Ramesh Kumar, Chandigarh V. ITO, W-5(1), Chandigarh

ITA 510/CHANDI/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6696 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-12-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 23-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH SR DR
• Assessee Lawyers: N K SAINI ITP
• Keywords: Business income; Peak credit; Set aside
• Section: 143(3); 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B CHANDIGARH !, ' # $ , $ % & ' ( ) , *+ # BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM ./ ITA NOS. 510 & 511/CHD/2018 / ASSESSMENT YEAR : 2014-15 & 2009-10 SHRI RAMESH KUMAR, SCF 37, SECTOR 26, CHANDIGARH. VS THE ITO, WARD 5(1), CHANDIGARH. ./ PAN NO: AEMPK1346R / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI N.K.SAINI, ITP # ! ' / REVENUE BY : SHRI MANJIT SINGH, SR.DR $ % ! &/ DATE OF HEARING : 06.12.2018 '()* ! &/ D ATE OF PRONOUNCEMENT : 28.02.2019 *,/ ORDER PER DIVA SINGH BY THESE TWO APPEALS FILED THE ASSESSEE ASSAILS THE CORR ECTNESS OF THE SEPARATE ORDERS DATED 21.02.2018 OF CIT(A) CHANDIGAR H PERTAINING TO 2014-15 AND 2009-10 ASSESSMENT YEARS ON IDENTICAL ISSUE S. ACCORDINGLY, FOR THE SAKE OF CONVENIENCE, A COMMON ORDER IS BEING PASS ED AFTER HEARING THE PARTIES. FOR READY REFERENCE, WE REPRODUCE THE GROUNDS FROM ITA 510/CHD/2018 : 1. THE ORDER PASSED BY THE LEARNED CIT (A) IS CONTRARY TO LAW & FACTS OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME (APPEAL) HAS ERR ED IN LAW IN CONFIRMING THE INCOME ASSESSED AT RS. 64,36,440/- AGAINST THE DECL ARED INCOME OF RS. 5,12,980/-. 3. THE LEARNED COMMISSIONER OF INCOME TAX APPEAL HAS E RRED IN LAW AND FACTS IN CONFIRMING THE ADDITION OF RS. 59,23,460/- MADE TO THE INCOME OF ASSESSEE ON ACCOUNT OF CASH DEPOSIT IN HIS BANK ACCOUNT MAINTAINED WITH PN B CHANDIGARH. THE ADDITION MADE IS REQUIRED TO DELETED. 4. THE APPELLANT CRAVES LEAVE TO ADD TO OR AMEND ANY G ROUND OF APPEAL BEFORE THE DISPOSAL OF APPEAL 2. THE RELEVANT FACTS OF THE CASE ARE THAT E-FILED RETUR N OF THE ASSESSEE DECLARING AN INCOME OF RS. 5,12,980/- WAS PICKED UP FOR SCRU TINY, ON THE BASIS OF THE AIR INFORMATION WHICH REFLECTED DEPOSIT OF CASH IN THE ASSESSEE'S SAVING BANK ACCOUNT NO.0583000101106441 MAINTAINE D WITH ITA-510&511/CHD/2018 A.Y. 2014-15&2009-10 PAGE 2 OF 7 PUNJAB NATIONAL BANK SECTOR 19-C, CHANDIGARH. IT WAS NO TICED THAT IN THE SAID ACCOUNT, THERE WERE DEPOSITS OF RS. 59,23,460/-. THE DEPOSITS MADE ON DIFFERENT DATES STARTING FROM 02.04.2013 TO 01.01.2 014 TOTALING RS. 59,23,460/- WERE INCLUDED IN THE SHOW CAUSE NOTICE ISSU ED BY THE AO REQUIRING THE ASSESSEE TO EXPLAIN. AS PER REPLY FURN ISHED THROUGH HIS ADVOCATE, THE ASSESSEE STATED THAT HE WAS DEALING IN RE SALE OF VEGETABLES IN SECTOR 26, CHANDIGARH AND FOR THE SPECIFIC PERIOD, HIS TUR NOVER WAS RS. 77,63,439/- WHICH INCLUDED THE CASH DEPOSITED AND TRAN SACTED THROUGH HIS BANK ACCOUNT WITH PUNJAB NATIONAL BANK, SECT OR 19, CHANDIGARH. THE ASSESSEE WAS REQUIRED TO FURNISH SUPPORT ING DOCUMENTARY EVIDENCE. THE ASSESSEE IN REPLY STATED TH AT APART FROM THE DETAILS AVAILABLE IN HIS BANK ACCOUNT, HE HAS NOT RETAINED ANY OTHER RECEIPTS. THE AO NOTICED THAT THE BOOKS OF ACCOUNT OF T HE ASSESSEE HAD BEEN AUDITED BY CHARTERED ACCOUNTANT AND THE ARGUMEN T THAT THE ONLY EVIDENCE AVAILABLE WAS THE BANK PASS BOOK, WAS CONSIDERED TO BE NOT SUFFICIENT. THE AO RECORDED THE STATEMENT OF THE ASSESSE E IN THE PRESENCE OF HIS ADVOCATE SMT. MADHU BHANDARI AND HELD TH AT THE ASSESSEE FAILED TO DISCHARGE THE BURDEN PLACED UPON HIM. AS A RESULT OF THIS, THE ENTIRE DEPOSITS IN THE SAID BANK ACCOUNT WERE I NCLUDED AS ASSESSEES INCOME. 3. IN APPEAL BEFORE THE CIT(A), THE ASSESSEE RAISE VARIOUS ARGUMENTS INCLUDING THE FACT THAT THE WITHDRAWALS FROM THE ACCOUNT H AVE BEEN INGORED AND INFACT THESE WERE MUCH MORE THAN THE DEPOS ITS. ACCORDINGLY, IT WAS REQUESTED THAT AT BEST A PEAK CREDIT COULD HAVE BEEN ADDED. HOWEVER, THE CIT(A) DISMISSED THE ASSESSEE'S CLAIM REFERRING TO VARIOUS DECISIONS OF DIFFERENT COURTS HOLDING THAT THE ASSESSEE HAS FAILED TO PROVE THAT THESE WERE BUSINESS DEPOSITS. 4. SIMILAR WAS THE POSITION IN 2009-10 ASSESSMENT YEAR, TH E ONLY DIFFERENCE BEING THAT HEREIN THE DETAILS OF THE CASH DEPOSIT S IN THE SAID BANK ACCOUNT TOTALING RS. 37,19,994/- WERE FOUND TO HAVE BEEN NOT EXPLAINED TO THE SATISFACTION OF THE AO LEADING TO THE ADD ITION OF THE SAID AMOUNT WHICH WAS CONFIRMED IN APPEAL BY THE CIT(A). 5. THE LD. AR INVITING ATTENTION TO THE PAPER BOOK FILED IN T HE RESPECTIVE YEARS SUBMITTED THAT THE ASSESSEE HAS BEEN ENGAGED IN THIS ACTIVITY FOR THE LAST SO MANY YEARS, COPY OF THE RETURN FO R 2006-07 ASSESSMENT YEAR FILED ON 17.07.2006 AVAILABLE AT PAGES 23 A ND 24 WAS ITA-510&511/CHD/2018 A.Y. 2014-15&2009-10 PAGE 3 OF 7 RELIED UPON TO SHOW THAT THE ASSESSEE HAS BEEN RETURN ING INCOME U/S 44AF. SIMILARLY IN 2007-08 AND 2008-09 ASSESSMENT YEAR, T HE ASSESSEE HAS FILED RETURN OF INCOME ON 17.01.2008 AND 17.03.2009 U/S 44AF. IT WAS HIS SUBMISSION THAT IN NONE OF THE YEARS, SCRUTINY ORD ERS U/S 143(3) WERE PASSED. THE DECISION TO PASS A SCRUTINY ORDER, IT W AS SUBMITTED, IS NOT IN THE HANDS OF THE ASSESSEE. ON QUERY, IT WAS SUB MITTED THAT THE ASSESSEE HAS BEEN FUNCTIONING OVER THE YEARS FROM THE VERY SAME LOCATION IN THE VERY SAME MANNER AND AS PER HIS PAST PR ACTICE HAS NOT RETAINED ANY OF THE VOUCHERS OR BILLS. THUS APART FROM HIS BANK ACCOUNT AND RETURNS FILED RELYING THEREON HE HAS NO OTHER DOCUM ENTARY SUPPORT HIS CLAIM THAT THE ASSESSEE HAS BEEN ENGAGED IN THE ACT IVITY OF BUYING AND SELLING VEGETABLES AND FRUITS ETC., HOWEVER IT WAS SUBMIT TED THAT THE ASSESSEE QUA THE DEPOSITS FOUND REFLECTED IN ITS BANK ACC OUNT WOULD BE ABLE TO SHOW THAT THE DEPOSITS HAVE BEEN MADE IN AMARA WATI (MAHARASHTRA), PATTAMBI (KERALA) KHANDWA (M.P.) ERNAKULAM (KERA LA), BIJAPUR (KARNATAKA), NEW SABZI MANDI (INDORE), PNB COLLEGE RO AD, BELGAUM, (KARNATAKA) ETC., ETC., AND THE CHEQUES HAVE BEEN ISSUED IN FAVOUR OF THE PARTIES WHO HAVE SUPPLIED THE VEGETABLES AND TH ESE HAVE ALSO BEEN ENCASHED IN DIFFERENT PLACES. IT WAS SUBMIT TED AS AND WHEN A PARTY WOULD BOOK FOR A SPECIFIC CONSIGNMENT OF VE GETABLES OR APPLES AT AMARAVATI, INDORE AND ERNAKULAM, KHANDWA ETC., T HE CASH WOULD BE DEPOSITED IN ASSESSEE'S BANK ACCOUNT AND THE ASSESSEE WOULD ISSUE A CHEQUE IN FAVOUR OF THE PARTY FOR WHOM THE CONSIG NMENT OF VEGETABLES OR APPLES ETC. WAS BEING PURCHASED FOR ONWARD TRANSFER TO AMRAVATI, INDORE ETC. ACCORDINGLY, IT WAS HIS SUBMISSION THA T THE ENTIRE DEPOSITS AND WITHDRAWALS RELATE TO HIS BUSINESS OF RE-SALE OF FRUITS AND VEGETABLES AND THE ASSESSEE HAS BEEN IN THIS LINE OF BUSIN ESS FOR THE LAST SO MANY YEARS. HOWEVER, IT IS A FACT THAT NO RECEIPTS OR BILLS OR DETAILS HAVE BEEN RETAINED BY THE ASSESSEE AS HE WAS NOT AWA RE THAT THESE WERE TO BE MAINTAINED. 6. THE LD. SR.R RELIED UPON THE IMPUGNED ORDERS. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, IT IS SEEN THAT THE ASSESSEE ADDRE SSING THE SAID DEPOSITS IN THE PUNJAB NATIONAL BANK, SECTOR 19C, CHANDIGA RH CONSISTENTLY RIGHT FROM THE ASSESSMENT STAGE, HAS BEEN STATING THAT THESE WERE DEPOSITS MADE IN THE BUSINESS OF THE ASSESSEE OF RE -SALE OF FRUITS ITA-510&511/CHD/2018 A.Y. 2014-15&2009-10 PAGE 4 OF 7 AND VEGETABLES ETC. AT DIFFERENT PLACES AND IT IS A MATTER OF FACT THAT THE BILLS AND VOUCHERS ETC. HAVE NOT BEEN RETAINED. IT IS CLAIM ED THAT ON THE BASIS OF THESE VERY EVIDENCES RETURNS OF INCOME HAVE BEE N FILED OVER THE YEARS WHICH THOUGH HAVE NOT BEEN SUBJECTED TO SCRUTIN Y HOWEVER IT IS UNDERSTOOD BY HIM AS BEING ACCEPTABLE. IT IS SEEN THAT THE AO RECORDED THE STATEMENTS OF THE ASSESSEE WITH SAID EFFECT HOWEVER DID NOT ACCEPT THE EXPLANATION FOR WANT OF DOCUMENTARY EVIDENCE. SINCE DOCUMENTARY EVIDENCE ITSELF HAS NOT BEEN RETAINED AS PER THE CLAIM THE RECORDING OF STATEMENT IS NEITHER HERE NOR THERE. 8. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE CIT (A) CONSIDERING IDENTICAL ARGUMENTS IN PARA 6.3.1 OF HIS ORDER PO SED THE QUESTION THAT ; WHETHER THERE WAS ANY JUSTIFIABLE EXPLANATION FOR THE SAID CASH DEPOSITS OR NOT ? PROCEEDING FURTHER, THE CIT(A) TOOK NOTE OF THE FACT THAT THE ASSESSEE WAS UNABLE TO FURNISH NECESSARY SUPPORTING DOCUMENTS AND INFACT ACCEPTED THAT THE BILLS AND VOUCHERS HAVE NO T BEEN RETAINED AND THE BOOKS OF ACCOUNT HAD BEEN MADE ON TH E BASIS OF THE DEPOSITS IN THE BANK ACCOUNT. THE RELEVANT EXTRACT FROM THE IMPUGNED ORDER IS EXTRACTED HEREUNDER : BEFORE THE AO, THE ASSESSEE CONTENDED THAT HE WAS DEALING IN RESALE OF VEGETABLES ARID THE SAID CASH DEPOSITS WERE PART OF HIS BUSINESS TURNOVER, WHICH IN THE YEAR UNDER CONSIDERATION WAS RS 77,63,439/-. HOWEVER BEFORE THE AO, THE ASSESSEE WAS UNABLE TO FURNISH NECESSARY DOCUMENTS IN SUPPORT OF HIS CONTENTION THAT THE IMPUGNED CASH DEPOSITS IN HIS SAVING BANK ACCOUNT PERTAINED TO HIS BUSINESS RECEIPTS. THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS, HENCE THE CLAIM OF THE ASSESSEE THAT THE SAID DEPOSITS WE RE OUT OF HIS BUSINESS RECEIPTS COULD NOT BE VERIFIED. THE AO RECORDED THE STATEMEN T OF THE ASSESSEE ON 03.10.2016, EXTRACTS OF WHICH ARE REPRODUCED BY HIM IN THE IMPUGNED ORDER. IN THE STATEMENT THE ASSESSEE CLEARLY DENIED HAVING AN Y BILLS OF ANY PURCHASE, SALE OR EXPENSES. HE ALSO STATED THAT NO EVIDENCE REGARD ING THE SOURCE OF CASH DEPOSITED IN HIS BANK ACCOUNT WAS AVAILABLE WITH HI M. 9. THE CIT(A), THEREAFTER TOOK NOTE OF THE FACT THAT SEV ERAL OPPORTUNITIES HAVE BEEN GIVEN TO THE ASSESSEE AT THE A SSESSMENT PROCEEDINGS TO LEAD EVIDENCE TO ESTABLISH THAT THE CASH DEPOSITS WERE BUSINESS RECEIPTS. THE ASSESSEE WAS HELD TO HAVE NOT DI SCHARGED THE ONUS PLACED UPON HIM, ACCORDINGLY, TAKING NOTE OF THE FACT THAT S INCE MANY PAYMENTS ARE IN CHEQUE, HE NOTED THAT THE ASSES SEE COULD HAVE GIVEN DETAILS OF THESE CHEQUE PAYMENTS TO ESTAB LISH THE SAID ACCOUNT WAS A BUSINESS ACCOUNT BUT HE FAILED TO DO SO. AS A RESULT THEREOF THE ENTIRE RECEIPTS OF RS. 59,23,460 /- WERE TREATED AS UNEXPLAINED CASH DEPOSITS. THE FACTS AR E STATED TO ITA-510&511/CHD/2018 A.Y. 2014-15&2009-10 PAGE 5 OF 7 BE IDENTICAL IN BOTH THE APPEALS. WE HAVE SEEN FRO M THE DETAILS OF THE COPIES OF THE BANK ACCOUNTS MADE AVAILABLE I N THE PROCEEDINGS THAT CASH HAS BEEN DEPOSITED IN THE SP ECIFIC ACCOUNT AT VARIOUS PLACES IN MAHARASHTRA, KERALA, M ADHYA PRADESH, KARNATAKA ETC. AND CHEQUES HAVE BEEN ISSUE D IN FAVOUR OF SPECIFIC BANK ACCOUNTS IN PUNJAB NATIONAL BANK, KUMS, MEERUT (UP), PUNJAB NATIONAL BANK, RAOPURA, V ADODARA (GUJRAT). THUS, THESE SHOW THAT THE FUNDS WERE INT RODUCED AT DIFFERENT PLACE AND DISPERSED AT DIFFERENT PLACES. THIS FACT ALONE THOUGH CONSISTENT WITH THE ASSESSEES CLAIM DOES NO T BY ITSELF ESTABLISH THAT THESE DEFINITELY WERE BUSINESS RECEI PTS AND PAYMENTS. IN THE TIMES WE LIVE IN AND CONSIDERING THE FACT THAT THIS A BORDER STATE SENSITIVE TO THE POSSIBILITIES OF NEFARIOUS ANTI-SOCIAL ACTIVITIES WHERE SUSPICIOUS CASH DEPOSI TS NECESSARILY WOULD HAVE RAISED A FLAG AS THE REQUISITE AUTHORITI ES WOULD BE VIGILANT AND ALERT TO KEEP AN EYE ON POSSIBLE DRUG OR ANTI- TERRORIST FUNDING, WE FIND THAT ON RECORD THERE IS NO SUCH SUSPICION OR SUGGESTION. ACCORDINGLY THE ASSESSEES CLAIM THAT THESE WERE BUSINESS RECEIPTS BECOMES MORE PLAUSIBLE . HOWEVER, WE ARE PAINED TO NOTE THAT THE DECISION MA KING PROCESS HAS TO BE BASED ON THESE SURMISES WHICH SIT UATION ARISES PURELY ON ACCOUNT OF THE LAXNESS OF THE TAX AUTHORITY AT THE VERY FIRST STAGE WHICH COULD HAVE BEEN ADDRESSE D BY DIRECTING A SPOT ENQUIRING BY DEPUTING AN INSPECTOR TO VERIFY THE ASSESSEES CLAIMS OF FUNCTIONING FROM THE SPECI FIC PLACE OF BUSINESS DESCRIBED AS IN FRONT OF SHOP-CUM-FLAT NO. 37 SECTOR 26 FRUITS & VEGETABLES MARKET, CHANDIGARH SINCE 199 8-99 AS PER THE SUBMISSIONS EXTRACTED IN PARA 6.2 AT PAGE 3 OF THE IMPUGNED ORDER. THIS FACT COULD HAVE BEEN EASILY V ERIFIED BY CARRYING OUT A SPOT ENQUIRY. IT NEED NOT BE LOST SI GHT OF THAT THE TAX ADMINISTRATION IS PART OF THE GOVERNMENT MACHIN ERY AND WORKS FOR THE STATE WHICH EXISTS FOR THE WELFARE AN D BENEFIT OF ITS CITIZENS.THE TAX ADMINISTRATION IS NOT EXPECTED TO SIT BACK AND ITA-510&511/CHD/2018 A.Y. 2014-15&2009-10 PAGE 6 OF 7 ONLY MAXIMIZE THE TAX COLLECTIONS BASED ON THE IGNO RANCES OF THE ASSESSEE ON THE CONTRARY IT IS EXPECTED TO EDUC ATE, INFORM AND ADVICE THE ASSESSEE IN ENSURING THAT ONLY JUST AND DUE TAXES OF THE STATE ALONE ARE COLLECTED. THE SAID P ROACTIVE DECISION MAKING BECOMES MORE IMPERATIVE WHEN THE TA X ADMINISTRATION SEEKS TO PENALIZE THE MARGINAL TAXES PAYERS WHO HAVE NEVER BEEN INFORMED / EDUCATED ENOUGH SO AS TO BE ADVISED TO RETAIN THE SUPPORTING BILLS AND VOUCHER S FOR EXPLAINING THE DEPOSITS NOTICED IN THEIR BANK ACCOU NTS. ATTEMPTS SHOULD BE MADE TO PUBLICALLY EDUCATE CITIZ ENS THAT ALL FINANCIAL DOCUMENTS SUPPORTING DEPOSITS AND WITHDRA WALS FROM THE BANK ACCOUNTS ETC., NEED TO BE NECESSARILY RETA INED IN ORDER TO SUPPORT THE EXPLANATION OFFERED AS AND WHEN A QU ERY IS RAISED. THE ASSESSEE IS STATED TO BE ENGAGED IN A SIMILAR ACTIVITY OVER THE YEARS AND AFTER RELYING UPON PAST PRACTICE, HE IS MAINTAINING HIS BOOKS OF ACCOUNT ON THE BASIS OF DEPOSITS IN HIS BANK ACCOUNT IN THE BELIEF THAT THE BANK STATEM ENT IS SUFFICIENT EVIDENCE TO SUPPORT HIS CLAIM WHICH HE M AY SO PERCEIVE IS EVIDENT TO THE WORLD AT LARGE WHEREIN H E IS FUNCTIONING IN THIS LINE FROM 1998-99 ASSESSMENT YE AR IN FRONT OF SHOP-CUM-FLAT NO. 37 SECTOR 26, THEN THE BELIEF CANNOT BE SAID TO BE EITHER MISPLACED OR MISCHIEVOUS IN THE A BSENCE OF ANY PUBLICITY BY THE TAX AUTHORITIES THAT THE FINAN CIAL RECEIPTS / BILLS ETC NEED TO BE ESTABLISHED. ACCORDINGLY, WE A RE OF THE VIEW THAT IN THE INTERESTS OF SUBSTANTIAL JUSTICE, KEEPIN G IN VIEW THE CONCERNS OF THE REVENUE ALSO ALIVE, IT WOULD BE APPR OPRIATE TO SET ASIDE THE ISSUE BACK TO THE FILE OF THE AO WITH THE DIRECTION TO CARRY OUT NECESSARY ENQUIRY AND THEREAFTER CONFRONT THE ASSESSEE WITH THE REPORTS SO GATHERED AND DECIDE THE ISSUE K EEPING IN VIEW THE PAST HISTORY OF THE ASSESSEE FROM THE SPEC IFIC LINE OF BUSINESS AS PER THE CLAIM PUT FORTH. NEEDLESS TO S AY THAT THE AO SHALL PASS A SPEAKING ORDER IN ACCORDANCE WITH L AW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEI NG HEARD. ITA-510&511/CHD/2018 A.Y. 2014-15&2009-10 PAGE 7 OF 7 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. 11. SINCE THE FACTS AND CIRCUMSTANCES IN ITA 511/CH D/2018 ARE IDENTICAL TO ITA 510/CHD/2018, THEREFORE, OUR D ECISION RENDERED IN ITA 510/CHD/2018 WOULD APPLY MUTATIS-MU TANDIS TO ITA 511/CHD/2018 ALSO. 12. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.02.2019. SD/- SD/- ( % & ' ( ) ) ( ! ) (ANNAPURNA GUPTA) (DIVA S INGH) *+ #/ ACCOUNTANT MEMBER ' #/ JUDICIAL MEMBER