Shri Sanjiv Walia, Bathinda V. The income Tax Officer, Bathinda

ITA 355/ASR/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9897 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 11-03-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 02-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Unexplained cash credit; Business income
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. NO. 355/ASR/2014 AS SESSMENT YEAR: 2009-10 SANJEEV WALIA, PROP. WALIA CONSTRUCTION CO., BATHINDA. [PAN: AABPW 2184L] VS. INCOME TAX OFFICER, WARD-1(1), BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P. N. ARORA (ADV.) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 11.03.2019 DATE OF PRONOUNCEMENT: 31.05.2019 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS), BATHINDA ('CI T(A)' FOR SHORT) DATED 13.3.2014, PARTLY ALLOWING THE ASSESSEES APPEAL CO NTESTING HIS ASSESSMENT U/S. 144 OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) DATED 25.11.2011 FOR THE ASSESSMENT YEAR (AY) 2009-10. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE-INDIVIDUAL, A CIVIL CONTRACTOR, OPERATING UNDER THE NAME M/S. WALIA CO NSTRUCTION CO., RETURNED HIS INCOME FOR THE YEAR ON 22.9.2009 AT RS.8,13,290, IN CLUDING PROFIT ON THE CONTRACT BUSINESS AT RS.8,97,656/-; ASSESSEE HAVING CLAIMED A TAX BREAK ON INVESTMENT/S (PB PG. 7). NO BOOKS OF ACCOUNT OR OTHER VOUCHERS WERE PRODUCED DURING THE ITA NO. 355/ASR/2014 (AY 2009-10) SANJEEV WALIA V. ITO 2 ASSESSMENT PROCEEDINGS DESPITE SUFFICIENT OPPORTUNI TY. THE ASSESSING OFFICER (AO), ACCORDINGLY, FOLLOWING THE RATE APPROVED BY T HE HONBLE JURISDICTIONAL HIGH COURT IN SUCH CASES, APPLIED A PROFIT RATE OF 10% O N THE DISCLOSED TURNOVER OF RS.108.55 LACS. THE ASSESSEE WAS FOUND TO HAVE A SA VING BANK (S/B) ACCOUNT WITH INDUS IND BANK, BATHINDA, WHICH HOWEVER DID NOT FIN D REFLECTION IN THE ASSESSEES BALANCE-SHEET AS ON 31.3.2009. THE SAME BORE DEPOSI TS FOR RS.31.50 LACS DURING THE RELEVANT YEAR, WHICH WERE EXPLAINED TO BE THE SALE PROCEEDS OF THE ASSESSEES CONTRACT BUSINESS, SO THAT A PROFIT RATE BE APPLIED THERETO; THE SAME HAVING BEEN INADVERTENTLY OMITTED TO BE DISCLOSED, OFFERING A S UM OF RS.2,60,190/- TOWARD THE SAME. THE AO, ACCEPTING THE ASSESSEES ALTERNATE CL AIM OF THE CASH WITHDRAWALS IN THE SAID ACCOUNT AS EXPLAINING THE DEPOSITS (MADE S UBSEQUENTLY), WORKED OUT THE PEAK AMOUNT AT RS.17.85 LACS (AT PARA 4, PAGE 5 OF THE ASSESSMENT ORDER), AND ADDED THE SAME. IN APPEAL, THE LD. CIT(A), IN VIEW OF THE CASH WITHDRAWALS IN THE ASSESSEES OTHER BANK ACCOUNT, BEING A CURRENT ACCO UNT WITH THE SAME BANK, WAS OF THE VIEW THAT THE ASSESSEE HAD SUFFICIENT FUNDS TO EXPLAIN THE DEPOSIT OF CASH IN THE INDUS IND BANK S/B ACCOUNT. THE ADDITION FOR THE PE AK AMOUNT WOULD THEREFORE NOT OBTAIN. THE ADDITION TO THE RETURNED INCOME OF RS.8 .13 LACS COULD ONLY BE FOR THE ADDITIONAL ASSETS FOUND, AND WHICH IS THE BANK BALA NCE WITH THE INDUSIND BANK AS ON 31.03.2009, I.E., RS. 10,51,517/-. HE, ACCORDING LY, DIRECTED FOR THE ADDITION TO THE RETURNED INCOME OF RS.8,13,290/- TO THAT EXTENT ONLY, WHICH WAS THOUGH DIRECTED TO BE ASSESSED AS BUSINESS INCOME. AGGRIEV ED, THE ASSESSEES IS IN SECOND APPEAL, RAISING THE FOLLOWING GROUND: ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING AN ADDITION OF RS.10 ,51,517/- ON ACCOUNT OF DEPOSITS REMAINED INVESTED IN THE BANK A CCOUNT WITHOUT APPRECIATING THE EXPLANATION AND CONSIDERING THE SO URCE GIVEN AS PER GROUND OF APPEALS AND DURING ASSESSMENT PROCEEDINGS . ITA NO. 355/ASR/2014 (AY 2009-10) SANJEEV WALIA V. ITO 3 3. I HAVE HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD. THE ASSESSEE, DURING THE HEARING, RAISED A LEGAL PL EA (THROUGH HIS COUNSEL, SH. ARORA), I.E., HIS BOOKS OF ACCOUNT HAVING BEEN REJECTED, NO ADDITION U/S. 69A COULD IN LAW BE MADE, RELYING ON THE DECISIONS IN CIT V. AGGARWAL ENGG. CO . [2008] 302 ITR 246 (P&H); RAM AVTAR PAREEK V. ITO (IN ITA NO. 274/2017, DATED 21/12/2017); AND MADDI SUDARSANAM OIL MILLS V. CIT [1959] 37 ITR 369 (AP), BESIDES BY THE TRIBUNAL. HE, HOWEVER, WAS UNABLE TO ANSWER THE QUESTION THAT THE ADDITION, SUSTAINED BY THE LD. CIT(A), THOUGH ASSES SED AS BUSINESS INCOME, IS QUA THE BALANCE IN THE ASSESSEES UNDISCLOSED BANK ACCO UNT AS AT THE YEAR-END, I.E., FOR THE ASSET FOUND, UNEXPLAINED U/S. 69A. IN FACT, THE SAME HAS BEEN, ACCEPTING THE ASSESSEES PLEA, ASSESSED BY THE LD. CIT(A) AS INCO ME OF THE SAME BUSINESS, WHICH HAD THOUGH REMAINED TO BE DISCLOSED. ITS ASSESSMEN T AS BUSINESS INCOME, AS ONE UNDERSTANDS AND DISCERNS FROM HIS ORDER, IS IN VIEW OF THE ASSESSEE HAVING NO OTHER (DISCLOSED) SOURCE OF INCOME, SO THAT THE SAID DEPO SITS WOULD ONLY REPRESENT THE UNDISCLOSED PROFIT OF HIS BUSINESS. IT HAS, THEREFORE, NOTHING TO DO WITH THE ASSESSEES ACCOUNTS, NOT FORMING PART THEREOF . AS SUCH, THE PROPOSITION THAT NO SEPARATE ADDITION QUA CASH CREDITS IN ACCOUNTS COULD BE MADE WHERE THE A CCOUNTS ARE REJECTED AND THE INCOME ESTIMATED, WOULD HAVE N O APPLICATION. IF THE ASSESSEES CASE, ON THE OTHER HAND, IS THAT THE SAID INCOME IS TO BE REGARDED AS THE ASSESEES BUSINESS INCOME, AS HE CONTENDS, THE SAME HAS ALREA DY BEEN ASSESSED AS SUCH, SO THAT THE SAID PLEA IS OF NO CONSEQUENCE. THAT IS, T HE ADDITION AS FINALLY SUSTAINED, THOUGH BASED ON THE EVIDENCE OF UNEXPLAINED BANK DE POSIT, HAS BEEN AS UNDISCLOSED PROFIT OF HIS BUSINESS, I.E., EVIDENCE IN RESPECT O F WHICH, BY WAY OF BANK DEPOSIT, HAD BEEN FOUND. THE ASSESSEES CASE, THUS, CONSIDER ED EITHER WAY, IS WITHOUT ANY MERIT, AND THE CONTENTION RAISED, NOT APPLICABLE ON FACTS. IN-AS-MUCH AS, HOWEVER, IN MY VIEW, THE ADDITION I S LIABLE TO BE SUSTAINED U/S. 69A, IT WOULD BE IN ORDER TO DISCUSS THE ARGUM ENT ADVANCED IN SOME DETAIL. THE ITA NO. 355/ASR/2014 (AY 2009-10) SANJEEV WALIA V. ITO 4 PROPOSITION THAT NO ADDITION QUA AN UNEXPLAINED CASH CREDIT IN ACCOUNTS COULD BE MADE WHERE THE ACCOUNTS ARE FOUND NOT RELIABLE TO Y IELD THE TRUE BUSINESS INCOME, IS UNSOUND AND NOT TENABLE IN LAW. THE REASON IS SI MPLE. THE CASH CREDIT, AS EXPLAINED BY THE APEX COURT PER ITSS SEVERAL DECIS IONS (VIZ. ASST. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD . [2007] 291 ITR 500 (SC)), IS ITSELF AN EVIDENCE O F RECEIPT OF MONEY. THE SAME, ACCORDINGLY, WHERE NOT SATISFACTORILY EXPLAINED AS TO ITS NATURE AND SOURCE, IS DEEMED AS INCOME (SEC.68) . SECTION145(3), ON THE OTHER HAND, GETS ATTRACTED WHEN THE ASSESSEES ACCOUNTS A RE NOT CORRECT AND COMPLETE, OR WHERE THE METHOD OF ACCOUNTING FOLLOWED IS SUCH AS IS NOT AMENABLE TO YIELD THE CORRECT PROFIT OF THE ASSESSEES BUSINESS. THAT DOE S NOT UNDERMINE THE EVIDENCE AS TO THE ADMITTED RECEIPT IN THE FORM OF A CREDIT IN THE ASSESSEES ACCOUNTS. OR, FOR THAT MATTER, BANK DEPOSITS MADE OUTSIDE THE BOOKS O F ACCOUNT. NO DOUBT, THE SAID PROPOSITION DID NOT FIND FAVOUR WITH THE APEX COURT , AS IN CIT VS. DEVI PRASAD VISHWANATH PRASAD [1969] 72 ITR 94 (SC); KALE KHAN MOHD. HANIF VS. CIT [1963] 50 ITR 1 (SC), AS WELL AS, FOLLOWING THE SAM E, BY THE HONBLE JURISDICTIONAL HIGH COURT, AS IN GROVER FABRICS INDIA PVT. LTD. VS. CIT [2011] 332 ITR 312 (P&H). THE REVENUE, IT MAY BE APPRECIATED, WHERE DE EMING INCOME U/S. 68 (OR S. 69/69A), IS UNDER NO OBLIGATION TO SHOW THAT THE IN COME IS FROM A PARTICULAR SOURCE ( ROSHAN DI HATI VS. CIT [1977] 107/938 (SC); KALEKHAN MOHD. HANIF (SUPRA); DEVI PRASAD VISHWANATH PRASAD (SUPRA)). THE ESTIMATION OF INCOME UPON REJECTION OF THE ACCOUNTS, ON THE OTHER HAND, IS QUA A PARTICULAR SOURCE/S OF INCOME. THE ASSESSEE CAN THOUGH PLEAD FOR TELESCOPING, SATISFYI NG THE ASSESSING AUTHORITY THAT THE SAME IS WARRANTED IN THE FACTS AND CIRCUMSTANCE S OF THE CASE, AS EXPLAINED IN DEVI PRASAD VISHWANATH PRASAD (SUPRA). THE ADDITIONAL INCOME I.E., OTHER THAN THE RETURNE D INCOME, IN THE INSTANT CASE, AS I SEE IT, IS OUTSIDE THE BOOKS OF ACCOUNT, I.E., QUA AN ASSET NOT FINDING REFLECTION THEREIN. THE SAME, THEREFORE, HAS NO REL ATION WITH THE ASSESSEES ITA NO. 355/ASR/2014 (AY 2009-10) SANJEEV WALIA V. ITO 5 ACCOUNTS, NOR SHOWN TO BE SO, FOR THE ASSESSEE TO R AISE THE SAID PLEA. IN FACT, THE LD. CIT(A) IN DECIDING THE ASSESSEES APPEAL, CONFUSED THE TWO. THIS IS AS HE HAS, BASED ON THE ASSESEES CURRENT ACCOUNT WITH THE BAN K, DULY REFLECTED IN HIS ACCOUNTS, HELD THE ASSESSEE TO HAVE SUFFICIENT FUND S TO EXPLAIN THE CASH DEPOSITS IN THE S/B ACCOUNT WITH INDUS IND BANK. WHEN THE CASH WITHDRAWALS FROM THE CURRENT ACCOUNT (WITH BANK) ARE DULY RECORDED IN THE ASSESS EES ACCOUNTS, WHERE IS THE QUESTION OF THE SAID CASH BEING DEPOSITED IN A BANK ACCOUNT NOT REFLECTED THEREIN? IF THESE CASH WITHDRAWALS COULD EXPLAIN THE NET CASH D EPOSIT OF RS.17.85 LACS (FROM 15.12.2008 TO 28.02.2009), THE SAME COULD AS WELL E XPLAIN THE REDUCED BANK BALANCE OF RS.10.52 LACS AS ON 31.3.2009 WHICH, IN FACT, AS APPARENT, IS A PART OF RS.17.85 LACS, THE BALANCE ON 28.02.2009. THERE IS IN FACT NOTHING TO SHOW THAT THE UNDISCLOSED RECEIPTS WHICH ARE IN CASH, ARE OF TH E SAME, I.E., CONTRACT BUSINESS, THE BURDEN TO ESTABLISH THE SOURCE OF THE RECEIPT, WHICH IS ON THE ASSESEE, BEING WHOLLY UNEXPLAINED. THE LD. CIT(A) HAS, IN DECIDING IN THE MANNER HE DOES, PERHAPS UNWITTINGLY, CONVERTED, WITHOUT EVIDENCE, A SOURCE-BASED INCOME ASSESSMENT INTO AN ASSET-BASED ONE. WOULD THAT MEAN THAT ANY INCOME SPENT OR OTHERWISE APPLIED, I.E., OTHER THAT FOR ACQUIRING A N ASSET, CANNOT BE ASSESSED AS INCOME, BEING NOT REPRESENTED BY AN ASSET? IN SUM 4. THE LD. CIT(A) HAS, IN UPHOLDING THE REJECTION O F ACCOUNTS, ASSESSED THE ADDITION OF RS.17.85 LACS AS BUSINESS INCOME U/S. 2 8, AT RS.10.52 LACS, THE BALANCE IN THE UNDISCLOSED BANK ACCOUNT AS AT THE YEAR-END. HOW, THEN, ONE MAY ASK, THE ASSESSEES PLEA, STATING THE DEPOSITS TO BE A PART OF HIS UNDISCLOSED TURNOVER, VALID ? FURTHER, IT IS SURELY NOT SO, WHERE IT IS OPINED, F OR THE AFORE-STATED REASONS, FOR BEING REGARDED AS ASSESSABLE U/S. 69A, I.E., AS ASSESSED BY THE AO (AT RS.17.85 LACS). THERE HAS BEEN NO IMPROVEMENT IN HIS CASE THE MAT TER BEING PRIMARILY FACTUAL, BY ITA NO. 355/ASR/2014 (AY 2009-10) SANJEEV WALIA V. ITO 6 THE ASSESSEE BEFORE THE TRIBUNAL, BEING IN FACT SANS ANY MATERIAL/EVIDENCE. I, ACCORDINGLY, DECLINE INTERFERENCE. THE ONLY MODIFICATION THAT I, IN CONSONANCE WITH TH E FINDING/S ISSUED, DIRECT, IS OF THE ASSESSMENT OF INCOME, TO THE EXTENT OF RS .10,51,517/-, U/S. 69A. THIS IS FOR THE REASON THAT THERE IS NOTHING ON RECORD TO HOLD IT AS BUSINESS INCOME, MUCH LESS OF THE SAME BUSINESS. A PROFIT OF RS.10.52 LACS ON A TURNOVER OF RS.31.50 LACS MAY NOT BE, AGAIN, REASONABLE, AT LEAST ON THE BASIS OF THE MATERIAL ON RECORD. IT MAY WELL REPRESENT THE EARNINGS OF THE BUSINESS, OR FROM ALL IED ACTIVITIES, CARRIED OUT BY THE ASSESSEE IN THE PAST, SURFACING IN THE FORM OF THE BANK DEPOSITS; THE ASSESSEE HAVING DEPOSITED A LUMP-SUM AMOUNT OF RS.9 LACS ON 15.12.2 008, I.E., ON OPENING THE BANK ACCOUNT, LOST SIGHT OF BY THE LD. CIT(A). IN THIS R EGARD, IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE DID NOT, DESPITE SUFFICIENT OPPOR TUNITY, PRODUCE THE BOOKS OF ACCOUNT, OR EVEN THE VOUCHERS ON WHICH THE SAME ARE BASED, BEFORE THE AO. THE ASSESSEES BUSINESSES INCOME, ACCORDINGLY, GETS ASS ESSED AT THE RETURNED INCOME OF RS.8.97 LACS. FURTHER, IN-AS-MUCH AS THE INCOME IS ASSESSED ON THE BASIS OF THE ASSET/S FOUND NOT RECORDED IN ACCOUNTS, THERE IS NO SCOPE FOR TELESCOPING OF THIS INCOME AGAINST THE INCOME DISCLOSED PER THE ASSESSE ES ACCOUNTS, ALSO NOTED BY THE LD. CIT(A). AS REGARDS THE RELIEF ALLOWED ON QUANTU M BY HIM, THE SAME, EVEN AS THE SAME HAS BEEN OPINED AS NOT MERITED, IS NOT DISTURB ED ONLY IN VIEW OF S. 268A OF THE ACT; THE LD. DR NOT RAISING ANY PLEA OR ORAL GR OUND TO THAT EFFECT. COMING TO THE ASSESSEES RELIANCE ON CASE LAW. THE SAME STAND PERUSED. IT HAS ALREADY BEEN EXPLAINED THAT THE CONTENTION IS N OT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE DECISION IN AGGARWAL ENGG. CO . (SUPRA) IS BASED ON THE DECISION IN CIT V. BANWARILAL BANSIDHAR [1998] 229 ITR 229 (ALL), WHICH IS IN RESPECT OF DISALLOWANCE OF EXPENDITURE DEBITED IN A CCOUNTS, WHICH STAND REJECTED FOR WANT OF RELIABILITY. THE ADDITION IN THE INSTAN T CASE, ON THE OTHER HAND, IS QUA UNEXPLAINED DEPOSITS IN THE ASSESSEES BANK ACCOUNT , NOT FORMING PART OF HIS ITA NO. 355/ASR/2014 (AY 2009-10) SANJEEV WALIA V. ITO 7 ACCOUNTS. THE PROPOSITION IS, EVEN OTHERWISE, AS CL ARIFIED WITH REFERENCE TO JUDICIAL PRECEDENTS BY THE APEX COURT AND THE HONBLE JURISD ICTIONAL HIGH COURT, FOUND NOT VALID. WHEN A CASH CREDIT, FORMING PART OF THE ACCO UNTS, CANNOT, WITHOUT EVIDENCE, BE REGARDED AS PART OF THE BUSINESS INCOME, HOW COU LD THE SAID BANK DEPOSITS, BEING OUTSIDE THE BOOKS OF ACCOUNT, BE, AS A MATTER OF PROPOSITION, REGARDED AS BUSINESS INCOME, WHICH ALSO IMPLIES IT TO BE FOR TH E RELEVANT YEAR? SURELY NOT. I DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 31, 2019 SD/- (SANJAY ARORA) ACCOUNTANT MEMBER DATE: 31.05.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: SANJEEV WALIA PROP. M/S WALI A CONSTRUCTION CO. BATHINDA. (2) THE RESPONDENT: THE INCOME TAX OFFICER, WAR D 1(1), BATHINDA. AMRITSAR. (3) THE CIT(APPEALS)-BATHINDA (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER