The ITO, Khargone V. Shri Sunny Maru, Barwani

ITA 378/IND/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66712 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 14-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Business income; Peak credit
• Section: 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ABPPM5835K I.T.A.NO. 378 /IND/201 2 . A.Y. : 2005 - 06 INCOME - TAX OFFICER, KHARGONE VS. SHRI SUNNY MARU, L/H LATE SHRI VISHNU MARU, RANJIT CHOWK, BARWANI. APPELLANT RESPONDENT C.O.NO. 73/IND/2012 (ARISING OUT OF I.T.A.NO.378/IND/2012.) A.Y. : 2005 - 06 SHRI SUNNY MARU, L/H LATE SHRI VISHNU MARU, RANJIT CHOWK, BARWANI VS. INCOME-TAX OFFICER, KHARGONE CROSS OBJECTOR RESPONDENT DEPARTMENT BY : SHRI R.A.VERMA, SR. DR ASSESSEE B Y : SHRI S. N. AGARWAL, CA DATE OF HEARING : 12 . 10 .2012 -: 2: - 2 DATE OF PRONOUNCEMENT : 25 . 10 .201 2 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER O F CIT(A) DATED 27.2.2012 FOR THE ASSESSMENT YEAR 2005-06 IN THE MATTER OF ORDER PASSED U/S 144 OF THE INCOME-TAX AC T, 1961. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE DERIV ED INCOME FROM TRADING IN KIRANA ITEMS AND OTHER INCOME FROM BUSINESS AMOUNTING TO RS. 76,730/-. AFTER PROCESSING THE RET URN, NOTICE U/S 148 WAS ISSUED AND CASE WAS FIXED FOR ASSESSMEN T. INFORMATION WAS CALLED FOR BY ISSUING NOTICE U/S 14 3(3)/142(1) ON VARIOUS DATES, THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNT AND EXPLAIN THE INCOME OFFERED IN HIS RETURN. HOWEVER, THE ASSE SSEE HAS NOT COMPLIED AND FAILED TO APPEAR AND COMPLY WITH T HE STATUTORY NOTICE/SUMMONS ISSUED FROM TIME TO TIME A ND ALSO -: 3: - 3 FAILED TO FURNISH THE REQUIRED DETAILS AND PRODUCE BOOKS OF ACCOUNT, BILLS AND VOUCHERS ETC. ASSESSING OFFICER OBSERVED THAT UNDER THESE CIRCUMSTANCES, THERE WAS NO OTHER ALTERNATE BUT TO COMPLETE THE ASSESSMENT TO THE BEST OF JUDGM ENT U/S 144. ACCORDINGLY, INCOME OF THE ASSESSEE WAS DETERM INED U/S 144 ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. T HE ASSESSING OFFICER OBSERVED THAT AS PER INCOME TAX DETAILS, IT WAS NOTICED THAT THE ASSESSEE HAS DEPOSITED CASH OF RS. 30,10,5 78/- IN THE SAVING BANK ACCOUNT NO. 6715 MAINTAINED IN DENA BAN K, BARWANI. COPY OF BANK STATEMENT WAS ALSO OBTAINED B Y THE ASSESSING OFFICER AND PLACED ON RECORD. FROM THE CO PY OF BANK STATEMENT, IT WAS NOTICED THAT THERE WERE VARIOUS E NTRIES IN THIS BANK ACCOUNT DURING THE PERIOD UNDER CONSIDERA TION. IN ADDITION TO THE CASH DEPOSIT AMOUNTING TO RS. 30,10 ,578/- DURING THE PERIOD UNDER CONSIDERATION, VARIOUS CHEQ UES HAVE BEEN CREDITED TO THE ACCOUNT DURING THE PERIOD THRO UGH WHICH A SUM OF RS. 36,02,586/- HAS BEEN CREDITED IN THIS ACCOUNT. IT WAS ALSO NOTICED THAT SEVERAL CHEQUES WERE ISSUED O UT OF THIS ACCOUNT AMOUNTING TO RS. 24,72,811/-. ACCORDINGLY, THE ASSESSING OFFICER PREPARED A CASH FLOW STATEMENT AS PER -: 4: - 4 ANNEXURE I AND WORKED OUT PEAK CREDIT IN THE ACCOUN T, AT RS. 16,97,130/-. AS AGAINST THE BUSINESS INCOME AT RS. 76,730/- OFFERED BY THE ASSESSEE, THE ASSESSING OFFICER ESTI MATED BUSINESS INCOME AT RS. 2 LAKHS AND ALSO UNEXPLAINED INVESTMENT IN BUSINESS AT RS. 2 LAKHS. AGAINST THES E ADDITIONS, THE ASSESSEE APPROACHED TO THE CIT(A), WHO CONFIRME D THE ADDITION ON ACCOUNT OF INCOME ESTIMATED FROM KIRANA AND SUGAR BUSINESS AT RS. 2 LAKHS AND UNEXPLAINED INVES TMENT IN BUSINESS AT RS. 2 LAKHS. HOWEVER, THE CIT(A) DELETE D THE ADDITION OF RS. 16,97,130/- BY OBSERVING THAT THE A SSESSEE HAVE ALSO ISSUED CHEQUES FROM THIS ACCOUNT TOWARDS PURCHASE OF GOODS AND IN TURN WHEN THE GOODS WERE SOLD, CASH WAS RECEIVED AND THE SAME WAS DEPOSITED IN THE BANK ACC OUNT. 3. AGAINST THE ABOVE ORDER, THE REVENUE HAS FILED THE APPEAL AND THE ASSESSEE HAS ALSO AGGRIEVED FOR THE ADDITIONS CONFIRMED BY THE LD.CIT(A) IN RESPECT OF PROFIT EST IMATED BY THE ASSESSING OFFICER AND INITIAL INVESTMENT IN BUSINES S. 4. SHRI R. A. VERMA, SR. DR, APPEARED ON BEHALF OF THE REVENUE AND CONTENDED THAT THE ASSESSING OFFICER HA S PRECISELY PREPARED A CASH FLOW, WHEREIN BOTH CHEQUE ENTRY AND -: 5: - 5 CASH ENTRY INTO BANK ACCOUNT WAS CONSIDERED AND THE ASSESSING OFFICER HAS WORKED OUT PEAK INVESTMENT IN THE BANK, WHICH WAS NOT DISCLOSED IN THE REGULAR BOOKS OF ACC OUNT. HE FURTHER SUBMITTED THAT BOOKS OF ACCOUNT WERE NOT PR ODUCED BEFORE ASSESSING OFFICER EVEN AFTER GIVING SO MUCH OPPORTUNITY BY THE ASSESSING OFFICER. HE FURTHER CONTENDED THAT WITHOUT SPECIFICALLY CONSIDERING EACH AND EVERY ENTRY OF CA SH DEPOSIT AND WITHDRAWAL IN THE UNACCOUNTED BANK ACCOUNT AS P REPARED BY THE ASSESSING OFFICER AS PER ANNEXURE I AND FORM ING PART OF ITS ASSESSMENT ORDER, THE CIT(A) HAS DELETED THE EN TIRE ADDITION MADE TOWARDS UNACCOUNTED CASH DEPOSIT. 5. ON THE OTHER HAND, SHRI S.N. AGARWAL, C. A., APPEAR ED ON BEHALF OF THE ASSESSEE AND CONTENDED THAT WHILE WORKING OUT THE PEAK CASH DEPOSIT IN THE BANK ACCOUNT, THE ASSESSING OFFICER HAS NOT CONSIDERED THE AMOUNT OF CASH RECEI VED OUT OF GOODS PURCHASED THROUGH THE ISSUE OF CHEQUES, WHICH DULY FIND PLACED IN THE BANK STATEMENT. ACCORDINGLY, HE JUSTIFIED THE ORDER OF CIT(A) FOR DELETING THE ADDITION IN RE SPECT OF PEAK CREDIT IN THE BANK ACCOUNT. -: 6: - 6 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FIND FROM RECORD THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS NOT PRODUCED ANY BOOKS OF ACCOUNT AND IT WAS FO UND BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS VARIOUS DEPOSITS IN THE BANK ACCOUNT EITHER IN CASH OR THROUGH CHEQUES. ON THE BASIS OF BANK ACCOUNT, THE ASSESSING OFFICER CALCUL ATED PEAK CREDIT OF RS. 16,97,130/- AND ADDED THE SAME IN THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ALSO ESTIMATED BUSINESS INCOME AT RS. 2 LAKHS BY TAKING INTO ACCOUNT CHEQU E AND CASH DEPOSITED IN THE BANK WHICH AMOUNTED IN TOTAL TO RS . 66.12 LAKHS. EVEN IF WE TAKE 4 % NET PROFIT RATE ON SUCH RECEIPTS, THE ESTIMATION OF PROFIT AT RS. 2 LAKHS BY THE ASSESSIN G OFFICER WAS VERY LIBERAL. ACCORDINGLY, WE DO NOT FIND ANY REASO N TO INTERFERE IN THE ORDER OF CIT(A) UPHOLDING THE ADDITION OF RS . 2 LAKHS ON ACCOUNT OF PROFIT EARNED BY THE ASSESSEE. THE ASSES SING OFFICER HAS ALSO ESTIMATED THE INITIAL INVESTMENT IN BUSINE SS AT RS. 2 LAKHS, WHICH WAS CONFIRMED BY THE LD.CIT(A). KEEPIN G IN VIEW UNEXPLAINED INVESTMENT IN BUSINESS IN TRADING OF KI RANA AND SUGAR, WE DO NOT FIND ANY REASON TO INTERFERE IN TH E ORDER OF -: 7: - 7 CIT(A) FOR UPHOLDING THE ADDITION OF RS. 2 LAKHS ON ACCOUNT OF INITIAL INVESTMENT. 7. WITH REGARD TO AMOUNT OF UNEXPLAINED DEPOSIT AS WORKED OUT BY THE ASSESSING OFFICER AT RS. 16,97,13 0/-, WE FOUND THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE CHEQUES ISSUED OUT OF THIS ACCOUNT WHICH AMOUNTED T O RS. 24,72,811/-. THESE CHEQUES WERE ISSUED BY THE ASSES SEE FOR PURCHASE OF KIRANA GOODS AND THE SALE CONSIDERATION WHICH WAS RECEIVED BY THE ASSESSEE IN CASH AND THE SAME W AS DEPOSITED BY HIM IN HIS BANK ACCOUNT. IF WE TAKE IN TO ACCOUNT CASH OF RS. 30,10,578/- AND CHEQUE DEPOSIT OF RS. 3 6,02,586/- ,WE FOUND THAT THERE IS TOTAL CREDIT OF RS. 66.12 L AKHS IN THE BANK ACCOUNT. THE ASSESSING OFFICER HAS WORKED OUT PEAK CREDIT OF RS. 16,97,130/- WITHOUT CONSIDERING THE A MOUNT OF CASH RECEIVED IN RESPECT OF GOODS PURCHASED BY ISSU E OF CHEQUES WHICH IS ALLEGED TO BE RS. 24,72,811/-. AT THE VERY SAME TIME, THE ASSESSING OFFICER HAS OBSERVED IN TH E ASSESSMENT ORDER THAT THE ASSESSEE HAS DEPOSITED RS . 36,02,586/- THROUGH CHEQUE IN THIS BANK ACCOUNT. HO WEVER, IN THE REMAND REPORT DATED 24.2.2012 WITH REGARD TO ADDITION -: 8: - 8 OF PEAK CREDIT OF RS. 16,97,130/-, THE OBSERVATION OF THE ASSESSING OFFICER WAS AS UNDER :- HOWEVER, THE ABOVE SUBMISSION IS MADE AND THE AMOUNTS MENTIONED IN THE ABOVE BODY ARE SUMMARIZED AS UNDER :- A) TOTAL PEAK OF CREDITS RS. 16,97,130/- B) TOTAL WITHDRAWALS BY CHEQUES RS. 36,02,485/- LESS: TOTAL CREDITS BY CHEQUES RS.25,94,157/- EXCESS WITHDRAWAL BY CHEQUES RS.10,08,328/- 8. IT IS CLEAR FROM THE OBSERVATION MADE IN THE REMAND REPORT THAT OUT OF TRANSACTION OF DEPOSIT OF CHEQUE AND WITHDRAWAL THROUGH CHEQUE, THERE WAS A SURPLUS WITH DRAWAL BY CHEQUE AMOUNTING TO RS. 10,08,328/- WHICH CAN REASONABLY BE PRESUMED THAT THIS EXCESS WITHDRAWAL BY CHEQUE WAS UTILIZED FOR PURCHASE OF GOODS WHICH MIG HT HAVE BEEN SOLD IN CASH. THUS, THE DEPOSIT OF CASH OF RS. 10,08,328/- MAY BE GIVEN CREDIT AGAINST THE PEAK CASH CREDIT WO RKED OUT BY THE ASSESSING OFFICER AT RS. 16,97,130/-. WE ALS O FOUND THAT CIT(A) HAS NOT CONSIDERED THE CLOSING BALANCE IN THE BANK -: 9: - 9 ACCOUNT AMOUNTING TO RS. 7,40,746/- AS ON 31.3.2005 . THUS, THE CONCLUSION DRAWN BY THE LD.CIT(A) ON THIS GROUN D IS SET- ASIDE AND KEEPING IN VIEW TOTALITY OF FACTS AND CIR CUMSTANCES OF THE CASE, WE MODIFY BOTH THE ORDERS OF THE AUTHO RITIES BELOW AND DIRECT THE ASSESSING OFFICER TO RETAIN ADDITION ON ACCOUNT OF PEAK CREDIT TO RS. 6,88,802/-( RS. 6,97,130/- (- ) RS. 10,08,328/-). WE DIRECT ACCORDINGLY. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED IN PART WHEREAS CROSS OBJECTION FILED BY TH E ASSESSEE IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 2012. SD/ - SD/ - (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :25 TH OCTOBER, 2012. CPU* 1518