Shri Sourabh Jain, Dewas V. THE ITO, Dewas

ITA 339/IND/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2364 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Income from undisclosed sources; Peak credit; Capital receipt
• Section: 143(3); 142(1); 68

Judgement Text

ITA NO.339/IND/2016, A.Y. 2011-12 SOURABH JAIN 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.339/IND/2016 ASSESSMENT YEAR: 2011-12 ORDER PER MANISH BORAD, AM. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS), UJJAIN [IN SH ORT REFERRED TO AS THE CIT (A)] DATED 22.01.2016 ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT DATED 28.02.2016 FRAMED BY TH E INCOME TAX OFFICER, DEWAS PERTAINING TO ASSESSMENT YEAR 2011-1 2. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF A PPEAL. SHRI SOURABH JAIN 101-A, GANGA NAGAR, A.B.ROAD, DEWAS VS. INCOME TAX OFFICER, DEWAS (APPELLANT) (RE SPONDENT ) PAN NO.AGHPJ1855F RESPONDENT BY SHRI K.G. GOYAL , SR. DR APPELLANT BY SHRI HITESH CHIMNANI,CA (AR) DATE OF HEARING: 08.01.2018 DATE OF PRONOUNCEMENT: 16.01.2018 ITA NO.339/IND/2016, A.Y. 2011-12 SOURABH JAIN 2 1 ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE T HE LD.CIT(A) HAS ERRED IN APPRECIATING THE FACT THE BANK ACCOUNT IN DENA B ANK BELONGS TO CO- OWNER SHRI KAILASH JAIN AND AMOUNT DEPOSITED IN SAI D ACCOUNT PERTAINS TO HIM, AS EVIDENCED BY REGISTRY OF PROPERTY SOLD BY K AILASH JAIN (CO-OWNER) TOTAL AMOUNT OF RS.13,21,200/- 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) FURTHER ERRED IN MAKING ADDITION OF TOTAL DEPOSIT MADE IN OTHER TWO ACCOUNTS (AXIS BANK RS.61,38,545/-) WHICH PERTAINS TO CONSTRUCTION & BILL DISCOUNTING ACTIVITIES OF THE ASSESSEE AND INCOME OF WHICH IS O FFERED IN INCOME TAX RETURN, ASSESSED HAS PRODUCED ALL NECESSARY EVIDENC ES BEFORE A.O AND IS ON RECORD. 3. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE T HE LD.CIT(A) HAS NOT DECIDED UPON LEGAL OBJECTION ON APPLICABILITY OF SE C. 68 IN THIS MATTER. 4. CONSEQUENTLY, INTEREST U/S 234B, 234C IS WRONGLY CALCULATED AND NEED TO BE AMENDED. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN CIVIL CONSTRUC TION BUSINESS AS WELL AS BILL DISCOUNTING. RETURN OF INCOME FILED ON 29.08.2011 DECLARING TOTAL INCOME OF RS.2,13,562/-. CASE SELE CTED FOR SCRUTINY. NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE DULY SERVED UPON THE ASSESSEE. INFORMATION RECEIVED BY THE DEPARTMENT AB OUT THE ALLEGED CASH DEPOSITS IN THE BANK ACCOUNT HELD WITH DENA BA NK AND AXIS BANK TOTALING TO RS.74,59,745/-. INFORMATION WAS C ALLED FOR FROM THE ASSESSEE. HOWEVER, ON BEHALF OF THE ASSESSEE T HE FAMILY MEMBER REPLIED AS THE ASSESSEE HAS GONE ABROAD FO R EMPLOYMENT. TWO OF THE BANK ACCOUNTS WAS JOINTLY HELD WITH ASSE SSEES FATHER. STATEMENT OF FATHER WAS RECORDED ON 31.01.2014 WHER EIN HE CATEGORICALLY STATED THAT ALL THE TRANSACTIONS IN T HE IMPUGNED BANK ACCOUNT RELATES TO ASSESSEE, ACCORDINGLY THE LD.A.O COMPLETED THE ASSESSMENT ASSESSING INCOME OF RS.76,73,310/- AFTER MAKING ITA NO.339/IND/2016, A.Y. 2011-12 SOURABH JAIN 3 ADDITION U/S 68 OF THE ACT FOR UNEXPLAINED CASH CRE DIT OF RS.74,59,745/-. 4. ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) BUT FAILED TO SUCCEED AND IMPUGNED ADDITION WAS SUSTAINED. NOW THE AGGRI EVED ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING VARIOUS GR OUNDS. 5. WE FIRST TAKE UP GROUND NO.1. 1.ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE TH E LD.CIT(A) HAS ERRED IN APPRECIATING THE FACT THE BANK ACCOUNT IN DENA BANK BELONGS TO CO-OWNER SHRI KAILASH JAIN AND AMOUNT DEPOSITED IN SAID ACCO UNT PERTAINS TO HIM, AS EVIDENCED BY REGISTRY OF PROPERTY SOLD BY KAILAS H JAIN (CO-OWNER) TOTAL AMOUNT OF RS.13,21,200/- 6. THE LD. COUNSEL SUBMITTED THAT THE BANK ACCOUNT HELD WITH DENA BANK JOINTLY BELONGS TO KAILASH CHAND JAIN, FA THER OF THE ASSESSEE. DURING THE YEAR I.E. ON 18.11.2010, KAIL ASH CHAND JAIN SOLD THE PROPERTY SITUATED AT PLOT NO.127, WARD-9, GANGA NAGAR COLONY, DEWAS WHICH FOR A CONSIDERATION IN CASH OF RS.12,31,000/- AND THIS AMOUNT WAS DEPOSITED IN DENA BANK ACCOUNT. HE FURTHER SUBMITTED THAT KAILASH CHAND JAIN HAS SHOWN THIS TR ANSACTION OF SALE OF PLOT IN HIS INCOME TAX RETURN AND THEREFORE THIS AMOUNT SHOULD NOT BE TREATED AS UNEXPLAINED. 7. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENT ATIVE VEHEMENTLY ARGUED AND SUPPORTING THE ORDER OF LOWER AUTHORITIES AND FURTHER ADDED THAT SHRI KAILASH CHAND JAIN HAS HIMSELF DENIED OF ANY SUCH TRANSACTION IN THE STATEMENT GIVEN BEFO RE THE LD. ASSESSING OFFICER. ITA NO.339/IND/2016, A.Y. 2011-12 SOURABH JAIN 4 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. IN GROUND NO.1 THE ASSESSEE HAS CHALLENGED THE ACTION OF LD.CIT(A) CONFIRMING THE ADDITION OF RS. 13,21,200/- . 9. AFTER GOING THROUGH THE SUBMISSIONS OF LD. COUNS EL AS WELL AS PERUSING THE RELATED PAGES IN THE PAPER BOOK WE FIN D THAT THE ASSESSEE HOLDS ACCOUNT WITH DENA BANK JOINTLY WITH HIS FATHER KAILASH CHAND JAIN. CASH OF RS.13,21,200/- ALLEGED TO HAVE BEEN DEPOSITED. THE PROPERTY SITUATED AT WARD NO.9, GANG A NAGAR COLONY, DEWAS OWNED AND POSSESSED BY KAILASH CHAND JAIN WAS SOLD DURING THE YEAR ON 18.11.2010. AS PER THE SALE AGREEMENT KAILASH CHAND JAIN RECEIVED SALE CONSIDERATION IN C ASH AT RS.12,31,000/-. THESE FACTS GOES UN UN-REBUTTED BY THE REVENUE AUTHORITIES. FURTHER KAILASH CHAND JAIN HAS VERIFIE D ALL THESE DETAILS INCLUDING SALE OF PLOT OF LAND ON THE AFFID AVIT FILED BEFORE THE LOWER AUTHORITIES. WE THEREFORE UNDER THE GIVEN FAC TS AND CIRCUMSTANCES OF THE CASE ARE OF THE VIEW THAT OUT OF TOTAL CASH DEPOSITED OF RS.13,21,200/- WE ARE SATISFIED WITH T HE EXPLANATION FOR DEPOSITING CASH OF RS.12,31,000/- WHICH THE AS SESSEES FATHER RECEIVED FROM SALE OF PLOT OF LAND. THE REMAINING AMOUNT I.E RS.90,200/- (RS.13,21,200/- (-) RS.12,31,000/-), IN OUR VIEW IS ALSO DEEMED TO THE PART OF GROSS TURN OVER OF RS.7,20,00 0/- SHOWN BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT ATTACHE D WITH THE INCOME TAX RETURN. WE THEREFORE DELETE THE ADDITIO N OF RS.13,21,200/- AND ALLOWED GROUND NO.1 OF THE ASSES SEE. ITA NO.339/IND/2016, A.Y. 2011-12 SOURABH JAIN 5 10. NOW WE TAKE UP GROUND NO.2 AND 3. 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) FURTHER ERRED IN MAKING ADDITION OF TOTAL DEPOSIT MADE IN OTHER TWO ACCOUNTS (AXIS BANK RS.61,38,545/-) WHICH PERTAINS TO CONSTRUCTION & BILL DISCOUNTING ACTIVITIES OF THE ASSESSEE AND INCOME OF WHICH IS O FFERED IN INCOME TAX RETURN, ASSESSED HAS PRODUCED ALL NECESSARY EVIDENC ES BEFORE A.O AND IS ON RECORD. 3. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE T HE LD.CIT(A) HAS NOT DECIDED UPON LEGAL OBJECTION ON APPLICABILITY OF SE C. 68 IN THIS MATTER. 11. THE LD. COUNSEL FOR THE ASSESSEE ARGUING ON THE LEGALITY OF THE APPLICABILITY OF SECTION 68 OF THE ACT ON THE ALLEG ED CASH DEPOSITS OF RS.61,38,545/- IN THE AXIS BANK PLEADED THAT THE AS SESSEE IS NOT MAINTAINING ANY REGULAR BOOKS OF ACCOUNTS THEREFORE SECTION 68 IS NOT APPLICABLE. FURTHER ON MERITS IT WAS PLEADED THAT THE ALLEGED CASH DEPOSITS ARE PART OF THE BUSINESS RECEIPTS AS CONTRACTOR AND BILL DISCOUNTING. HE FURTHER SUBMITTED THAT THE LD .A.O SHOULD HAVE CALCULATED THE PEAK CREDIT OF THE CASH IN HAND WIT H THE ASSESSEE RATHER THAN ADDING THE TOTAL AMOUNT OF CASH DEPOSIT ED. 12. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESEN TATIVE SUBMITTED THAT THE ASSESSEE HAS NOT BEEN ABLE TO PR OVE THAT THE ALLEGED CASH DEPOSITS ARE ON ACCOUNT OF BUSINESS RE CEIPTS OR IN THE ALTERNATIVE THE SAME CASH HAS BEEN WITHDRAWN AND DE POSITED AND THEREFORE NO BENEFIT OF PEAK CREDIT SHOULD BE ALLOW ED. 13. WE HAVE HEARD RIVAL CONTENTION AND PERUSED THE RECORDS PLACED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT CAS H OF RS.61,38,545/- WAS DEPOSITED IN TWO BANK ACCOUNTS H ELD WITH AXIS BANK OUT OF WHICH ONE WAS JOINTLY OWNED WITH HIS FA THER KAILASH ITA NO.339/IND/2016, A.Y. 2011-12 SOURABH JAIN 6 CHAND JAIN AND ANOTHER HELD WITH SONAL JAIN. BEFOR E LD. CIT(A) IT WAS ACCEPTED ON BEHALF OF THE ASSESSEE THAT RS.61,3 8,545/- (RS.43,69,845/- (+) RS.17,68,700/-) VERY MUCH PERTA INS TO ASSESSEE ONLY AND THEY WERE RECEIVED ON ACCOUNT OF CONSTRUC TION ACTIVITIES AND BILL DISCOUNTING ACTIVITIES. WE ALSO FIND THAT THE ASSESSEE HAS FILED CASH FLOW STATEMENT WHICH IS ACTUALLY THE CAS H BOOK WHEREIN IT HAS SHOWN OPENING CASH BALANCE OF RS.3,59,707.83, W HICH HOWEVER HAS NO BASIS AND FURTHER IN THIS CASH BOOK INFLOW A ND OUTFLOW OF CASH HAS BEEN SHOWN. 14. FURTHER IT WAS ALSO NOT DISPUTED BY THE REVENUE AUTHORITIES THAT THE ASSESSEE IS DOING THE BUSINESS OF CONSTRUCTION ACTIVITIES AS WELL AS BILL DISCOUNTING BECAUSE THE INCOME SHOWN IN THE INCOME TAX RETURN HAS BEEN ACCEPTED BY THE ASSESSING OFFICER A PART FROM THE ADDITIONS MADE. ASSESSEE IS ALSO AGREEING THAT THE SE ARE BUSINESS RECEIPTS. THE REVENUE HAS ALSO BEEN UNABLE TO LAY HANDS ON EVIDENCE OR DOCUMENTS ABOUT ANY UNDISCLOSED ASSETS OWNED BY THE ASSESSEE WHICH CAN SHOW THAT THE ALLEGED TOTAL CASH DEPOSITS OF RS.61,38,545/- BEING UNACCOUNTED INCOME HAS BEEN IN VESTED THEREON. 15. WE THEREFORE ARE OF THE CONSIDERED VIEW THAT TH E ALLEGED CASH DEPOSITS OF RS.61,38,545/- SHOULD BE TREATED AS A P ART OF BUSINESS RECEIPT OF THE ASSESSEE ONLY. CERTAINLY ONLY THE P ROFIT ELEMENT EMBEDDED IN SUCH BUSINESS RECEIPT IS TO BE TAXED. W E FOR THE PURPOSE OF ESTIMATING INCOME, REFERRED TO THE PROFI T AND LOSS ACCOUNT PREPARED BY THE ASSESSEE IN THE FINANCIAL Y EAR 2010-11 ITA NO.339/IND/2016, A.Y. 2011-12 SOURABH JAIN 7 WHEREIN NET PROFIT @28% HAS BEEN DISCLOSED ON THE G ROSS CONSTRUCTION RECEIPTS. WE HOWEVER TAKING A LENIENT VIEW ACCEPTING POSSIBILITY THAT IN THE ALLEGED CASH DEPOSITS, THER E MAY BE SOME AMOUNT PERTAINING TO CAPITAL RECEIPT OR ADVANCE OR OTHERWISE FIND IT JUSTIFIED TO APPLY A NET PROFIT RATE OF 20% ON THE ALLEGED CASH DEPOSITS OF RS.61,38,545/- WHICH WILL WORK OUT INCO ME OF RS.12,27,709/-. WE ACCORDINGLY DO SO AND PARTLY ALL OW THE ASSESSEES GROUND NO.2 BY DELETING ADDITION OF RS.4 9,10,836/- AND SUSTAINING THE REMAINING AMOUNT OF RS.12,27,709/-. THIS GROUND OF ASSESSEES APPEAL IS PARTLY ALLOWED. 16. AS FAR AS GROUND NO.3, CHALLENGING THE LEGALITY OF APPLICABILITY OF SECTION 68 OF THE ACT ON THE ALLEGED CASH DEPOS IT IS CONCERNED WE FIND THAT THIS GROUND IS DEVOID OF ANY MERIT BECAUS E THE ASSESSEE HAS HIMSELF PREPARED CASH BOOK, PROFIT AND LOSS ACC OUNT AND BALANCE SHEET WHICH ITSELF FORMS THE PART AND PARCE L OF REGULAR BOOK OF ACCOUNTS BEING MAINTAINED BY THE ASSESSEE AND TH EREFORE THIS GROUND OF APPEAL IS DISMISSED. 17. GROUND NO.4 IS CONSEQUENTIAL AND GROUND NO.5 IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 18. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.01.201 8. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 16 TH JANUARY, 2018 ITA NO.339/IND/2016, A.Y. 2011-12 SOURABH JAIN 8 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE ITA NO.339/IND/2016, A.Y. 2011-12 SOURABH JAIN 9 1. DATE OF DICTATION : 12/01/2018 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER : 15/01/2018 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR.P.S./P .S: 15.1.2018 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT: 15.1.2018 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.: 16.1.2018 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 16. 1.2018 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK:17.1. 18 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISSTANT R EGISTRAR FOR SIGNATURE OF THE ORDER. 9. DATE OF DESPATCH OF THE ORDER: