Nathi Lal Gupta, New Delhi V. ITO, New Delhi

ITA 3535/DEL/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0044 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 01-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 22-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: C L ARORA
• Keywords: Business income
• Section: 68

Judgement Text

ITA NO.3535/DEL/2010 ASSTT.YEAR: 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO.3535/DEL/2010 ASSTT.YEAR: 2006-07 SHRI NATHI LAL GUPTA, VS INCOME TAX OF FICER, 61/13A. RAMJAS ROAD, WARD 33(2), NEW DELHI. KAROL BAGH, NEW DELHI. (PAN: AAAG2613B) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI C.L. ARORA, ADV. RESPONDENT BY: SHRI P. DAM KANUNJNA, SR. DR DATE OF HEARING: 01.04.2015 DATE OF PRONOUNCEMENT: O R D E R PER C.M. GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE CIT(A)-XXVI, NEW DELHI DATED 19.04.2010 IN APPEAL NO. 132/08-09 FOR AY 2006-07. ALTHOUGH THE ASSESSEE HAS RAISED SIX GROU NDS IN THIS APPEAL BUT EXCEPT GROUND NO. 4, OTHER GROUNDS ARE ARGUMENTATIVE AND S UPPORTIVE TO THE MAIN GROUND NO. 4 WHICH READS AS UNDER:- THAT THE LD. CIT GROSSLY ERRED IN NOT ACCEPTING TH E EXPLANATION OF RECEIVING THE PAYMENT FROM DEBTORS A ND IGNORING THE CONFIRMATIONS OF THE DEBTORS. IN FACT HE FURTH ER ERRED IN NOT ADOPTING THE USUAL PRACTICE OF CONFIRMING THE STATE D POSITION FROM THE DEBTORS, WHEN FULL PARTICULARS OF THE DEBT ORS WERE AVAILABLE WITH HIM. ITA NO.3535/DEL/2010 ASSTT.YEAR: 2006-07 2 2. BRIEFLY STATED THE FACTS GIVING RISE TO THIS APP EAL ARE THAT THE CASE WAS SELECTED FOR SCRUTINY ON THE BASIS OF AIR INFORMATI ON THAT THE ASSESSEE HAS DEPOSITED CASH OF RS. 2 LAKH ON 29.7.2005 IN STANDA RD CHARTERED BANK. REPLYING TO THE QUERY RAISED BY THE AO, THE ASSESSE E SUBMITTED THAT HE HAD MORE THAN RS. 3 LAKH AS CASH IN HAND AND DEPOSITED RS.2 LAKH IN THE BANK ACCOUNT OUT OF THIS CASH. THE AO ALSO NOTED THAT FROM THE BALAN CE SHEET FOR THE PERIOD ENDING ON 31.3.2005 THE ASSESSEE HAD RS.4,72,174 UN DER THE HEAD OF CASH-IN- HAND & DEBTORS AND FOR THE PERIOD ENDING ON 31.3.20 05 THE ASSESSEE HAD RS.3,75,928 UNDER THE SAME HEAD. THE AO NOTED THAT THERE IS NO BIFURCATION OF CASH-IN-HAND & DEBTORS AND, THEREFORE, IT IS NOT AS CERTAINABLE HOW MUCH CASH WAS AVAILABLE WITH THE ASSESSEE ON THE DATE OF DEPO SIT OF RS. 2 LAKH I.E. 29.7.2005. THE AO REJECTED THE EXPLANATION OF THE ASSESSEE AND ADDED THE IMPUGNED AMOUNT TO THE TAXABLE INCOME OF THE ASSESS EE U/S 68 OF THE INCOME TAX ACT, 1961. 3. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT(A) WHICH WAS ALSO DISMISSED GRANTING PART RELIEF FOR THE ASSESSE E AND THE ADDITION MADE BY THE AO WAS CONFIRMED TO THE EXTENT OF RS.1.49 LAKH. NO W, THE EMPTY HANDED ASSESSEE IS BEFORE THIS TRIBUNAL IN THE SECOND APPE AL. 4. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. FROM THE ASSES SMENT ORDER, IT IS CLEAR THAT ITA NO.3535/DEL/2010 ASSTT.YEAR: 2006-07 3 THE AO MADE IMPUGNED DISALLOWANCE BY HOLDING THAT T HE BIFURCATION OF CASH IN HAND AND DEBTORS HAS NOT BEEN SUBMITTED, THEREFORE, THE EXACT AMOUNT OF CASH IN HAND CANNOT BE ASCERTAINED ON THE DATE OF IMPUGNED DEPOSIT OF RS. 2 LAKH I.E. ON 25.7.2005. FROM CAREFUL READING OF THE IMPUGNED OR DER OF THE CIT(A) FROM PARA 4, WE NOTE THAT THE ASSESSEES COUNSEL SUBMIT TED BREAK UP OF CASH-IN-HAND & DEBTORS AND CLOSING BALANCE OF CASH ON 31.3.2005 WAS RS.45,974 WHICH BECAME OPENING CASH BALANCE ON 1.4.2005 FOR THE YEA R UNDER CONSIDERATION I.E. 2006-07. THE CIT(A) FURTHER NOTED THAT THE BUSINES S RECEIPTS OF THE ASSESSEE DURING THE PERIOD 1.4.2005 TO 29.7.2005 WERE RS.1,5 3,360 AND AGAINST THIS RECEIPT, EXPENSES OF RS.33,250 WERE INCURRED. THE CIT(A) ALSO NOTED THAT THE ASSESSEE HAD RECEIVED REPAYMENT OF DEBTS IN CASH AM OUNTING TO RS.94,000 DURING 26.7.2005 TILL 29.7.2005. THE ASSESSEE, IN THE BACKGROUND OF AFORESAID FACTS, CONTENDED THAT FROM THE SAID THREE SOURCES, THE ASSESSEE HAD CASH-IN-HAND OF RS.2,26,570 ON 29.7.2005 AND OUT OF THIS CASH IN HAND, THE ASSESSEE DEPOSITED RS.2 LAKH TO THE BANK ACCOUNT OF STANDARD CHARTERED BANK. 5. FROM BARE READING OF IMPUGNED ORDER, WE NOTE THA T THE CIT(A) REJECTED THE EXPLANATION OF THE ASSESSEE WITH FOLLOWING OBSE RVATIONS AND CONCLUSION:- 6. I HAVE CAREFULLY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. I FIND THAT CONTRARY TO THE STAND TAKEN IN SCRUTINY PROCEEDINGS FOR ASSESSMENT YEAR 2 005-06, THE APPELLANT COULD NOT PRODUCE BOOKS OF ACCOUNT FOR AY 2006-07. THE APPELLANT HAS NOW GIVEN BREAK UP OF 'DEBTORS' A ND 'CASH IN HAND'. HOWEVER, THE APPELLANT HAS CHANGED THE EX PLANATION BEFORE ME AS COMPARED TO WHAT WAS GIVEN BEFORE THE AO AND ITA NO.3535/DEL/2010 ASSTT.YEAR: 2006-07 4 HAS SUBMITTED THAT AN AMOUNT OF RS.94 000/- WAS ON ACCOUNT OF REPAYMENT FROM DEBTORS. ON EXAMINATION OF CONFIRMAT ION FROM THE DEBTORS WHICH ARE ALL IN ONE TO TWO LINES SENTE NCES WRITTEN IN HAND, I FIND THAT IT IS SURPRISING THAT ALL THES E DEBTORS PREFERRED TO REPAY LIABILITIES IN CASH DURING THE S AME PERIOD I.E. 26/7/2005 TO 28/7/2005. NO PAN WAS GIVEN IN TH E CASE OF THREE OF SUCH DEBTORS AND ALL THESE PAYMENTS WERE K EPT LESS THAN RS.20,000/-. FURTHER, THE APPELLANT HAS SHOW N VERY HIGH PROFIT BY SHOWING MEAGER EXPENSES OF RS.33,520/- AG AINST THE BUSINESS RECEIPTS OF RS.153600/- IN ORDER TO ENHANC E THE CASH AVAILABLE ON 29/7/2005. IN THE ABSENCE OF BOOKS OF ACCOUNT, WHICH WERE SURPRISINGLY NOT MAINTAINED DURING THIS YEAR CONTRARY TO PRECEDING YEAR, THE CONTENTIONS OF APPE LLANT ARE NOT VERIFIABLE. 6.2 ON CAREFUL CONSIDERATION, LAM OF THE VIEW THAT THE APPELLANT COULD NOT EXPLAIN THE GENUINENESS OF SOUR CES OF CASH DEPOSITS BEFORE ME IN TOTAL. ON TAKING INTO ACCOUNT THE OPENING BALANCE OF RS.45,974/- AND ALSO COMPUTING THE HOUSE HOLD WITHDRAWALS @ RS.10,000/- PER MONTH AND BY KEEPING G.P. RATE IN THE BUSINESS OF MOBILE REPAIRING, AT 25%, A ND BY TREATING THE CONFIRMATION FROM SUNDRY DEBTORS AS IN GENUINE, I HOLD THE APPELLANT WAS SHORT BY RS.1.49 LAKHS AS ON 29/7/2005 FOR MAKING CASH DEPOSIT OF RS.2 LAKHS IN HIS BANK A CCOUNT. ACCORDINGLY, THE ADDITION MADE BY THE AO IS CONFIRM ED TO THE EXTENT OF RS.L.49 LAKHS. 6. IN VIEW OF ABOVE OBSERVATIONS AND CONCLUSION OF THE CIT(A), WE NOTE THAT THE CIT(A) WENT ON TO CONSIDER THE QUANTUM OF RECEI PTS AND EXPENSES AND ALSO THE GP RATE FOR THE PERIOD FROM 1.4.2005 TO 29.7.20 05 WHICH IS ONLY APPROXIMATELY 1/3 RD PERIOD OF THE FINANCIAL YEAR. THE CIT(A) CONSIDER ING ALL IRRELEVANT FACTS AND ASPECTS HELD THAT THE ASSESSEE WAS SHORT BY RS.1.49 LAKH CASH AS ON 29.7.2005 AND THE ADDITION WAS CONFIRMED UP T O THIS EXTENT WHICH IS NOT A PROPER AND JUSTIFIED APPROACH. WE MAY POINT OUT THA T FOR CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE, THE ONLY FACT TO BE SEEN WAS THAT WHETHER ITA NO.3535/DEL/2010 ASSTT.YEAR: 2006-07 5 THE ASSESSEE HAD SUFFICIENT CASH IN HAND ON 29.7.20 05 TO DEPOSIT RS. 2 LAKH CASH TO HIS BANK ACCOUNT? THE GP RATE AND PROPORTION OF RECEIPTS AND EXPENSES IS NOT RELEVANT TO DECIDE THIS ISSUE IN THE MIDDLE OF FINA NCIAL YEAR. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) COULD NOT DEMOL ISH THIS EXPLANATION OF THE ASSESSEE THAT THE ASSESSEE HAD CASH IN HAND OF MORE THAN RS.2 LAKH AS ON 29.7.2005 AND OUT OF THIS AMOUNT, THE ASSESSEE DEPO SITED IMPUGNED CASH TO HIS BANK ACCOUNT WITH STANDARD CHARTERED BANK. THEREFO RE, WE DECLINE TO ACCEPT THE CONCLUSION OF THE CIT(A) WHICH CONFIRMS THE ADD ITION U/S 68 OF THE ACT TO THE EXTENT OF RS.1.49 LAKH AND WE SET ASIDE THE SAM E. ACCORDINGLY, MAIN GROUND OF THE ASSESSEE IS ALLOWED AND THE AO IS DIRECTED T O DELETE THE ENTIRE ADDITION MADE U/S 68 OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/05/2015. SD/- SD/- (J.S. REDDY) (CHANDRAMOHAN GAR G) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 06TH MAY, 2015 GS ITA NO.3535/DEL/2010 ASSTT.YEAR: 2006-07 6 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. C.I.T. 5. DR BY ORDER ASSTT. REGISTRAR