ITO, New Delhi V. Shri Rajneesh Dhupar, New Delhi

ITA 5282/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90882 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 12-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 15-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: SAURAV ROHTAGICA
• Keywords: Unexplained investment; Opportunity of cross examination
• Section: 143(3); 142(1)

Judgement Text

ITA NO S . 5281 & 5282/ DEL/ 2012 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NOS.5281&5282/DEL/2012 (ASSESSMENT YEAR: 2007 - 08) ITO WORD - 43(2) NEW DELHI RAJNEESH DHUPAR C - 44, OLD GOVIND PURA, PARWANA ROAD NEW DELHI PAN: AIWPD9281E (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI VIKRAM SAHAY, SR. D R RESPONDENT BY :SHRI SAURAV ROHTAGI,CA DATE OF HEARING 12.03 .2015 DATE OF PRONOUNCEMENT 0 1 .04 .2015 PER A. T. VARKEY, JUDICIAL MEMBER TH ESE ARE TWO APPEAL S FILED BY THE REVENUE , AGAINST THE ORDER DATED 23 . 7. 2012 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS - XXX ) , NEW DELHI , PERTAINING TO THE ASSESSMENT YEAR 2007 - 08. ONE APPEAL IS AGAINST THE DELETIONS OF ADDITION MADE BY THE AO AND OTHER IS AGAINST THE CANCELLATION OF PENALTY LEVIED BY THE AO AGAINST THE ASSESSEE FOR THE SAME ASSESSMENT YEAR. 2. THE GROUNDS OF APPEAL RAISE D IN ITA NO. 5281/DEL/2012 READS AS UNDER: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN : - 1 . DELETING THE ADDITION OF RS.6,12,269/ - OUT OF TOTAL ADDITION OF RS.6,21,080/ - MADE ON ACCOUNT OF ESTIMATED PROFIT @10% OF TOTAL UNEXPLAINED CASH DEPOSIT OF RS . 62,12,286/ - TREATED AS TOTAL TURNOVER OF THE ASSESSEE S OWN BUSINESS WITHOUT CONSIDERING THE FACTS BROUGHT OUT BY THE AO. 2. DELETING AN ADDITION OF RS. 4,77,300 / - MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT WITHOUT CONSIDERING THE FACTS THAT NO EXPLANATION COULD BE GIVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ITA NO S . 5281 & 5282/ DEL/ 2012 2 3 . DELETING AN ADDITION OF RS. 4,22,006/ - MADE ON ACCOUNT OF UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT BY CONSIDERING THE ADDITIONA L EVIDENCE PRODUCED BEFORE HIM. 3 . THE FACTS IN BRIEF ARE THAT IN THIS CASE R ETURN OF INCOME WAS FILED ON 31.7.2007 DECLARING TOTAL INCOME OF RS. 92,960/ - . THE RETURN WAS PROCESSED ON 20.1.2009 U/S. 143(1) OF THE INCOME TAX ACT , 1961 (HEREIN AFTER THE ACT ) . THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS ON THE BASIS OF SCRUTINY CASES PROGRAMME AND ACCORDINGLY STATUTORY NOTICES U/S. 143(2) AND 142(1) WERE ISSUED AND THE ASSESSEE WAS ASKED TO FILE COPIES OF ALL BANK ACCOUNTS WITH NARRATION OF EACH ENTRY ABOVE RS. 10,000/ - DR./CR. ; AND ALSO TO EXPLAIN THE SOURCE OF DEPOSIT OF RS. 57,69,988/ - IN SAVINGS BANK ACCOUNT AS PER AIR INFORMATION AND A COPY OF THE SAME WERE ISSUED TO THE ASSESSEE. IN RESPONSE THERETO, LD. CO UNSEL OF THE ASSESSEE APPEARED ON BEHALF OF THE ASSESSE E BEFORE THE AO AND SUBMITTED THAT THE ASSESSEE WAS AN EMPLOYEE IN THE COMPANY M/S KAJARI CEREMICS LTD.; AND THE MARKETING EXECUTIVE OF THE SAID COMPANY . ACCORDING TO THE ASSESSEE THE CASH DEPOSITED BY HIM IN HIS BANK ACCOUNT WAS THE CASH COLLECTED FROM THE CUSTOMERS OF THE COMPANY. HE EXPLAINED THAT SOMETIMES WHEN THE COMPANY MADE SALE TO THE CUSTOMER, THE CUSTOMER PAY CASH, BUT THE COMPANY HAS THE POLICY OF NOT ACCEPTING CASH PAYMENT, IN THAT CASE THE ASSESSEE ACCEPTED THE CASH AND DEPOSITED IN HIS BANK ACCOUNT ON BEHALF OF THE COM PANY, AND MADE DD FOR THE SAID SUM AND REMIT THE DD IN LIEU OF CASH RECEIVED TO THE COMPANY. THUS ACCORDING TO THE ASSESSEE, ALL THE CASH WER E COLLECTED BY HIM WAS UTILIZIED IN ISSUING DD IN FAVOR OF THE COMPANY. HOWEVER, THE AO DISBELIEVED THE EXPLANATION OF THE ASSESSEE. THEREAFTER, AO COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT V IDE HIS ORDER DATED 24 . 12 .2009 ON AN INCOME OF RS. 16,13,944 / . ITA NO S . 5281 & 5282/ DEL/ 2012 3 4 . BEING AGGRIEVED WITH THE ASSESSMENT ORDER DATED 24 . 12 .2009 , ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 23 . 7 .201 2 WA S PLEASED TO ALLOW THE APPEAL OF THE ASSESSEE. 5 . NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNED ORDER DATED 23 . 7 .20 12 AND FILED THE PRESENT APPEAL BEFORE US . 6 . AT THE TIME OF HEARING LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL . 7 . ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE SAME MAY BE UPHELD. 8 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORD S AVAILABLE WITH US . WE FIND THAT IN THIS CASE THE ASSESSEE HAS TWO BANK ACCOUNTS AND IS A SALARIED EMPLOYEE WITH M/S KAJARIA CERAMICS AND WORKING AS A MARKETING MANAGER AND HAS COLLECT ED CASH FROM THE CUSTOMERS AND DEPOSITED THE SAID CASH IN HIS ACCOUNT AND CONVERTED THE SAME INTO DEMAND DRAFT/ CHEQUE THROUGH HIS BANK ACCOUNTS AND THEREAFTER PROMPTLY REMITS THE DD/CHEQUE BACK TO THE EMPLOYER COMPANY. THE A O TREATED THE WHOLE OF SUCH PAYMENT OF RS.62,12,868/ - AS TURNOVER OF THE A SSESSEE S OWN BUSINESS AND ESTIMATED THE NET PROFIT AT 10% ON SUCH SALES AND MADE ADDITION OF RS.6,21,286/ - . IN SUCH A SCENARIO, T HE QUESTION IS WHEN THE MONEY HAS COME TO THE BANK OF THE A SSESSEE AND HA S GONE TO THE EMPLOYER OF M/S KAJARIA CERAMICS LTD., IN THE SAME FINANCIAL YEAR IN THE FORM OF CHEQUES/DRAFTS, HOW CAN IT BE TURN - OVER OF THE ASSESSEE ? AND WHY THE A O DID NOT GIVE AN OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT OR HIS AR IN HIS OFFICE? IF THE AO HAD DISBELIEVE D ASSESSEE S ITA NO S . 5281 & 5282/ DEL/ 2012 4 EXPLANATION IN RESPECT TO THE MONEY TRANSACTION IS HIS ACCOUNTS THEN THE AO IS DUTY BOUND TO PRODUCE EVIDENCE TO CONTRADICT THE EXPLANATION GIVEN BY THE ASSESSEE. THE LD CIT(A) HAS RIGHTLY OBSERVED AFTER A PERUSAL OF THE BANK ACCOUNTS THAT DIFFERENCE BETWEEN CASH DEPOSIT AND DEMAND DRAFT OR PAY ORDER MADE DURING THE FINANCIAL YEAR SHOWS TOTAL DIFFERENCE OF RS.88 1 1/ - ONLY. SO HE HAS RIGHTLY HELD THAT MAXIMUM OF THIS AMOUNT OF RS. 8811/ - CAN BE T REATED AS INCOME OF THE A SSESSEE , THOUGH, IT MAY BE COMMISSION PAID FOR MAKING DD/PAY ORDERS. THE A SSESSEE HAS SHOWN CASH ACCOUNT WHERE THE OPENING BALANCE OF CASH IS R S. 11,000/ - WHICH IS NORMAL BALANCE FOR A SALARIED EMPLOYEE AND THERE IS ALWAYS POSITIVE BALANCE OF CASH THROUGHOUT THE YEAR AND CLOSING BALANCE IS RS.8311 / - WHICH IS WITHIN THE PERMISS IBLE LIMIT. WE FIND CONSIDERABLE COGENCY IN THE FINDING OF THE LD. CIT(A) THAT THE ASSESSEE S SUBMISSIONS ARE FOUND TO BE GENUINE AND BONAFIDE AND THE AO SHOULD NOT DISBELIEVE SUCH FA CTS PRODUCED BY THE ASSESSEE AND REJECT HIS SUBMISSION IN TOTO WITHOUT BRINGING EVIDENCES ON BOARD TO PROVE THAT EXPLANATION WAS FALSE. THEREFORE, THE LD. CIT(A) HAS RIGHTLY DIRECTED THE AO TO MAKE ADDITION OF RS. 8811/ - ONLY . IN VIEW OF THE ABOVE FACTUAL MATRIX, WE ARE OF THE CONSIDERED VIEW THAT THE NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. CIT(A), HENCE, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THIS GROUND OF APPEAL RAISED BY THE REVENUE. 9 . WITH REGARD TO AD DITION OF RS.4,77,300/ - IS CONCERNED, WE FIND THAT CASH DEPOSITS OF TWO AMOUNTS RS.3,77,300 / - + RS. L LAKHS HAVE BEEN DULY EXPLAINED BY THE ASSESSEE S COUNSEL IN HIS FIRST SUBMISSIONS DATED 24 - 05 - 2012 A ND ALSO IN THE CASH ACCOUNT FOR THE FINANCIAL YEAR 2006 - 07 THE AO TREATED PEAK CASH DEPOSIT ITA NO S . 5281 & 5282/ DEL/ 2012 5 IN SOUTH INDIAN BANK OF ASSESSEE ON 9 - 09 - 2006 AS UNEXPLAINED INVESTMENT. THE ASSESSEE S COUNSEL SUBMITTED THAT THIS CASH DEPOSIT IS PART OF TOTAL CASH DEPOSIT OF RS.62,12,868/ - WHICH HAS BEEN TREATED BY THE AO AS UN ACCOUNTED SALES. FURTHER, THE LD. COUNSEL OF THE ASSESSEE HAS EXPLAINED THAT THE CASH DEPOSITS OF RS.3,77,3001 - DOES NOT BELONG TO ASSESSEE BUT TO M / S KAJARIA CERAMICS LTD. A ND DD HAS BEEN ISSUED FROM HIS ACCOUNT TO M/S KAJARIA FOR RS.3,77,264/ - ON 9 - 09 - 06 OUT OF CASH DEPOSIT OF RS.3,77,300 / - . THEREFORE, WE FIND THAT LD. CIT(A) HAS RIGHTLY HELD THAT THIS ADDITION STANDS EXPLAINED AND DELETED. WE ALSO FIND THAT AS REGARDS THE CASH DEPOSITS OF RS. 1 LAKH ON 3 - 03 - 2007 IS ALSO AVAILABLE CASH FROM THE CASH ACCO UNTS AND BEING REASONABLE AND SOURCE STANDS EXPLAINED. THEREFORE, THE LD. CIT(A) HAS DELETED THE ADDITION. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE NO INTERFERENCE IS CALLED FOR IN THE ORDER PASSED BY THE LD. CIT(A), HENCE, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THIS GROUND OF APPEAL RAISED BY THE REVENUE. 10 . WITH REGARD TO LAST ADDITION WHICH IS RELATED WITH DEPOSITS OF CASH/CHEQUE OF RS.4,22,006/ - IS CONCERNED, WE ARE OF THE CONSIDER ED VIEW THAT LD. CIT(A) HAS RIGHTLY OBSERV ED THAT OUT OF THE LAST 3 DEPOSITS IN PAGE NO. 11 OF THE ASSESSMENT ORDER IT REFLECTS CASH DEPOSITS OF RS.15,000/ - ON 3 - 01 - 200 7 , RS.37,000/ - ON 27 - 01 - 2007 AND RS.12,750/ - ON 27 - 02 - 2007 AND OTHER DEPOSITS, ARE IN T HE FORM OF CHEQUES WHICH HAVE BEEN DULY EXPLAINED BY THE ASSESSEE . THUS WE FIND THAT THE ADDITION OF RS. 4,22,006/ - STANDS EXPLAINED AND SO, THE LD . CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 4,22,006/ - . IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER PASSED BY THE ITA NO S . 5281 & 5282/ DEL/ 2012 6 LD. CIT(A), HENCE, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THIS GROUND OF APPEAL RAISED BY THE REVENUE. ITA NO. 5282/DEL/12 (ITO VS. RAJNEESH DHUBAR) (A.Y. 2007 - 08) 11 . NOW WE TAKE UP THE APPEAL OF THE REVENUE AGAINST THE PENALTY CANCELLED BY THE LD CIT(A) IE. RS.4,91,929/ - , 12. THE GROUNDS OF APPEAL RAISED IN ITA NO. 5282/DEL/2012 READ AS UNDER: - ON THE FACTS AND THE CIRCUMSTANCES OF THIS CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 4,91,929/ - LEVIED U/S. 271(1)(C) OF THE INCOME TAX ACT. 12 . SINCE WE HAVE ALREADY UPHELD THE DEC ISION OF THE LD. CIT(A) ON THE DELETION OF THE THREE ADDITIONS MADE BY THE AO , AS AFORESAID , IN THE QUANTUM APPEAL AND SINCE WE HAVE DECIDED THE ISSUES IN FAVO U R OF THE ASSESSEE AND HAS NOT FOUND ANY CONCEALMENT OF INCOME, THEREFORE, WE ARE OF THE VIEW THAT THE NO INTERFERENCE IS CALLED FOR ON OUR PART IN THE IMPUGNED ORDER PASSED BY THE LD. C IT(A), HENCE, WE ALSO UPHOLD THE ORDER OF THE LD. CIT(A) ON TH E ISSUE OF DELETION OF PENALTY MADE UNDER THE ACT, WHEREIN THE LD. CIT(A) HAS DIRECTED THE AO TO CANCEL THE PENALTY IMPOSED BY HIM . 13 . IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 0 1 . 04 .2015. S D / - S D / - (R.S. SYAL ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 0 1 /0 4 /2015 A K KEOT ITA NO S . 5281 & 5282/ DEL/ 2012 7 COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI