The ITO, Mandsaur V. Smt. Sonali Kothari, Mandsaur

ITA 382/IND/2013

• Counselvise Citation: 38222714 RSA 2013
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 31-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S MUNDRA
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Peak credit; Additional evidence
• Section: 148; 68

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. : AZXPK7875K I.T.A.NO. 382 /IND/201 3 A.Y. : 2008-09 ITO, MANDSAUR VS. SMT. SONALI KOTHARI , JANKAPURA, MANDSAUR AP PELLANT RESPONDENT C.O.NO.78/IND/2013 (ARISING OUT OF I.T.A.NO. 382/IND/2013) A.Y. : 2008-09 SMT. SONALI KOTHARI, JANKAPURA, MANDSAUR VS. ITO, MANDSAUR CROSS OBJECTOR RESPONDENT DEPARTMENT BY : SHRI R.A.VERMA, SR. DR AS SESSEE BY : SHRI S.S.MUNDRA, CA DATE OF HEARING : 27 . 0 8 .201 3 DATE OF PRONOUNCEMENT : 29 . 0 8 .201 3 O R D E R -: 2: - 2 PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A), UJJAIN, DATED 25.03.2013, FOR THE ASSESSMEN T YEAR 2008-09 IN THE MATTER OF ORDER PASSED U/S 143(3)/14 7 OF THE INCOME-TAX ACT, 1961. 2. THE RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND DID NOT FILE THE RETURN FOR THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2008-09. THE CAS E WAS SELECTED FOR SCRUTINY ON THE BASIS OF AIR INFORMATI ON THAT THE ASSESSEE HAS DEPOSITED CASH OF RS. 26,88,000/- ON D IFFERENT DATES IN FINANCIAL YEAR 2007-08 IN HER SAVING BANK ACCOUNT MAINTAINED IN PUNJAB NATIONAL BANK, MANDSAUR. THERE FORE, THE ASSESSING OFFICER HAS RECORDED THE REASON AND I SSUED NOTICE U/S 148 ON 1.9.2010. IN COMPLIANCE OF THE NO TICE THE ASSESSEE HAS FILED THE RETURN ON 27.12.2010 SHOWING TOTAL INCOME FROM RETAIL TRADING BUSINESS AT RS. 1,35,780 /-. SHE HAS SHOWN BUSINESS INCOME OF RS. 89,892/- AND INCOME FR OM OTHER SOURCES AT RS. 45,890/-. THE ASSESSING OFFIC ER HAS -: 3: - 3 COMPLETED THE ASSESSMENT BY MAKING ADDITION OF RS. 26,88,000/- DEPOSITED IN BANK ACCOUNT IN CASH AS UNEXPLAINED CASH CREDIT U/S 68 AND RS. 4,50,565/- A S UNEXPLAINED OPENING CAPITAL. TOTAL ADDITION OF RS. 31,38,565/- WAS MADE BY THE ASSESSING OFFICER AND TOTAL INCOME ASSESSED AT RS. 32,74,350/- VIDE ORDER DATED 19.12.2011. THE ASSESSING OFFICER OBSERVED THAT VARIOUS OPPORTUNITIES WERE GI VEN TO THE ASSESSEE FOR APPEARING ON 17.6.11, 19.7.11, 25.7.11 AND 11.10.11, 14.10.11, 19.10.11, 20.10.11 AND 31.10.11 , BUT NOBODY APPEARED ON BEHALF OF THE ASSESSEE EXCEPT MA KING A REQUEST FOR AN ADJOURNMENT. AS PER THE DETAILS FILE D BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE A SSESSEE HAS SHOWN DETAILS OF TRADING BUSINESS IN WHICH PURCHAS ES OF RS. 2,84,500/-, SALES OF RS. 3,76,250/- GROSS PROFIT OF RS. 91,750/- ETC. WERE SHOWN RESULTING INTO NET PROFIT AT RS. 89 ,892/-. THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE H AD SHOWN OPENING CAPITAL OF RS. 5,86,506/-, AS TRADE DEBTORS OF RS. 5,35,000/- AND CASH IN HAND AT RS. 51,506/-. THE AS SESSING OFFICER FURTHER OBSERVED THAT AS PER SAVING BANK AC COUNT OF THE ASSESSEE IN PUNJAB NATIONAL BANK, MANDSAUR, THERE W AS TOTAL -: 4: - 4 DEPOSIT OF RS. 30,57,859/- IN FIVE MONTHS. IT WAS F URTHER OBSERVED THAT IN THIS ACCOUNT, THERE WAS CREDIT FRO M VARIOUS PLACES IN CASH AMOUNTING TO RS. 26,88,000/-, WHICH WAS IMMEDIATELY WITHDRAWN IN THE FORM OF SELF AND, THUS , ACCOUNT OPENED ON 8.5.2007 WAS CLOSED ON 8.10.2007. KEEPING IN VIEW THE SALES SHOWN BY THE ASSESSEE AT RS. 3,76,250/-, THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CON TENTION REGARDING DEPOSIT OF CASH IN THE BANK ACCOUNT OUT O F SALE PROCEEDS. KEEPING INTO THE VIEW THE ASSESSEES SUBM ISSION AS PER ITS REPLY DATED 17.11.2011, WHEREIN ASSESSEE HA S CONTENDED THAT RETAIL TRADE WAS UNDERTAKEN AT LOCAL LEVEL BOTH WITH RESPECT TO PURCHASE AND SALE, THE ASSESSING OF FICER TREATED THE AMOUNT CREDITED IN THE BANK ACCOUNT IN DIFFERENT PLACES OF THE COUNTRY AS UNACCOUNTED INCOME OF THE ASSESSEE. ACCORDINGLY, ADDITION OF RS. 26,88,000/- AND RS. 4, 50,565/- WAS MADE U/S 68 OF THE INCOME-TAX ACT, 1961. 3. BY THE IMPUGNED ORDER BY ACCEPTING ADDITIONAL EVIDENCE, THE LD. CIT(A) HELD THAT THE DEPOSIT OF C ASH IN THE BANK ACCOUNT WAS OUT OF SALE PROCEEDS IN RESPECT OF RETAIL TRADE BUSINESS. THE LD. CIT(A) ESTIMATED PROFIT AT 5% ON RETAIL -: 5: - 5 TRADE BY ESTIMATING SALES AT RS. 36 LAKHS AS AGAINS T SALE OF RS. 30 LAKHS SHOWN BY THE ASSESSEE IN THE REVISED COMPU TATION. ACCORDINGLY, THE LD. CIT(A) UPHELD THE ADDITION U/S 44AE @ 5 %, WHICH WORKS OUT AT RS. 1,80,000/-. THE REVENUE I S AGGRIEVED BY THE ORDER OF CIT(A) FOR DELETING THE A DDITION MADE BY THE ASSESSING OFFICER WITH RESPECT TO CASH DEPOS ITED IN THE BANK ACCOUNT. THE ASSESSEE HAS ALSO FILED CROSS OBJ ECTION FOR CIT(A)S ACTION IN ESTIMATING THE SALES AT RS. 36 L AKHS AS AGAINST SALE OF RS. 30 LAKHS SHOWN BY THE ASSESSEE IN REVISED COMPUTATION AND THEREBY COMPUTING NET PROFIT AT 5% ON SALES OF RS. 36 LACS. 4. SHRI R. A. VERMA, SR. DR APPEARED ON BEHALF OF THE DEPARTMENT AND DRAWN OUR ATTENTION TO VARIOUS OPPOR TUNITIES GIVEN BY THE ASSESSING OFFICER TO THE ASSESSEE TO E XPLAIN THE SOURCE OF AMOUNT DEPOSITED IN THE BANK ACCOUNT. OUR ATTENTION WAS ALSO DRAWN TO THE TRADING ACCOUNT FIL ED BY THE ASSESSEE INDICATING SALES OF RS. 3,76,350/-, WHEREA S CIT(A) HAS ACCEPTED SALES OF ASSESSEE AT RS. 36 LAKHS. AS PER LD. SR. DR, THE ASSESSEE COULD NOT PRODUCE EVIDENCE BEFORE THE ASSESSING OFFICER WITH RESPECT TO THE RETAIL TRADIN G BUSINESS -: 6: - 6 BEING CARRIED ON BY HER AND THE RESPECTIVE AMOUNT O F PAYMENT RECEIVED AGAINST SALES, WHICH WAS ALLEGED TO BE DEP OSITED IN THE BANK ACCOUNT AT VARIOUS PARTS OF THE COUNTRY. T HE LD. SENIOR DR FURTHER CONTENDED THAT BEFORE ACCEPTING A DDITIONAL EVIDENCE UNDER RULE 46A, THE LD. CIT(A) HAS NOT GIV EN ANY JUSTIFICATION AS TO WHY THE ASSESSEE HAS FAILED TO PRODUCE THESE EVIDENCES BEFORE THE ASSESSING OFFICER WHEN VARIOUS OPPORTUNITIES WERE GIVEN BY THE ASSESSING OFFICER T O THE ASSESSEE. LD. SENIOR DR ALSO DRAWN OUR ATTENTION TO THE SAVING BANK ACCOUNT OPENED BY THE ASSESSEE AT PUNJAB NATIO NAL BANK, WHEREIN ASSESSEE HAS SHOWN HER STATUS AS HOUS E WIFE. 5. ON THE OTHER HAND, SHRI S. S. MUNDRA, C. A. APPEARE D ON BEHALF OF THE ASSESSEE AND CONTENDED THAT SINCE EVIDENCE REGARDING REMITTANCE OF PAYMENT BY THE PARTIES WAS NOT AVAILABLE AT THE TIME HEARING WAS GOING ON BEFORE T HE ASSESSING OFFICER, THE ASSESSEE SUBMITTED ALL THESE EVIDENCES BEFORE THE CIT(A), WHO HAS SENT ALL THESE DETAILS TO THE ASSES SING OFFICER FOR HIS REMAND REPORT. HOWEVER, AS PER THE LD. AUTH ORIZED REPRESENTATIVE , THE ASSESSING OFFICER INSTEAD OF E XAMINING THE ADDITIONAL EVIDENCE, SENT BY THE LD.CIT(A), DECLINE D TO ACCEPT -: 7: - 7 THE SAME. HE FURTHER CONTENDED THAT REVISED COMPUTA TION OF INCOME WAS FIRST FILED BEFORE THE ASSESSING OFFICER AND NOT BEFORE THE CIT(A), AS PER THE SIGNATURE OF THE ASSE SSING OFFICER OBTAINED ON SUCH COMPUTATION. AS PER LD. AUTHORIZED REPRESENTATIVE , SINCE THE ASSESSEE WAS ENGAGED IN RETAIL TRADE, WHEREIN TURNOVER WAS BELOW RS. 40 LAKHS, THE ASSESSEE IS NOT SUPPOSED TO KEEP BOOKS OF ACCOUNTS. ACCORDIN GLY, NO FAULT CAN BE FOUND IN THE ACTION OF CIT(A) FOR ESTI MATING PROFIT OF RETAIL BUSINESS AT 5% OF THE GROSS SALES. ALTERN ATIVELY, HE ARGUED THAT EVEN AS PER THE BANK STATEMENT, THE PEA K CREDIT WAS TO THE TUNE OF RS. 3,95,529/- AS ON 14.6.2007, THEREFORE, NO ADDITION IS JUSTIFIED ABOVE THE AMOUNT OF THIS P EAK CREDIT. 6. RIVAL CONTENTIONS HAVE BEEN CONSIDERED AND RECORDS PERUSED. IT IS CLEAR FROM THE ASSESSING OFFICERS O RDER THAT VARIOUS OPPORTUNITIES WERE GIVEN TO THE ASSESSEE TO SUBSTANTIATE DEPOSIT OF AMOUNT IN THE BANK. HOWEVER , THE ASSESSEE WAS UNABLE TO EXPLAIN THE SAME. IT IS ALSO A MATTER OF RECORD THAT VIDE ITS REPLY DATED 17.11.2011, THE AS SESSEE HAS STATED REGARDING CARRYING ON RETAIL TRADE AT LOCAL LEVEL AND EFFECTING PURCHASE AND SALE IN THE MANDSAUR DISTRIC T ONLY. -: 8: - 8 KEEPING IN VIEW THESE FACTS, THE AMOUNT DEPOSITED I N THE BANK ACCOUNT, WHICH WAS COMING FROM THE VARIOUS CITIES O THER THAN MANDSAUR, CANNOT BE ACCEPTED ON ACCOUNT OF SALE PRO CEEDS OF BUSINESS CARRIED OUT AT MANDSAUR. EVEN THOUGH BEFOR E THE CIT(A), THE ASSESSEE HAS FILED EVIDENCE WITH REGARD TO REMITTANCE OF FUND BY THE BUYER, HOWEVER, NO POSITI VE REMAND REPORT WAS SENT BY THE ASSESSING OFFICER NOR THE CI T(A) HAS GIVEN HIS OWN FINDING WITH RESPECT TO THE JUSTIFIAB ILITY OF THE ASSESSEES CONTENTION REGARDING RECEIPT OF AMOUNT F ROM RESPECTIVE BUYERS. WITHOUT RECORDING ANY OF HER FIN DING, THE LD. CIT(A) WAS NOT JUSTIFIED IN REACHING TO THE CONCLUS ION THAT THE AMOUNT DEPOSITED IN THE BANK ACCOUNT WAS OUT OF SAL E PROCEEDS OF RETAIL BUSINESS ALLEGED TO BE CONDUCTED AT MANDSAUR DISTRICT AS PER ASSESSEES OWN CONTENTION, WHEREAS THE AMOUNT WAS ACTUALLY FLOWN FROM OTHER CITIES OF THE COUNTRY. 7. IN VIEW OF THE ABOVE DISCUSSION, WE ARE INCLINED T O AGREE WITH THE CONTENTIONS OF SHRI R. A. VERMA, LD. SENIOR DR TO THE EFFECT THAT CIT(A) WAS NOT JUSTIFIED IN DELE TING THE ADDITION OF RS. 26.88 LACS MADE U/S 68 BY ACCEPTING ASSESSEES -: 9: - 9 CONTENTION OF DEPOSIT IN BANK ACCOUNT OUT OF SALE P ROCEEDS OF RETAIL TRADE. 8. HOWEVER, AT THE VERY SAME TIME, WE FOUND THAT WHATEVER AMOUNT WAS DEPOSITED IN THE BANK ACCOUNT W AS IMMEDIATELY WITHDRAWN BY WAY OF SELF CHEQUE. THUS, CASH WAS AVAILABLE FOR AGAIN ROUTING IN THE BANK ACCOUNT. IN VIEW OF THESE FACTS, WE ARE SETTING ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO RESTRICT ADDITION U/S 68 TO THE EXTENT OF PEAK CREDIT OF RS. 3,95,529/- A S ON 14.6.2007. THUS, IN ADDITION TO THE BUSINESS INCOME OF RS. 89,892/- OFFERED BY THE ASSESSEE, ADDITION U/S 68 IS RESTRICTED TO RS. 3,95,529/-. 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 29 TH AUGUST, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29 TH AUGUST, 2013. CPU* 2728