ITO, New Delhi V. Shri Gautam Murgai, New Delhi

ITA 4402/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97078 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 19-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: VK SABHARWAL
• Keywords: Unexplained cash credit; Gift; Business income; Salary income; Corroborative evidences; Tax effect; Revised return
• Section: 147; 148

Judgement Text

1 ITA NO.4402. DEL.13 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.- 4402/DEL/2013 (ASSESSMENT YEA R-2006-07) ITO WARD-44(3), ROOM NO. 210, D- BLOCK, DR. S. P. MUKHERJEE CIVIC CENTRE, J. N. MARG NEW DELHI (APPELLANT) VS GAUTAM MURGAI B-53, SOUTH EXTENSION, PART-2 NEW DELHI AAGPM4791A (RESPONDENT) APPELLANT BY SH.T. VASANTHAN, SR. DR RESPONDENT BY SH.V. K. SABHARWAL, ADV. ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY REVENUE AGAINST ORDER DATED 25/06/2013 PASSED BY CIT(A) XXX, NEW DELHI. THE GROUNDS OF APPEAL RA ISED HEREIN, ARE AS FOLLOWS:- 1. DELETING THE ADDITION OF RS.14,19,676/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDITS AND PAYMENTS OF CREDIT CARDS FROM UNDISCLOSED SOURCES. 2. TREATING THE UNEXPLAINED CASH CREDITS AS BUSINES S RECEIPT AND DETERMINING INCOME FROM BUSINESS BY APPLYING NET P ROFIT @ 5% OF THE BUSINESS RECEIPTS BY IGNORING THE MATERIAL FACT S THAT THE ASSESSEE HAD FAILED TO PROVE THE SOURCES OF CASH CR EDITS. 2. THE ASSESSEE IS AN EMPLOYEES OF INDIAN AIRLINES, ACCORDINGLY HE FILED HIS RETURN DECLARING AN INCOME OF RS. 1,82,610/-. THE S AME WAS ACCEPTED AS DATE OF HEARING 26.08.2015 DATE OF PRONOUNCEMENT 31.08.2015 2 ITA NO.4402. DEL.13 CORRECT UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961. CONSEQUENTLY, THE NOTICE U/S. 148 OF THE ACT WAS ISSUED. AS PER THE INFORMATION RECEIVED IT WAS FOUND THAT THE ASSESSEE IS HAVING BANK ACCOUNT WITH CITI BANK AND WITH HSBC BESIDES HAVING A SEPARATE SALARY ACCOUNT WITH CENTR AL BANK OF INDIA. THE BANK ACCOUNTS WITH CITI BANK, CENTRAL BANK OF INDIA AND HSBC LTD. SHOWS THAT TOTAL DEPOSITS AMOUNTING TO RS.2,61,800/-, RS. 3,61,575/- AND RS.5,34,658/- RESPECTIVELY DURING THE FINANCIAL YEA R 2005-06 TOTALING TO RS.11,58,033/-. THE ASSESSING OFFICER FOUND THE SAM E TO BE ESCAPED ASSESSMENT AS PER PROVISIONS OF LAW CONTAINED U/S. 147 OF THE ACT, THEREFORE, ON THE BASIS OF WHICH THE NOTICE WAS ISSUED U/S. 14 8 OF THE ACT. THE ASSESSEE ASKED THE REASONS RECORDED, CONTAINED U/S. 147 OF T HE ACT, BY VIRTUE OF WHICH THE NOTICE WAS ISSUED U/S. 148 OF THE ACT, TO THE A SSESSEE. THE SAME WAS SUPPLIED TO THE ASSESSEE. THE ASSESSEE VIDE HIS LET TER DATED 02.12.2011 CHALLENGED THE INITIATION OF PROCEEDINGS U/S. 147 O F THE ACT ON THE FOLLOWING GROUNDS: 1. THAT THE PROCEEDINGS INITIATED U/S. 147 OF THE I NCOME TAX ACT, 1961, ARE PERVERSE TO THE LAW AND TO THE FACTS OF THE CAS E AND NOT TENABLE BECAUSE THE DEPOSITS OF RS. 3,61,575/- WITH THE CEN TRAL BANK OF INDIA DURING THE YEAR PERTAINS ONLY TO THE CREDIT OF SALA RY RECEIVED BY THE ASSESSEE FROM HIS EMPLOYER INDIAN AIRLINES, WHICH H AS ALREADY BEEN DISCLOSED IN HIS ITR AND A SUM OF RS. 86,148/- CRED ITED IN HIS SAID BANK A/C ON 06.04.2005 WAS THE MATURITY AMOUNT RECEIVED FROM UTI, WHICH WERE DEPOSITED IN THE PRECEDING YEAR BY THE ASSESSE E, THEREFORE THE SAME COULD NOT BE THE INCOME. 2. THAT WITH REGARD TO THE DEPOSITS OF RS.5,34,658/ - WITH HSBC BANK LTD., WHICH HAS ALSO BEEN TAKEN AND TREATED AS DEPO SITS FROM UNDISCLOSED SOURCES WHILE INITIATING THE PROCEEDINGS U/S. 147 O F THE ACT, IS NOT CORRECT BECAUSE THE SAID SB A/C PERTAINS ONLY TO TH E WIFE OF THE ASSESSEE MRS. ASHITA MURGAI, WHO IS A SEPARATE ASSESSEE, DEC LARED HERE SALARY 3 ITA NO.4402. DEL.13 DURING THE YEAR OF RS.6,38,345/- AND FILED HERE ITR ACCORDINGLY. IN THE SAID A/C THE ENTIRE DEPOSITS PERTAINS TO THE CREDIT OF HER SALARY RECEIVED DURING THE YEAR FROM HER EMPLOYER, THEREFORE, BY TA KING THE SAID DEPOSITS OF RS.5,34,658/- IN HER BANK A/C DURING THE YEAR, P RESUMED TO BE TREATED AS UNACCOUNTED DEPOSITS OF THE ASSESSEE VITIATES TH E PROCEEDINGS INITIATED U/S. 147 OF THE ACT BY THE ASSESSING OFFICER, THERE FORE, IT WAS CHALLENGED BEFORE THE ASSESSING OFFICER PRIMARILY PRIOR TO THE COMMENCEMENT OF THE PROCEEDINGS, THAT THE SAID PROCEEDINGS SO INITIATED AFTER RECORDING THE REASONS FOR WHICH THE COPY HAS ALSO BEEN SUPPLIED A RE AGAINST THE LAW AND TO THE FACTS OF THE CASE AND FURTHER IT WAS STA TED THAT THE NOTICE HAS NOT BEEN ISSUED U/S. 148 OF THE ACT WITHIN THE TIME LIMIT PRESCRIBED U/S. 149 (1)(B) OF THE ACT, IN ACCORDANCE WITH THE PROVI SIONS OF LAW CONTAINED U/S. 151 OF THE ACT. THAT THE ASSESSING OFFICER WITHOUT GOING THROUGH TH E EXPLANATION GIVEN, MATERIAL PRODUCED, FILED AND AVAILABLE WITH HIM, PR OCEEDED TO REJECT THE OBJECTIONS RAISED ARBITRARILY, CAPRICIOUSLY AND IN A FRIVOLOUS MANNER, WITHOUT ADHERING TO THE PROVISIONS OF LAW CONTAINED UNDER WHICH HE COULD NOT PRESUME TO BE THE CONCEALED INCOME OF THE ASSESSEE DURING THE YEAR, AS FOR THE ONE BANK ACCOUNT MAINTAINED IN THE CENTRAL BANK OF INDIA ONLY THE SALARY OF THE ASSESSEE HAS BEEN CRED ITED AND THE DEPOSITS APPEARING IN THE OTHER BANK A/C MAINTAINED WITH HSB C BANK, THE SAME DOES NOT BELONGS TO THE ASSESSEE AS THE SAME WAS BE ING OPERATED BY HIS WIFE MRS. ASHITA MURGAI, THE ASSESSING OFFICER OUT- RIGHTLY REJECTED THE OBJECTIONS FILED BY THE ASSESSEE AGAINST THE INITIA TION OF PROCEEDINGS U/S. 147 OF THE ACT, AS SUCH THE INITIATION OF PROCEEDIN GS DECLARED TO BE VALID BY THE ASSESSING OFFICER IS ILLEGAL AND NOT TENABLE IN THE EYES OF LAW AND LIABLE TO BE QUASHED. 3. THAT WITH REGARD TO THE DEPOSITS OF RS.2,61,800/ - IN THE CITI BANK A/C NO. 5150374229, THE COUNSEL OF THE ASSESSEE ATT ENDED THE HEARING 4 ITA NO.4402. DEL.13 ON 29/12/2011 AND EXPLAINED THAT THE DEPOSITS OF RS . 2,61,800/- ON VARIOUS DATES PERTAINS TO THE SALE PROCEEDS OF ELEC TRONIC ITEMS WHICH THE ASSESSES DID DURING THE YEAR, BUT SINCE THE ASSESSE E HAS NOT MAINTAINED AND WAS NOT REQUIRED TO MAINTAIN ANY BOOKS OF ACCOU NTS FOR THE SAID TRANSACTIONS UNDER THE PROVISIONS OF LAW CONTAINED U/S 44AF OF THE ACT, THEREFORE, 5% PROFIT DEDUCED/DERIVED THERE FROM COU LD MAXIMUM BE ADDED TO THE INCOME OF THE ASSESSEE FROM UNDISCLOSE D SOURCES WHICH COMES TO RS.13,090/- AND NO FURTHER ADDITIONS COULD HAVE BEEN WARRANTED AND TO HAVE BEEN MADE IN THE INCOME OF TH E ASSESSEE, AS HAS BEEN DONE BY THE ASSESSING OFFICER. THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE INCOME OF THE ASSESSEE OF RS.2,61,800/- IS PERVERSE TO THE PROVISIONS OF AND TO THE FACTS OF T HE CASE. THAT IN SUPPORT OF ASSESSEES CONTENTION, THE COPIE S OF PURCHASE BILLS COMPLETE IN ALL RESPECTS, CONFIRMING THE PROCUREMEN T OF MATERIAL AGAINST WHICH THE SAID PAYMENTS WERE MADE THROUGH HIS TWO C REDIT CARDS OF CITI BANK WERE ENCLOSED FOR PERUSAL AND RECORDS ALONG WI TH THE PETITION FILED UNDER RULE 46A OF THE INCOME TAX RULES, WHICH THE A SSESSEE WAS PREVENTED BY REASONABLE AND SUFFICIENT CAUSE TO PRO DUCE AND FILE THE SAME DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HEREFORE, THE INCOME OF THE ASSESSEE SHALL BE COMPUTED IN THE FOLLOWING MANNER:- INCOME FROM SALARY DECLARED AS PER RETURN RS.182610/- INCOME FROM OTHER SOURCES A. INTEREST ON DEPOSITS RS. 1992/- B. INCOME AS 5% PROFIT ON THE TOTAL CREDIT OF RS.26 1800/- WITH THE CITI BANK RS.13090/- TOTAL RS.197692/- ROUNDED OFF 197700/- 5 ITA NO.4402. DEL.13 4. THE CIT(A) RELIED UPON THE LETTER DATED 02.12.20 11 SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER CHALLENGING T HE INITIATION OF PROCEEDINGS U/S. 147 OF THE ACT. THE CIT(A) FURTHER HELD THAT T HE ASSESSEES WIFE IS FILING HER INCOME TAX RETURN IN ITO, WARD 32(4) SINCE MANY YEA RS BEFORE A.Y. 2003-04. SHE IS DERIVING HER INCOME FROM SALARY SEPARATELY. HENCE, HER INCOME AND THE GIFTS SHE HAS RECEIVED FROM HER UNCLE IN USA IN US$ FOR THE HELP OF HER FATHER, WAS EXCLUDED FROM THE INCOME TAX ASSESSMENT OF THE ASSESSEE, SHRI GAUTAM MURGAI. THUS, DIRECTED THE ASSESSING OFFICER TO COM PUTE THE ASSESSEES INCOME FROM HIS SALARY INCOME AND HIS INCOME FROM SMALL BU SINESS U/S. 44AF AT 5% OF TURNOVER AND TOTAL INCOME WAS RECOMPUTED FOR A.Y. 2 006-2007 WAS OF RS. 1,97,692/-. 5. THE DR SUBMITTED THAT FOR OTHER ASSESSMENT YEAR THE TAX EFFECT WAS BELOW FOUR LAKHS HENCE FOR A.Y. 2003-04, 2004-05, 2 005-06, 2007-08 AND 2008-09 APPEAL WAS NOT FILED BY THE DEPARTMENT. THE DR RELIED UPON THE ASSESSMENT ORDER AND FURTHER POINTED OUT PAGE 4 OF THE ASSESSMENT ORDER WHICH IS REPRODUCED HEREIN BELOW :- THE ABOVE STATED CONTENTION CANNOT BE ACCEPTED SI NCE NO DOCUMENTARY EVIDENCE HAS BEEN FURNISHED ALONG WITH THE LETTER S UGGESTING THAT SUCH CREDITS IN THE BANK ACCOUNTS ARE ON ACCOUNT OF SALE S MADE TO THE CUSTOMERS AND DEPOSITED IN THE BANK TO PAY OFF THE CREDIT CAR D DUES. FURTHER THE ASSESSEES CONTENTION OF DOING BUSINESS ON WHICH PR OFIT U/S 44AF (COMES @ 5%) HAS BEEN EARNED IS ALSO NOT ACCEPTABLE SINCE NO DECLARATION HAS BEEN MADE IN THE RETURN ORIGINALLY FILED AND NEITHE R HAD YOU REVISED YOUR RETURN BEFORE THE EXPIRY OF TIME LIMIT FOR FILING T HE REVISED RETURN. AN ASSESSEE IS REQUIRED TO SUBSTANTIATE HIS CLAIMS WIT H SUPPORTING DOCUMENTS. IT IS ALL AFTERTHOUGHT OF THE ASSESSSEE. THE ASSESSEE HAS COOKED UP A STORY JUST-TO COVER UP THE DEPOSITS MAD E IN BANK OUT OF UNDISCLOSED INCOME FOR MAKING PAYMENTS OF CREDIT-CA RDS AS WELL AS IN BANKS. THE ASSESSEE HAS FAILED TO DISCHARGE HIS ON US WITH SUPPORTING EVIDENCES. 6 ITA NO.4402. DEL.13 THE DR FURTHER SUBMITTED THAT THE ASSESSEE BEING A N EMPLOYED PERSON CANNOT RUN ANY BUSINESS AND THUS THE ENTIRE AMOUNT SHOULD BE TAKEN INTO ACCOUNT. 6. THE AR TOTALLY RELIED UPON THE CIT(A)S ORDER AN D URGED THAT THE APPEAL BE DISMISSED. 7. WE HAVE PERUSED ALL THE RELEVANT RECORDS AND PRO CEEDINGS AND HEARD BOTH THE PARTIES, THE CIT(A) HAS CORRECTLY MENTIONE D THAT THE INCOME OF THE ASSESSEES WIFE HAS TO BE EXCLUDED FROM THE INCOME TAX ASSESSMENT OF THE ASSESSEE, AS THE WIFE OF THE ASSESSEE IS FILING HER RETURNS WITH THE RESPECTIVE ITO. THE CIT(A) HAS CORRECTLY DIRECTED THE ASSESSIN G OFFICER TO COMPUTE THE ASSESSEES INCOME FROM SALARY AND INCOME FROM SMALL BUSINESS UNDER SECTION 44AF AT 5% OF TURNOVER AND RECOMPUTED THE SAME. THE ASSESSING OFFICER HAS FAILED TO ESTABLISH THAT THE INCOME OF THE WIFE IS NOT SEPARATE FROM THE ASSESSEES INCOME ALONG WITH HIS SALARY INCOME. 8. IN RESULT, THE APPEAL OF THE DEPARTMENT IS DISMI SSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 ST OF AUGUST 2015. SD/- SD/- ( N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31/08/2015 *R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR 7 ITA NO.4402. DEL.13 ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 26.08.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 27.08.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 27.08.2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 31.08.2015 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK .08.2015 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 8 ITA NO.4402. DEL.13