS. 22,59,223/- AS UNEXPLAINED INCOME UNDER SECTION 69A OF THE ACT, AND ADDED TO THE TOTA L INCOME OF THE ASSESSEE. 7. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE LE ARNED CIT (A) WHO CONFIRMED THE ORDER OF THE AO BY HOLDING AS UND ER: 2. I HAVE CONSIDERED CAREFULLY, THE SUBMISSIONS MA DE BY THE APPELLANT AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OF FICER. AT PARAGRAPH 4.2 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS GIV EN DETAILED REASONS FOR MAKING THE ADDITION OF RS. 22,59,223/- ON ACCOUNT O F UNEXPLAINED CASH DEPOSITS IN THE IMPUGNED BANK ACCOUNT MAINTAINED WI TH STATE BANK OF INDIA, SAVAR KUNDLA BRANCH, WHICH ARE AS UNDER:- I) THE ASSESSEE HAS WORKED OUT INCOME OF RS. 1,14, 624/- FROM BUSINESS ON A PLAIN PAPER. HOWEVER, HE HAS N OT FURNISHED ANY PROVISIONAL PROFIT AND LOS ACCOUNT, TRADING ACCOU NT,CAPITAL ACCOUNT, BALANCE SHEET AND BOOKS OF ACCOUNT. THEREFORE, T HIS CLAIM OF THE ASSESSEE IS NOT ACCEPTABLE. AS PER THE NORMS OF T HE IT ACT UNDER THE PROVISIONS OF SECTION 28, THE ASSESSEE HAS TO MAIN TAIN REGULAR BOOKS OF ACCOUNTS AND ON THE BASIS OF THE BOOKS, T HE TRADING ACCOUNT, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE ASSESSEE ITA NO.31/RJT/2 014 A.Y.2009-10 - 5 - CAN GIVE CLEAR PICTURE OF INCOME OF THE ASSESSEE F OR HIS BUSINESS: NOT MERE ON WORKING ON PLAIN PAPER AND ESTIMATE BASIS . II) THE ASSESSEE HAS OFFERED PEAK AMOUNT OF RS. 1, 19,324/- .HOWEVER, HE HAD NOT FURNISHED THE FUNDS FLOW STAT EMENT AND THE BASIS FOR AVAILING PEAK BALANCE. THEREFORE, HIS CLAIM I S NOT ACCEPTABLE. III) AS THE ASSESSEE HAS ACCEPTED VIDE HIS REPLY D ATED 26.11.2011 THAT HE HAD ENGAGED IN THE BUSINESS OF TRADING IN MECHANICAL IRON SCALE AND HE WAS MAKING URD PURCHA SES. IV) THE ASSESSEES CLAIM OF BUSINESS OF MANUFACTUR ING OF MECHANICAL IRON SCALE CANNOT BE ACCEPTABLE WITHOUT NAY BASIC EVIDENCE OR BOOKS OF ACCOUNTS. THIS IS A FABRICAT ED STORY OF THE ASSESSEE GIVING THE COLOUR OF CASH TRANSACTION IN HIS ACCOUNT AS BUSINESS TURNOVER. 3. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AUTHORIZED REPRESENTATIVE COULD NOT PRODUCE ANY EVIDENCE TO DE MONSTRATE THE FACT THAT THE APPELLANT WAS DOING BUSINESS OF MANUFACTURING OF ME CHANICAL IRON SCALE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. AV AILABLE FACTS ON RECORD ESTABLISH THAT THE APPELLANT IS A LIC AGENT DERIVES INCOME FROM SALARY AND COMMISSION. THE APPELLANT DID NOT MAINTAINED ANY B OOKS OF ACCOUNTS OR DO NOT HAVE ANY SUCH EVIDENCE TO SHOW THAT HE WAS CARR YING OUT BUSINESS AS CLAIMED. BASED ON THE AIR INFORMATION, THE ASSESSI NG OFFICER HAS OBTAINED THE DETAILS OF TRANSACTIONS IN THE IMPUGNED BANK ACCOUN T MAINTAINED WITH SAVAR KUNDLA BRANCH U/S. 133(6) OF THE IT ACT, 1961. IN THE ABSENCE OF ANY EVIDENCE WITH THE APPELLANT TO SHOW THAT HE WAS CARRYING OUT BUSINESS DURING THE PREVIOUS YEAR UNDER CONSIDERATION, THE PLEA TAKE BY THE APPELLANT THAT HE HAS CARRIED OUT BUSINESS CANNOT BE ACCEPTED. THEREFORE , ALL THE CASH DEPOSITS TOTALING TO RS. 22,59,223/- CONSTITUTE APPELLANTS UNDISCLOSED INCOME IN TERMS OF PROVISIONS CONTAINED U/S. 69A OF THE IT ACT, 196 1. HENCE I DECLINE TO INTERFERE WITH THE ASSESSMENT MADE IN THIS CASE U/S . 143(3) OF THE IT ACT, 1961. THE ADDITION MADE AT RS. 22,59,223/- U/S. 69A OF TH E IT ACT, 1961 STANDS CONFIRMED. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) , THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LEARNED AR FOR THE ASSESSEE BEFORE US, BESID ES REITERATING THE FACT AS SUBMITTED BEFORE LOWER AUTHORITIES, SUBMITT ED COPY OF SBI BANK ITA NO.31/RJT/2 014 A.Y.2009-10 - 6 - STATEMENT, WORKING OF PEAK CREDIT AND COPIES OF VAR IOUS CASE LAWS WHICH ARE AVAILABLE ON RECORD 9. ON THE CONTRARY THE LEARNED DR VEHEMENTLY SUPPOR TED THE FINDING OF THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE PRESENT C ASE, THE AO TREATED THE DEPOSITS MADE BY THE ASSESSEE FOR THE SUM OF RS. 22 ,59,223/- IN HIS BANK ACCOUNT AS UNEXPLAINED MONEY UNDER THE PROVISIONS O F SECTION 69A OF THE ACT. THE VIEW TAKEN BY THE AO WAS SUBSEQUENTLY CONF IRMED BY THE LEARNED CIT-A. 11. THE LEARNED AR BEFORE US HAS MADE TWO FOLD CONT ENTIONS. THE 1 ST CONTENTION OF THE ASSESSEE IS THAT THE IMPUGNED AMO UNT REPRESENTS ASSESSEES BUSINESS TRANSACTION AND THE 2 ND FOLD CONTENTION OF THE ASSESSEE IS THAT THERE WERE CASH WITHDRAWALS AS WELL AGAINST THE DEPOSIT MADE WITH THE IMPUGNED BANK. THEREFORE THE LEARNED AR CONTEND ED TO APPLY THE PEAK CREDIT THEORY. HOWEVER, WE FIND THAT THE LEARNED AR BEFORE US HAS NOT FILED ANY DOCUMENTARY EVIDENCE SUGGESTING THAT THE ASSESSEE W AS ENGAGED IN THE BUSINESS OF CARRYING SALE & PURCHASE OF MECHANICAL IRON SCALE. THUS IN THE ABSENCE OF DOCUMENTARY EVIDENCE, WE REJECT THE 1 ST FOLD CONTENTION OF THE LEARNED AR FOR THE ASSESSEE. ITA NO.31/RJT/2 014 A.Y.2009-10 - 7 - HOWEVER, WE FIND FORCE IN THE ALTERNATE/2 ND FOLD CONTENTION OF THE ASSESSEE. THE PROVISION OF SECTION 69A OF THE ACT R EQUIRES ADDITION OF THE UNRECORDED MONEY OWNED BY THE ASSESSEE. THE RELEVAN T PROVISION OF SECTION 69A OF THE ACT READS AS UNDER: 69A. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE AND SUCH MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE IS NOT RECOR DED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISIT ION OF THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, OR THE EXPLANA TION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE MONEY AND THE VALUE OF THE BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE MA Y BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. FROM THE PRECEDING DISCUSSION WE NOTE THAT THE ASSE SSEE SHOULD BE THE OWNER OF MONEY, BULLION, JEWELLERY ETC WHICH WA S NOT RECORDED IN THE BOOKS OF ACCOUNTS. INDEED THE AMOUNT OF CASH OWNED BY THE ASSESSEE WAS NOT DISCLOSED IN THE INCOME TAX RETURN/ BOOKS OF AC COUNTS. THUS THE PROVISION OF SECTION 69A OF THE ACT IS ATTRACTED IN THE PRESENT FACTS AND CIRCUMSTANCES. 12. THE NEXT CONTROVERSY ARISES ABOUT THE QUANTIFIC ATION OF THE MONEY OWNED BY THE ASSESSEE. IN THIS REGARD THERE IS NO S PECIFIC MENTIONED UNDER THE ACT FOR TREATING THE PARTICULAR AMOUNT AS UNEXPLAINED MONEY UNDER SECTION 69A OF THE ACT. ON PERUSAL OF THE BAN K STATEMENT, WE NOTE THAT THERE WERE FREQUENT WITHDRAWALS FROM AND DEPOS ITS IN THE BANK OF THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT THE EN TIRE CASH DEPOSIT CANNOT BE TREATED AS UNEXPLAINED MONEY ON THE GROUND THAT THE AMOUNT WITHDRAWN HAS BEEN UTILIZED FOR THE RE-DEPOSITS. IT IS BECAUSE THE REVENUE ITA NO.31/RJT/2 014 A.Y.2009-10 - 8 - HAS NOT BROUGHT ANYTHING ON RECORD SUGGESTING THAT THE MONEY WITHDRAWN FROM THE BANK BY THE ASSESSEE WAS INCURRED AS AN EX PENDITURE OR INVESTMENT. ACCORDINGLY, IN THE ABSENCE OF THE INFO RMATION, WE ARE PRESUMING THAT THE MONEY WITHDRAWN FROM THE BANK WA S UTILIZED FOR THE PURPOSE OF THE DEPOSIT. THUS IN SUCH A SITUATION WE ARE OF THE VIEW THAT THE PEAK CREDIT SHOULD BE APPLIED WHILE WORKING OUT THE INCOME UNDER SECTION 69A OF THE ACT. ACCORDINGLY WE SET ASIDE TH E ISSUE TO THE FILE OF THE AO FOR WORKING OUT THE PEAK CREDIT FROM THE BAN K OF THE ASSESSEE TO DETERMINE UNDISCLOSED INCOME. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 20/01/2020 -SD- -SD- (RAJPAL YADAV) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 20/01/2020 TANMAY, SR. PS TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT. 3. / * ' 0* / CONCERNED CIT 4. ' 0* ( ) / THE CIT(A)- 5. 34 5 #*( , , /DR,ITAT, RAJKOT 6. 5 67 8 ) / GUARD FILE. / BY ORDER, $ 3* #* //TRUE COPY// !/#$ %& ( DY./ASSTT.REGISTRAR) $ &'$ ( , / ITAT, RAJKOT