Joginder Singh, Amritsar. V. The Income Tax Officer, Ward 4(2), Amritsar.

ITA 501/ASR/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3801 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-01-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJAN SRIVASTAVA
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. NO. 501/ASR/2016 AS SESSMENT YEAR: 2008-09 JOGINDER SINGH, H. NO. 120, VIJAY NAGAR, BATALA ROAD, AMRITSAR [PAN: AOKPS 3292N] VS. INCOME TAX OFFICER, WARD-4(2), AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAJAN SRIVASTAVA (C.A.) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 10.01.2019 DATE OF PRONOUNCEMENT: 31.01.2019 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AMRITSAR ('CIT(A)' FOR S HORT) DATED 30.06.2016, DISMISSING THE ASSESSEES APPEAL CONTESTING HIS ASS ESSMENT U/S. 143(3) R/W S. 147 OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) DA TED 22.01.2016 FOR THE ASSESSMENT YEAR (AY) 2008-09. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, AN INDIVIDUAL IN THE RETAIL BUSINESS OF PAINTS AND CHEMICALS, WAS OBSERVED TO H AVE DEPOSITED RS.36,91,473/- CASH IN HIS BANK ACCOUNT WITH ICICI BANK DURING THE RELEVANT YEAR. ON BEING QUERIED IN ITS RESPECT IN THE ASSESSMENT PROCEEDING S, HE EXPLAINED THE SAME TO BE PRIMARILY THE SALE PROCEEDS OF HIS BUSINESS, DEPOSI TED IN BANK, EVEN AS HE IS NOT ITA NO. 501/ASR/2016 (AY 2008-09) JOGINDER SINGH V. ITO 2 MAINTAINING ANY BOOKS OF ACCOUNT, HAVING RETURNED H IS INCOME FOR THE RELEVANT YEAR ON A TURNOVER OF RS.30 LACS U/S. 44AF OF THE ACT, D ECLARING INCOME THEREFROM AT 5.2%. FOR THE BALANCE DEPOSIT OF RS.6.91 LACS, I.E. , IN EXCESS OF RS.30 LACS, THE SAME WAS EXPLAINED TO BE ON ACCOUNT OF: (A) REVERSAL OF A CASH WITHDRAWAL OF RS.1.60 LACS B Y THE BANK AS CASH COULD NOT BE WITHDRAWN DUE TO TECHNICAL PROBLEMS; (B) REDEPOSITED OF CASH WITHDRAWN FROM THE BANK. THE ASSESSING OFFICER (AO) ALLOWING THE ASSESSEE CR EDIT FOR RS.1.60 LACS, MADE AN ADDITION FOR THE BALANCE RS.5,31,473 AS UNEXPLAINED CASH DEPOSIT U/S. 69A, AND WHICH STANDS CONFIRMED IN APPEAL IN THE ABSENCE OF THE ASSESSEE MAKING ANY IMPROVEMENT IN HIS CASE BEFORE THE FIRST APPELLATE AUTHORITY. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 3. I HAVE HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD. THE ASSESSEES CASE BEFORE ME REMAINS THE SAME, I. E., AS BEFORE THE REVENUE AUTHORITIES, WITH THE LD. COUNSEL, SH. SRIVASTAVA, SEEKING TO EXPLAIN THE CASH DEPOSIT ON THE BASIS OF A CASH-BOOK, STATED TO BE DRAWN ON THE BASIS OF THE CASH SALE BILLS AND THE DEPOSITS AND WITHDRAWALS IN THE BANK. WHY S HOULD NOT THE ASSESSEE HAVE EXPLAINED THE CASH DEPOSITS, SIMILARLY, EARLIER, AS HE SEEKS TO DO NOW, FAILS ME. THE ASSESSEES CASE, NEVERTHELESS, STANDS TO REASON; TH E DOCUMENT SUBMITTED IN SUPPORT BEING ONLY ON THE BASIS OF THE PRIMARY RECORD, I.E. , THE SALE BILLS AND THE BANK STATEMENT, DEPICTING THE WITHDRAWAL FROM AND DEPOSI T OF CASH WITH THE BANK. THE SALES ARE IN CASH. WHY, THEN, THE DEPOSIT OF THE SA ME IN BANK; THE PAYMENT FOR PURCHASE BEING ALSO IN CASH, BE LOOKED AT WITH DOUB T? THE VALIDITY OF THE ASSESSEES EXPLANATION IS BORNE OUT BY THE FACT THAT THERE ARE CASH WITHDRAWALS FROM THE BANK, SUGGESTIVE OF A ROTATION OF FUNDS. IN FACT, SH. SRI VASTAVA WOULD SUBMIT THAT IN A MISGUIDED ATTEMPT TO OBTAIN A CREDIT LIMIT FROM THE BANK BY SHOWING AN INCREASED ITA NO. 501/ASR/2016 (AY 2008-09) JOGINDER SINGH V. ITO 3 TURNOVER IN THE BANK ACCOUNT, THE ASSESSEE WOULD WI THDRAW CASH FROM THE BANK ONLY TO DEPOSIT IT THE FOLLOWING DAY. THIS, WHERE S O, WOULD STAND BORNE OUT BY THE RECORD, I.E., THE BANK STATEMENT. THAT IS, WOULD ST AND PROVED WITH REFERENCE TO THE BANK ENTRIES OF CASH WITHDRAWALS AND DEPOSITS, VALI DATING THE ASSESSEES EXPLANATION. THE SAME CONSTITUTING THE ASSESSEES E XPLANATION FOR THE CASH DEPOSITS TO THE EXTENT DEEMED UNEXPLAINED, HAS BEEN INEXPLIC ABLY NOT EXAMINED BY THE REVENUE AUTHORITIES. WITHOUT EXAMINING THE ASSESSEE S EXPLANATION ON MERITS, THEY HAVE PROCEEDED TO ISSUE A FINDING OF THE CASH DEPOS ITS, TO THE EXTENT IN EXCESS OF THE DECLARED TURNOVER, AS UNEXPLAINED, SAVE A DEPOSIT WHICH IN FACT REPRESENTS A REVERSAL OF A WRONG DEBIT BY THE BANK INASMUCH CASH WITHDRAWAL DID NOT FRUCTIFY. THIS IS UNFORTUNATE. WHY CANNOT CASH WITHDRAWAL EXP LAIN THE CASH DEPOSIT, PARTICULARLY WHERE IT IS IMMEDIATELY THEREAFTER, WI TH THE DECLARED TURNOVER HAVING BEEN ACCEPTED. IN FACT, EVEN WHERE THE CASH DEPOSIT IS WITH A TIME LAG (OF CASH WITHDRAWALS), AND NOT IMMEDIATELY THEREAFTER, THE R EASON OUGHT TO BE INQUIRED, AS IT COULD WELL BE THAT THE FUNDS ARE IN THE INTERIM DEP LOYED IN BUSINESS, INDICATING UNREPORTED TURNOVER. THEN, IS THE QUESTION OF PURCH ASES, I.E., TO THE EXTENT THEREOF, AS THERE CAN BE NO SALES WITHOUT CORRESPONDING PURC HASES. THE DRAWING OF THE CASH-BOOK BY THE ASSESSEE IS IN FACT ONLY A TABUL ATION OF THESE ENTRIES TO MORE EXPLICITLY DEPICT THE MOVEMENT AND AVAILABILITY OF CASH, I.E., FOR BEING DEPOSITED IN BANK. THE SAME IN FACT REFLECTS THE CASH AVAILABILI TY ON A DAILY BASIS, ENHANCING ITS VALIDITY TOWARD EXPLAINING THE CASH DEPOSIT/S AS TH E SAME SHOWS THE CASH AVAILABILITY ON A DAY-TO-DAY BASIS, I.E., AT THE TI ME OF ITS DEPOSIT, WHICH ONLY IS RELEVANT, FOR CASH ARISING LATER IN TIME COULD NOT POSSIBLY EXPLAIN THE CASH DEPOSIT AT AN EARLIER POINT OF TIME. SH. SRIVASTAVA WAS REQUIRED TO SHOW THE CASH UTILI ZATION ON PURCHASES. THIS IS AS THE CASH GENERATED ON SALES, WHICH IS THE PRI NCIPAL SOURCE OF CASH WITH THE ASSESSEE THAT WITHDRAWN BEING AGAIN ONLY FROM THA T DEPOSITED EARLIER, SOURCE OF ITA NO. 501/ASR/2016 (AY 2008-09) JOGINDER SINGH V. ITO 4 WHICH IS STATED TO BE CASH SALES, CANNOT BE ASSESSE D AS TO ITS ADEQUACY WITHOUT CONSIDERING, SIMULTANEOUSLY, ITS UTILIZATION FOR P URCHASES. THIS IS AS SALES ONLY IMPLIES STOCK (OF GOODS), SO THAT THE SAME HAVE BEE N PURCHASED AND ARE BEING REGULARLY REPLENISHED, AS ONLY A CONTINUED AVAILABI LITY OF STOCK COULD GENERATE SALES AND, THUS, CASH. THAT IS, THE AVAILABILITY OF CASH, THE PRIME SOURCE OF WHICH IS STATED TO BE CASH SALES, CANNOT BE CONSIDERED INDEPENDENT OF AND DE HORS THE PURCHASE OF GOODS, AGAIN STATED TO BE IN CASH. SH. SRIVASTAVA W OULD, ON THE NEXT DATE OF HEARING, FURNISH THE INCOME STATEMENT AND THE BALANCE-SHEET, AGREEING WITH THE CASH STATEMENT FURNISHED EARLIER, WHICH IN TURN IS IN AG REEMENT WITH THE BANK STATEMENT. THIS WAS IN FACT IN TWO TIME SEGMENTS, I.E., UP TO 30/6/2007 AND FOR THE LATER NINE MONTHS OF THE YEAR. THIS WAS DONE AS THERE IS NO BA NK ACCOUNT, IN WHICH THE CASH COULD BE DEPOSITED, TILL 21/6/2007, SO THAT THE CAS H GENERATED UP TO THIS DATE WOULD STAND TO BE ACCUMULATED BY THE ASSESSEE. BOTH THE P URCHASES AND SALES ARE UNIFORM FOR THE YEAR, AS IS THE GROSS PROFIT RATE. SOME ENT RIES OF CASH WITHDRAWAL AND DEPOSIT IN THE CASH STATEMENT (CASH-BOOK) WERE TEST CHECKED WITH REFERENCE TO THE BANK STATEMENT REFLECTING THE CASH DEPOSITS AT RS. 36.91 LACS (CORRECT AMOUNT IS RS. 35.31 LACS) DURING THE YEAR. THE INCOME STATEMENT, DISCLO SING A NET PROFIT OF RS. 1,53,892, ALSO MATCHED THE ASSESSEES INCOME AS RETURNED. 4. I, THEREFORE, FIND NO REASON NOT TO ACCEPT THE A SSESSEES EXPLANATION FOR THE CASH DEPOSIT IN HIS BANK ACCOUNT. NO DOUBT ACCOUNT STATEMENTS (INCLUDING OF CASH) STAND PRODUCED BEFORE THE TRIBUNAL, BUT THE SAME AR E ONLY IN SUBSTANTIATION OF HIS EXPLANATION BY THE ASSESSEE WHICH REMAINS THE SAM E THROUGHOUT, AND IN FACT OUGHT TO HAVE BEEN, IF REQUIRED, CALLED FOR BY THE REVENUE AUTHORITIES. IN FACT, THE LD. DR, SH. CHARAN DASS, WAS AT LOSS TO, UPON INQUI RY BY THE BENCH, EXPLAIN THE COMPLETE LACK OF EXAMINATION OF THE ASSESSEES EXPL ANATION, BORNE OUT BY THE ITA NO. 501/ASR/2016 (AY 2008-09) JOGINDER SINGH V. ITO 5 RECORD (BANK STATEMENT) BY THE REVENUE. THE IMPUGNE D ADDITION IS, ACCORDINGLY, DIRECTED FOR DELETION. I DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 31, 2 019 SD/- (SANJAY ARORA) ACCOUNTANT MEMBER DATE: 31.01.2019 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: JOGINDER SINGH H. NO. 120, V IJAY NAGAR, BATALA ROAD, AMRITSAR (2) THE RESPONDENT: INCOME TAX OFFICER, WARD-4( 2), AMRITSAR (3) THE CIT(APPEALS)-2, AMRITSAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER