ITO 16(3)(4), MUMBAI V. BHAGWANRAM K. BISHNOI, MUMBAI

ITA 3727/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2435 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 10-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Keywords: Salary income; Block assessment
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH , MUMBAI BEFORE SRI MAHAVIR SINGH, J M AND SRI RAMIT KOCHAR , AM ITA NO . 3727 /MUM/2013 (A.Y: 2009 - 10 ) THE INCOME TAX OFFICER - 16(3) (4),MATRU MANDIR, TARDEO ROAD, MUMBAI - 400 007 VS. SHRI BHAGWANRAM K. BISHNOI, 16/19 CHANDAN BHAVAN, 2 ND FLOOR, 4 TH LANE, KHETWADI BACK LANE, KHETWADI, MUMBAI - 4. PAN:ALAPB0261B APPELLANT .. RESPONDENT APPELLANT BY .. SRI A. RAMACHANDRAN, SR. DR RESPONDENT BY .. NONE DATE OF HEARING .. 1 7 - 10 - 2016 DATE OF PRONOUNCEMENT .. 17 - 10 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE REVENUE IS ARISING OU T OF THE ORDER OF THE CIT (A) - 2 7 , MUMBAI IN APPEAL NO. CIT (A) - 2 7 / 16(3 ) (4)/347/2011 - 12 DATE D 25 - 02 - 2013 . ASSESSMENT WAS FRAMED BY THE I TO, WARD 16(3)(4), MUMBAI FOR THE ASSESSMENT YEAR 2009 - 10 VIDE HIS ORDER DATED 30 - 12 - 2011 U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) . 2. THE FIRST TWO INTERCONNECTED ISSUES IN THIS APPEAL OF THE REVENUE ARE AGAINST THE ORDER OF THE CIT (A) IN RESTRICTING THE COMMISS ION RECEIPTS AT 1% AS AGAINST ESTIMATED BY THE AO AT 5% AND ALSO SETTING OFF OF THE SAME AGAINST PEAK ADDITION SUSTAINED BY HIM AT RS.8,42,800/ - AS AGA INST THE ADDITION MADE BY THE A O OF ENTIRE BANK DEPOSITS OF RS.14,67,300/ - TREATING THE SAME AS UNEXPLAIN ED CASH CREDIT U/S 68 OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS DERIVING INCOME FROM SALARY AND COMMISSION FROM CHEQUE DISCOUNTING BUSINESS AND ALSO INCOME FROM SUPERVISION OF LOADING AND UNLOADING OF IRON AND STEEL. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS DEPOSITED A SUM OF RS.14,67,300/ - BY WAY OF CASH DEPOSITS IN HIS BANK ACCOUNT OF BANK OF BARODA, ITA NO. 3727 /MUM/20 1 3 2 ZAVERI BAZAR BRANCH, MUMBAI OUT OF COMMISSION BUSINESS OF CHEQUE DISCOUNTING. THE ASSESSEE COUL D NOT EXPLAIN THESE CASH DEPOSITS AND HENCE, THE A O ADDED THESE AS UNDISCLOSED CASH DEPOSITS U/S 68 OF THE ACT. SIM ULTANEOUSLY, ACCORDING TO THE A O THERE ARE CHEQUE DEPOSITS OF RS.5,72,33,000/ - IN ASSESSEES BANK ACCOUNT AND THE ASSESSEE AFTER DEDUCTING 1% COMMISSION, RETURNED THE BALANCE AMOUNT TO THE PARTIES AND DECLARED THE COMMISSION INCOME FROM CHEQUE DISCOUNTING BUSINESS AT RS.6,01,000/ - AND RS.54,000/ - FROM SUPERVISION COMMISSION FROM LOADING AND UNLOADING OF IRON AND STEEL . THE AO IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE, TREATED THE COMMISSION AT 5% OF CHEQUE DISCOUNT AND ALSO ADDED FURTHER AMOUNT OF RS.28,670/ - FROM LOADING AND UNLOADING OF IRON AND STEEL BUSINESS. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A) WHO RESTRICTED THE COM MISSION AT 2.5% AND SET OFF THE SAME AGAINST PEAK ADDITION OF CASH DEPOSITS AT RS.8,42,800/ - OUT OF UNDISCLOSED CASH DEPOSITS MADE IN THE BANK ACCOUNT. WHILE DOING SO, THE CIT (A) OBSERVED IN PARA 4, 6 AND 6.1 AS UNDER: - 4. I HAVE CONSIDERED THE APPELLANT S SUBMISSIONS. AT THE OUTSET, AS REGARDS THE IMPUGNED BANK ACCOUNT IN THE BANK OF BARODA, I NOTE THAT THE SAID BANK ACCOUNT WAS OPENED ON 09.05.2008 AND FOR THE YEAR UNDER CONSIDERATION CASH OF RS.14,67,300/ - AND THE CHEQUES WORTH RS.5,72,33,000/ - WERE DE POSITED IN THE SAID ACCOUNT. THE PERUSAL OF THE SAID BANK ACCOUNT SHOWS THAT THE APPELLANT HAS DEPOSITED CASH OF RS.8,42,800/ - BEING THE PEAK CASH DEPOSIT AS ON 12.09.2008 IN THE AFORESAID BANK ACCOUNT. THERE WERE NO CASH WITHDRAWALS PRIOR TO THE SAID DATE TO E4XPLAIN THESE DEPOSITS. THE CASH WITHDRAWALS WERE STARTED FROM 15.09.2008 ONWARDS AND THE SUBSEQUENT DEPOSITS CAN ONLY BE EXPLAINED FROM SUCH WITHDRAWALS. THEREFORE, THE APPELLANT CANNOT TAKE PLEA THAT THE IMPUGNED PEAK CASH DEPOSITS OF RS.8,42,000/ - AS ON 12.09.2008 WAS OUT OF THE CASH WITHDRAWALS. SECONDLY, APPELLANT HAS DEPOSITED CHEQUES WORTH RS.1.41 CRORES IN THE SAID BANK ACCOUNT AS ON 12.09.2008 AND GOING BY THE APPELLANTS VERSION THAT THE COMMISSION EARNED IN CHEQUE DISCOUNTING BUSINESS IS 1% OF THE TURNOVER, APPELLANT COULD HAVE EARNED A MAXIMUM INCOME OF RS.1.41 LACS FROM SUCH TRANSACTIONS. FURTHER, CONSIDERING THE EXPENSES CLAIMED AGAINST SAID COMMISSION EARNED BY THE APPELLANT, IT WOULD NOT HAVE POSSIBLE THAT THE ENTIRE AMOUNT OF COMMISSION EARNED WAS AVAILABLE TO THE APPELLANT TO DEPOSIT IN THE FORM OF CASH. THUS, IN MY CONSIDERED OPINION, THERE IS NO SATISFACTORY EXPLANATION PLACED ON RECORD BEFORE THE A.O. OR MADE AVAILABLE BEFORE ME FOR THE PEAK CASH DEPOSIT OF RS.8,42,800/ - MADE IN THE APPELLANTS BANK ACCOUNT. ACCORDINGLY, I HOLD THAT THE AFORESAID AMOUNT OF RS.8,42,800/ - BY WAY OF CASH DEPOSITS IN THE BANK STANDS UNEXPLAINED AND HAS TO BE ASSESSED AS APPELLANTS INCOME U/S.68 OF THE ITA NO. 3727 /MUM/20 1 3 3 ACT. I DIRECT THE A.O. TO ASSESS THE AFORESAID AMOUNT OF RS.8,42,800/ - IN PLACE OF RS.14,67,300/ - . APPELLANT GETS PART RELIEF ON THIS ISSUE. 6. AS REGARDS THE COMMISSION EARNED IN CHEQUE DISCOUNTING BUSINESS AT 1% OF THE TURNOVER, WHILE IT IS A FACT THAT THE A. O. HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE SAME SHOULD BE ASSESSED AT 5%, NEVERTHELESS, THE APPELLANT HAS ALSO OT PRODUCED ANY BOOKS OF ACCOUNTS AND OTHER MATERIAL TO SHOW THAT THE SAME WAS ACTUALLY EARNED AT 1% OF THE TURNOVER AND NOT MORE. FURTHER, THE DECISION OF THE ITAT MUMBAI BE NCH RELIED UPON BY THE APPELLANT IN THE CASE OF MOHANLAL PATEL WAS RENDERED IN RESPECT OF A.YS. 1988 TO 1998, BEING THE BLOCK ASSESSMENT. THE A.YS. INVOLVED THEREIN BEING VERY OLD, THE PROFIT PARAMETERS ACCEPTED THEREIN CANNOT BE APPLIED TO THE AYS AS LATE AS 2009 - 10. SECONDLY, ITAT, HYDERABAD BENCH IN THE CASE OF SUNIL KUMAR SINGHANIA HELD THAT THE DISCOUNTING CHARGES OFFERED AT 0.28% BY THE APPELLANT WERE ON LOWER SIDE AND UPHELD THE ASSESSMENT MADE BY THE A. O. BASED ON THE SEIZED MATERIALS. THUS, THE IM PUGNED DECISIONS ARE NOT OF MUCH RELEVANCE TO THE FACTS OF THE APPELLANTS CASE. 6.1 HOWEVER, CONSIDERING THE FACT THAT THE APPELLANT HAS INDULGED IN CHEQUE DISCOUNTING BUSINESS FOR THE FIRST TIME DURING THE YEAR UNDER CONSIDERATION AND ALSO THE FACT THA T THE CASH DEPOSITS OF RS.8,42,800/ - WERE DIRECTED TO BE ASSESSED AS INCOME U/S 68 OF THE ACT AND NOT RULING OUT THE POSSIBILITY THAT SUCH CASH COULD HAVE EARNED BY THE APPELLANT FROM THE BUSINESS OF CHEQUE DISCOUNTING, I AM OF THE CONSIDERED OPINION THAT NO FURTHER ADDITION IS WARRANTED IN THIS REGARD. I OTHER WORDS, THE COMMISSION RECEIPTS OF RS.6 LACS SHOWN BY THE APPELLANT ON HIS OWN TOGETHER WITH THE UNEXPLAINED CASH DEPOSITS OF RS.8,42,800/ - WOULD RESULT IN AN INCOME OF RS.14.42 LACS ON A TURNOVER OF RS.5.72 CRORES WHICH WORKS OUT TO 2.5% OF THE TURNOVER IN THE CHEQUE DISCOUNTING BUSINESS. IN MY CONSIDERED OPINION, SUCH PROFIT IS REASONABLE AND JUSTIFIED IN THE ABSENCE OF ANY ADVERSE MATERIAL BROUGHT ON RECORD BY THE A.O. ACCORDINGLY, THE ADDITION MADE BY THE A. O. AT 5% OF THE TURNOVER IS DELETED AS HAVING NO BASIS THEREOF. AGGRIEVED, THE ASSESSEE CAME IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. FIRST OF ALL, WE FIND THAT ADMITTEDLY THE CASH DEPOSITS IN THE BANK ACCOUNT I.E. BANK OF BARODA AT RS.14,67,300/ - AND THERE ARE CASH WITHDRAWALS AS WELL AS CASH DEPOSITS . WE FIND THAT THE CIT (A) HAS EXAMINED THE PEAK OF CASH DEPOSITS SUBMITTED BY THE ASSESSEE AND THE S AME WAS TAKEN BY THE CIT (A) AT RS.8,42,800/ - . NOW, WHEN CONFRONTED, THE LEARNED SR. DR COULD NOT POINT OUT ANY DISCREPANCY IN THE PEAK ADDITION SUSTAINED BY THE CIT (A) . ACCORDINGLY, WE ARE OF THE VIEW THAT THE CIT (A) HAS RIGHTLY ACCEPTED THE CASH ITA NO. 3727 /MUM/20 1 3 4 DEPOSI T OF RS.8,42,800/ - AS PEAK ADDITION AND LINKED THE SAME TO THE COMMISSION INCOME AFTER ESTIMATING THE SAME AT 2.5% OF THE TURNOVER IN THE CHEQUE DISCOUNTING BUSINESS OF THE ASSESSEE. ADMITTEDLY, THE CHEQUE DISCOUNTING BUSINESS TURNOVER IS TO THE TUNE OF RS .5.72 CRORES AND ON WHICH 2 .5 % OF THE TURNOVER WILL RESULT INTO AN INCOME OF RS.14.42 LACS WHICH IS CASH DEPOSITS IN THE ASSESSEES BANK ACCOUNT. ACCORDINGLY, HE ESTIMATED THE PEAK OF UNEXPLAINED CASH DEPOSIT AT RS.8,42,800/ - AND SET OFF THE SAME AGAINST T HE COMMISSION INCOME AT 2.5%. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) AND HENCE, THESE TWO INTERLINKED ISSUES OF THE REVENUES APPEAL ARE DISMISSED. 5 . THE NEXT ISSUE IS AGAINST THE ORDER OF THE CIT (A) DELETING THE ADDITION OF UNSECURED LOAN ADDED BY THE AO U/S 68 OF THE ACT AMOUNTING TO RS.1.85 LACS. 6. WE HAVE HEAD THE RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE A O NOTICED FROM THE BALANCE SHEET FILED BEFORE HIM THAT THERE IS UNSECURED LOAN CREDITORS TO THE TUNE OF RS.1.85 LACS. AS THE ASSESSEE COULD NOT FILE ANY CONFIRMATION OR GENUINENESS OF THESE LOAN CREDITORS, THE AO TREATED THE SAME AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOU RCES. AGGRIEVED, TH E ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A), WHO DELETED THE ADDITION BY OBSERVING IN PARA 7 OF THE APPELLATE ORDER AS UNDER: - 7. AS REGARDS THE UNSECURED LOANS OF RS.1,85,000/ - , I NOTE THAT THE IMPUGNED AMOUNT WAS APPEARING IN THE BALANCE SHEET OF TH E APPELLANT FOR THE A. Y. 2008 - 09 I.E. AS ON 31.03.2008. IN SUCH CASE, THE A. O. CANNOT TREAT THE SAME AS CASH CREDIT U/S 68 OF THE ACT FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE AFORESAID ADDITION IS ALSO DELETED. FROM THE ABOVE FINDINGS OF TH E CIT (A) AND THE OBSERVATIONS OF THE AO, WE ARE OF THE VIEW THAT WHETHER THESE UNSECURED LOANS PERTAIN TO THE ASSESSMENT YEAR 2008 - 09 OR 2009 - 10 I.E. THE PRESENT YEAR NEEDS VERIFICATION. HENCE, WE RESTORE THIS ISSUE BACK TO THE FILE OF THE AO WHEREIN, THE A O WILL EXAMINE WHETHER THESE PERTAIN TO ASSESSMENT YEAR 2008 - 09 OR 2009 - 10 AND ACCORDINGLY DECIDE THE ISSUE. RESULTANTLY, THIS ISSUE OF THE REVENUES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 3727 /MUM/20 1 3 5 7. IN THE RESULT, THE APPEAL OF THE R EVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 - 10 - 2016 . BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI SR. NO. PARTICULARS DATE INITIALS MEMBER CONCERNED 1 DICTATION GIVEN ON 18 / 1 0/16 LK DEKA JM 2 DRAFT PLACED BEFORE AUTHOR 19 /10/16 / 25/10/16 3 DRAFT PROPOSED/PLACED BEFORE THE SE COND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR.PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO THE BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER SD/ - (RAMIT KOCHAR ) ACCONTANT MEMBER MUMBAI, DATED: 17 - 10 - 2016 LAKSHMIKANTA DEKA/SR.PS SD/ - ( MAHAVIR SINGH ) JUDICIAL MEMBER COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//