ITO WD 2(5), THANE V. NANDKUMAR JAGANNATH KALE, THANE

ITA 4890/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7058 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 08-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SW ARABH DESH
• Keywords: Unexplained cash credit; Peak credit
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B , MUMBAI BEFORE SHRI RAJENDRA , HON'BLE ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER ITA NO . 4890 /MUM/201 5 (A.Y : 201 1 - 12) INCOME TAX OFFICER WARD 2(5 ), ROOM NO . 16 , 6 TH FLOOR, ASHAR I.T. PARK, B - WING, MIDC, WAGLE INDUSTRIAL ESTATE, THANE (W) 400 604 V . SHRI NANDKUMAR JAGANNATH KALE ( PROP. OF KALE ENGINEERING WORKS) FLAT NO. A - 3, SHREERAM DARSHAN SOCIETY , BHAYANDER (W), THANE PAN NO: ANFPK 38 51 K (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI SW ARABH DESHPANDE DATE OF HEARING : 12 .06.2018 DATE OF PRONOUNCEMENT : 22 .06.2018 O R D E R PER C.N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 1, THANE DATED 30.06.2015 FOR THE ASSESSMENT YEAR 2011 - 12. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1.1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON'BLE CIT(A) ERRED IN NOT CONFIRMING THE ADDITION OF RS. 61,87,100/ - ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS. 2 ITA NO.4890/MUM/2015 (A.Y: 2011 - 12) SHRI NANDKUMAR JAGANNATH KALE 1.2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON'BLE CIT(A) ERRED IN HOLDING CASH DEPOSITS OF RS. 34,37,200/ - OUT OF CASH DEPOSITS OF RS. 61,87,100/ - AS UNEXPLAIN ED SALES AND COMPUTING NET PROFIT OF RS. 5,57,857/ - (@ 16.23% OF RS. 34,37,200/ - ) DESPITE THE ABSENCE OF ANY DETAIL OR EVIDENCE ON RECORD REGARDING THE NATURE OF BUSINESS TO WHICH THE SAID UNACCOUNTED SALES (AS HELD BY THE CIT(A)) PERTAINED. 1.3 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON'BLE CIT(A) ERRED IN GIVING COMPLETE RELIEF TO THE ASSESSEE IN RESPECT OF THE BALANCE CASH DEPOSITS OF RS. 27,49,900/ - (RS. 61,87,100/ - ( - ) RS. 34,37,200/ - ) ON THE BASIS OF RELIEF GIVEN IN RESPECT OF CASH DEPOSITS OF RS. 34,37,200/ - . 1.4 WITHOUT PREJUDICE TO GROUND NO. 1.3 ABOVE, WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON'BLE CIT(A) ERRED IN GIVING COMPLETE RELIEF TO THE ASSESSEE IN RESPECT OF THE BALANCE CASH DEPOSITS OF RS. 27,49,900/ - AND NOT WORKING OUT NET PROFIT AT THE SAME RATE (16.23 % ) AS WORKED OUT IN THE CASE OF CASH DEPOSITS OF RS. 34,37,200/ - . 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON'BLE CIT(A) ERRED I N GIVING COMPLETE RELIEF TO THE ASSESSEE IN RESPECT OF ADDITION OF RS. 60,000/ - ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS ON THE BASIS OF RELIEF GIVEN IN RESPECT OF CASH DEPOSITS OF RS. 34,37,200/ - DESPITE CONFIRMING IN HIS ORDER THAT THE ADDITION OF RS. 6 0,000/ - ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN WAS RIGHTLY MADE BY THE A.O. [LINE NO. 8 TO 10 OF PARA 13 OF ORDER OF CIT(A).]. 3. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO A DD, AMEND, ALTER OR DELETE ANY GROUND OF APPEAL. 3. INSPITE OF ISSUE OF NOTICE ON SEVERAL OCCASIONS NONE APPEARED NOR ANY ADJOURNMENT PE TI TION WAS MOVED BY THE ASSESSEE. NOTICE SENT BY THE REGISTRY ON THE LAST OCCASION I.E. 27.04.2018 POSTING THE CASE FOR H EARING ON 12.06.2018 RETURNED UNSERVED WITH AN ENDORSEMENT UNCLAIMED BY THE POSTAL AUTHORITIES. IN THE CIRCUMSTANCES WE PROCEED TO DISPOSE OFF THIS MATTER ON HEARING THE LD.DR . 4. THE LD. DR SUBMITTED THAT THE ASSESSEE FAILED TO EXPLAIN CASH DEPOSITS MADE IN THE BANK ACCOUNT AND IN FACT THE ASSESSEE HAS NOT GIVEN ANY DETAILS BEFORE THE ASSESSING OFFICER AND THEREFORE THE ASSESSING 3 ITA NO.4890/MUM/2015 (A.Y: 2011 - 12) SHRI NANDKUMAR JAGANNATH KALE OFFICER COMPLETED THE ASSESSMENT U/S. 144 OF THE ACT TREATING THE CASH DEPOSITS AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. LD.DR SUBMITTED THAT THE LD.CIT(A) DIRECTED THE ASSESSING OFFICER TO COMPUTE THE PEAK CREDIT INSTEAD OF SUSTAI NING THE ENTIRE ADDITION MADE U/S. 68 OF THE ACT. LD.DR STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE PERUSED THE ORDERS OF THE ASSESSING OFFICER AS WELL AS THE LD.CIT(A) , NO DO UBT THERE WAS NO EXPLANATION NOR DETAILS WERE FURNISHED BEFORE THE ASSESSING OFFICER AT THE TIME OF THE ASSESSMENT PROCEEDINGS. HOWEVER, IN THE COURSE OF PROCEEDINGS BEFORE THE LD.CIT(A) THE ASSESSEE DID SUBMIT THE BANK STATEMENT ETC. , AND CONTENDED THAT THE CASH DEPOSITS WERE MADE FROM OUT OF THE MONEYS WITHDRAWN FROM THE BANK . IT WAS CONT ENDED AS THE BANKERS HAD INFORMED THE ASSESSEE THAT THE TRANSACTIONS IN HIS BANK ACCOUNT WERE INSUFFICIENT TO RAISE FINANCE S FROM THE BANK AND TO SHOW INCREASE IN TRANSACTIONS IN THE BANK ACCOUNT THE ASSESSEE WITH DRAWN AND DEPOSITED THE SAME CASH IN HIS BA NK ACCOUNT . IT WAS ALSO CONTENDED THAT IN THE PRECEDING ASSESSMENT YEAR ALSO I.E., 2009 - 10 SIMILAR TRANSACTIONS HAD BEEN DONE IN THE BANK ACCOUNT AND THE ASSESSING OFFICER MADE PEAK ADDITION W HILE COMPLETING THE ASSESSMENT U/S. 143 OF THE ACT. IT WAS ALS O CONTENDED THAT IF THE EXPLANATION OF THE ASSESSEE WITH REGARD TO THE SOURCE OF DEPOSITS BEING EARLIER WITHDRAWAL IS 4 ITA NO.4890/MUM/2015 (A.Y: 2011 - 12) SHRI NANDKUMAR JAGANNATH KALE NOT ACCEPTED THEN ONLY THE PEAK OF ALL TRANSACTIONS S HO U LD BE ADDED. VARIOUS CASE LAWS HAVE BEEN CITED BEFORE THE LD.CIT(A). 6. THE LD.CIT(A ) CALLED FOR REMAND REPORT ON THE SUBMISSIONS MADE BY THE ASSESSEE AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT OF THE ASSESSING OFFICER THE LD.CIT(A) CONCLUDED THAT THE TOTAL CASH DEPOSITS WERE AT .61,87,100/ - AND THE CASH WITHDR AWAL FROM THE BANK ACCOUNT THROUGH ATM AMOUNTED TO .65,54,700/ - . AFTER ANALYZING THESE TRANSACTIONS, THE LD.CIT(A) CONCLUDED THAT .34,37,200/ - DEPOSITED IN CASH AT DIFFERENT OUTSTATION LOCATIONS IS NOTHING BUT UNACCOUNTED SALES AND THE LD.CIT(A) ESTIMAT ED THE GROSS PROFIT @16.23% ON THESE UNACCOUNTED SALES BY ADOPTING THE G.P. PERCENTAGE SHOWN BY THE ASSESSEE DURING THE CURRENT YEAR AND DIRECTED THE ASSESSING OFFICER TO ADD THE SAME AS INCOME OF THE ASSESSEE. ON THE BALANCE CASH DEPOSITS IN THE ASSESSE E ACCOUNT ARE CONCERNED THE LD.CIT(A) DIRECTED TO TREAT ONLY THE PEAK OF THE TRANSACTIONS AS ADDITION AS THERE ARE CORRESPONDING CASH WITHDRAWALS FROM THE BANK ACCOUNT AND DEPOSITS OF THE SAME AMOUNT INTO THE BANK ACCOUNT. WHILE HOLDING SO THE LD.CIT(A) O BSERVED AS UNDER: - 11. I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SUBMISSIONS, THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AND THE TWO REMAND REPORTS AND THE APPELLANT'S SUBMISSIONS ON THE SAME. FROM THE DETAILS OF THE CASH DEPOSITS IN THE APPELL ANT'S BANK ACCOUNT WITH ICICI BANK, IT IS SEEN THAT THE TOTAL CASH DEPOSITED IN THIS BANK ACCOUNT AMOUNTS TO RS.61,87,100/ - FOR THE YEAR UNDER CONSIDERATION. CASH HAS BEEN WITHDRAWN FROM THE THIS BANK ACCOUNT THROUGH ATM WITHDRA WALS AMOUNTING TO RS. 65,54, 700/ - FOR THE YEAR. THE APPELLANT'S SUBMISSIONS REGARDING THE SOURCE OF ALL THE CASH DEPOSITS BEING OUT OF EARLIER 5 ITA NO.4890/MUM/2015 (A.Y: 2011 - 12) SHRI NANDKUMAR JAGANNATH KALE WITHDRAWALS, CANNOT BE ACCEPTED BECAUSE A MAJOR PORTION OF THE CASH AMOUNT HAS BEEN DEPOSITED AT DIFFERENT LOCATIONS LIKE AJMER, JAIPUR, UDAI PUR, MADURAI, ETC., WHEREAS THE WITHDRAWALS OF CASH HAVE BEEN MADE AT BHAYANDER, MUMBAI. THEREFORE, THERE DOES NOT APPEAR TO BE ANY APPARENT CO - RELATION BETWEEN THE CASH WITHDRAWN AT MUMBAI AND THE CASH DEPOSITED AT VARIOUS DESTINATIONS. FOR THIS REASON, THE APPELLANT'S ALTERNATIVE SUBMISSION REGARDING ADDITION OF ONLY 'PEAK' OF ALL THE TRANSACTIONS CANNOT BE ACCEPTED BECAUSE FOR WORKING OUT THE PEAK, A REASONABLE CO - RELATION HAS TO BE THERE BETWEEN AMOUNT WITHDRAWN AND DEPOSITED IN THE BANK ACCOUNT. THE ONLY INFERENCE WHICH CAN BE DRAWN, AS FAR AS THE CASH DEPOSITED AT OUTSTATION LOCATIONS IS CONCERNED, IS THAT THE APPELLANT WAS MAKING UNACCOUNTED SALES TO PARTIES AT DIFFERENT DESTINATIONS, WHO USED TO DEPOSIT CASH IN THE APPELLANT'S BANK ACCOUNT AT THOSE DESTINATIONS. THEREFORE, THE AMOUNT OF RS.34,37,200/ - DEPOSITED IN CASH IN THE APPELLANT'S BANK ACCOUNT AT DIFFERENT OUTSTATION LOCATIONS IS HELD TO BE THE APPELLANT'S UNACCOUNTED SALES. THE APPELLANT HAS SHOWN A NET PROFIT RATE OF 16.23% ON THE DECLARED SALES IN THE PROFIT & LOSS ACCOUNT. THEREFORE, THE PROFIT ON THE UNACCOUNTED SALE S IS WORKED OUT AT RS. 5,57,857/ - BY APPLYING THE NET PROFIT RATE OF 16.23% ON UNA CCOUNTED SALES OF RS. 34,37,200/ - AND THE SAME IS ADDED TO THE APPELLANT'S INCOME. 12. AS FAR AS THE BALANCE CASH DEPOSITS IN THE APPELLANT'S BANK ACCOUNT ARE CONCERNED, IT IS SEEN THAT THERE ARE CORRESPONDING CASH WITHDRAWALS ALSO FROM THE BANK ACCOUNT AS ALREADY MENTIONED ABOVE. THEREFORE, AT THE MOST A 'PEAK' OF SUCH TRANSACTIONS CAN ONLY BE AD DED TO THE APPELLANT'S INCOME IN VIEW OF VARIOUS DECISIONS RELIED UPON BY THE APPELLANT AND REPRODUCED AS ABOVE. THE APPELLANT HAS WORKED OUT THE 'PEAK' AT RS. 1,08,000/ - IN RESPECT OF TOTAL TRANSACTIONS INCLUDING CASH DEPOSITED AT BHAYANDER AS WELL AS AT OUTSTATION LOCATIONS. AS AN ADDITION OF RS. 5,57,857/ - HAS ALREADY BEEN MADE TO THE APPELLANT'S INCOME ON ACCOUNT OF PROFITS EARNED ON UNACCOUNTED SALES DEPOSITED IN CASH AT OUTSTATION LOCATIONS, NO SEPARATE ADDITION OF THE ' PEAK' AMOUNTING TO RS. 1,08,000 / - IS REQUIRED TO BE MADE. THEREFORE, THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDITS IS RESTRICTED TO RS.5,57,857/ - . 7. ON A CAREFUL CONSIDERATION AND READING OF THE LD.CIT(A) ORDER , WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE FINDING OF THE LD.CIT(A). HEN C E THE SAME IS SUSTAINED . 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 22 ND JUNE, 2018. SD/ - SD/ - ( RAJENDRA ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 22 / 06/2018 GIRIDHAR , S R. PS 6 ITA NO.4890/MUM/2015 (A.Y: 2011 - 12) SHRI NANDKUMAR JAGANNATH KALE COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASSTT. REGISTRAR) ITAT, MUM