Savinder Singh, Kurukshetra V. ITO, Kurukshetra

ITA 343/CHANDI/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5019 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 21-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: K R CHHABRA
• Keywords: Unexplained investment; Peak credit; Additional evidence
• Section: 144

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.343/CHD/2017 (ASSESSMENT YEAR : 2011-12) SAVINDER SINGH, VS. THE INCOME TAX OFFICER, 253/2, MASITA HOUSE, WARD-1, THANEAR, KURUKSHETRA. KURUKSHETRA. PAN: BCRPS8345G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.R. CHHABRA RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 18.04.2017 DATE OF PRONOUNCEMENT : 13.07.2017 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 RELATING TO ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. ORDER PASSED BY LND . CIT (A) IS ILLEGAL, ARBIT RARY AND BAD IN LAW. 2. ON FACTS AND IN CIRCUMSTANCES OF THE CASE LND. C IT (A) WAS NOT JUSTIFIED IN CO CONFIRMING THE ADDITION OF RS.20000 0/- ON ACCOUNT OF DEPOSIT MADE IN BANK. 3. ON FACTS AND IN CIRCUMSTANCES OF THE CASE LND. C IT (A) WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.840750- ON ACCOU NT OF ESTIMATED 15% PROFIT ON THE TOTAL TURNOVER OF RS.5605000/- WH EN THE ASSESSED WAS NOT CARRYING ON ANY BUSINESS OR PROFES SION. 3. BRIEF FACTS LEADING TO THE AFORESAID ADDITION A RE THAT RETURN DECLARING INCOME OF RS.1,51,200/- PLUS AGRICULTURAL INCOME OF RS.4 LACS WAS FILED BY THE A SSESSEE ON 13.5.2011. SUBSEQUENTLY, ASSESSMENT PROCEEDINGS WERE 2 INITIATED BUT ON ACCOUNT OF NON-COMPLIANCE BY THE A SSESSEE TO VARIOUS NOTICES SENT TO IT, EX-PARTE ASSESSMENT U/S 144 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WA S FRAMED AND ADDITION MADE OF AN AMOUNT OF RS.56,05000/- BEI NG THE AMOUNTS FOUND DEPOSITED IN HDFC BANK ACCOUNT OF THE ASSESSEE, THE SOURCE OF WHICH REMAINED UNEXPLAINED. THE ASSESSING OFFICER TREATED THE SAME AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES AND ADDED THE SAM E TO THE INCOME OF THE ASSESSEE. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHERE THE ASSESSEE PLEADED THAT BEI NG AN ILLITERATE AGRICULTURIST MOST OF THE WORK WAS BEING LOOKED AFTER BY HIS SON WHO HAD SHIFTED TO USA FOR EMPLOYM ENT. THE ASSESSEE FURTHER SUBMITTED THAT THERE WAS DIFFI CULTY IN OPENING BANK ACCOUNT AND ALSO THAT HE WAS UNAWARE O F THE PROCEDURE OF INCOME-TAX CASES, BECAUSE OF WHICH PRO PER COMPLIANCE COULD NOT BE MADE DURING ASSESSMENT. ADDITIONAL EVIDENCES WERE FILED DURING APPELLATE PR OCEEDINGS WHICH WERE REQUESTED BY THE ASSESSEE TO BE ADMITTED FOR THE AFORESAID REASONS. THE LD.CIT(APPEALS) SENT THE AD DITIONAL EVIDENCES TO THE ASSESSING OFFICER FOR HIS COMMENTS WHO OBJECTED TO THE ADMISSION OF THE SAME SAYING THAT A DEQUATE OPPORTUNITY HAD BEEN AFFORDED DURING ASSESSMENT PROCEEDINGS WHICH THE ASSESSEE HAD NOT AVAILED OF. THE ASSESSING OFFICER ALSO STATED IN HIS REPORT THAT TH E ASSESSEE IS ATTRIBUTING THE AMOUNTS DEPOSITED IN HIS BANK AC COUNT TO LAND SOLD IN THE PRECEDING YEAR WHICH IS ONLY A MAD E UP 3 STORY SINCE NO PRUDENT PERSON WOULD RETAIN CASH FOR SUCH A LONG PERIOD. ASSESSING OFFICERS REPORT WAS FORWAR DED TO THE LD. AR OF THE ASSESSEE FOR HIS COMMENTS WHO STATED THAT THE ASSESSING OFFICER HAD ERRED IN MAKING ADDITION OF T HE ENTIRE CASH DEPOSITS WITHOUT TAKING INTO CONSIDERATION THE FACT THAT THE WITHDRAWALS WERE ALSO MADE FORM THE SAME B ANK ACCOUNT. THE ASSESSEE SUBMITTED THAT IT WAS OUT OF HIS SALE PROCEEDS OF LAND AND THE AMOUNTS WITHDRAWN EARLIER THAT THE DEPOSITS WERE MADE. THE ASSESSEE ALSO SUBMITTE D THAT IT HAD NO OTHER BUSINESS OR PROFESSION AND HIS ONLY INCOME WAS HOUSE PROPERTY AND AGRICULTURAL INCOME. THE LD.CIT(APPEALS) AFTER CONSIDERING THE ASSESSEES SUBMISSIONS OBSERVED THAT THE ASSESSEE HAD SOLD LAN D FOR A SUM OF RS.99,10,000/- ON 4.6.2009 VIDE TWO DOCUMENT S NO.899 AND 900. THE LD.CIT(APPEALS) ALSO NOTED THA T ON THE SAME DATE CASH DEPOSITS OF RS.74,10,000/- WAS MADE IN THE BANK ACCOUNT AND SUBSEQUENTLY THERE WAS A LARGE NUMBER OF TRANSACTIONS IN THE BANK ACCOUNT WHICH INDICATED THAT IT WAS NOT POSSIBLE TO DIRECTLY LINK THE CASH AVAILABLE ON THE SALE OF AGRICULTURAL LAND TO THE A MOUNT OF CASH DEPOSITED DURING THE YEAR. THE LD.CIT(APPEALS ) THEREAFTER HELD THAT THERE IS POSSIBILITY THAT SOME CASH WAS AVAILABLE WITH THE ASSESSEE ON ACCOUNT OF LARGE NUM BER OF TRANSACTIONS MADE DURING THIS PERIOD BUT THE EXACT AMOUNT CANNOT BE DETERMINED. HE THEREAFTER ACCEPTED THE ARGUMENTS OF THE ASSESSEE TO CONSIDER SOME AVAILABI LITY OF CASH TO JUSTIFY THE CASH DEPOSITS. THEREAFTER THE LD.CIT(APPEALS) HELD THAT AFTER ANALYZING THE BANK 4 ACCOUNTS, IT APPEARS THAT THE ASSESSEE HAD UTILIZED HIS FUNDS FOR CARRYING OUT SOME BUSINESS ACTIVITY AND I T WOULD BE FAIR TO ESTIMATE PROFIT ELEMENT OF THE SAME @ 1 5% ON THE TOTAL TURNOVER OF RS.56,05,000/-. HE, THEREFORE, E STIMATED THE PROFIT EARNED FROM UNDISCLOSED BUSINESS TURNOVE R OF RS.8,40,750/-. THE LD.CIT(APPEALS) FURTHER CONSIDE RED THE INVESTMENT OF 10% OF THE TOTAL TURNOVER AS UNDISCLO SED INVESTMENT CALCULATING IT TO BE RS.5,60,500/-. HOW EVER, CONSIDERING THE AVAILABILITY OF CASH IN VIEW OF SAL E OF AGRICULTURAL LAND NOT FULLY DEPOSITED IN THE BANK A ND THE OPENING CAPITAL AVAILABLE WITH THE ASSESSEE, THE LD.CIT(APPEALS) ESTIMATED THE TOTAL INVESTMENT AT R S.2 LACS. HE, THEREFORE, RESTRICTED THE ADDITION MADE OF RS.10,40,750/- (RS.8,40,750 + RS.2,00,000/-). 5. AGGRIEVED BY THE SAME, THE ASSESSEE HAS NOW COME UP IN APPEAL BEFORE US. THE LD. COUNSEL FOR A SSESSEE DURING THE COURSE OF ARGUMENTS BEFORE US REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES THAT THE ENTIRE CREDIT IN THE BANK ACCOUNT OF THE ASSESSEE W AS SOURCED FROM THE AMOUNT GATHERED FROM SALE OF AGRIC ULTURAL LAND BY THE ASSESSEE AND FROM SUMS WITHDRAWN FROM B ANK IN CASH EARLIER. THE LD. COUNSEL FOR ASSESSEE SUBM ITTED THAT THERE WAS FREQUENT WITHDRAWALS FROM THE BANK O F THE ASSESSEE AND PEAK DEPOSITS NEVER EXCEEDED THE CAPIT AL OF THE ASSESSEE. THEREFORE, THE LD. COUNSEL FOR ASSES SEE STATED THAT THERE WAS NO GROUND FOR MAKING ADDITION FOR UNEXPLAINED INVESTMENT AND ON ACCOUNT OF PROFITS 5 ESTIMATED. THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT THE ASSESSEE WAS NOT CARRYING ON ANY BUSINESS OR PROFES SION AND HIS ONLY SOURCE OF INCOME WAS HOUSE PROPERTY AN D AGRICULTURAL INCOME. NO BOOKS OF ACCOUNT WERE ALSO MAINTAINED BY THE ASSESSEE, THE LD. COUNSEL FOR ASS ESSEE CONTENDED. 6. THE LD. DR, ON THE OTHER HAND RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E ORDERS OF THE AUTHORITIES BELOW AND GONE THROUGH TH E DOCUMENTS PLACED BEFORE US. THE ASSESSEE, WE FIND, HAD DEPOSITED A SUM OF RS.56,05,000/- IN CASH IN HIS BA NK ACCOUNT IN HDFC DURING THE YEAR, WHICH THE ASSESSIN G OFFICER ADDED BACK TO THE INCOME OF THE ASSESSEE SI NCE THE SOURCE OF THE SAME REMAINED UNEXPLAINED. THE LD.CIT(APPEALS), ON THE OTHER HAND, HELD THAT THE D EPOSITS WERE ON ACCOUNT OF SOME BUSINESS BEING CARRIED ON B Y THE ASSESSEE AND HE ESTIMATED THE NET PROFIT EARNED ON THE SAID BUSINESS AND THE INVESTMENT MADE BY HIM ON THE SAID BUSINESS AND WORKED OUT THE ADDITION TO BE MADE AT RS.10,40,750/-. 8. THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE BEFORE US IS THAT THE ASSESSEE IS NOT CARRYING ON A NY BUSINESS OR PROFESSION AND, THEREFORE, THE FINDING OF THE LD.CIT(APPEALS) IS INCORRECT TO THAT EXTENT AND THE ADDITION MADE ON ACCOUNT OF ESTIMATION OF NET PROFIT AND UND ISCLOSED INVESTMENT IN THE BUSINESS AMOUNTING IN ALL TO 6 RS.10,40,750/- WAS INCORRECT. FURTHER THE LD. COUN SEL FOR ASSESSEE HAS PLEADED THAT THE ENTIRE DEPOSITS IN TH E BANK ACCOUNT STAND EXPLAINED ON ACCOUNT OF THE LAND SOLD IN THE PRECEDING YEAR AND ON ACCOUNT OF HIS SAVINGS FROM AGRICULTURAL INCOME AND WITHDRAWALS MADE FROM THE S AID BANK ACCOUNT. THE CONTENTION OF THE LD. COUNSEL FO R ASSESSEE WAS THAT IF THE PEAK CREDIT WAS WORKED OUT , IT WOULD COME TO BE LESS THAN THE OPENING CAPITAL OF T HE ASSESSEE AND THUS NO ADDITION WAS WARRANTED IN THE PRESENT CASE. 9. WE FIND MERIT IN THE CONTENTIONS RAISED BY THE LD. COUNSEL FOR THE ASSESSEE. IT IS NOT DISPUTED THAT THE ONLY INCOME DECLARED BY THE ASSESSEE IN HIS RETURN OF I NCOME WAS INCOME FROM HOUSE PROPERTY AND AGRICULTURAL INC OME. THERE IS NO FINDING, EITHER IN THE ASSESSMENT ORDER OR THE CIT (APPEALS) ORDER, TO THE EFFECT THAT THE ASSESSE E WAS CARRYING ON ANY BUSINESS OF ANY SORT. IN SUCH CIRCU MSTANCES WE ARE UNABLE TO UNDERSTAND AS TO HOW THE LEARNED C IT (APPEALS) ARRIVED AT THE CONCLUSION THAT THE CASH D EPOSITED IN THE BANK ACCOUNT WAS ATTRIBUTABLE TO SOME ACTIVI TY CARRIED OUT BY THE ASSESSEE. THE LEARNED CIT (APPE ALS) HAD SIMPLY STATED THAT AFTER ANALYZING THE BANK ACCOUNT IT APPEARS THAT THE ASSESSEE HAS UTILIZED HIS FUNDS FO R CARRYING OUT SOME BUSINESS ACTIVITIES. IT HAS NOT EVEN BEEN CLARIFIED BY THE LEARNED CIT (APPEALS) AS TO HOW TH E TRANSACTIONS IN THE BANK ACCOUNT LED TO SUCH A CONC LUSION. WE HAVE PERUSED THE COPY OF THE BANK ACCOUNT PLACED BEFORE 7 US AND FIND THAT THE TRANSACTIONS REFLECTED IN THE SAME PERTAIN TO CASH DEPOSITS MADE ON VARIOUS OCCASIONS AND WITHDRAWALS OF THE SAME BY CHEQUE OR FUNDS TRANSFER RED. WE FAIL TO UNDERSTAND AS TO HOW THESE TRANSACTIONS ARE A POINTER TO THE FACT THAT THE ASSESSEE WAS CARRYING ON SOME BUSINESS ACTIVITY SPECIALLY WHEN THERE IS NO BACKGR OUND OF THE ASSESSEE HAVING EVER CARRIED OUT ANY BUSINESS A CTIVITY BROUGHT TO LIGHT BY REVENUE AUTHORITIES. EVEN THE LEARNED D.R. COULD NOT THROW ANY LIGHT ON THIS ANALYSIS CAR RIED OUT BY THE LEARNED CIT (APPEALS). IN VIEW OF THE SAME, WE DO NOT AGREE WITH THE LEARNED CIT (APPEALS) THAT THE A SSESSEE WAS CARRYING ON ANY BUSINESS ACTIVITY TO WHICH THE CASH DEPOSITS ARE ATTRIBUTABLE AND, THEREFORE, THE ESTIM ATION OF NET PROFIT ON THE SAME AND AMOUNTING TO RS.8,40,750 /- AND UNDISCLOSED INVESTMENT IN THE BUSINESS ACTIVITY EST IMATED AT RS.2 LACS IS DIRECTED TO BE DELETED. FURTHER WE FIND THAT THE LEARNED CIT (APPEALS) HAD RELIED UPON THE FOLLO WING TWO DECISION OF THE I.T.A.T. IN SUPPORT OF HIS ABOVE FI NDINGS: I) ITO VS. RAJEEV KUMAR IN ITA NO.454(ASR)/2014 DATED 23.3.2016. II) ITO VS. PARMOD MITTAL IN ITA NO.704/CHD/2013 10. THE RELIANCE PLACED BY THE LEARNED CIT (APPEAL S) ON THE AFORESAID DECISIONS WE FIND IS TOTALLY MIS-C ONCEIVED. IN BOTH THE CASES, THE ASSESSEES WERE ENGAGED IN SO ME BUSINESS ACTIVITY AND, THEREFORE, THE CASH CREDITED IN THE BANK ACCOUNT WAS ATTRIBUTED TO THEIR BUSINESS ACTIV ITIES AND NET PROFIT AND ADDITION MADE BY ESTIMATING THE NET PROFIT ON THE SAME. IN THE PRESENT CASE SINCE THERE IS NO FI NDING OF 8 ANY BUSINESS ACTIVITY BEING CARRIED ON BY THE ASSES SEE, THEREFORE THE DECISIONS RENDERED BY THE I.T.A.T. IN THE ABOVE TWO CASES WILL NOT APPLY TO THE PRESENT CASE. IN V IEW OF THE ABOVE, THE ADDITION MADE ON ACCOUNT OF ESTIMATED NE T PROFIT AND INVESTMENT AMOUNTING TO RS.10,40,750/- IS DIREC TED TO BE DELETED. 11. FURTHER WE FIND THAT THE LEARNED CIT (APPEALS) HAS NOT UPHELD THE ADDITION MADE BY THE ASSESSING O FFICER BY HOLDING THE CASH DEPOSITED IN THE BANK AS UNEXPL AINED. IN FACT, THE LEARNED CIT (APPEALS) HELD THAT THE CA SH DEPOSITED CAN BE ATTRIBUTED TO THE CASH AVAILABLE W ITH THE ASSESSEE ON ACCOUNT OF SALE OF LAND IN THE PRECEDIN G YEAR BUT HAS HELD THAT SINCE THE ASSESSEE IS NOT MAINTAI NING ANY PROPER BOOKS OF ACCOUNT THE EXACT AMOUNT CANNOT BE DETERMINED. HE, THEREFORE, PARTLY ACCEPTED THE AVA ILABILITY OF CASH TO JUSTIFY THE CASH DEPOSITS. BUT THEREAFT ER HE MADE NO ADDITION ON ACCOUNT OF THE SAME BUT UPHELD THE A DDITION FOR A DIFFERENT REASON AS STATED ABOVE BY HOLDING T HE CASH DEPOSITS TO BE ON ACCOUNT OF SOME BUSINESS ACTIVITI ES CARRIED OUT BY THE ASSESSEE AND ESTIMATING A NET PR OFIT THEREOF AND MADE ADDITION ON THE SAME. SINCE WE HA VE ALREADY HELD THAT THE CASH DEPOSITS CANNOT BE ATTRI BUTED TO ANY BUSINESS ACTIVITY CARRIED OUT BY THE ASSESSEE A ND ADDITION MADE ON ACCOUNT OF THE SAME HAS BEEN DIREC TED TO BE DELETED. GROUNDS OF APPEAL NO2 & 3 RAISED BY TH E ASSESSEE ARE ALLOWED. 9 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS, THEREFORE, ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13 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