NARSHINGH LAL KALOTIA, Jaipur V. ITO, Jaipur

ITA 429/JPR/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2016 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POONAM ROY DCIT DHK
• Keywords: Business income; Peak credit; Deemed to accrue or arise in india

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 429/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 LATE SHRI NARSINGH LAL KALOTIA, THROUGH- L/H SMT. ASHA DEVI, W/O DECEASED, RADHA KRISHNA NAGAR, IMLIWALA PHATAK, JAIPUR. CUKE VS. I.T.O., WARD- 6(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACMPK 6393 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. JAIN (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SMT. POONAM ROY (DCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28/06/2017 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 30/06/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISES AGAI NST THE ORDER DATED 21/03/2014 PASSED BY THE LD. CIT(A)-II, JAIPUR FOR THE A.Y. 2009-10, WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE AUTHORITIES BELOW HAVE GROSSLY ERRED I N LAW AND FACTS IN CONFIRMING ADDITION OF RS. 26,99,000/- U/S 69B ON ACCOUNT OF ALL CASH DEPOSITS IN BANK ACCOUNT WITHOU T ANY BASIS AND JUSTIFICATION AND THUS DESERVES TO BE QUA SHED. ITA 429/JP/2014_ NARSINGH LAL KATOLIA VS ITO 2 2. THAT THE AUTHORITIES BELOW HAVE GROSSLY ERRED IN LAW AND FACTS IN NOT ACCEPTING PEAK CASH CREDIT THEORY WHICH IS GENERALLY ACCEPTED IN INCOME TAX LAW TO AVOID MULTI PLE COUNTING. 3. THAT THE AUTHORITIES BELOW HAVE GROSSLY ERRED IN LAW AND FACTS IN NOT CONSIDERING ASSESSEE APPELLANT A BENAM I OF SHRI BAIJNATH AGARWAL WHO OPENED BANK ACCOUNT IN THE NAM E OF ASSESSEE AND OPERATED SUCH BANK ACCOUNT AND THUS WA S OSTENSIBLE OWNER. BAIJNATH AGARWAL ALSO OPENED ACCOUNTS NAMELY - NSE- CAPITAL, NCX- FUTURES, MCX FUTURES, N SE- FUTURES, ETC. WITH ANGEL COMMODITIES BROKING(P) LTD , IN THE NAME OF ASSESSEE. 4. THAT THE AUTHORITIES BELOW HAVE GROSSLY ERRED IN LAW AND FACTS IN NOT ADJUSTING BUSINESS LOSS IN SHARE TRANS ACTIONS FROM DEEMED INCOME COMPUTED U/S 69B. 5. THAT THE APPELLANT RESERVES HIS RIGHTS TO ADD AM END OR ALTER THE GROUNDS OF APPEAL ON OR BEFORE DATE OF APPEAL H EARING. 2. IN THIS APPEAL, THE ASSESSEE HAS TAKEN FIVE GROU NDS BUT THE ONLY EFFECTIVE ISSUE INVOLVED IN THE APPEAL IS AGAINST C ONFIRMING THE ADDITION OF RS. 26,99,000/- U/S 69B OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON ACCOUNT OF CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE. 3. IN THE GROUND NO. 2, THE ASSESSEE PLEADED THAT T HE LD. CIT(A) SHOULD HAVE ACCEPTED THE PEAK CASH CREDIT THEORY FOR MAKIN G THE DISALLOWANCE. HE ALSO SUBMITTED THAT THE ASSESSEE WAS A BENAMI OF SHR I BAIJNATH AGARWAL, WHO OPENED BANK ACCOUNT IN THE NAME OF ASSESSEE AND OPERATED SUCH BANK ACCOUNT, THEREFORE, NO ADDITION SHOULD BE MADE IN THE HANDS OF THE ASSESSEE. HE ALSO PLEADED THAT IN THE IMMEDIATE PRE CEDING YEAR, THE LD. ITA 429/JP/2014_ NARSINGH LAL KATOLIA VS ITO 3 CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE AND HEL D THAT 8% OF THE GROSS TOTAL DEPOSITS IN THE BANK ACCOUNT SHALL BE T AKEN AS NET PROFIT AND THE ASSESSING OFFICER IS DIRECTED TO DO SO. HE ALSO PLEADED THAT THE REVENUE HAS NOT GONE IN APPEAL AGAINST THE ORDER OF THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2008-09 DATED 11/12/2013. 4. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE ASSESSEE IN ONE HAND CLAIMED THAT HE IS BENAMI OF SHRI BAIJNATH AGA RWAL AND ON THAT OTHER HAND, HE ALSO SUBMITS THAT THE ADDITION MAY BE MADE BY APPLYING THE PEAK THEORY OR ALTERNATIVELY 8% OF THE TOTAL DEPOSITS IN THE BANK ACCOUNT, THEREFORE, THE STAND OF THE ASSESSEE IS NOT CLEAR. SHE ALSO PRAYED TO SUSTAIN THE ORDER OF THE LD. CIT(A). 5. I HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE QU ANTUM OF CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE DURING THE RELEVANT PERIOD IS NOT IN DISPUTE. THE ASSESSEE HAS SUBMITTED COPY OF T HE BANK STATEMENT FOR THE RELEVANT PERIOD, WHICH IS PLACED AT PAGE NOS. 9 TO 16 OF THE PAPER BOOK. THE LD. CIT(A) IN THE YEAR 2008-09 HAS DECIDED THE ISSUE AND THE SAME HAS BEEN ACCEPTED BY THE REVENUE. THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT(A) IS AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SU BMISSION MADE. IN VIEW OF THE SUBMISSION FILED BY THE A/R FOR THE APPELLANT I T IS VERY CLEAR THAT THE APPELLANT DEPOSITS IN THE ICICI BANK SAVING ACCOUNT IS THE BUSINESS RECEIPTS OF ITA 429/JP/2014_ NARSINGH LAL KATOLIA VS ITO 4 THE APPELLANT AND THE SAME WERE UTILIZED FOR HIS BU SINESS. HENCE, IN VIEW OF THESE FACTS THE AMOUNT OF RS. 12,03,000/- IS TREATE D AS BUSINESS RECEIPTS OF THE APPELLANT. AS REGARDS THE AMOUNT, OF RS. 12,03,000/ - IS BUSINESS RECEIPTS OF THE APPELLANT, IT IS FAIR AND REASONABLE TO APPLY NET P ROFIT RATE OF 8 % ON THIS RECEIPTS OF THE APPELLANT. THE AO IS DIRECTED TO CA LCULATED TAX ACCORDINGLY. THE APPELLANT PARTLY SUCCEEDS ON THIS GROUND. IT IS FUR THER OBSERVED THAT THE AO HAS MADE THE ADDITION FOR THE CASH DEPOSIT OF RS.8,82,0 00/- IN THE BANK ACCOUNT IGNORING THE FACT THAT THE PEAK DEPOSIT AS PER LEDG ER AS WELL AS COPY OF BANK ACCOUNT PRODUCE BY THE ASSESSEE IS RS.2,02,252/- AS ON 05.04.2007. IN THE VARIOUS DECISIONS INCLUDING THE DECISION OF RAJASTH AN HIGH COURT IN CASE OF CIT VS. ISHWARDASS MUTHA 270 ITR 597, IT IS ACCEPTED TH AT ADDITION SHOULD BE MADE ONLY TO THE EXTENT OF THE PEAK CREDIT AND NOT THE E NTIRE CREDIT AS BY AGGREGATING ALL THE CREDITS THEY TENT TO GETS TWICE WHICH IS AGAINST THE PRINCIPAL OF TAXATION. RESPECTFULLY FOLLOWING THESE DECISIONS, I FIND THAT THE ADDITION MADE BY THE AO FOR THE ENTIRE CASH DEPOSIT IN THE BANK ACCOUNT CANT BE SUSTAINED. THE ADDITION IS THEREFORE RESTRICTED TO PEAK DEPOSIT OF RS.2,02,252/-. THE APPELLANT PARTLY SUCCEEDS ON THI S GROUND. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THIS APPEA L IS ALSO PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/06/2017. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30 TH JUNE, 2017 *RANJAN ITA 429/JP/2014_ NARSINGH LAL KATOLIA VS ITO 5 VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- LATE SHRI NARSINGH LAL KALOTIA, THROUG H- L/H SMT. ASHA DEVI, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 6(2), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 429/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR