ITO, New Delhi V. Shri Pankaj Sharma Alias Yatinder Sharma, Delhi

ITA 3495/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6376 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 19-05-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER ITA NOS.3495 & 3496/DEL/2013 ASSESSMENT YEAR : 2005-06 ITO, WARD-34(4), ROOM NO.319-D, 3 RD FLOOR, VIKAS BHAWAN, D-BLOCK, IP ESTATE, NEW DELHI. VS. PANKAJ SHARMA ALIAS YATINDER SHARMA, C-44, MAIN ROAD, YAMUNA VIHAR, GHONDA, DELHI. PAN : AYDPS7578N ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI G.N. GUPTA, ADVOCATE DEPARTMENT BY : MS. MEENAKSHI VOHRA, SR. DR ORDER PER A.D. JAIN, JUDICIAL MEMBER: ITA NO.3495/DEL/2013 THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 2005-06, AGAINST THE ORDER DATED 26.03.2013, PASSED BY THE LD. CIT (A)-XXV II, CONTENDING THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN IGNORING THE ASSESSING OFFICERS COMMENTS FOR THE ADDITION OF ` 11,88,000/- IN HIS ORDER REGARDING NON- FURNISHING THE COMPLETE DETAILS ON ACCOUNT OF CONCEAL ED INCOME, I.E., CASH DEPOSITS INTO BANK ACCOUNT AND ACCEPTING IT AS SALE PR OCEEDS WITHOUT ANY DOCUMENTARY EVIDENCE. 2. THE FACTS ARE THAT ITS INFORMATION WAS RECEIVED IN THIS CASE ACCORDING TO WHICH, THERE WERE CASH DEPOSITS OF ` 11,88,000/- IN THE ASSESSEES BANK ACCOUNT AS ON 31.03.2005. NO RETURN OF INCOME HAD BE EN FILED BY THE ITA NO.3495 & 3496/DEL/2013 2 ASSESSEE. NOTICE U/S 142 (1) DATED 18.09.2007 WAS ISSUED TO THE ASSESSEE ASKING HIM TO FILE HIS RETURN OF INCOME BY 19.10.2007 . HOWEVER, NO SUCH RETURN OF INCOME WAS FILED. AGAIN, NOTICE U/S 142 (1) ALONG WITH SHOW CAUSE NOTICE DATED 01.11.2007 WAS ISSUED TO THE ASSESSEE ASKING H IM TO EXPLAIN THE SOURCE OF CASH DEPOSITS IN HIS BANK ACCOUNT AND TO EXPLAIN WHY THIS AMOUNT SHOULD NOT BE ADDED TO HIS INCOME AS FROM UNDISC LOSED SOURCES. NO REPLY WAS FILED TO THIS SHOW CAUSE NOTICE. THEREFORE, T HE AO MADE AN ADDITION OF ` 11,88,000/- TO THE ASSESSEES INCOME BY TREATING THESE CASH DEPOSITS AS HIS INCOME FROM UNDISCLOSED SOURCES. AS NO RETURN OF INCO ME WAS FILED IN THIS CASE, THE INCOME OF THE ASSESSEE WAS DETERMINED AT ` 11,88,000/-. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT (A) RESTRICTED THE ADDITION MADE BY THE AO FROM ` 11,88,000/- TO ` 1,77,000/-. 4. CHALLENGING THE IMPUGNED ORDER, THE LD. DR HAS CO NTENDED THAT THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION CORRECTL Y MADE BY THE AO; THAT WHILE DOING SO, THE LD. CIT (A) HAS FAILED TO TAKE I NTO CONSIDERATION THE FACT THAT IT WAS DUE TO THE REASON THAT NO REPLY WAS FURNISH ED BY THE ASSESSEE TO THE SHOW CAUSE NOTICE ISSUED U/S 142 (1) OF THE IT ACT; AND THAT THE ASSESSEE HAVING NOT FURNISHED THE DETAILS OF THE CASH DEPOSITS, THE ADDITION OUGHT TO HAVE BEEN SUSTAINED. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDE D THAT AS PATENT ON RECORD, THE ASSESSEE WAS RUNNING THE BUSINESS OF SALE OF LA DIES SAREES, SUIT FABRICS THROUGH ROAD SIDE COUNTER/WEEKLY RETAIL MARKE T; THAT SALES WERE MADE IN CASH; THAT THE CASH DEPOSITS MADE IN THE BANK ACCOU NT THROUGHOUT THE YEAR WERE OUT OF CASH SALES; THAT THE SALES/TURNOVER OF THE ASSESSEE WAS APPROXIMATELY OF ` 80,000/- TO ` 90,000/- PER MONTH; THAT THE PURCHASES WERE ALSO MADE IN CASH; THAT THE MARGIN OF PROFIT ON THE SALES WAS IN THE RANGE OF 6% TO 7%; THAT SINCE THE ASSESSEES INCOME FOR THE YEAR U NDER CONSIDERATION WAS BELOW THE TAXABLE LIMIT, NO RETURN OF INCOME WAS FILED; THAT THE AO ITA NO.3495 & 3496/DEL/2013 3 WRONGLY TREATED THE ENTIRE CASH DEPOSITED IN THE ASSESSEE S BANK ACCOUNT AS THE ASSESSEES INCOME; THAT THE AO DID THIS ON THE BASIS OF MERE ASSUMPTIONS AND INCOMPLETE INFORMATION; THAT OUT OF T HE ASSESSEES BANK PASSBOOK, AS SUMMONED BY THE AO AND NOT AVAILABLE WITH THE ASSESSEE BEING OLD, WAS INCOMPLETE; THAT IN THE CASH ACCOUNT M ADE ON THE BASIS OF BANK ACCOUNT AND PROFIT & LOSS ACCOUNT, THE NET PROFI T OF THE ASSESSEE STOOD SHOWN AT ` 69,570/-, ON A TURNOVER OF ` 9,85,870/-; THAT THE ASSESSMENT HAVING BEEN FRAMED U/S 144 OF THE ACT, THE ASSESSEE HA D FILED SUBMISSIONS ALONG WITH DOCUMENTARY EVIDENCE BEFORE THE LD. CIT (A); THAT THE LD. CIT (A) HAD FORWARDED THE SAME TO THE AO; THAT IN THE REMAND REPORT DATED 18.03.2013, THE AO HAD COMMENTED THAT THE ASSESSEE, AS P ER THE DETAILS FILED, HAD DEPOSITED HUGE AMOUNT IN HIS BANK ACCOUNT ON DIFFERENT DATES, WHEREAS REGULAR MONTHLY CASH SALES OF ` 70,000/- TO 85,000/- HAD BEEN SHOWN BY THE ASSESSEE; THAT THE BANK STATEMENT SUBMITTED B Y THE ASSESSEE WAS INCOMPLETE; THAT IT APPEARED THAT THE ASSESSEE HAD SHOWN DEPOSITS ON ESTIMATE BASIS; THAT ALSO APPEARED THAT THE ASSESSEE WAS MA INTAINING SOME CURRENT ACCOUNT DURING THE YEAR UNDER CONSIDERATION; THAT IN THE SUMMARY OF BANK TRANSACTIONS, THE ASSESSEE HAD SHOWN PERSONAL WITHDRAW ALS OF ` 21,371/- ONLY, WHICH NEEDED JUSTIFICATION; THAT AS SUC H, THE CASE REQUIRED A DEEP SCRUTINY AFTER OBTAINING COMPLETE BANK STATEMEN TS FROM THE CONCERNED BANKS AND OTHER DETAILS FROM THE ASSESSEE; AND THAT THE A PPEAL BE DECIDED ON MERITS. 6. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT IN RESPON SE TO THE AFORESAID REMAND REPORT, THE ASSESSEE HAD STATED BEFORE THE LD. CI T (A), INTER ALIA, THAT THE DEPOSIT OF ` 2,50,000/- IN THE MONTH OF JUNE, 2004 WAS OUT OF CA SH SALES OF ` 85,000/- FOR MAY, 2004 AND THE BALANCE AMOUNT OF ` 1,65,000/- WAS OUT OF CASH IN HAND WITHDRAWN FROM THE BANK ACCOUNT; THA T SO FAR AS REGARDS THE DEPOSIT OF ` 4,73,372/- IN THE MONTH OF SEPTEMBER, 2004, IT REP RESENTED CASH DEPOSITS DURING THE PERIOD FROM 1.7.04 TO 31.9.04, I. E., A PERIOD OF THREE MONTHS AND NOT OF ONE MONTH; THAT DURING THESE THREE MONTHS, THE ASSESSEE ITA NO.3495 & 3496/DEL/2013 4 HAD MADE CASH WITHDRAWALS OF ` 6,23,672/- AND HAD MADE CASH SALES OF ` 2,51,800/-; THAT APROPOS THE CREDIT ENTRY OF ` 1,07,000/-, DATED 14.10.04, THIS AMOUNT HAD BEEN TRANSFERRED TO THE ASSESSEES BANK ACCOU NT FROM THE BANK ACCOUNT OF A CUSTOMER, AGAINST THE SALE OF SAREES AND IT WAS NOT A TRANSFER FROM THE ASSESSEES CURRENT ACCOUNT, SINCE THE ASSESSEE DID N OT HAVE ANY BANK ACCOUNT OTHER THAN THE SAVINGS BANK ACCOUNT (AFF IDAVIT TO THIS EFFECT HAD BEEN FILED); THAT WITHDRAWALS OF ` 21,371/- HAD BEEN MADE FROM THE BANK ACCOUNT AND AN AMOUNT OF ` 53,400/- HAD BEEN WITHDRAWN BY THE ASSESSEE FROM HIS BUSINESS; AND THAT THUS, THE TOTAL HOUSEHOLD WI THDRAWALS OF THE ASSESSEE WERE OF ` 74,771/-, WHICH WAS SUFFICIENT FOR MEETING THE DAY- TO-DAY HOUSEHOLD EXPENSES OF THE ASSESSEES FAMILY. 7. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT THE ASSESSEES SUBMISSIONS REGARDING CASH DEPOSITS HAVING BEEN MA DE OUT OF CASH SALES HAD NOT BEEN ACCEPTED BY THE ASSESSEE FOR WANT OF BOOKS OF ACCOUNT AND RETURN OF INCOME; THAT THE ASSESSEE IS NOT I N APPEAL AGAINST SUCH ACTION OF THE LD. CIT (A); THAT THE LD. CIT (A) , HOWEVER, HAS CORRECTLY TAKEN INTO CONSIDERATION THE WITHDRAWALS MADE BY THE ASSESSEE IN CASH, FOR WHICH WITHDRAWALS, CREDIT STANDS ALLOWED TO THE ASSESSEE; THAT THE LD. CIT (A) HAS WORKED OUT THE PEAK IN ARRIVING AT THE FIGURE OF ` 1,77,000/- AND RESTRICTING THE ADDITION TO THIS AMOUNT. 8. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MAT ERIAL ON RECORD. UNDISPUTEDLY, NO RETURN OF INCOME HAD BEEN FILED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, CONTENDING THAT HIS INCOME FOR THE YEAR UNDER CONSIDERATION WAS BELOW THE TAXABLE LIMIT, BEING ` 69,570/- ON A TURNOVER OF ` 9,85,870/-. THE DETAILS OF THE CASH DEPOSITS AND WITHDR AWALS IN THE ASSESSEES SAVING BANK ACCOUNT WITH SYNDICATE BANK, YAMUN A VIHAR, DELHI, FROM AY 2005-06 AS REPRODUCED BY THE LD. CIT (A) IN THE IMPUGNED ORDER ARE AS FOLLOWS:- ITA NO.3495 & 3496/DEL/2013 5 DATE PARTICULARS DEBIT CREDIT BALANCE 19.05.2004 CASH DEPOSIT 1,05,000 (1,05,000) 26.05.2004 CASH WITHDRAWAL 14,000 (91,000) 26.05.2004 CASH WITHDRAWAL 1,09,000 18,000 28.05.2004 CASH WITHDRAWAL 50,000 68,000 31.05.2004 CASH WITHDRAWAL 5,000 73,000 05.06.2004 CASH DEPOSIT 2,50,000 (1,77,000) 23.06.2004 CASH WITHDRAWAL 1,00,000 (77,000) 01.07.2004 TO 30.09.2004 CASH WITHDRAWAL CASH DEPOSIT 6,23,677 4,73,372 5,46,677 73,305 14.10.2004 CASH DEPOSIT 1,07,000 (33,695) 16.10.2004 CASH DEPOSIT 37,628 (71,323) 06..1.1.2004 WITHDRAWAL SLIP 1,00,000 28,677 09.11.2004 CASH DEPOSIT 6,000 22,677 16.11.2004 CASH WITHDRAWAL 40,000 62,677 18.11.2004 CASH DEPOSIT 40,000 22,677 23.11.2004 CASH DEPOSIT 60,000 (37,323) 25.11.2004 CASH DEPOSIT 45,000 (82,323) 02..12.2004 CASH WITHDRAWAL 10,000 (72,323) 08.12.2004 CASH DEPOSIT 55,000 (1,27,323) 14.12.2004 CASH WITHDRAWAL 50,000 (77,323) 17.12.2004 CASH WITHDRAWAL 80,000 2,677 23.12.2004 CASH WITHDRAWAL 10,000 12,677 15.02.2005 CASH DEPOSIT 9,000 3,677 11,91,677 11,88,000 TOTAL CASH DEPOSITED DURING THE YEAR 11,88,000 /- TOTAL CASH WITHDRAWN DURING THE YEAR 11,91,677/- 9. AGAIN, UNDISPUTEDLY, THE DETAILS OF THE ASSESSEES BANK ACCOUNT FOR THE PERIOD FROM 1.7.04 TO 30.9.04 WERE NOT AVAILABLE. T HE ASSESSEE HAD ADOPTED THE BALANCING FIGURE OF DEPOSITS AND WITHDRAWALS. EVE N THE COPY OF THE BANK ACCOUNT AVAILABLE WITH THE AO WAS INCOMPLETE. THE DE TAILS OF CASH DEPOSITS AND WITHDRAWALS WERE FILED BY THE ASSESSEE ON THE BASIS OF THIS INCOMPLETE COPY OF ACCOUNT. IT WAS IN THIS SITUATION THAT THE LD. CIT (A) RESTRICTED THE ADDITION TO ` 1,77,000/- ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THE FIGURE OF ` 1,77,000/- REPRESENTS THE NEGATIVE CASH BALANCE DURIN G THE YEAR, AS ON 5.6.04. IT WAS FOUND THAT AFTER ACCOUNTING FOR THE CASH DEPOSITS AND THE CASH WITHDRAWALS, THE SOURCE OF THE AMOUNT OF ` 1,77,000/- AS ON 5.6.04, REMAINED UNEXPLAINED. IT WAS AS SUCH, THAT THE LD. CI T (A) TREATED THIS AMOUNT OF ` 1,77,000/- AS THE ASSESSEES INCOME FROM UNDISCLOSED COUR SES. THIS FIGURE OF ` 1,77,000/- WAS SEEN TO WORK OUT TO A PROFIT RATE OF 14.9% ON A TURNOVER OF ` 11,88,000/-. THIS WAS FOUND TO BE MUCH HIGHER THAN T HE ITA NO.3495 & 3496/DEL/2013 6 PRESUMPTIVE RATE OF NET PROFIT APPLICABLE IN TERMS OF THE PROVISIONS OF SECTION 44AF OF THE ACT. 10. THE DEPARTMENT HAS NOT BEEN ABLE TO SUCCESSFULLY R EFUTE BEFORE US THE ABOVE FACTS DULY TAKEN INTO CONSIDERATION AND DISCUSSED IN DETAIL BY THE LD. CIT (A) IN THE IMPUGNED ORDER. WE FIND THE APPROACH OF THE LD. CIT (A) IN ADOPTING THE PEAK OF THE DEPOSITS AND WITHDRAWALS DURI NG THE YEAR, TO BE WELL JUSTIFIED. THE SAME IS, THUS, SUSTAINED, REJECTING THE GRIEVANCE OF THE DEPARTMENT. 11. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T, FOR THE ABOVE DISCUSSION, STANDS DISMISSED. ITA NO.3496/DEL/2013 12. THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 2005- 06, AGAINST THE ORDER DATED 26.03.2013, PASSED BY THE LD. CIT (A)-XXV II, CONTENDING THAT THE LD. CIT (A) HAS ERRED IN DELETING THE PENALTY OF ` 3,14,754/- CORRECTLY LEVIED ON THE ASSESSEE U/S 271 (1)(C) OF THE IT ACT. 13. PURSUANT TO DETERMINING THE ASSESSEES INCOME AT ` 11,88,000/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN HIS BANK, THE A O LEVIED PENALTY OF ` 3,70,048/-, BEING 100% OF THE TAX SOUGHT TO BE EVAD ED ON THE ALLEGED CONCEALED INCOME OF ` 11,88,000/-. THE LD. CIT (A) HELD THAT SINCE NO RET URN OF INCOME HAD BEEN FILED, DESPITE THE ASSESSEE HAVING TA XABLE INCOME AS DETERMINED BY THE AO, THE WHOLE OF THE INCOME DETER MINED BY THE AO REPRESENTED THE CONCEALED INCOME OF THE ASSESSEE AND THA T THEREFORE, PENALTY U/S 271 (1)(C) OF THE IT ACT HAD RIGHTLY BEE N IMPOSED ON THE ASSESSEE. THE LD. CIT (A), HOWEVER, DIRECTED THE AO TO RECOMPUTED THE AMOUNT OF PENALTY AFTER GIVING EFFECT TO THE APPEAL ORDER IN THE ASSESSEES CASE IN THE QUANTUM MATTER, WHEREIN THE UNDISCLOSED IN COME OF THE ASSESSEE WAS RESTRICTED TO ` 1,77,000/-. ITA NO.3495 & 3496/DEL/2013 7 14. WHILE DEALING WITH ITA NO.3495/DEL/2013, I.E., THE QUANTUM APPEAL, WE HAVE UPHELD THE ACTION OF THE LD. CIT (A) IN RESTRIC TING THE UNDISCLOSED INCOME OF THE ASSESSEE TO ` 1,77,000/-. IN VIEW THEREOF, WE HOLD THAT THE LD. CIT (A) HAS RIGHTLY DIRECTED THE AO TO RE-COMPUTE THE AMOUNT OF PENALTY AFTER GIVING EFFECT TO THE CIT(A)S APPEAL ORDER IN THE QUANTUM C ASE. THE PENALTY TO THE EXTENT OF ` 3,14,754/- HAS, THEREFORE, IN OUR CONSIDERED OPINIO N, BEEN RIGHTLY DELETED. TO THIS EXTENT, THE PROVISIONS OF SECTION 271 (1)(C) OF THE ACT ARE NOT ATTRACTED. 15. FOR THE ABOVE DISCUSSION, THE DEPARTMENTS APPEAL I N THIS MATTER IS ALSO DISMISSED. 16. IN THE RESULT, BOTH THE APPEALS FILED BY THE DEPA RTMENT ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 23.05.201 4. SD/- SD/- [ J.S. REDDY ] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 23 RD MAY, 2014. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.