PRASHANT TORASKAR, MUMBAI V. ASST CIT 25(1),

ITA 5813/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3070 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 16-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SONI
• Keywords: Onus to prove
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI SANJAY ARORA, AM ./ I.T.A. NO. 5813/MUM/2014 ( / ASSESSMENT YEAR: 2010 - 11 ) PRASHANT TORASKAR 101, 1 ST FLOOR, SUNFLOWER CHS, ST. FRANCIS ROAD, VILE PARLE (W), MUMBAI - 400 057 / VS. ASST. CIT - 25(1), MUMBAI ./ ./ PAN/GIR NO. AAAPT 5707 B ( / APPELLANT ) : ( / RESPONDENT ) / APPE LLANT BY : SHRI TARUN GHIA / RESPONDENT BY : SHRI VIJAY KUMAR SONI / DATE OF HEARING : 07.7.2016 / DATE OF PRONOUNCEMENT : 21 . 9 .2016 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN A PPEAL PREFER RED BY THE ASSESSEE AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 35 , MUMBAI (CIT(A) FOR SHORT) DATED 09.6.2014 , PARTLY ALLOWING THE A SSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER ) FOR THE ASSESSMENT YEAR (A.Y.) 2010 - 11 VIDE ORDER DATED 07.3.2013 . 2. THE APPEAL IS DELAYED BY ONE DAY. THE SAME IS EXPLAINED BY WAY OF AN AFFIDAVIT DATED 11.4.2016 BY THE APPELLANT AS CAUSED UNDER THE BONA FIDE IMPRESSION OF HAVING BEEN FILED IN TIME ; HE BEING ENGAGED IN IDENTIFYING A COUNSEL FOR ADVICE AND REPRESENTATION BEFORE THE TRIBUNAL AND , THUS , IN FILING THE APPEAL, RESULTING IN IT BEING 2 ITA NO. 5813/MUM/2014 (A.Y. 2010 - 11) PRASHANT TORASKAR VS. ASST. CIT DEFERRED TO THE LAST DAY. WE FIND TH E SAME REASONABLE. THE APPEAL WAS ACCORDINGLY ADMITTED AND ITS HEARING PROCEEDED WITH. 3 . T HE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE - INDIVIDUAL, A THANE BASED RETAILER I N PHARMACEUTICALS (BY THE TRADE NAME M / S . BIOTROL ) WAS ON THE BASIS OF THE A IR INFORMATION FOUND TO BE MAINTAINING A BANK ACCOUNT WITH ICICI BANK ( # 021101502990 ), WHICH WAS NOT DISCLOSED PER HIS RETURN OF INCOME FOR THE YEAR, FILED ON 15 . 10 .2010 AT AN INCOME OF RS. 9.61 L ACS (REVISED TO RS.1 2 ,79,420 / - ON 23 . 11 . 2012). O N BEING QUESTIONED IN ITS RESPECT, THE ASSESSEE ADMITTED TO THE SAID BANK ACCOU NT BEING NOT DISCLOSED TO THE R EVENUE, AGREEING FOR BEING CHARGED TO TAX ON THE PROFIT RELATABLE TO THE CREDITS APPEARING IN THE SAID BANK ACCOUNT (RS.71.10 L ACS), WHICH WERE CLAIMED TO REPRESENT THE SALE RECEIPTS . THE DEBITS IN TH IS ACCO UNT, IT WAS FURTHE R EXPLAINED, WE RE TOWARD PURCHASE AND EXPENSES. A SEPARATE PROFIT AND LOSS ACCOUNT, TITLED AS P ERSONAL P & L A CCOUNT , WAS PREPARED IN RESPECT OF THE ASSESSEES TRANSACTIONS RO U TED T HROUGH THIS B ANK ACCOUNT, DISCLOSING A NET PROFIT OF RS.5, 33 ,867 / - (AT PB PG . 37). A RECONCILIATION OF THE PURCHASES CLAIM ED THEREIN (AT RS.1 01. 81 L ACS), STATED TO BE FROM THREE PARTIES, WITH THAT REFLECTED IN TH E ASSESSEES ACCOUNT AS APPEARING IN THE IR BOOKS OF ACCOUNT, WAS PREPARED, ALSO SUBMITTING THE COPY OF THE PURCHASE B ILLS. THE SAME DID NOT FIND FAVOUR WITH THE R EVENUE. THE ASSESSEE HAD NOT FURNISHED ALL THE PURCHASE BILLS SO AS TO VERIFY ITS CLAIM OF THE DEBITS IN THE BANK ACCOUNT AS BEING TOWARD PURCHASES. THEN, AGAIN, THE SAME DOES NOT EXPLAIN THE CASH DEPOSITS IN TH E UNDISCLOSED BANK ACCOUNT, CLAIMED TO BE SALES , QUA WHICH CLAIM NO EVIDENCE STOOD ADDUCED. THE ENTIRE AMOUNT CREDITED TO THE ICICI BANK ACCOUNT ( RS.71,09,920/ - ) WAS ACCORDINGLY ADDED AND CONFIRMED, PLACING RELIANCE ON THE DECISIONS IN THE FOLLOWING CASE S, HOLDING THE BURDEN OF PROOF TO BE ON THE ASSESSEE, AND IN THE ABSENCE OF AN E XPLANATION NO ONUS LAY ON THE R EVENUE TO SHOW IF THE CREDIT IS FROM A PARTICULAR SOURCE : 1) SUMATI DAYAL VS. CIT [ 1995 ] 214 ITR 801 (SC) ; 2) ROSHAN DI HATTI VS. CIT [1 977 ] 107 ITR 93 8(SC); 3) CIT VS. DEVI PRASAD VISHWANATH PRASAD [ 1969] 72 ITR 194 (SC) ; 4) CIT VS. M. GANAPATHI MUDALIAR [ 1964 ] 53 ITR 623 (SC); 3 ITA NO. 5813/MUM/2014 (A.Y. 2010 - 11) PRASHANT TORASKAR VS. ASST. CIT 5) KALE KHAN MOHAMMAD HANIF VS. CIT [ 1963] 50 ITR 1 (SC); AND 6) A. GOVINDARJULU MUDALIAR VS. CIT [ 1958] 34 ITR 807 (SC) . AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. WITHOUT DOUBT, THE BURDEN TO PROVE THE NATURE AND SOURCE OF THE CREDIT/DEPOSIT IN HIS BANK ACCOUNT IS ON THE ASSESSEE, IN THE ABSENCE OF WHICH THE SAME IS LIABLE TO BE DEEMED AS HI S UNEXPLAINED INCOME FOR THE RELEVANT YEAR. WHY, THE ONUS TO PROVE A CLAIM WHICH IN THE PRESENT CASE EXTENDS TO PROV ING THE NEXUS OF THE WITHDRAWALS IN HIS ( ICICI ) BANK ACCOUNT WITH THE DEPOSITS THEREIN , IS ONLY ON THE ASSESSEE (REFER : SUDHIR KUMAR SHARMA (HUF) VS. CIT (ITA NOS. 123 & 124 OF 2014 DATED 28.7.2014 (P&H), SLP AGAINST WHICH STANDS DISMISSED BY THE HONBLE APEX COURT (IN CC NO. 394/2016) ) , ALSO CIT VS. CALCUTTA AGENCY LTD. [1951] 19 ITR 191 (SC) ) . THE ASSESSEE STATES THE WITHDRAW A LS TO BE TOWARD PAYMENT AGAINST PURCHASE OF TRADED GOODS, I.E., IN THE MAIN, WITH THE CREDITS REPRESENTING THE SALE PROCEEDS OF THE SAID GOODS. THE PAYMENTS S TAND SUBSTANTIATED ON THE BASIS OF THE ACCOUNT STATEMENT OF THE ASSESSEES ACCOUNT, D EPICTING PAYMENTS, BOTH FROM HIS ICICI BANK AND THE OTHER ( AXIS ) BANK ACCOUNT IN THE BOOKS OF THE SUPPLIER S , ONE OF WHOM, M/S. S. D. B IO S TANDARD DIAGNOSTICS (P.) LTD. IS STATED TO HAVE FURNISH ED THE SAME DIRECTLY TO THE A SSESSING OFFICER (A. O .) U /S. 133( 6 ). IN OUR CLEAR VIEW, THE R EVENUES APPROACH IS NOT REASONABLE; THE ASSESSEE HAVING ADDUCED SUFFICIENT EVIDENCE TO EXHIBIT THE SAID BANK ACCOUNT AS BEING THE BANK ACCOUNT OF HIS UNDISCLOSED BUSINESS TRANSACTIONS. WE, HOWEVER, REFRAIN FROM ISSUING ANY FIN AL FIND ING /S IN THE MATTER, AS THE SAID ACCOUNT BEARS AND, IN ANY CASE, THER E IS A DISTINCT POSSIBILITY OF IT BEARING , CREDITS OTHER THAN BY WAY OF CASH DEPOSITS, WHICH COULD BE BY WAY OF DEPOSIT OF DIRECT INCOMES, VIZ . RENT, INTEREST, PROFESSIONAL FEES, E TC . AS WELL. IN FACT, WE OBSERVE THAT THE TURNOVER IN RESPECT OF THE UNDISCLOSED TRANSACTIONS (PER THE P & L A/C. /PB PG.37 ) , I.E., RS.80.32 L ACS , EXCEED S THE TOTAL CREDIT (RS.71.10 L ACS) IN THE ASSESSEES IC ICI BANK ACCOUNT. HOW? SIMILARLY, THE WITHDRAW A LS COULD ALSO BE IN RESPECT OF PERSONAL EXPENSES , OR WHICH CANNOT BE CONSIDERED AS INCURRED 4 ITA NO. 5813/MUM/2014 (A.Y. 2010 - 11) PRASHANT TORASKAR VS. ASST. CIT WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES, OR EVEN FOR PERSONAL SAVIN GS/INVESTMENT. THE ASSESSEES PERSONAL P & L ACCOUNT ( AT PB P G. 37) WOULD THEREFORE REQUIRE BE ING VERIFIED, BOTH WITH RESPECT TO THE GROSS PROFIT REFLECTED AND THE INDIRECT EXPENDITURE CLAIMED THEREIN. THIS, WE CONSIDER TO BE THE PRINCIPAL CONCERN OR ISSUE ARISING IN THE PRESENT CASE. OUR PRELIMINARY EXAMINATION REVEALS THE ASSESSEE TO HAVE DISCLOS ED A G ROSS PROFIT AT 15.25%, WHICH COMPARES FAVOURABLY WITH THE (PRE - VAT) GROSS PROFIT OF 15.86% ON THE DISCLOSED TURNOVER SALES OF RS.25.15 L ACS (PB PG . 40). THIS IS AS THE UNDISCLOSED TURNOVER A TTRA CTS NO TAX (VAT) . THIS GROSS PROFIT RATE , THOUGH NOT CON CLUSIVE, SHOULD RECOMMEND ITSELF FOR ACCEPTANCE I N THE ABSENCE OF A NYTHING TO THE CONTRARY. WE MAY IN THIS CONTEXT ALSO ADD THAT THE ASSESSEE HAS FURNISHED COPY OF SALE BILLS (ON ITS LETTER - HEAD ) TOGETHER WITH COURIER RECEIPTS ( PB PGS . 44 - 51 ), SIGNIFYING SALE TO O UTSTATION PARTIES . THAT APART, THE CASH STANDS DEPOSITED FROM VARIOUS STATIONS, VIZ. BHUVANESWAR, DHULE, NASIK, ETC. GIVES CREDENCE TO THE ASSESSEES CLAIM OF THE SAME REPRESENTING SALE PROCEEDS RECEIVED FROM DIFFERENT STATIONS (REFER GROUND 2 BEF ORE US). T HE SAID SALE BILLS W OULD ALSO REVEAL THE PROFIT COMPONENT THEREIN, I.E., WITH REFERENCE TO THE CORRESPONDING PURCHASE BILLS. WOULD THAT, HOWEVER, IMPACT THE ASSESSEES BUSINESS PROFILE STATED TO BE OF A RETAILER AND , THUS , THE PROFIT, IS A QUES TION THAT WOULD REQUIRE BEING EXAMINE D ? FURTHER, THE INDIRECT EXPENSES CLAIMED (RS.7.09 LACS) ARE MUCH HIGHER, BOTH IN VALUE AND IN PERCENTAGE TERMS, TH A N THAT CLAIMED AGAINST THE DISCLOSED TURNOVER , I.E., RS.0.74 L ACS. THOUGH BY ITSELF NOT CONCLUSIVE OF T HE MATTER, THE ONUS TO JUSTIFY H IS CLAIMS WOULD BE ON THE ASSESSEE. THE RECEIPT OF CASH OR FUNDS FROM O UT - STATION PARTIES MAY THOUGH PERHAPS EXPLAIN THE IN ORDINATE INCREASE IN THE POST AGE EXPENSES CLAIMED QUA THE UNDISCLOSED TRANSACTIONS. WE ARE IN THIS RE GARD, HOWEVER, NOT IN AGREEMENT WITH THE LD. C OUNSEL FOR A DIRECTION TO THE AO TO ADOPT A PARTICULAR PERCENTAGE AS A NET PROFIT, I.E., AS CLAIMED TO HAVE BEEN ACCEPTED BY HIM FOR OTHER YEARS. THE ASSESSMENT ORDERS FOR THOSE YEARS ARE NOT ON RECORD. THE AO, WHERE HE HAS ISSUE D DEFINITE FINDINGS UPON EXAMINATION /VERIFICATION , WOULD THOUGH BE OBLIGED TO TAKE GUIDANCE FROM THE FACTUAL FINDINGS OR INFERENCES DRAWN FOR THOSE YEARS. HE HAS TO , WE MAY THOUGH ADD , ACT IN A REASONABLE, YET , COGENT 5 ITA NO. 5813/MUM/2014 (A.Y. 2010 - 11) PRASHANT TORASKAR VS. ASST. CIT MANNER, TAKING A BR OAD VIEW OF TH E MATTER IN TH AT TH E FULL DETAILS AND EVIDENCES IN RESPECT OF EXPENSES, HITHERTO UNDISCLOSED , MAY NOT BE FORTHCOMING. THAT APART, EVEN THE ASSESSEES UNDISCLOSED CAPITAL, I.E. , THE CAPITAL DEPLOYED IN THE ASSESSEES UNDISCLOSED BUSINESS, WO ULD HAVE TO BE SEPARATELY CONSIDERED FOR ADDITION. TOWARD THIS, IN OUR VIEW, THE AO SHALL HIMSELF OR CAUSE THE ASSESSEE TO COMPILE THE CONSOLIDATED BALANCE SHEET, INCORPORATING THE ERSTWHILE UNDISCLOSED BANK ACCOUNT ALSO . THIS, ON A COMPARISON WITH THE BAL ANCE - SHEET ALREADY FURNISHED , WOULD REVEAL THE ADDITIONAL CAPITAL, SO THAT THE SAME , TO TH E EXT ENT UN EXPLAINED, WOULD MERIT BEING SEPARATELY ADDED U /S. 69/6 9A . WHETHER THE OPENING CAPITAL, AND IF SO TO WHAT EXTENT, GET S EXPLAINED ON THE BASIS OF SIMILAR TRA NSACTIONS UNEARTHED FOR A PRECEDING YEAR, IS A MATTER OF FACT. I T MAY BE A RGUED THAT WE ARE, IN SO DIRECTING, EXCEEDING OUR JURISDICTION. THE ARGUMENT IS F AC ILE AND WITHOUT MERIT. THE ADDITION ARISES ONLY IN CONSEQUENCE OF THE ASSESSEES NON - DISCLOSURE OF H IS BANK ACCOUNT, WHICH STANDS DISCOVERED BY THE REVENUE. THE ACCOUNTS, INCLUDING THE FINAL ACCOUNTS , COMPILED ON THE BASIS OF THE SAID ACCOUNT , ARE ONLY THE ASSESSEES EXPLANATION TOWARD THE CREDITS APPEARING THEREIN, ALSO ENABLING THE DETERMINATION OF TH E CORRECT INCOME, I. E., LIABLE TO BE BROUGHT TO TAX Q UA THE SAID CREDITS , WHICH THE REVENUE HAS EXTENDED TO THE ENTIRE CREDIT, DISBELIEVING THE ASSESSEES EXPLANATION. THE A.O. SHALL, ACCORDINGLY, REDO THE ASSESSMENT WITH REFERENCE TO THE ASSESSEES UNDIS CLOSED BANK ACCOUNT , DETERMINING THE AMOUNT THAT IS I N THE FACTS AND CIRCUMSTANCES OF THE CASE PROPERLY ASSESSABLE AS INCOME. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 21 , 201 6 SD/ - SD/ - ( MAHAVIR SINGH ) (S ANJAY ARORA) / J UD ICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 21 . 0 9 .201 6 . . ./ ROSHANI , SR. PS 6 ITA NO. 5813/MUM/2014 (A.Y. 2010 - 11) PRASHANT TORASKAR VS. ASST. CIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI