SUNERA ALTAF PUNJANI, MUMBAI V. ITO 13(1)2, MUMBAI

ITA 4348/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9198 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2013
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: MARLON REGO
• Keywords: Income from undisclosed sources; Peak credit
• Section: 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO. 4 3 4 9 / MUM/20 1 3 ( / ASSESSMENT YEAR : 200 9 - 10 ) FARIDA HANIF PUNJANI, ROOM NO.32, 4 TH FLOOR, HUSEINI BUILDING, 134/138, NISHAN PADA ROAD, - 40009 VS. ITO 13(1)(2), MUMBAI ./ ./ PAN/GIR NO. : A JOPP 0192 M ( / APPE LLANT ) .. ( / RESPONDENT ) AND ./ ITA NO. 4348 /MUM/201 3 ( / ASSESSMENT YEAR :200 9 - 10 ) SUNERA ALTAF PUNJANI, ROOM NO.32, 4 TH FLOOR, HUSEINI BUILDING, 134/138, NISHAN PADA ROAD, - 40009 VS. ITO 13(1)(2), MUMBAI ./ ./ PAN/GIR NO. : A JXPP 3702 C ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI MARLON REGO /REVENUE BY : SHRI NEIL PHILIP / DATE OF HEARING : 1 9 /03/2015 / DATE OF PRONOUNCEMENT 25 / 03/2015 / O R D E R PER R.C.SHARMA (A.M) : TH E SE ARE THE APPEALS FILED BY DIFFERENT ASSESSEES AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2009 - 2010. 2. TH E GRIEVANCE IN BOTH THE APPEALS RELATES TO ADDITION MADE U/S.68 ON ACCOUNT OF AMOUNT FOUND TO BE DEPOSITED IN BANK ACCOUNT. ITA NO S . 4349&4348 /1 3 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. IN THIS CASE, AS PER A.I.R. INFORMATION, THE ASSESSEE HAS DEPOSITED CASH O F RS.37,89,800 / - IN ICIC I BANK ( A/ C NO.642601500103) MOHAMMAD ALI ROAD, MUMBAI - 400 003. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAD GIVEN A COPY OF BANK STATEMENT OF MEMON CO. - OP. BANK ONLY FOR THE PERIOD 01 - 04 - 2008 TO 31 - 03 - 2009. DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE ORDER SHEET NOTING DATED 19 - 10 - 2011, SHE WAS ASKED TO EXPLAIN THE SOURCE OF CASH DEPOSITS OF RS.37,89,800J - IN ICICI BANK. SHE WAS ALSO ASKED TO STATE, VIDE ORDER SHEET NOTING DATED 16 - 11 - 2011, AS TO WHY THE ENTIRE CASH DEP OSIT OF RS.37 ,89,800 / - SHOULD NOT BE TREATED AS INCOME FROM UNDISCLOSED SOURCES AND ADDED TO HER TOTAL INCOME. BEFORE THE AO THE AR IN THIS CONNECTION FILED VARIOUS SU BMISSIONS STATING AS UNDER: 'THAT THE HUSBAND OF THE ASSESSEE IS RETAILER AND HE USED THE ABOVE REFERRED BANK ACCOUNT FOR HIS OWN BUSINESS. HE DEPOSITED MONEY IN THE ACCOUNT WITH MOHAMED ALI ROAD BRANCH AND WITHDRAWN THE SAME FROM ANOTHER BRANCH (A TM) OF THE BANK. SOME T IMES AMOUNT DEPOSITED IN OTHER BRANCH AND WITHDRAWN FROM MOHAMED ALI RO AD BRANCH. THIS WAS DONE FOR THE SAKE OF TRANSFERRING MONEY AND TO AVOID RISK OF CARRYING CASH. WEEKLY ABOUT 40 TO 45 THOUSAND RUPEES WERE DEPOSITED AND WITHDRAWN WHATEVER AMOUNT HE HAS CARRIED FROM COMMISSION BUSINESS BY THESE TRANSACTIONS HE HAS SHOWN IN HIS RETURN OF INCOME. THE NATURE AND STYLE OF HIS BUSINESS IS STATED TO BE THAT HE HAS CONTACTS WITH SOME VENDORS WHO PICK REJECTED, DAMAGED GOODS FROM FACTORIES, EXPORTERS. WHEN MATERIALS AVAILABLE THEY INFORM TO MR. HANIF, SIMILARLY HE INFORMS TO HIS CU STOMERS WHO ARE STREET VENDORS SELLING GARMENTS ON FOOTPATH. THEY GIVE HIM ORDER OF A DOZEN OR TWO DOZENS AFTER GATHERING ORDERS HE GOES TO THAT VENDOR AND PURCHASES MATERIALS AND DISTRIBUTES THEM TO HIS CUSTOMERS WHO ORDERED FOR. ALL THE VENDORS THEY HAVE NO PAN CARD OR ANY PERMANENT ADDRESS OF BUSINESS AS THEY USED TO CHANGE THEIR PLACE WEEKLY AREA FOR EXAMPLE IN DADAR THE WEEKLY HOLIDAY IS MONDAY, SHOPS ARE CLOSED ON MONDAY THE STREET VENDORS USES FOOTPATH IN FRONT OF CLOSED SHOPS FOR SELLING OF THEIR IT EMS. DUE TO THESE TYPE OF CUSTOMERS MR. HANIF CAN NOT KEEP ANY RECORD AS THE TRANSACTIONS ARE AGAINST CASH AND OF SMALL AMOUNTS BECAUSE COST FOR A DOZEN T - SHIRTS COME TO RS.1,000/ - TO RS.1,500/ - . HE HAS NO OTHER PARTICULAR PLACE OF BUSINESS, AS HE GOES TO VENDORS AND CUSTOMERS. HE HAS NO OTHER RETAIL BUSINESS. THE PROFIT SHOWN IN HIS CAPITAL ACCOUNT IS A SHARE OF PROFIT RECEIVED FROM FIRM AND THERE IS NO ANY INDIVIDUAL PROFIT AND LOSS ACCOUNT IN A. Y. 2009 - 10' . ITA NO S . 4349&4348 /1 3 3 'IT IS ALSO FURTHER STATED THAT SINCE THE BA NK ACCOUNT IS IN HER NAME AND THE INITIAL MONEY KEP T THERE WAS FROM HER CASH BALANCE, SHE CANNOT REFRAIN MYSELF FROM THE RESPONSIBILITY OF THOSE TRANSACTIONS. THE CASH DEPOSITS ARE NOT CONSTANT AND NOT UTILIZED FOR PURCHASING ANY FIXED ASSETS OR HUGE SECUR ITIES INVESTMENT ETC. THE TRANSACTIONS ARE OF SMA LL AMOUNTS NOT MORE THAN RS.25, 000 / - AT A TIM E, AND AMOUNT OF AROUND RS. 60, 000 / - IS ROUTED THROUGH OUT THE YEAR WHICH CAN BE SEEN FROM THE BANK STATEMENT. THE ENTIRE MATTER WAS HAPPENED ONLY DUE TO UNAWAREN ESS AND ILLITERACY. THERE WAS NO MY INTENSE TO CONCEAL THE INCOME, BUT SINCE IT WAS A MISTAKE AND SOME REASONABLE PENALTY MUST BE THERE AND THAT IS WHY SHE AND HER HUSBAND BOTH HAVE ACCEPTED THAT SINCE THE BANK ACCOUNT IS IN THE NAME OF THE ASSESSEE THE TR ANSACTIONS WHICH ARE NOT COVERED IN THE ACCOUNTS OF THE ASSESSEE MAY BE CONSIDERED AS BUSINESS TURN OVER AND DEEMED PRO F IT AS SPECIFIED U/ S. 4 4 AF OF THE INCOME - TAX ACT BE ADDED IN HER INCOME. IN VIEW OF THE SAME, TO MAKE ADDITIONS OF TOTAL OF SMALL CASH D EPOSITS DURING WHOLE YEAR IN HER INCOME WILL NOT BE JUSTIFIED AND THEREFORE SUGGESTED TO TREAT. THE DEPOSITS AS TU RN OVER OF THE BUSINESS U/ S. 44AF OF THE INCOME - TAX ACT. AS PER THE PROVISION OF THAT 5% OF TURNOVER BE ADDED IN HER INCOME AS DEEMED PROFIT. ' 4. IN VIEW OF THE ABOVE SUBMISSION THE AO OBSERVED THAT THE HUSBAND OF THE ASSESSEE OPERATED THE ACCOUNT IN ICICI BANK FOR BUSINESS AND EARNED COMMISSION, SUMMONS U/S. 131 OF THE INCOME - TAX ACT, DATED 08 - 12 - 2011 WAS ISSUED TO THE HUSBAND OF THE ASSESSE E, SHRI HANIF PUNJANI WHOSE STATEMENT ON OATH WAS RECORDED ON 08 - 12 - 2011. HE WAS ASKED TO STATE AS TO WHY THE AMOUNT OF CASH DEPOSIT OF RS.37,89,800/ - SHOULD NOT BE ADDED TO HIS INCOME. THE SPECIFIC QUESTION AND ANSWER GIVEN BY THE HUSBAND OF THE ASSESSEE IS REPRODUCED BELOW: Q.II WHY CASH DEPOSITS OF RS.37,89,800/ - SHOULD NOT BE ADDED IN YOUR INCOME. WHAT DO YOU WANT TO SAY? A.II IT SHOULD NOT BE ADDED IN MY INCOME BECAUSE, THE AMOUNT OF CASH DEPOSITS OF RS.37,89,800/ - IS A TURNOVER OF WHOLE YEAR. USUAL LY I DEPO SIT AND WITHDRAW AMOUNT OF RS.25 ,000/ - AROUND AT A TIME FOR ANY BU SINESS PURPOSE. SINCE, I PURCHASE MATERIALS ON BEHALF OF MY CLIENTS FROM SUBURB AREAS. I WITHDRAW MONEY FROM NEARBY ICICI BANK BRANCH TO AVOID RISK OF TRANSIT. YOU CAN SEE FROM THE BANK STATEMENT THAT THE TOTAL AMOUNT OF RS.60,000/ - HAS BEEN ROUTED THOROUGH OUT THE YEAR IN A SMALL AMOUNTS. HENCE, IT IS NOT JUSTIFIED TO ADD THE TOTAL AMOUNT OF TURNOVER OF RS.37,89,800/. - OF BANK STATEMENT I N MY INCOME. SINCE ACCOUNT IS OWNED BY MY WI FE THE REASONABLE ADDITION SHOULD BE MADE IN HER INCOME AND NOT IN MY INCOME ITA NO S . 4349&4348 /1 3 4 HOWEVER, THE AO DID NOT CONVINCE WITH THE ASSESSEES CONTENTION AND ADDED THE ENTIRE AMOUNT OF CASH DEPOSIT ED IN THE BANK ACCOUNT IN THE TOTAL INCOME OF THE ASSESSEE. 5 . BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ACTION OF THE AO. THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT CASH WAS DEPOSITED AND WITHDRAWN FROM THE BANK ACCOUNT AND THE CASH SO WITHDRAWN WAS AGAIN DEPOSI TED IN THE BANK IN CONNECTION WITH THE SMALL BUSINESS CARRIED OUT BY THE HUSBAND OF THE ASSESSEE. THE CONTENTION OF THE ASSESSEE AND HER HUSBAND NOWHERE FOUND FALSE BY THE AO. THE AO HAS NOT BROUGHT ANYTHING ON RECORD TO CONTROVERT THIS ASSERTION OF ASSESS EE . UNDER THESE CIRCUMSTANCES, EACH CREDIT ENTRY IN THE BANK CANNOT BE TREATED AS ASSESSEES INCOME, INSOFAR AS CASH WITHDRAWN WAS AGAIN DEPOSITED IN THE VERY SAME BANK ACCOUNT . IT IS NOT THE CASE OF THE AO THAT CASH WITHDRAWN FROM THE BANK ACCOUNT HAD BEE N UTILIZED BY ASSESSEE SOMEWHERE ELSE. WE, THEREFORE, DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF PEAK CREDIT IN THE SAID BANK ACCOUNT. WE DIRECT ACCORDINGLY. 7 . AS T HE FACTS AND CIRCUMSTANCES IN THE CASE OF ITA NO.4348/MUM/2013 ARE EXACTLY SAM E, THEREFORE, FOLLOWING THE REASONING GIVEN HEREINABOVE, WE DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF PEAK CREDIT IN THE BANK ACCOUNT AFTER VERIFYING THAT THERE WAS CASH DEPOSIT AND CASH WITHDRAWAL IN THE BANK ACCOUNT. WE DIRECT ACCORDINGLY. 8 . IN THE RESULT, APPEALS OF BOTH THE ASSESSEES ARE ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 25 /03/ 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 25/03 /201 5 . . /PKM , . / PS ITA NO S . 4349&4348 /1 3 5 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPON DENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//