The ITO, Ward-5(1), Surat V. Smt. Farzana Md.Amin Qureshi, Surat

ITA 3186/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89668 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 16-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Unexplained investment; Peak credit
• Section: 69

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO.3186/AHD/2011 / ASSESSMENT YEAR: 2008-2009 ITO, WARD-5(1) SURAT. VS SMT.FARZANA MD. AMIN QURESHI 4/4777, HAZI MANZIL, TAIYABI MOHALLO, ZAMPA BAZAR, SURAT. PAN : AACPQ 0557 E ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI DINESH SINGH, SR.DR ASSESSEE(S) BY : NONE (WRITTEN SUBMISSIONS) / DATE OF HEARING : 18/06/2015 / DATE OF PRONOUNCEMENT: 25/06/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A )-IV, SURAT DATED 17.8.2011. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE I S THAT THE CIT(A) ERRED IN DELETING ADDITION OF RS.12,49,586/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH/CHEQUE DEPOSITED IN THE BANK ACCOUNT. ITA NO.3186/AHD/2011 2 3. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE ASSESSEE HAS MAINTAINED SAVING BANK ACCOUNT NO.1180 727 WITH THE ROYAL BANK OF SCOTLAND, SURAT IN WHICH THERE WAS CASH/CHEQUE DEPOSITS OF RS.14,24,265/-. THE ASSESSEE WAS REQUI RED BY THE AO TO EXPLAIN THE CREDIT ENTRIES AS WELL AS WITHDRAWAL S FROM THE ACCOUNT, BUT THERE WAS NO RESPONSE FROM THE ASSESSE E. THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN INCOME FROM TR ADING AND IT WAS NOT COMMENSURATE WITH CASH DEPOSITS IN THE BANK ACCOUNT. HE CONCLUDED THAT IT WAS A CASE OF MANIPULATION OF RECORDS BY NOT DISCLOSING TRUE AND FAIR AFFAIRS OF BUSINESS. SIN CE NO EXPLANATION REGARDING CREDIT ENTRIES IN BANK ACCOUNT WERE GIVEN , THESE WERE TREATED AS UNEXPLAINED INVESTMENTS UNDER SECTION 69 OF THE ACT. 4. BEFORE THE CIT(A), THE ASSESSEE FILED A COPY OF B ANK STATEMENT AND SUBMITTED THAT THE SAID BANK ACCOUNT WAS REFLECTED IN THE BALANCE SHEET PREPARED BY THE ACCOUNTANT, AN D THEREFORE, IT IS TO BE TAKEN AS DULY CONSIDERED WHILE FILING RETU RN OF INCOME. IT WAS FURTHER SUBMITTED THAT CASH WAS OFTEN WITHDRAWN FROM THE ACCOUNT AND RE-DEPOSITED, IF REMAINING UNUSED. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD DEPOSITED LOAN AMOU NTS OF RS.59,630/- AND RS.1,17,316/- ON 1.9.2007 AND ON 3. 12.2007 RESPECTIVELY, AND THESE HAVE ALSO BEEN CONSIDERED AS UNEXPLAINED. IT WAS FURTHER SUBMITTED THAT THE BA NK ACCOUNT WAS PART OF PERSONAL ACCOUNTS WHICH WERE ATTACHED ALONG WITH THE RETURN OF INCOME, AND THEREFORE, NO ADDITION U/S.69 WAS CALLED FOR. IT WAS ALTERNATIVELY SUBMITTED THAT THE AO WAS OBLI GED TO PASS A JUDICIOUS ORDER AND OUGHT TO HAVE TAXED ONLY REAL I NCOME AND THEREFORE, IF THE TRANSACTIONS IN THE ACCOUNTS WERE CONSIDERED AS UNACCOUNTED, ONLY PROFIT DETERMINED AS PER PROVISIO N OF SECTION ITA NO.3186/AHD/2011 3 44AF SHOULD HAVE BEEN ADDED. IT WAS SUBMITTED THA T THE INCOME THEREFORE SHOULD HAVE BEEN DETERMINED AT RS.65,365/ - ONLY BEING 5% OF RS.12,47,319/-, BEING DEPOSITS OF RS.14,24,26 5/- LESS LOANS OF RS.59,630/- AND RS.1,17,316/-. THE CIT(A) AFTE R CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE OBSERVED THAT THE BANK ACCOUNT WAS UNDISCLOSED, AND THE CREDITS IN THE BAN K ACCOUNT HAVE NOT BEEN EXPLAINED, AND THEREFORE, THE INCOME IN TH E NATURE OF UNEXPLAINED INVESTMENTS ARISES IN THE HANDS OF THE ASSESSEE, IN ADDITION TO PROFITS ON THE TRANSACTIONS IN THE BANK ACCOUNT, AS IT HAS BEEN ACCEPTED IN HIS SUBMISSIONS THAT BUSINESS WAS CONDUCTED THROUGH THE BANK. THE ASSESSEE HAS OFFERED INCOME FROM STITCHING AND EMBROIDERY. THE PEAK CREDIT OF RS.1,35,476/- A PPEARED ON 5.11.2007. THE PROFITS UPTO THE DATE ON WHICH PEAK APPEARED WAS INCLUDED IN THE PEAK AND THEREFORE, ONLY PROFITS ON SUBSEQUENT CREDIT TRANSACTIONS WERE REQUIRED TO BE ADDED OVER AND ABOVE THE PEAK. ACCORDING TO THE CIT(A), REASONABLE PROFIT A T THE RATE OF 5% ON ALL SUBSEQUENT CREDITS IN THE ACCOUNT DURING THE YEAR PLUS ANY INTEREST CREDITED IN THE ACCOUNT AFTER THE DATE OF PEAK. ACCORDINGLY, HE DIRECTED THE AO TO DETERMINE THE PR OFIT AND INTEREST AND PARTLY ALLOWED THE GROUND OF THE APPEA L OF THE ASSESSEE. 5. DR SUPPORTED THE ORDER OF THE AO, WHEREAS THE AR HAS FILED WRITTEN SUBMISSIONS AND REITERATED SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 6. AFTER CONSIDERING RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD, WE FIND THAT THE AO FOUND THAT THE ASSESSEE HAD A BANK ACCOUNT NO.1180727 WITH ROYAL BANK OF SCOTLAND, SURA T WHEREIN ITA NO.3186/AHD/2011 4 CASH/CHEQUE DEPOSITS OF RS.14,24,265/- WERE MADE DU RING THE YEAR BY THE ASSESSEE. THE ASSESSEE WAS REQUIRED TO EXPLAIN CREDIT ENTRIES AS WELL AS WITHDRAWALS, BUT THE ASSESSEE FA ILED TO COMPLY WITH THE REQUIREMENTS OF THE AO, THEREFORE, THE AO MADE ADDITION OF RS.14,24,265/- AS UNEXPLAINED INVESTMENT UNDER S ECTION 69 OF THE ACT. 7. ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE WAS IN THE BUSINESS OF STITCHING AND EMBROIDERY WORK, AND HAS EXPLAINED THAT IT WAS CONDUCTING THE BUSINESS THROUGH BANK ACCOUNT . THEREFORE, THE CIT(A) CONCLUDED THAT THE DEPOSITS WERE THE BUS INESS RECEIPTS OF THE ASSESSEE. ACCORDINGLY, THE CIT(A) TOOK PEAK CREDIT AS ON 5.11.2007 BEING RS.1,35,476/- AND 5% OF THE AMOUNT DEPOSITED IN THE BANK ACCOUNT SUBSEQUENT TO THE DETERMINATION PEAK AS THE INCOME OF THE ASSESSEE PLUS ANY INTEREST CREDIT IN THE SAID BANK ACCOUNT, AND ACCORDINGLY, THE AO DIRECTED TO COMPUT E THE INCOME OF THE ASSESSEE FROM THE SAID BANK ACCOUNT. 8. THE DR SUPPORTED THE ORDER OF THE AO. HE COULD NOT POINT OUT ANY SPECIFIC MISTAKE IN THE ORDER OF THE CIT(A) . 9. IN OUR CONSIDERED VIEW, UNDER THE INCOME TAX ACT , THE INCOME OF THE ASSESSEE IS TO BE TAXED AND NOT THE R ECEIPTS OF THE ASSESSEE DURING THE YEAR. THE CIT(A) HAS DETERMINE D THE INCOME OUT OF THE DEPOSITS IN THE BANK ACCOUNT OF THE ASSE SSEE BY TAKING THE PEAK DEPOSITS PLUS 5% OF THE DEPOSITS SUBSEQUEN T TO THE DETERMINATION OF THE PEAK AND INTEREST PAID IN THE BANK ACCOUNT AS INCOME OF THE ASSESSEE, WHICH IN OUR CONSIDERED VIE W, IS QUITE REASONABLE IN THE FACTS OF THE CASE. WE, THEREFORE , FIND NO ITA NO.3186/AHD/2011 5 INFIRMITY IN THE ORDER OF THE CIT(A), WHICH IS HERE BY CONFIRMED, AND THE GROUND APPEAL OF THE REVENUE IS REJECTED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON THURSDAY THE 25 TH JUNE, 2015 AT AHMEDABAD. SD/- SD/- (S.S. GODARA) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED /06/2015