ITO, New Delhi V. Sh. Chhotey Lal Gupta, New Delhi

ITA 3129/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6557 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 16-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 31-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R S AHUJA
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Peak credit; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3129 /DEL/201 6 A.Y. : 20 0 7 - 08 INCOME TAX OFFICER, WARD 41(4), ROOM NO. 1911, BLOCK-E-2, CIVIC CENTRE, NEW DELHI 110 002 VS. SH. CHHOTEY LAL GUPTA, H-347, J.J. COLONY, SHAKURPUR, DELHI 110 034 (PAN: AIKPG4520B) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. RAKESH KUMAR, SR. DR ASSESSEE BY : SH. R.S. AHUJA, FCA ORDER THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 11/3/2016 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-14, NEW DELHI ON THE FOLLOWING GROUNDS:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W CIT(A) HAS ERRED IN- 1. DELETING THE ADDITION OF RS. 42,25,722/- ON ACCOUNT O F UNEXPLAINED CASH CREDITS IN HIS BANK ACCOUNT. 2. NOT AFFORDING THE OPPORTUNITY TO THE AO TO PRESENT HIS CASE BEFORE ADMITTING THE ADDITIONAL GROUNDS. THE L D. 2 CIT(A) ACCEPTED THE SUBMISSIONS / EVIDENCES FILED BY THE ASSESSEE DURING THE COURSE OF APPELLATE AND EXAMINED THE SAME WITHOUT REFERRING IT TO THE AO FOR HIS COMME NTS / REMAND REPORT WHICH IS IN CONTRAVENTION OF RULES 46 A OF IT RULES. THE CLAIMS OF LD. CIT(A) THAT HE HAD SENT TW O LETTERS TO AO FOR HIS COMMENTS / REMAND REPORT HAS NOT BEEN FOUND CORRECT AS THE AO HAS CATEGORICALLY STATED THAT NO LETTER SEEKING REMAND REPORT BY THE LD. CIT(A) WAS RECEIVED IN HIS OFFICE. 3. THE APPELLANT CRAVES THE RIGHT TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT IN THIS CASE WAS COMPLETED VIDE ORDER DATED 18.12.2009 U/S 143(3) OF THE IT ACT, 1961 AT AN INCOME OF RS. 49,32,000/- AS AGAINST RETU RNED INCOME OF RS. 1,97,705/- MAKING THE ADDITION OF RS. 47,35,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE BANK. THE ASSESSEE WEN T IN APPEAL BEFORE THE LD. CIT(A)-XVI, NEW DELHI AGAINST THE IM PUGNED ORDER, WHO VIDE HIS ORDER DATED 23.11.2010 IN APPEAL NO. 2 48/09-10 CONFIRMED THE ADDITION OF RS. 4,49,278/- I.E. 10% OF PURCHASES OF RS. 44,92,780/- MADE BY THE LD. AO ON ACCOUNT OF UNE XPLAINED CASH CREDITS IN THE BANK ACCOUNT AS THE SAME COVERS THE PEA K CREDIT ALSO. 3 HE FURTHER DELETED THE ADDITION OF RS. 42,85,722/-. AG GRIEVED WITH THE ORDER OF THE LD. CIT(A), THE MATTER WAS TAKEN BEFO RE THE ITAT BY THE DEPARTMENT. THE ITAT VIDE ITS ORDER DATED 15.0 3.2013 IN ITA NO. 807/DEL/2011 AFTER CONSIDERING THE SUBMISSIONS O F THE AR OF THE ASSESSEE AS WELL AS DEPARTMENTAL REPRESENTATIVE RESTORE D THE ISSUE UNDER CONSIDERATION TO THE FILE OF THE LD. CIT(A) WITH THE FOLLOWING OBSERVATIONS:- 'WE HAVE HEARD BOTH THE SIDES, CONSIDERED MATERIAL ON RECORD, PRECEDENT RELIED UPON AND RELEVANT PROVISIONS OF LAW AND FIND THAT CIT(A) HAS ADMITTED ADDITIONAL EVIDEN CE DESPITE OBJECTION HAVING BEEN FILED BY THE LD. AO AND THEREAFTER ALSO CERTAIN OTHER EVIDENCE WAS FILED BY TH E ASSESSEE AND WITHOUT ASSOCIATING THE ASSESSING OFFICE R WITH THE APPEAL PROCEEDINGS OR SEEKING FURTHER REMAND REPORT, SUCH ADDITIONAL EVIDENCE WAS NOT ONLY ADMIT TED, BUT CONSIDERED TO GIVE RELIEF TO THE ASSESSEE WHICH A CTION OF THE CIT(A) IS IN CLEAR VIOLATION OF RULE 46A OF T HE IT RULES. AS SUCH, WHILE ACCEPTING THE APPEAL OF THE REVENUE, WE SET ASIDE THE ORDER OF THE CIT(A) AND RE STORE THE MATTER BACK ON HIS FILE WITH THE DIRECTION RE-DECI DE THE APPEAL AFRESH AFTER GIVING THE DUE OPPORTUNITY T O THE ASSESSING OFFICER AS WELL AS TO THE AR BY APPLYING 4 PROVISIONS OF RULE 46A OF IT RULES. WE HOLD AND DIR ECT ACCORDINGLY.' 2.1 PURSUANT TO THE ORDER OF THE TRIBUNAL, DURING TH E COURSE OF APPELLATE PROCEEDINGS THE LD. AR HAS SUBMITTED AS UNDER :- 'THE APPELLANT IS AN ILLITERATE PERSON AND IS ENGAGE D IN A SMALL KIRANA BUSINESS IN AN AREA WHICH IS ADJACENT TO SLUMS. THE APPELLANT DOES NOT KEEP ANY BOOKS OF ACCOUNTS. THE APPELLANT FILED A RETURN OF INCOME, INTER ALIA, DISCLOSING BUSINESS INCOME AT RS . 68,500/- BY APPLYING A NET PROFIT RATE OF 8% ON GROSS KIRANA RECEIPTS OF RS. 8,56,250/- (PB PAGES 2 & 3 REFER) DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE LD. AO FOUND THAT THE APPELLANT HAD FROM TIME TO TIME DEPOSITED CASH AGGREGATING TO RS. 47,35,000/- IN STANDARD CHARTED BANK AND CALLED UPON THE APPELLANT TO EXPLAIN THESE DEPOSITS. A COPY OF THE EXPLANATION MAY KINDLY BE SEEN AT PAGE 7 OF THE PAPER BOOK. THE LD. AO, HOWEVER, TREATED THE SUM OF RS. 47,35,000/- AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES AND INITIATED PENALTY 5 PROCEEDINGS U/S 271 (1 )(C) 'FOR CONCEALING THE PARTICULARS OF ITS INCOME'. BEING AGGRIEVED, THE APPELLANT FILED AN APPEAL BEFORE YOUR PREDECESSOR. A COPY OF HIS ORDER DATED 23.11.2010 IS PLACED IN THE PB AT PAGES 40 TO 51. IN PARA 4.1 OF THE AFORESAID ORDER, CIT(A) HAS OBSERVED 'FURTHER, IN ABSENCE OF ANY OTHER CONTRARY FACTS BROUGHT BY THE AO, THE CASH DEPOSITS IN THE BANK ACCOUNT DULY EXPLAINED FROM CASH IN HAND/SALE CONSIDERATION ARE HELD GENUINE'. HE, HOWEVER, HELD THAT THE APPELLANT WAS ENGAGED IN PURCHASE AND SALE OF KEROSENE OIL ON HIS OWN. THE LD. CIT(A) ESTIMATED THE PURCHASE OF KEROSENE OIL AT RS. 44,92,780/- AND DETERMINED THE INCOME FROM KEROSENE OIL BUSINESS AT RS. 4,49,278/- BY APPLYING A NET PROFIT RATE OF 10%.' 2.2 LD. CIT(A) OBSERVED THAT THE ABOVE WRITTEN SUBMIS SIONS WERE SENT TO THE LD. AO VIDE OFFICE LETTER F.NO. CIT (A)- 14 /15-16/383 DATED 16.11.2015 FOR HIS COMMENTS U/R 46A OF THE IT RULES 1962 AND FURTHER REMINDER VIDE THIS OFFICE F. NO. CIT (A)- 14 15-16/463 DATED 23.02.2016 WHO HAS NOT SUBMITTED HIS COMMENTS/RE PORT. 6 2.3 LD. CIT(A) FURTHER NOTED THAT THE ABOVE MENTIONE D ADDITIONAL EVIDENCES FILED BY THE LD. AR ARE RELEVANT TO THE ADJUD ICATION OF THE APPEAL, THEREFORE THE SAME WERE ADMITTED UNDER RULE 46 A OF THE IT RULES, 1962 AND THE APPEAL WAS BEING DECIDED ON THE MERIT AND MATERIAL AVAILABLE ON RECORD. 2.4 LD. CIT(A) HAVE CONSIDERED THE SUBMISSIONS OF THE LD. AR AND FINDING OF THE AO AND IT WAS NOTICED THAT HIS PREDECESS OR VIDE ABOVE MENTIONED ORDER DATED 23.11.2010 HAS GIVEN THE FOLLOW ING FINDINGS IN THE ASSESSEES CASE FOR ASSESSMENT YEAR UNDER CONS IDERATION AS UNDER:- IN ABSENCE OF BOOKS OF ACCOUNTS, THE INCOME FROM BUSINESS OF KEROSENE OIL SALE ARE NOT VERIFIABLE. KE EPING IN VIEW THE FACTS AND CIRCUMSTANCES IN TOTALITY, THE INCOME FROM KEROSENE OIL BUSINESS. IS WORKED OUT @ 10% OF PURCHASES OF RS. 44,92,780/-, WHICH WORKS OUT TO RS. 4,49,278/-. THE NET PROFIT RATE OF 10% IS APPLIED HER E BECAUSE THE APPELLANT IS PURCHASING THE KEROSENE OIL AT THE RATE PRESCRIBED FOR BPLI RATION CARD HOLDERS BUT SELLING IT IN THE OPEN MARKET AT THE HIGHER PRICES, T HUS THE PROFIT OF MARGIN SHOULD BE MORE. FURTHER, IT COV ERS PEAK CREDIT ALSO (EXCLUDING DEPOSITS OUT OF OPENING CASH, 7 IF ANY). THUS THE ADDITION OF RS. 4,49,278/- IS UPHE LD. THIS BUSINESS INCOME IS FURTHER TREATED TO HAVE BEEN UTILIZED FOR HOUSE HOLD EXPENSES AS THE HOUSE HOLD EXPENSES IS QUITE MEAGER AND DEPOSITING RS. 2,87,22 0/- IN THE BANK ACCOUNT AS CLAIMED OUT OF OWN SAVINGS AND OPENING BALANCE. KEEPING IN VIEW THE ABOVE FINDINGS AND JUDICIAL PRONOUNCEMENTS (RELIANCE IS PLACED ON RATI OS REPORTED IN 2491TR 265 AND 128 ITR 294), I HEREBY HO LD THAT THE LD. AO WAS NOT JUSTIFIED IN TREATING DEPOSITS OF RS. 42,85,722/- (RS. 47,35,0001- MINUS RS. 4,49,278 II UNEXPLAINED. HENCE, THE ADDITION OF RS. 42,85,722/- IS DELETED. ACCORDINGLY, THE APPELLANT GETS RELIEF.' 2.5 LD. CIT(A) VIDE HIS ORDER DATED 11.3.2016 HAS OB SERVED THAT HIS PREDECESSOR'S ORDER IS SPEAKING AS HE HAS DEALT THE ISSUE IN DETAIL AND HE HAS NO REASON TO DEVIATE FROM THE SAM E. ACCORDINGLY, LD. CIT(A) CONFIRMED THE ADDITION OF RS. 4,49,278/- & DELETE THE ADDITION OF RS. 42,85,722/- MADE BY THE LD. AO. TH IS GROUND OF APPEAL WAS PARTLY ALLOWED. 3. AGAINST THE ORDER DATED 11.3.2016, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 8 4. LD. SR. DR RELIED UPON THE ORDER OF THE AO AND RE ITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 5. ON THE CONTRARY, LD. A.R. OF THE ASSESSEE RELIED UP ON THE ORDER OF THE LD. CIT(A) AND REQUESTED THAT THE APPEAL OF THE REVENUE MAY BE DISMISSED, BECAUSE THE LD. CIT(A) HAS PASSED A WE LL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON MY PA RT. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECOR DS ESPECIALLY THE ORDERS OF THE LOWER AUTHORITIES A S WELL AS THE ORDER OF THE TRIBUNAL IN THE FIRST ROUND OF APPEAL. WITH RE GARD TO GROUND NO. 2 RELATING TO NOT AFFORDING THE OPPORTUNITY TO THE AO TO PRESENT HIS CASE BEFORE ADMITTING THE ADDITIONAL GROUND AND AC CEPTING THE SUBMISSIONS/ EVIDENCES IS CONCERNED, I NOTE THAT ITAT VIDE ITS ORDER DATED 15.03.2013 IN ITA NO. 807/DEL/2011 AFTER CONSI DERING THE SUBMISSIONS OF THE AR OF THE ASSESSEE AS WELL AS DEPA RTMENTAL REPRESENTATIVE RESTORED THE ISSUE UNDER CONSIDERATION T O THE FILE OF THE LD. CIT(A) WITH THE FOLLOWING OBSERVATIONS:- 'WE HAVE HEARD BOTH THE SIDES, CONSIDERED MATERIAL ON RECORD, PRECEDENT RELIED UPON AND RELEVANT PROVISIONS OF LAW AND FIND THAT CIT(A) HAS ADMITTED ADDITIONAL EVIDE NCE DESPITE OBJECTION HAVING BEEN FILED BY THE LD. AO AND THEREAFTER ALSO CERTAIN OTHER EVIDENCE WAS FILED BY TH E 9 ASSESSEE AND WITHOUT ASSOCIATING THE ASSESSING OFFICE R WITH THE APPEAL PROCEEDINGS OR SEEKING FURTHER REMAND REPORT, SUCH ADDITIONAL EVIDENCE WAS NOT ONLY ADMIT TED, BUT CONSIDERED TO GIVE RELIEF TO THE ASSESSEE WHICH A CTION OF THE CIT(A) IS IN CLEAR VIOLATION OF RULE 46A OF T HE IT RULES. AS SUCH, WHILE ACCEPTING THE APPEAL OF THE REVENUE, WE SET ASIDE THE ORDER OF THE CIT(A) AND RE STORE THE MATTER BACK ON HIS FILE WITH THE DIRECTION RE-DECI DE THE APPEAL AFRESH AFTER GIVING THE DUE OPPORTUNITY T O THE ASSESSING OFFICER AS WELL AS TO THE AR BY APPLYING PROVISIONS OF RULE 46A OF IT RULES. WE HOLD AND DIR ECT ACCORDINGLY.' 6.1 I FURTHER FIND THAT PURSUANT TO THE ORDER OF THE T RIBUNAL, DURING THE COURSE OF APPELLATE PROCEEDINGS LD.CIT(A) SENT THE SUBMISSIONS OF THE ASSESSEE TO THE AO VIDE HIS OFFICE LETTER F.NO . CIT (A)- 14/15- 16/383 DATED 16.11.2015 FOR HIS COMMENTS U/R 46A OF THE IT RULES 1962 AND FURTHER REMINDER VIDE THIS OFFICE F. NO. CIT (A)-14 15- 16/463 DATED 23.02.2016, BUT AO HAS NOT SUBMITTED HIS COMMENTS/REPORT. THEREFORE, LD. CIT(A) NOTED THAT THE ADDITIONAL EVIDENCES FILED BY THE AR ARE RELEVANT TO THE ADJUDI CATION OF THE APPEAL, THEREFORE THE SAME WERE ADMITTED UNDER RULE 46 A OF THE IT RULES, 1962 AND THE APPEAL WAS BEING DECIDED ON THE MERIT AND 10 MATERIAL AVAILABLE ON RECORD BY THE LD. CIT(A). IN V IEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE DECISION OF THE LD. CIT(A) IN ADMITTING THE ADDITIONAL GROUND AND ACCEPTING THE SUBMISSIONS/ E VIDENCES DOES NOT NEED ANY INTERFERENCE, HENCE THE SAME IS UPH ELD AND ACCORDINGLY, THE GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED. 7. WITH REGARD TO GROUND NO. 1 RELATING TO DELETION OF ADDITION OF RS. 42,25,722/- ON ACCOUNT OF UNEXPLAINED CASH CREDI TS IN HIS BANK ACCOUNT IS CONCERNED, I FIND THAT IN THE FIRST ROUN D OF APPEAL BEFORE THE THEN LD. CIT(A) THE LD. CIT(A) HAS ADJUDICATED THE ISSUE IN DISPUTE AS UNDER:- IN ABSENCE OF BOOKS OF ACCOUNTS, THE INCOME FROM BUSINESS OF KEROSENE OIL SALE ARE NOT VERIFIABLE. KE EPING IN VIEW THE FACTS AND CIRCUMSTANCES IN TOTALITY, THE INCOME FROM KEROSENE OIL BUSINESS. IS WORKED OUT @ 10% OF PURCHASES OF RS. 44,92,780/-, WHICH WORKS OUT TO RS. 4,49,278/-. THE NET PROFIT RATE OF 10% IS APPLIED HER E BECAUSE THE APPELLANT IS PURCHASING THE KEROSENE OIL AT THE RATE PRESCRIBED FOR BPLI RATION CARD HOLDERS BUT SELLING IT IN THE OPEN MARKET AT THE HIGHER PRICES, T HUS THE PROFIT OF MARGIN SHOULD BE MORE. FURTHER, IT COV ERS PEAK CREDIT ALSO (EXCLUDING DEPOSITS OUT OF OPENING CASH, 11 IF ANY). THUS THE ADDITION OF RS. 4,49,278/- IS UPHE LD. THIS BUSINESS INCOME IS FURTHER TREATED TO HAVE BEEN UTILIZED FOR HOUSE HOLD EXPENSES AS THE HOUSE HOLD EXPENSES IS QUITE MEAGER AND DEPOSITING RS. 2,87,22 0/- IN THE BANK ACCOUNT AS CLAIMED OUT OF OWN SAVINGS AND OPENING BALANCE. KEEPING IN VIEW THE ABOVE FINDINGS AND JUDICIAL PRONOUNCEMENTS (RELIANCE IS PLACED ON RATI OS REPORTED IN 2491TR 265 AND 128 ITR 294), I HEREBY HO LD THAT THE LD. AO WAS NOT JUSTIFIED IN TREATING DEPOSITS OF RS. 42,85,722/- (RS. 47,35,000/- MINUS RS. 4,49,278 /- UNEXPLAINED. HENCE, THE ADDITION OF RS. 42,85,722/- IS DELETED. ACCORDINGLY, THE APPELLANT GETS RELIEF.' 7.1 I FURTHER FIND THAT IN PURSUANCE TO THE ORDER DATE D 15.3.2013 OF THE TRIBUNAL IN THE SECOND ROUND OF APPELLATE PROC EEDINGS THE LD. CIT(A) HAS OBSERVED THAT HIS PREDECESSOR'S ORDER IS SPEAKING AS HE HAS DEALT THE ISSUE IN DETAIL AND HE HAS NO REASON TO DEVIATE FROM THE SAME. ACCORDINGLY, LD. CIT(A) CONFIRMED THE ADDI TION OF RS. 4,49,278/- & DELETE THE ADDITION OF RS. 42,85,722/- M ADE BY THE LD. AO. THIS GROUND OF APPEAL WAS PARTLY ALLOWED. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, IN MY CONS IDERED OPINION, THE PART RELIEF GRANTED BY THE LD. CIT(A) IS A REASON ABLE ONE, HENCE, 12 THE DOES NOT NEED ANY INTERFERENCE AND ACCORDINGLY THE SAME IS UPHELD, AS A RESULT, THE GROUND NO. 1 HEREBY DISMISS ED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/02/2017. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 17/02/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES