ITO, Rewari V. Shri Nand Ram, Rewari

ITA 3529/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4147 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 02-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NAVEEN DAHIYA
• Keywords: Income from undisclosed sources
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO.3529/DEL/2017 ASSESSMENT YEAR : 2013-14 ITO, WARD- 2, REWARI. VS. NAND RAM, S/O JAG RAM, 238, VILLAGE BHANKLI, REWARI. PAN : ALOPR1204N (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI ARUN KUMAR YADAV, SR.DR ASSESSEE BY : SHRI NAVEEN DAHIYA, CA DATE OF HEARING : 01-01-2018 DATE OF PRONOUNCEMENT : 12-01-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 24.03.2017 OF CIT(A), ROHTAK RELATING TO ASSESSMENT YEAR 2013-14. 2. THE ONLY GROUND RAISED BY THE REVENUE READS AS U NDER :- 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS RIGHT IN DELETING THE ADDITION OF RS.33,89,267/- PRESUMING THE ADDITI ON ON BASELESS ASSUMPTION OF TREATING THE DEPOSIT AS SALE PROCEEDS WITHOUT ANY C ONCRETE, SUSTAINABLE AND VALID DOCUMENTARY EVIDENCES. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 14.08.2014 DECLARING INCOME OF RS.3,02,140/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS DEPOSITED CASH OF RS.60,71,660/- IN HI S BANK ACCOUNT WITH ORIENTAL 2 ITA NO.3529/DEL/2017 BANK OF COMMERCE AND VIJAYA BANK. HE, THEREFORE, A SKED THE ASSESSEE TO EXPLAIN SUCH DEPOSITS. IT WAS EXPLAINED BY THE ASS ESSEE THAT HE PURCHASED WHEAT AND GRAM BEING AGRICULTURAL PRODUCE FROM THE FARMER S AND SOLD IT IN THE VILLAGE TO OTHER TRADERS. ALL THE PURCHASES WERE MADE IN C ASH AND SOLD IN CASH TO THE PURCHASERS. THE CASH DEPOSITS MADE IN THE BANK ACC OUNT ARE THE SALE PROCEEDS. THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT AND THE PROFIT DECLARED IN THE RETURN OF INCOME MAY BE TREATED AS DECLARED U/S 44AD OF THE I.T. ACT. 4. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT TH E CONTENTION OF THE ASSESSEE ON THE GROUND THAT THIS SKETCH DRAWN BY TH E ASSESSEE IS NOT TRUSTWORTHY. HE OBSERVED THAT WHILE PREPARING CASH FLOW STATEMEN T THE ASSESSEE HAS SHOWN OPENING CASH BALANCE AS ON 01.04.2012 AT RS.1,00,00 0/- AND CLOSING CASH IN HAND ON 31.03.2012 AT RS.27,15,230/-. HE OBSERVED THAT THE ASSESSEE WAS MAKING HUGE TRANSACTIONS OF DEPOSIT AND WITHDRAWALS IN HIS BANK ACCOUNTS. AFTER REJECTING THE VARIOUS EXPLANATION GIVEN BY TH E ASSESSEE, THE ASSESSING OFFICER HELD THAT THE PEAK CASH BALANCE REPRESENTS ASSESSEES INCOME FROM UNDISCLOSED SOURCES. HE DETERMINED THE PEAK BALANC E AT RS.37,75,000/-. AFTER DEDUCTING THE INCOME DECLARED BY THE ASSESSEE AT RS .3,02,140/-, THE ASSESSING OFFICER MADE ADDITION OF RS.34,72,860/-. 5. IN APPEAL, THE LD. CIT(A) DELETED THE DISALLOWAN CE MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER :- 3 ITA NO.3529/DEL/2017 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPE LLANT, AS THE APPELLANT HAD FILED ITS RETURN OF INCOME AS PER THE PROVISIONS OF SEC.4 4AD OF THE ACT, WORST TO WORST NET PROFIT RATE OF 8% SHOULD HAVE BEEN APPLIED BY TREAT ING THE TOTAL BANK DEPOSITS AS GROSS RECEIPTS, AND IT IS APPLIED AS SUCH. THE INCOME OF THE APPELLANT IS COMPUTED @8% OF RS.60,71,660/- WHICH COMES TO RS.4,85,733/- AGAINST THE INCOME OF RS.4,02,140/- ALREADY SHOWN BY THE APPELLANT. THUS, THE ADDITION OF RS.83593/- IS CONFIRMED AND THE APPELLANT GETS THE A RELIEF FOR RS.33,89,267/- (34, 72,860.00 83,593.00). THIS GROUND OF APPEAL IS PARTLY ALLOWED. 6. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE TOTAL CASH DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE WAS RS.60,71,660/- WHICH IS LESS THAN THE AMOUNT PRESCR IBED U/S 44AD FOR THE RELEVANT ASSESSMENT YEAR AND THE ASSESSEE IS ENGAGE D IN THE BUSINESS OF PURCHASE AND SALE OF WHEAT AND MUSTERED. ALTHOUGH THE NATUR E OF BUSINESS WAS NOT MENTIONED BY THE ASSESSEE IN THE RETURN OF INCOME, HOWEVER, DURING THE ASSESSMENT STAGE, THE ASSESSEE HAD STATED SO BEFORE THE ASSESSING OFFICER AND NOT CONTROVERTED BY HIM. SINCE THE ASSESSEE HAD NO T MAINTAINED ANY BOOKS OF ACCOUNT AND SINCE HIS TURNOVER IS LESS THAN THE PRE SCRIBED LIMIT U/S 44AD, THEREFORE, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ADOPTING THE NET PROFIT RATE OF 8% ON SUCH CASH DEPOSITS TREATIN G THE SAME AS TURNOVER. SINCE THE ORDER OF THE LD. CIT(A), IN MY OPINION, IS A RE ASONED ONE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THEREFORE, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF 4 ITA NO.3529/DEL/2017 THE LD. CIT(A) ON THIS ISSUE. I, THEREFORE, UPHOLD THE SAME AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH JANUARY, 2018. SD/- (R. K. PANDA) ACCOUNTANT MEMBER DATED: 12-01-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI