Buta Singh S/o Sh. Harpal Singh, Pehowa V. ITO, Kurukshetra

ITA 342/CHANDI/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5066 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 21-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: K R CHHABRA
• Keywords: Business income; Peak credit; Source of fund
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.342/CHD/2017 (ASSESSMENT YEAR : 2011-12) BUTA SINGH S/O SH.HARPAL SINGH, VS. THE I.T.O., DIWAN COLONY, GALI NO.3, WARD-1, (TEHSIL KE PASS), GULDHERA ROAD, KURUKSHETRA. PEHOWA. PAN: AYXPS1711M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.R. CHHABRA RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 18.04.2017 DATE OF PRONOUNCEMENT : 12.07.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF CIT(APPEALS), KARNAL DATED 5.12.2016 R ELATING TO ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. ORDER PASSED BY LD . CIT (A) IS ILLEGAL, ARBI TRARY AND BAD IN LAW. 2. ON FACTS AND IN CIRCUMSTANCES OF THE CASE LD. C IT (A) WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.711000/- ON ACCO UNT OF NEGATIVE PEAK BALANCE. 3. ON FACTS AND IN CIRCUMSTANCES OF THE CASE LND. CIT (A) WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.677400/- ON ACCO UNT OF NET PROFIT FROM COMMISSION FROM PROPERTY DEALING . 3. BRIEF FACTS OF THE CASE ARE THAT DURING ASSESSM ENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT TH ERE WERE CASH DEPOSITS TO THE EXTENT OF RS.67,74,000/- IN HD FC BANK 2 ACCOUNT OF THE ASSESSEE. THE ASSESSEE WAS GIVEN VA RIOUS OPPORTUNITIES TO EXPLAIN THE SOURCE OF THESE DEPOSI TS BUT NO EXPLANATION WAS PROVIDED. THE ASSESSING OFFICER, T HEREFORE, ADDED THE ENTIRE CASH DEPOSITS OF RS.67,74,000 TO T HE INCOME OF THE ASSESSEE TREATING THE SAME AS UNEXPLA INED. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHERE THE ASSESSEE SUBMITTED THAT T HE CASH DEPOSITS WERE ATTRIBUTED TO CASH WITHDRAWALS MADE F ROM THE SAME ACCOUNT. THE ASSESSEE PREPARED A CASH FLOW STATEMENT EXPLAINING THE SOURCE OF CASH DEPOSITS TO BE ORIGINATING FROM THE CASH WITHDRAWN FROM THE BANK, FROM AGRICULTURAL INCOME, FROM BUSINESS INCOME AND CUSTO MER ADVANCE RECEIVED. THE CHART FILED BY THE ASSESSEE REPRODUCED AT PARA 4 OF THE CIT(APPEALS)S ORDER IS AS UNDER: 04.5.2010 AGRICULTURAL INCOME 2,00,000/- 24.6.2010 CUSTOMER ADVANCE 2,50,000 03 TO 08.11.2010 BUSINESS INCOME 1,00,000 BALANCE WITHDRAWALS FROM THE SAME BANK DURING THE YEAR: 62,24,000 TOTAL CASH DEPOSITS 67,74,000 5. THE SUBMISSIONS OF THE ASSESSEE WAS SENT TO THE ASSESSING OFFICER FOR HIS COMMENTS WHO STATED THAT THE ASSESSEES CONTENTION OF THE DEPOSITS BEING ATTRIBU TABLE TO WITHDRAWALS AND VARIOUS SOURCES OF INCOME WAS NOT ACCEPTABLE. THE ASSESSING OFFICER POINTED OUT THAT WHILE THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME FOR THE WHOL E YEAR OF RS.1,80,000/- THE DEPOSITS ATTRIBUTABLE TO THE SAME HAD 3 BEEN SHOWN AS RS.2 LACS. THE ASSESSING OFFICER ALS O POINTED OUT THAT THE ASSESSEE HAD SHOWN THE ENTIRE AGRICULTURAL INCOME AT THE BEGINNING OF THE YEAR ON LY. THEREFORE THE DEPOSITS ATTRIBUTABLE TO AGRICULTURAL INCOME WERE NOT ACCEPTED BY THE ASSESSING OFFICER . THE B USINESS INCOME OF RS.1 LAC WAS ALSO NOT ACCEPTED BY THE ASS ESSING OFFICER BECAUSE IT WAS NOT A REAL FIGURE AVAILABLE IN CASH. FURTHER SINCE NO PROOF OF ADVANCE RECEIVED FROM CUS TOMER WAS FILED, THE DEPOSITS OF RS.2,50,000 ATTRIBUTABLE TO THE SAME WAS ALSO NOT ACCEPTED. AS FOR THE DEPOSITS ATTRIBUTABLE TO WITHDRAWALS MADE FROM BANK, THE ASS ESSING OFFICER STATED THAT THERE WAS NOTHING ON RECORD TO PROVE THAT THE ENTIRE WITHDRAWALS WERE DEPOSITED BACK IN THE SAME BANK ACCOUNT. THE ASSESSING OFFICER STATED THAT THE WITHDRAWALS COULD ALSO HAVE BEEN MADE FOR PERSONAL EXPENSES, INVESTMENTS AND REPAYMENTS AND, THEREFORE , THE ENTIRE WITHDRAWALS COULD NOT BE SOURCED TO THE CASH DEPOSITS MADE. THE ASSESSING OFFICER FURTHER SUBMI TTED THAT EVEN IF THE ASSESSEES PLEA WAS ACCEPTED IT WO ULD BE JUST AND REASONABLE TO WORK OUT THE PEAK OF THE NEG ATIVE CASH IN HAND VIS--VIS CASH DEPOSITS AND CALCULATED THE SAME AT RS.7,11,000/-. HE FURTHER STATED THAT THE SAME OUGHT TO BE INCREASED ON ACCOUNT OF THE WITHDRAWALS WHICH WERE NOT USED FOR DEPOSITING BACK IN THE BANK ACCOU NT. THE ASSESSEE IN RESPONSE TO ASSESSING OFFICERS REPORT REITERATED THE SUBMISSIONS MADE EARLIER. THE ASSESSEE ALSO CO NTENDED THAT THE NEGATIVE CASH WORKED OUT TO RS.7,11,000/- WAS NOT CORRECT SINCE IT HAS NOT TAKEN INTO CONSIDERATION T HE 4 AVAILABILITY OF OPENING CASH IN HAND, AGRICULTURAL INCOME, BUSINESS INCOME EARNED AND ADVANCE RECEIVED FROM CL IENTS. THE LD.CIT(APPEALS) AFTER CONSIDERING ASSESSEES SU BMISSION HELD THAT THERE WERE NO BASIS FOR ADDING THE ENTIR E CASH DEPOSITS TO THE INCOME OF THE ASSESSEE. THE LD.CIT (APPEALS) HELD THAT ON THE ISSUE OF UNEXPLAINED CASH DEPOSITS THERE WERE VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THOS E OF I.T.A.T. WHEREIN IT HAD BEEN HELD THAT THE TOTAL DE POSITS COULD BE CONSIDERED AS TOTAL TURN OVER AND PROFIT R ATE BE APPLIED ON THE SAME FOR ARRIVING AT THE UNDISCLOSED INCOME AND ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENTS COULD ALSO BE MADE. THE LD.CIT(APPEALS) RELIED UPON THE F OLLOWING CASE LAWS: I) ITO VS. RAJEEV KUMAR IN ITA NO.454(ASR)/2014 DATED 23.03.2016 (G.P. + INVESTMENT). II) SMT. SURJIT KAUR IN ITA NO.1184/CHD/2011 DATED 15.02.2012 (ONLY PEAK AMOUNT SHOULD BE ADDED) . III) PARMOD MITTAL IN ITA NO. 704/CHD/2013 (TOTAL DEPOSITS CONSIDERED AS TURNOVER AND G.P. ADDITION TO BE MADE). IV) RAJEEV KHURANA VS. ITO IN ITA NO. 2906 DEL/2013 (PEAK TO BE TAKEN). V) SURESH SINGHAL VS. JCIT IN ITA NO. 40/CHD/2011 (PEA K TO BE TAKEN) VI) CIT VS. SUNDAR PAL ANAND 242 CTR P&R) 192 TAXMAN (PEAK TO BE TAKEN). 6. THEREAFTER LD.CIT (APPEALS) WORKED THE UNDISCLOSED INVESTMENT MADE BY THE ASSESSEE AT RS.7,11,000/- BEING THE NEGATIVE PEAK BALANCE REPOR TED BY THE ASSESSING OFFICER AND ADDED TO IT THE NET PROFI T CALCULATED ON THE TOTAL DEPOSITS MADE IN THE BANK A CCOUNT @ 5 10% AMOUNTING TO RS.6,77,400/-,THEREBY UPHOLDING T OTAL ADDITION OF RS.13,88,400/-. 7. AGGRIEVED BY THE SAME, THE ASSESSEE HAS FILED T HE PRESENT APPEAL BEFORE US. DURING THE COURSE OF HEA RING BEFORE US, THE LD. COUNSEL FOR ASSESSEE FILED GIST OF HIS ARGUMENTS IN WRITING VIDE SUBMISSIONS DATED 10/04/1 7 AND BORROWING FROM THEM ARGUED THAT THE ENTIRE CASH DEP OSITS HAVE BEEN MADE FROM, THE AGRICULTURAL INCOME, THE B USINESS INCOME AND THE CASH WITHDRAWALS AS SUBMITTED IN THE DETAIL FILED TO THE LD.CIT(APPEALS). ALTERNATIVELY, THE L D. COUNSEL FOR ASSESSEE SUBMITTED THAT IN ANY CASE, ADDITION C OULD HAVE BEEN MADE ONLY OF THE PEAK CREDIT BALANCE WHIC H WORKED OUT TO BE NIL IN THE PRESENT CASE. THE LD. COUNSEL FOR ASSESSEE, THEREFORE, STATED THAT NO ADDITION WA S WARRANTED IN THE PRESENT CASE. . 8. THE LD. DR, ON THE OTHER HAND SUPPORTED THE ORDER OF THE LD.CIT(APPEALS) AND STATED THAT IT IS AN ADMITTED FACT THAT THE ASSESSEE WAS EARNING COMMISS ION INCOME FROM PROPERTY DEALING. THE NATURE OF TRANSA CTION IN THE BANK ACCOUNTS SHOWING FREQUENT DEPOSITS AND WITHDRAWALS WERE, THEREFORE, ATTRIBUTABLE TO THIS L INE OF BUSINESS ONLY AND THE NET PROFIT ADDITION MADE BY T HE CIT(APPEALS) ON THE TOTAL DEPOSITS RECEIVED WAS, TH EREFORE, CORRECT. THE LD. DR ALSO SUPPORTED THE ADDITION MA DE ON ACCOUNT OF NEGATIVE CASH BALANCE AMOUNTING TO RS.7,11,000/- STATING THAT NO PLAUSIBLE EXPLANATION HAD BEEN GIVEN BY THE ASSESSEE FOR THE SAID NEGATIVE CA SH 6 BALANCE AND, THEREFORE, THE LD.CIT(APPEALS) HAD RIG HTLY MADE ADDITION ON ACCOUNT OF THE SAME. 9. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTI ES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND ALSO THE DOCUMENTS PLACED BEFORE US. THE ADDITIONS BEIN G CONTESTED BEFORE US ARE PRIMARILY AS FOLLOWS: A) RS,7,11,000/- ON ACCOUNT OF NEGATIVE PEAK BALANCE B) RS.6,77,400/- ON ACCOUNT OF NET PROFIT FROM COMMISSION FROM PROPERTY DEALING. 10. AS REGARDS ADDITION OF RS.6,77,400/- WE FIND T HAT THE LD.COUNSEL FOR THE ASSESSEE HAD HIMSELF ADMITTE D IN HIS WRITTEN ARGUMENTS FILED BEFORE US THAT THE DEPOSITS IN THE BANK ACCOUNT WERE ATTRIBUTABLE TO THE ASSESSEES PRO PERTY DEALING BUSINESS. THE RELEVANT SUBMISSIONS OF THE LD.COUNSEL ARE AS UNDER: THAT ASSESSEE IS AN AGRICULTURIST AND ALSO CARRYING ON THE BUSINESS OF PROPERTY DEALER DERIVING INCOME FROM COMMISSION ON SALE OF PROPERTIES OF HIS CLIENTS. IN ORDER TO HAVE BETTER BARGAIN THE CLIENTS SOME TIME GAVE ADVA NCE MONEY TO THE ASSESSEE FOR ENTERING THE AGREEMENT TO SELL WITH THE SELLERS. THIS IS THE TRUST MONEY KEPT BY THE ASSE SSEE ON BEHALF OF HIS CLIENTS. IN ORDER TO PROVIDE SAFE CUSTO DY THIS AMOUNT WERE DEPOSITED IN THE BANK ACCOUNT OF THE ASS ESSEE WHICH WERE LATER WITHDRAWN AND EITHER PAID TO THE SELL ER IN CASE THE MATURED OR OTHERWISE IT WAS REFUNDED TO THE PROSPECTIVE BUYER 11. IN VIEW OF THE ABOVE ADMITTANCE BY THE LD.COUN SEL FOR THE ASSESSEE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) IN MAKING ADDITION ON ACCOUNT OF COMMISS ION EARNED BY THE ASSESSEE ON THE TOTAL DEPOSITS MADE T REATING THE SAME AS THE TRANSACTIONS EXECUTED BY THE ASSESS EE IN THE COURSE OF HIS BUSINESS. MOREOVER WE FIND THAT I T IS NOT 7 THE CASE OF THE ASSESSEE THAT INCOME ON ACCOUNT OF THE SAID TRANSACTIONS HAS ALREADY BEEN RETURNED OR THAT THE DEALS IN RESPECT OF THE AMOUNTS DEPOSITED HAD NOT MATURED RE SULTING IN NO COMMISSION BEING EARNED. THEREFORE THE ENTIRE DEPOSITS ARE TO BE TREATED AS ON ACCOUNT OF BUSINES S OF PROPERTY DEALING CARRIED ON, ON WHICH COMMISSION WA S EARNED. THE LD.CIT(A) HAS ,WE HOLD, RIGHTLY RELIED ON THE DECISIONS OF THE CO-ORDINATE BENCH OF THE ITAT WHER EIN ON IDENTICAL SET OF FACTS ADDITION MADE OF PROFITS EAR NED BY TREATING THE CASH DEPOSITS IN THE BANK AS THE BUSIN ESS RECEIPTS OF THE ASSESSEE WAS UPHELD. THE ADDITION MADE ON ACCOUNT OF NET PROFIT FROM COMMISSION FROM PROPERTY DEALING AMOUNTING TO RS.6,77,400/-IS THEREFORE UPHELD. AS A CONSEQUENCE GROUND NO.3 RAISED BY THE ASSESSEE IS DISMISSED. 12. AS FOR ADDITION MADE OF RS.7,11,000/- WE HOLD THAT SINCE THE ENTIRE DEPOSITS MADE IN THE BANK HAV E BEEN HELD TO BE RECEIPTS IN THE COURSE OF PROPERTY DEALI NG BUSINESS OF THE ASSESSEE, THE SOURCE OF THE SAME ST AND EXPLAINED. THERE IS NO REASON AT ALL THEREFORE TO ATTRIBUTE THE SAME TO HAVE BEEN MADE FROM CASH WITHDRAWAL AND THUS ARRIVE AT A NEGATIVE BALANCE. WE, THEREFORE, HOLD THAT NO ADDITION ON ACCOUNT OF NEGATIVE PEAK BALANCE IS WAR RANTED AND THE ADDITION SO MADE IS DIRECTED TO BE DELETED. 13. GROUND NO.2 OF THE ASSESSEES APPEAL IS, THEREF ORE, ALLOWED IN ABOVE TERMS. 8 16. IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSES SEE IS PARTLY ALLOWED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12 TH JULY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH