Sh. Rajiv Kumar, Amritsar. V. The Income Tax Officer, Amritsar.

ITA 516/ASR/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4146 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-02-2019
• Assessment Year: 2005-2006
• Appeal Filed On: 06-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Assessee Lawyers: K R JAIN
• Keywords: Peak credit
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N. S. SAINI, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I. T. A. NOS. 516 & 517/(ASR)/2015 ASSESSMEN T YEARD: 2005-06 & 2006-07 SHRI RAJIV KUMAR, 64-E, RANI KA BAGH, AMRITSAR PAN NO. AAZPK1231R VS. INCOME TAX OFFICER, WARD-5(3), AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. K.R. JAIN, ADVOCATE RESPONDENT BY: SH. BHAWANI SHANKAR, DR DATE OF HEARING : 11.2.2019 DATE OF PRONOUNCEMENT : 14.2.2019 ORDER PER N.S. SAINI, AM: THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), AMRITSAR, DATED 31.7.2015. 2. IN BOTH THE YEARS IN APPEAL, THE ASSESSEE HAS TA KEN ADDITIONAL GROUNDS OF APPEAL, WHICH READS AS UNDER:- 1. THAT THE AO HAS ERRED IN LAW AND ON FACTS WHILE INI TIATING PROCEEDING U/S 147 OF THE INCOME TAX ACT. 2. THAT DESPITE SPECIFIC REQUESTS THE REASON/S OF INIT IATING THE PROCEEDING U/S 147 HAS NOT BEEN SUPPLIED. 3. THAT THIS IS A LEGAL GROUND AND NO FRESH INFORMATIO N IS REQUIRED FOR DECIDING THIS GROUND. 2 ITA NOS. 516 & 517/ASR/2015 SHRI RAJIV KUMAR, AMRITSAR 4. THE APPEAL IS FIXED FOR HEARING BEFORE THE HON'BLE BENCH ON 14 TH JANUARY 2016. 2. AT THE TIME OF THE HEARING, THE AR OF THE ASSESS EE SUBMITTED THAT HE DOES NOT PRESS THE ADDITIONAL GROUNDS RAISED IN THE APPEALS, HENCE, THEY ARE DISMISSED FOR WANT OF PROSECUTION. 3. THE COMMON GROUND OF APPEAL TAKEN IN BOTH THE Y EARS UNDER APPEAL IS THAT THE CIT(A) ERRED IN CONFIRMING THE AD OF RS. 1,79,500/- FOR THE ASSESSMENT YEAR 2005-06 AND RS. 85,000/- FOR THE ASSESSMENT YEAR 2006-07 FO R CASH DEPOSITS MADE BY THE ASSESSEE IN THE BANK ACCOUNT NO. 0115100015685 IN H DFC BANK LTD, THE MALL, AMRITSAR. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE AO OBS ERVED THAT THE ASSESSEE HAS MADE CASH DEPOSITS IN THE BANK ACCOUNT NO. 0015100015468 5 MAINTAINED WITH HDFC BANK, THE MALL, AMRITSAR OF RS. 8,60,783/- IN THE ASSESSM ENT YEAR 2005-06 AND RS. 8,89,670/- IN THE ASSESSMENT YEAR 2006-07. THE ASSE SSEE DID NOT COMPLY WITH THE NOTICES ISSUED AND, THEREFORE, THE SOURCE OF THE DE POSITS COULD NOT BE VERIFIED BY HIM, HENCE, HE ADDED THE SAME TO THE INCOME OF THE ASSES SEE. 5. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE SU BMITTED THAT THE PERUSAL OF THE BANK ACCOUNTS IT WILL SHOW THAT MOST ENTRIES OF DEP OSITS IN THE BANK ACCOUNT ARE OF SMALL AMOUNTS OF CASH DEPOSITS WHICH ARE EXPLAINABL E. IT WAS SUBMITTED THAT THE ASSESSEE WAS ACTING AS AN AGENT TO EXPORTERS M/S M. K. INTERNATIONAL AND M.K. AGRI INTERNATIONAL, D-19, GREATER KAILASH II, NEW DELHI . THE COMPANY PURCHASED RICE 3 ITA NOS. 516 & 517/ASR/2015 SHRI RAJIV KUMAR, AMRITSAR FROM FOOD CORPORATION OF INDIA IN PUNJAB AND THE RO LE OF THE ASSESSEE WAS TO TAKE DELIVERY OF RICE FROM FOOD CORPORATION OF INDIA AND TO DISPATCH TO DESTINATION. THE COMPANY TRANSFERRED FUNDS TO THE ASSESSEE TO PAY FR EIGHT, LOCAL CHARGES AND OTHER INCIDENTAL EXPENSES. THE ASSESSEE WAS ONLY PAID SER VICE CHARGES AND THE AMOUNT WERE TRANSFERRED IN HIS ACCOUNT AND WITHDRAWN WITHIN ONE FOR FEW DAYS OF REIMBURSEMENT OF LABOUR AND OTHER INCIDENTAL EXPENSES ON BEHALF OF T HE PRINCIPLE. HENCE, IT WAS SUBMITTED THAT THE AO WAS FACTUALLY WRONG IN STATIN G THAT CASH AMOUNTING TO RS. 8,60,783/- WAS DEPOSITED IN THE BANK ACCOUNT IN ASS ESSMENT YEAR 2005-06 AND RS. 8,89,670/- WAS DEPOSITED IN THE BANK ACCOUNT IN A SSESSMENT YEAR 2006-07 WHEN CREDIT OF FUNDS TRANSFERRED THROUGH BANKS AMOUNTING TO RS. 6,16,364/- IN THE ASSESSMENT YEAR 2005-06 AND RS. 7,09,001/- IN THE ASSESSMENT YEAR . 6. IT WAS FURTHER ARGUED THAT MAXIMUM PEAK AMOUNT D URING THE YEAR 2005-06 WAS RS. 2,02,856/- AND IN THE ASSESSMENT YEAR 2006-07 AND WAS RS. 4,08,152/-, WHILE THE PEAK BALANCE DURING THE PERIOD 7.1.2006 TO 31.3.200 6 AMOUNTED TO RS. 1,01,787/- AND DURING THE PERIOD 7.1.2007 TO 31.3.2007 AMOUNTED TO RS. 2,02,856/- AND, THEREFORE, THE MAXIMUM ADDITION IN THE ASSESSMENT YEAR 2005-06 COULD BE MADE OF RS. 1,01,069/- AND IN THE ASSESSMENT YEAR 2006-07 OF R S. 2,05,296/-. 7. THE CIT(A) DISMISSED THE SUBMISSIONS OF THE ASSE SSEE ON THE GROUND THAT THE ASSESSEE HAD NOT GIVEN ANY WORKING OF THE PEAK CASH AMOUNT OF RS. 2,02,856/- IN THE ASSESSMENT YEAR 2005-06 AND RS. 2,05,296 IN THE ASS ESSMENT YEAR 2006-07. 4 ITA NOS. 516 & 517/ASR/2015 SHRI RAJIV KUMAR, AMRITSAR 8. THE CIT(A) OBSERVED THAT IN THE ASSESSMENT YEAR 2005-06 AND 2006-07, THE FOLLOWING CREDIT ENTRIES IN THE BANK ACCOUNT WITH THE NARRATIONS GIVEN BELOW WERE TRANSFERRED ENTRIES / DEPOSITS BY CHEQUES:- ASSESSMENT YEAR: 2005-06 DATE AMOUNT(RS.) 03-04-2004 17,000/- FUNDS TRANSFER 1152560004209 29 - 04 - 2004 165,000 FUNDS TRANSFER 0272320001433 12-5-2004 50,000/- FUNDS TRANSFER CHANDIGARH 0272320001433 02-06-2004 100,000 FUNDS TRANSFER GK II, DELHI01272320001433 14-06-2004 20,000/- FUNDS TRANSFER GK-II DELHI 01272320001433 03-07-2004 20,000/- FUNS TRANSFER GK II 01272320001433 06-07-2004 200,000/- FUNDS TRANSFER LAJPAT NAGAR DE LHI 02942320000097 28-09-2004 6000/- FUNDS TRANSFER-AMRITSAR 11525600004209 06 - 02 - 2004 12,515/ - CHQ DEP - MICR CLG - AMRITSAR 03-12-2004 11,415/- CHQ DEP MICR BR-DEL 10-12-2004 5000/- FUNDS TRAN AMRITSAR 11525600004209 20-12-2004 3434/- RAYYA PHERIPHERY LOC FOR AMRITS AR BR 07-01-2004 6000/- CHQ DEP MICR CLG- SERVICE BR CHA TOTAL 616,364 ASSESSMENT YEAR: 2006-07 DATE AMOUNT (RS) 23-05-2005 3494/- CHQ DEP-MICR CLG-AMRITSAR 27-06-2005 13,000/- FUNDS TRANSFER-AMRITSAR 1152560004209 28-06-2005 3350/- CHQ DEP-MICR CLG - AMRITSAR 5 ITA NOS. 516 & 517/ASR/2015 SHRI RAJIV KUMAR, AMRITSAR 10-08-2005 10,000/- FUNDS TRANSFER - NEW DELHI 2711140000237 11-08-2005 20,000/- FUNDS TRANSFER - LAJPAT NAGAR 2942320000097 01-10-2005 225,860/- CHQ DEP - MICR CLG CLEARING BR - DEL 22-10-2005 408,152/- CHQ DEP - MICR CLG CLEARING BR - DEL 26-10-2005 1000/- FUNDS TRANSFER-NEW DELHI 0271050124511 13-01-2006 22,579/- CHQ DEP-MICR CLG AMRITSAR 27-03-2006 1566/- FUNDS TRAN-AMRITSAR TOTAL 709,001/- THEREFORE, HE HELD THAT SINCE THE AFORESAID DEPOSIT S TOTALING OF RS. 6,16,364/- IN THE ASSESSMENT YEAR 2005-06 AND RS. 7,09,001/- IN THE A SSESSMENT YEAR 2006-07 IN ACCOUNT NO. 011000154685, HDFC BANK, THE MALL AMRIT SAR WERE BY WAY OF TRANSFER ENTRIES / CHEQUE DEPOSITS, THEREFORE, THE AO WAS UN JUSTIFIED IN TREATING THE SAME AS CASH DEPOSITS AND MAKING THE ADDITIONS. ACCORDINGLY , HE DELETED THE ADDITONS OF RS. 6,16,364/- IN THE ASSESSMENT YEAR 2005-06 AND RS. 7 ,09,001 IN THE ASSESSMENT YEAR 2006-07. THEREAFTER, THE CIT(A) OBSERVED THAT THE A PPELLANT MADE FOLLOWING CASH DEPOSITS / WITHDRAWALS IN THE SAID BANK ACCOUNT IN THE HDFC BANK WHEREFROM THE PEAK CASH BALANCE OF ASSESSMENT YEAR 2005-06 AND 2006-0 7 WORKED OUT AS UNDER:- ASSESSMENT YEAR 2005-06 DATE WITHDRAWAL (RS.) DEPOSITS (RS.) CREDIT B ALANCE 01 - 04 - 2004 OPENING BALANCE 8196/ - 23-04-04 14,000/- 22,196/- 26-04-04 6000/- 28,196/- 6 ITA NOS. 516 & 517/ASR/2015 SHRI RAJIV KUMAR, AMRITSAR 01 - 06 - 04 16,000/ - 44,196/ - 01 - 06 - 04 16,000/ - 60,196/ - 01-06-04 16,000/- 76,196/- 09-06-04 15,000/- 91,196/- 02-09-04 23,000/- 114,196/- 16-09-04 20,000/- 134,196/- 06 - 10 - 04 5000/ - 129,196/ - 30 - 10 - 04 15,000/ - 144,196/ - 10-11-04 5500/- 149,696/- 08-01-04 10,000/- 159,696/- 07-02-04 8000/- 167,696/- 21-02-04 20,000/- 187,696/- ASSESSMENT YEAR 2006-07 DATE WITHDRAWAL(RS) DEPOSITS (RS) CR EDIT 01 - 04 - 2005 OPENING BALANCE 5300/ - 05 - 04 - 05 19,000/ - 24,300/ - 07 - 05 - 05 14,000/ - 38,300/ - 22 - 06 - 05 11,000/ - 49,300/ - 02 - 07 - 05 4000/ - 53300/ - 06 - 07 - 05 16,000/ - 69,300/ - 23 - 07 - 05 8000/ - 77,300/ - 10 - 08 - 05 10,000/ - 87,300/ - 05 - 11 - 05 3000/ - 90,300/ - 9. HE OBSERVED THAT THE MAXIMUM PEAK CASH CREDIT BA LANCE IN THE FINANCIAL YEAR 2004-05 WAS RS. 1,87,696/- ON 21.2.2014 AND THE MAX IMUM PEAK CASH CREDIT BALANCE DURING THE FINANCIAL YEAR 2005-06 WAS RS. 90,300/- AS ON 5.11.2005. HE OBSERVED THAT THE APPELLANT CLAIM THAT THE PEAK CREDIT BALANCE IS COVERED WITHIN THE RETURNED INCOME FILED BY THE ASSESSEE BUT AS THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE THE SOURCE OF THE ABOVE CASH DEPOSITS IN THE SAID BANK ACCOUNT , THEREFORE, NO CREDIT IN THE RETURN OF INCOME IS BEING ALLOWED TO THE APPELLANT, HENCE, HE CONFIRMED THE ADDITION OF RS. 7 ITA NOS. 516 & 517/ASR/2015 SHRI RAJIV KUMAR, AMRITSAR 1,79,500/- IN ASSESSMENT YEAR 2005-06 AND RS. 85,00 0/- IN THE ASSESSMENT YEAR 2006-07. 10. BEFORE US, THE AR OF THE ASSESSEE SUBMITTED THA T THE ASSESSEE IS FILING RETURN OF INCOME REGULARLY SINCE ASSESSMENT YEAR 2003-04. HE FILED A TABLE FOR GIVING THE ASSESSMENT ORDER WISE DETAILS OF GROSS TOTAL INCOME AND NET INCOME PLACED AT PAGE 30 OF THE PAPER BOOK WHICH IS AS UNDER:- SR. NO. ASSESSMENT YEAR GROSS INCOME NET INCOME 1 2003 - 04 1,68,860/ - 1,68,860/ - 2 2004 - 05 1,83,920/ - 1,83,920/ - 3 2005 - 06 1,65,750/ - 1,65,750/ - 4 2006 - 07 2,52,350/ - 2,45,291/ - 5 2007 - 08 3,99,430/ - 2,99,430/ - 6 2008 - 09 1,45,760/ - 1,45,760/ - 7 2009 - 10 3,42,830/ - 2,42,830/ - 8 2010 - 11 3,83,490/ - 3,52,310/ - 9 2011 - 12 4,12,650/ - 3,44,340/ - 10 2012 - 13 4,72,830/ - 3,91,690/ - 11. HE SUBMITTED THAT THE ASSESSEE WAS HAVING INCO ME IN EARLIER YEARS AS EVIDENCED IN THE RETURN OF INCOME AND, THEREFORE, THE ASSESSEE DEPOSITED THE CASH IN THE BANK ACCOUNT IN ASSESSMENT YEARS 2005-06 AND 20 06-07 OUT OF INCOMES OF EARLIER ASSESSMENT YEARS I.E FOR 2004-05 AT RS. 1,83,920/- AND FOR ASSESSMENT YEAR 2003-04 AT RS. 1,68,860/-, THEREFORE, THE ADDITION MADE S HOULD BE DELETED. 12. THE DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 13. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CAS E AND AFTER HEARING THE RIVAL SUBMISSIONS, WE ARE OF THE CONSIDERED OPINION, THAT THE ARGUMENTS OF THE REVENUE THAT THE ASSESSEE COULD NOT HAVE ANY SAVINGS OUT OF INCO ME EARNED IN THE IMMEDIATELY 8 ITA NOS. 516 & 517/ASR/2015 SHRI RAJIV KUMAR, AMRITSAR PRECEDING ASSESSMENT YEARS 2004-05 AND 2003-04 ARE AGAINST REAL LIFE FACTS. THE ASSESSEE WILL DEFINITELY HAVE SOME SAVINGS OUT OF T HE PAST YEARS INCOME. IT IS SEEN THAT THE ASSESSEE HAD SHOWN NET INCOME OF RS. 1,68,860/- IN THE ASSESSMENT YEAR 2003-04 AND RS. 1,83,920/- IN THE ASSESSMENT YEAR 2004-05. THUS, WE ESTIMATE THE SAVINGS OF THE ASSESSEE IN THE ASSESSMENT YEAR 2003-04 AT RS. 85,000/- AND ALSO IN THE ASSESSMENT YEAR 2004-05 AT RS. 87,000/-. ACCORDING, WE ALLOW DEDUCTION ON ACCOUNT OF DEPOSIT IN THE BANK OF RS. 85,000/- IN THE ASSES SMENT YEAR 2005-06 AND CONFIRM THE ADDITION OF RS. 92,500/- FOR THE ASSESSMENT YEA R 2005-06. SIMILARLY, WE ALLOW CREDIT FOR DEPOSIT IN THE BANK ACCOUNT OUT OF PAST YEAR SAVINGS OF RS. 85,000/- IN THE ASSESSMENT YEAR 2006-07 AND DELETE THE ADDITION OF RS. 85,000/-. THUS, THE GROUNDS OF APPEAL OF ASSESSMENT YEAR 2005-06 IS PARTLY ALLO WED AND FOR THE ASSESSMENT YEAR 2006-07 IS ALLOWED. 14. IN THE RESULT, THE APPEAL FOR ASSESSMENT YEAR 2 005-06 STANDS PARTLY ALLOWED, WHEREAS, THE APPEAL FOR ASSESSMENT YEAR 2006-07 STA NDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COUR T ON 14.2.2019. SD/- SD/- (N. K. CHOUDHRY) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 14.02.2019 RKK COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) THE CIT(APPEALS) (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T.