I.T.O., Ward-2(3), Gwalior V. Sh. Vijay Agrwal, Gwalior

ITA 444/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0540 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 7 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-04-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 28-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Peak credit; Set aside
• Section: 68; 69; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.444/AGRA/2012 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER, VS. SHRI VIJAY AGARWAL, WARD 2(3), GWALIOR. 183, KASIM KHAN KA BADA, DAL BAZAR, GWALIOR. (PAN : AICPA 4495 R). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : NONE DATE OF HEARING : 22.04.2013 DATE OF PRONOUNCEMENT : 30.04.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 12.06.2012 PASSED BY THE LD. CIT(A), GWALIOR FOR THE ASSESSMEN T YEAR 2009-10. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE LD. CIT(A) IS JUSTIFIED IN ESTIMATING PROFIT @ 5% ON TO TAL DEPOSITS OF RS.64,32,261/- IN THE ACCOUNT MAINTAINED WITH ICICI BANK WHEREAS THE ASSESSEE HAS FAILED TO PROVE THE SOURCE OF THE SAME. 2 ITA NO.444/AGRA/2012 A.Y. 2009-10 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS DEPOSITED RS.64, 32,261/- IN ICICI BANK GWALIOR. BEFORE THE A.O. THE ASSESSEE SUBMITTED TH AT THE ACCOUNT WITH ICICI BANK WAS NOT RELATED TO THE ASSESSEES BUSINESS. THE AS SESSEE WAS DONG BUSINESS OF DALALI AND COMMISSION OF EDIBLE OIL, GHEE, KIRANA E TC. IT WAS FURTHER SUBMITTED THAT ONE OF THE TRADER DEPOSITED CASH IN HIS ACCOUNT AFT ER ISSUING CASH MEMO FOR WHICH HE HAS GIVEN ALLUREMENT OF SOME DALALI. THE A.O. A SKED FOR NECESSARY EVIDENCE AND EXPLANATION. THE A.O. ALSO EXAMINED THE WHEREA BOUTS OF THE SO-CALLED FIRM M/S. BANSAL TRADING CO. BUT THE SAME COULD NOT BE T RACED OUT. UNDER THE FACTS AND CIRCUMSTANCES, THE A.O. CAME TO THE CONCLUSION THAT THE CASH DEPOSIT IN BANK WAS THE DEPOSIT OF THE ASSESSEE. THE A.O. MADE THE ENT IRE ADDITION OF RS.64,32,261/-. THE CIT(A) DIRECTED THE A.O. TO APPLY N.P. OF 5% ON THE TRANSACTION WHICH CAME TO RS.3,21,613/-. THE CIT(A) FURTHER DIRECTED THAT THIS INCOME ONLY TO BE ADDED IN ADDITION TO COMMISSION INCOME OF RS.1,72,600/- DECL ARED BY THE ASSESSEE IN THE RETURN. THE RELEVANT FINDING OF THE CIT(A) IS AS U NDER :- (PARAGRAPH NO.4.1) 4.1 FROM THE PERUSAL OF THE BANK ACCOUNTS, IT IS S EEN THAT THE PEAK CREDIT BALANCE IN THE SAME YEAR UNDER CONSIDERATION IS OF RS.4,47,315/- AS ON 09.02.09. THOUGH, VARIOUS CASH DEPOSITS TOTALING RS.64,32,261/- HAVE BEEN MADE IN THE BANK ACCOUNT, BUT AT THE SAME TIME THERE HAVE BEEN CORRESPONDING WITHDRAWALS IMME DIATELY THEREAFTER. THUS, THE APPELLANTS SUBMISSIONS THAT THESE TRANSACTIONS REPRESENT BUSINESS TRANSACTIONS ON WHICH HE HAS EAR NED BROKERAGE/COMMISSION ONLY APPEAR TO BE ACCEPTABLE. AS PER HIS STATEMENT AND SUBMISSIONS, COMMISSION @ 1 2% HAS BEEN EARNED BY 3 ITA NO.444/AGRA/2012 A.Y. 2009-10 THE APPELLANT WHICH HAS NOT BEEN FOUND TO BE FALSE BY THE A.O. HIMSELF EVEN AFTER LOCAL ENQUIRIES. A.O. HAS NOT MADE ANY ENQUIRY EITHER IN RESPECT OF DEBIT SIDE OF BANK TRANSACTIONS WHICH HA VE BEEN STATED TO BE PAYMENTS MADE TO SUPPLIERS ON WHICH THE APPELLANT H AS EARNED ONLY COMMISSION. IN MY VIEW, SINCE THE APPELLANT HAS NO T BEEN ABLE TO CATEGORICALLY PROVE THAT THE CONCERNED DEPOSITS DO NOT REPRESENT HIS BUSINESS TRANSACTIONS AND NO EVIDENCE HAS BEEN GIVE N IN SUPPORT OF CLAIM THAT THESE TRANSACTIONS HAVE BEEN CARRIED OUT FOR AND ON BEHALF OF ANOTHER PARTY, A.O. IS FOUND JUSTIFIED IN ASSESS ING THE SAME IN THE APPELLANTS HANDS. HOWEVER, IT IS SETTLED LEGAL PO SITION THAT ENTIRE PROCEEDS CANNOT BE REGARDED AS PROFIT OR INCOME OF THE APPELLANT SINCE NET PROFIT RATE IS TO BE APPLIED [MANMOHAN SA DNI VS. CIT (2008) 304 ITR 52 (MP); CIT VS. BALCHAND AJIT KUMAR (2003) 263 ITR 610 (MP)]. THIS IS PARTICULARLY SO IN ABSENCE OF ANY A DVERSE MATERIAL ON RECORD TO SHOW THAT ANY UNEXPLAINED AND UNDISCLOSED INVESTMENT HAS BEEN MADE BY THE APPELLANT WHICH IS REFLECTED BY AL LEGED UNACCOUNTED SALES/CREDITS. THE ONLY EVIDENCE ON ENTIRE RECORD IS THE BANK ACCOUNT STATEMENT OF THE APPELLANT. THEREFORE, ONLY GP/NP CAN BE BROUGHT TO TAX. A.O. HAS MADE THE IMPUGNED ADDITION U/S 69 FO R THESE UNEXPLAINED CASH CREDITS WITHOUT PROVING ANY UNEXPL AINED INVESTMENT BY THE APPELLANT DURING THE YEAR ESPECIALLY WHEN HI S FINANCIAL CONDITION HAS ALSO NOT BEEN FOUND TO BE COMMENSURAT E WITH SUCH TRANSACTIONS. SINCE THE APPELLANT HAS NOT MAINTAIN ED ANY BOOKS OF ACCOUNTS, IT WOULD BE REASONABLE AND JUSTIFIED TO A PPLY NET PROFIT RATE OF 5% ON THESE TRANSACTIONS WHICH COMES TO RS.3,21, 613/- IN ADDITION TO NET COMMISSION INCOME OF RS.1,72,600/- DECLARED AS PER HIS RETURN. 4. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE INSPI TE OF SERVICE OF NOTICE THROUGH DEPARTMENT. AFTER HEARING THE LD. DEPARTME NTAL REPRESENTATIVE. WE NOTICE THAT THE FACTS OF THE CASE ARE IDENTICAL TO THE FAC TS OF THE CASE DECIDED BY I.T.A.T., AGRA BENCH IN ITA NOS.463, 464 & 465/AGRA/2011 & 09 , 10 & 11/AGRA/2012 IN 4 ITA NO.444/AGRA/2012 A.Y. 2009-10 THE CASE OF SMT. MEENAKSHI DEVI, ALIGARH VIDE ORDER DATED 08.03.2013. THE RELEVANT FINDING OF THE SAID ORDER IS REPRODUCED AS UNDER :- 21. THE THIRD EFFECTIVE GROUND OF ASSESSEES APPEA L IS IN RESPECT OF EXCESSIVE ESTIMATION OF INCOME. THIS IS COMMON GRO UND OF APPEAL. THE REVENUE IS ALSO IN APPEAL. THE A.O. NOTICED TH AT THE ASSESSEE SHOWN PROFIT RATE OF 0.5%. THE A.O. AFTER REJECTIN G BOOKS OF ACCOUNT APPLIED 0.5% PROFIT RATE WHICH WAS RESTRICTED BY TH E CIT(A) AT 0.1%. THE A.O. APPLIED 0.5% RATE OF PROFIT AFTER CONSIDER ING FACTS OF THE RELEVANT YEAR AND ON THE BASIS OF MATERIAL ON RECOR D. THE CIT(A) IN PRINCIPLE AGREED WITH THE A.O. IN RESPECT OF ESTIMA TION OF INCOME BUT ON ACCOUNT OF REASONABLENESS AND CONSIDERING SOME C ASES, RESTRICTED IT TO 0.1%. NOW THE QUESTION TO BE EXAMINED BY US IS WHETHER UNDER THE FACTS AND CIRCUMSTANCES THE INCOME ESTIMATED BY THE REVENUE AUTHORITIES IS REASONABLE OR NOT. BEFORE COMING TO THE ISSUE, WE WOULD LIKE TO STATE AT THE COST OF REPETITION THAT RS.25, 31,96,401/-, RS.27,28,93,893/- & RS.34,71,02,418/- FOR ASSESSMEN T YEARS 1998-99, 1999-2000 & 2000-01 RESPECTIVELY WERE DEPOSITED IN BANK BY THE ASSESSEE. THE ASSESSEE HAS FAILED TO EXPLAIN THE S AME. THE A.O. CONSIDERED THE TURNOVER OF RS.25,31,96,401/- A.Y. 1 998-99. AS STATED ABOVE THAT AMOUNT DEPOSITED IN BANK ACCOUNT REMAINE D UNEXPLAINED, SECTION 68 OF THE ACT IS CLEARLY APPLICABLE. AT TH IS JUNCTURE, WE ARE AWARE OF OUR POWER THAT WE CANNOT ENHANCE THE ADDIT IONS. AS REGARDS ACCEPTANCE OF RETURNS OF EARLIER YEARS BY REVENUE, WE MAY STATE THAT AFTER ALL ONE DAY A CORRECT AND TRUE NATURE OF TRAN SACTION HAS TO BE ASCERTAINED AND REQUIRED TO BE PUT ON RECORD. IN T HIS REGARD, WE MAY REFER A JUDGMENT OF THE HONBLE APEX COURT IN THE C ASE OF CIT VS. BRITISH PAINTS INDIA LTD., 188 ITR 44 (SC) WHEREIN IT HAS BEEN HELD THAT THE A.O. IS JUSTIFIED UNDER SECTION 145 OF THE ACT TO REJECT THE BOOKS OF ACCOUNT AND DETERMINE THE CORRECT PROFIT I F ORDINARY PRINCIPLE OF ACCOUNTING ARE NOT FOLLOWED. IN THAT CASE THE A SSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF PAINTS CONT ENDED THAT IT IS ITS CONSISTENT PRACTICE TO VALUE THE GOODS IN PROGRESS AND FINISHED GOODS EXCLUSIVELY ON THE COST OF RAW MATERIAL AND BY TOTA LLY EXCLUDING OVERHEAD EXPENDITURES. THE A.O. HELD THAT THERE WA S NO JUSTIFICATION FOR THE ASSESSEE TO VARY FROM THE REGULAR ACCOUNTIN G PRINCIPLE OF VALUING STOCK AT EITHER COST (RAW MATERIAL + DIRECT EXPENDITURE) OR MARKET PRICE WHICHEVER WAS LOWER. THE QUESTION BEF ORE THE COURT 5 ITA NO.444/AGRA/2012 A.Y. 2009-10 WAS WHETHER THE A.O. COULD REJECT CONSISTENT PRACTI CE OF THE ASSESSEE IN VALUING STOCK IN EXCESS OF HIS POWER UNDER SECTI ON 145 OF THE ACT. THE COURT HELD THAT IT IS THE DUTY OF THE A.O. TO C ONSIDER WHETHER BOOKS OF ACCOUNTS DISCLOSED THE TRUE STATEMENT OF A CCOUNTS FROM WHICH THE CORRECT INCOME CAN BE DERIVED. 22. IN THE CASE UNDER CONSIDERATION, THE A.O. HAS A PPLIED 0.5% RATE OF PROFIT. THE CIT(A) HAS REDUCED IT TO 0.1%. IN A.Y. 2001-02, THE I.T.A.T. HAS DECIDED THE CASE OF THE ASSESSEE AFTER CONSIDERING FACTS OF THAT YEAR. IN THE A.Y. 2001-02 THE I.T.A.T. HAS AC CEPTED BOOKS OF ACCOUNT BUT IN THE A.Y. 2000-01 THE MATTER WAS SENT BACK TO THE FILE OF A.O. THUS, IT IS CLEAR THAT EACH YEAR IS SEPARATE YEAR AND EACH YEAR IS TO BE DECIDED CONSIDERING THE FACTS OF THAT YEAR. THE CONTENTION OF THE ASSESSEE THAT THE ORDER OF I.T.A.T. FOR A.Y. 2001-0 2 IS TO BE FOLLOWED IN THESE APPEALS IS NOT ACCEPTABLE BECAUSE THE I.T.A.T . ITSELF IN A.Y. 2000-01 HAS SENT BACK THE MATTER TO THE FILE OF A.O . THE PECULIAR FACTS NOTICED BY US IN THESE CASES ARE THAT THE A.O. DISC OVERED THAT THE AMOUNTS OF RS.25,31,96,401/-, RS.27,28,93,893/- & RS.34,71,02,418/- FOR ASSESSMENT YEARS 1998-99, 1999-2000 & 2000-01 R ESPECTIVELY WERE DEPOSITED IN BANK ACCOUNT BY THE ASSESSEE. TH E SOURCE OF THE SAID HUGE CASH DEPOSITS WERE NOT EXPLAINED BY THE A SSESSEE BY A SINGLE DOCUMENT, EVIDENCE OR BY ANY CONVINCING REASONS. I T IS RELEVANT TO NOTE THAT PRESENTLY THE COUNTRY IS BURNING BY CIRCU LATION OF BLACK MONEY. THE HUGE UNEXPLAINED DEPOSIT APPARENTLY IS A PART OF THAT CIRCULATION. UNDER THE FACTS AND CIRCUMSTANCES, TH E CONTENTIONS MADE AND THE DECISIONS RELIED IN RESPECT OF APPLYING RAT E OF PROFIT DO NOT HELP TO THE ASSESSEE. THE ADDITION OF ENTIRE GROSS AMOUNT IS WARRANTED FOR WANT OF EVIDENCE BUT THE A.O. HIMSELF HAS APPLIED 0.5% RATE OF PROFIT. THEREFORE, CONSIDERING OUR POWER, WE HAVE NO ALTERNATIVE BUT TO CONFIRM THE ORDERS OF A.O. THUS , THE ORDERS OF CIT(A) ON THE ISSUE ARE SET ASIDE AND THE ORDERS OF THE A.O. FOR THE ASSESSMENT YEARS 1998-99 TO 2000-01 ARE CONFIRMED O N THE ISSUE. 5. ON CONSIDERATION OF ABOVE ORDER OF ITAT, AGRA BE NCH, WE FIND THAT THE ASSESSEE HAS FAILED TO FURNISH NECESSARY EXPLANATIO N AND EVIDENCE REGARDING CASH DEPOSIT IN BANK. WHEN THE CASH DEPOSIT IN BANK IS NOT EXPLAINED BY THE ASSESSEE, 6 ITA NO.444/AGRA/2012 A.Y. 2009-10 THE GROSS AMOUNT IS LIABLE TO BE ADDED AS PER THE D ETAILED DISCUSSION MADE BY THE I.T.A.T., AGRA BENCH IN ITA NOS.463, 464 & 465/AGRA /2011 & 09, 10 & 11/AGRA/2012 IN THE CASE OF SMT. MEENAKSHI DEVI, AL IGARH VIDE ORDER DATED 08.03.2013 OF WHICH FINDING IS REPRODUCED AS ABOVE. WE, THEREFORE, FIND THAT THE CIT(A) HAS WRONGLY DIRECTED THE A.O. TO APPLY N.P. OF 5%. THEREFORE, WE SET SIDE THE ORDER OF CIT(A) AND ORDER OF A.O. IS RESTORED. ADDITION OF RS.64,32,261/- MADE BY THE A.O. IS CONFIRMED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY