Navin Bhasin, New Delhi V. ITO, New Delhi

ITA 4590/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4089 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 12-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 04-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `F: NEW DELHI BEFORE SHRI C.L.SETHI, JM & SHRI K.G. BANSAL, AM I.T. A. NO.4590/DEL OF 2009 ASSESSMENT YEAR: 2005-06 SHRI NAVIN BHASIN, INCOME-TAX OFFICER, C/O NAGESH BHATT & CO., CA VS WARD 21(1), NEW DELHI. 24/9, MOTI NAGAR, NEW DELHI APPELLANT RESPONDENT APPELLANT BY: NONE DEPARTMENT BY: SMT. MONA MOHANTY ORDER PER C.L. SETHI, JM: THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 1 .10.2009 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF AN ASSESSMENT M ADE U/S 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) PERTAINING TO ASSTT. YEAR 2005-06. 2. THE ASSESSEE HAS ASSAILED THE CIT(A)S ORDER IN RESTRICTING THE ADDITION TO RS.1,06,279/- OUT OF THE TOTAL ADDITION OF RS.4, 25,529/- MADE BY THE AO ON ACCOUNT OF DEPOSIT MADE IN THE BANK ACCOUNT. 3. NONE FOR THE ASSESSEE IS PRESENT. THIS MATTER W AS INITIALLY FIXED ON 4.2.2009, WHEN AT THE REQUEST OF THE ASSESSEE, THE MATTER WAS ADJOURNED TO 12.5.2010, AND THE DATE WAS ANNOUNCED IN THE OPEN C OURT AND BOTH THE PARTIES WERE INFORMED ACCORDINGLY. HOWEVER, ON 12.5.2010 I .E. TODAY, NONE FOR THE 2 ASSESSEE WAS PRESENT NOR ANY APPLICATION FOR ADJOUR NMENT WAS FILED. WE, THEREFORE, PROCEED TO DISPOSE OF THIS APPEAL ON MER IT, AFTER HEARING THE LEARNED DR. 4. IN THIS CASE, THE ASSESSEE FILED HIS RETURN OF I NCOME DECLARING TOTAL INCOME AT RS.77,700/- ON 24.5.2005. THEREAFTER, AN ASSESSMENT U/S 143(3) CAME TO BE PASSED BY THE AO VIDE ORDER DATED 31.12. 2007. IN THE ASSESSMENT ORDER, IT IS STATED BY THE AO THAT THERE WERE CASH DEPOSITS OF RS.19,79,589/- WHEREAS THE ASSESSEE HAD SHOWN SALE RECEIPTS OF RS.15,54,000/- ONLY. THE AO, THEREFORE, NOTED A DIF FERENCE OF RS.4,25,589/-. WITH REGARD TO THE AFORESAID DIFFERENCE, THE ASSESS EE EXPLAINED IT BEFORE THE AO THAT ASSESSEE WITHDREW THE CASH FROM THE BANK FO R MAKING PURCHASES. HOWEVER, IN CASE THE CASH WITHDRAWN WAS NOT FULLY U TILIZED FOR THE PURPOSES, IT WAS AGAIN RE-DEPOSITED IN THE BANK ACCOUNT. HOW EVER, THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO AS THE SAME WAS NOT BEING TALLIED WITH THE BANK STATEMENT. THE AO, THEREFORE , TREATED THE CASH DEPOSIT OF RS.4,25,529/- AS INCOME FROM UNDISCLOSED SOURCES AND ADDED THE SAME TO THE ASSESSEES TOTAL INCOME. 5. ON AN APPEAL, THE CIT(A) HELD THAT WHOLE OF THE RECEIPT CANNOT BE TREATED AS INCOME CHARGEABLE TO TAX. HE, THEREFORE , DIRECTED THE AO TO APPLY THE NET RATE OF PROFIT OF 5% TO THE TOTAL AMOUNT OF RS.4,25,529/- AND MADE THE 3 ADDITION OF PROFIT OF RS.21,279/-. THE LEARNED CIT (A) FURTHER HELD THAT FOR THE PURPOSE OF DEPOSITING THE AMOUNT OF RS.4,25,529 /-, A CERTAIN INITIAL MONEY WOULD BE NECESSARY. HE, THEREFORE, WORKED OU T THE AMOUNT OF 20% OF THE TOTAL AMOUNT AS UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE IN MAKING DEPOSIT OF RS.4,25,529/- THROUGHOUT THE YEAR. HE, THEREFORE, DIRECTED THAT ANOTHER ADDITION OF RS.85,000/- BE ALSO MADE ON ACC OUNT OF UNEXPLAINED INVESTMENT TOWARDS DEPOSIT IN BANK ACCOUNT. IN THI S MANNER, THE CIT(A) SUSTAINED THE ADDITION TO RS.1,06,279/- I.E. RS.21, 279/- + RS.85,000/-, AND HE GRANTED A RELIEF OF RS.3,19,250/-. 4. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US. 5. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT IN DISP UTE THAT THE ASSESSEE IS CARRYING ON A SMALL BUSINESS OF TRADING IN SPARE PA RTS OF LPG STOVE. THE MAJORITY OF THE SALES AFFECTED BY THE ASSESSEE ARE RECEIVED IN CASH. THE MAXIMUM SALE PRICE OF THE ITEM SOLD BY THE ASSESSEE IS AROUND RS.52 ONLY. THEREFORE, THE VARIOUS CASH DEPOSITED IN THE BANK C AN REASONABLY PRESUMED TO HAVE BEEN MADE OUT OF THE MONEY INVESTED IN THE BUSINESS BY THE ASSESSEE. WE, THEREFORE, HOLD THAT THERE SHOULD NOT BE ANY AD DITION ON ACCOUNT OF UNDISCLOSED INVESTMENT TOWARDS THE DEPOSIT MADE IN THE BANK ACCOUNT. HOWEVER, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT T HE PROFIT ELEMENT @ 5% 4 ON THE TOTAL DEPOSIT OF RS.4,25,529/- BE SEPARATELY ADDED TO THE RETURNED INCOME. THIS SHOULD MAKE TOTAL PROFIT OF THE ASSES SEE TO RS.77,700 (SHOWN BY THE ASSESSEE) + RS.21,279/- I.E. ADDITION TO BE MADE =RS.98,979/-. EVEN IF THE TOTAL TURNOVER OF THE ASSESSEE IS TAKEN AT RS.1 9,79,589/- AS ROUNDED OFF TO RS.19,79,600/- AND THE ASSESSEE, BEING A RETAILER, A PROFIT OF 5% IS APPLIED TO THE TOTAL SALE OF RS.19,79,600/-, THE NET PROFIT CH ARGEABLE TO TAX WOULD COME TO RS.98,980/- AS AGAINST RS.77,700/- SHOWN BY THE ASSESSEE. THE AO SHALL MODIFY THE ASSESSMENT ORDER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN THE MANNER AS INDICATED ABOVE. 7. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT O N 12 TH MAY, 2010 IMMEDIATELY AFTER THE HEARING WAS OVER. (K.G. BANSAL) (C.L . SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12 TH MAY , 2010 VIJAY COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A)-XXII, NEW DELHI 5. DR ASSISTANT REGISTRAR