ITO-23(3)(1), MUMBAI V. PRAGNESH A. THAKKAR, MUMBAI

ITA 593/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2097 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Assessee Lawyers: SAMIR DALAL
• Keywords: Business income; Business expenditure
• Section: 143(3); 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.593/MUM/2013 ASSESSMENT YEAR: 2009-10 ITO 2 3(3 )( 1 ) R.NO.401, 4 TH FLOOR, C-10, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA(E) / VS. PRAGNESH A. THAKKAR, B-401, LALIKA C.H.S. LTD. NAHUR (MM) ROAD, NEHRU NAGAR, MULUND (W) MUMBAI-400080 (REVENUE) (RESPONDENT ) P.A. NO. ACPPT4033P REVENUE BY SHRI O.P. MEENA (DR) RESPONDENT BY SHRI SAMIR DALAL (AR) ! ' # / DATE OF HEARING : 17/11/2015 ' # / DATE OF ORDER: 30/11/2015 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-3 3, PRAGNESH A. THAKKAR . 2 MUMBAI {(IN SHORT LD. CIT(A)} DATED 20.11.2012 FOR THE ASSESSMENT YEAR 2009-10, DECIDED AGAINST THE ASSESS MENT ORDER PASSED BY THE ASSESSING OFFICER (IN SHORT AO ) U/S 143(3) OF THE ACT. THE REVENUE HAS RAISED FOLLOWING GROUND S: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIAT E THAT THE AMOUNT DEPOSITED IN THE BANK WAS NOT DISCLOSED IN ASSESSEES BOOKS OF ACCOUNTS AND THAT THE SOURCE WI TH EVIDENCES OF THE SAME WERE NOT FURNISHED BEFORE THE A.O. 2 . DURING THE COURSE OF HEARING, SHRI SAMIR DALAL , AUTHORISED REPRESENTATIVE (LD COUNSEL) ON BEHALF OF THE ASSESSEE AND SHRI O.P. MEENA , DEPARTMENTAL REPRESENTATIVE (LD DR) ON BEHALF OF THE REVENUE, ARGUED THE CASE. 3. THE SOLITARY GROUND RAISED BY THE REVENUE IS WITH REGARD TO ACTION OF LD. CIT(A) IN DELETING THE ADDITION MADE BY AO ON ACCOUNT OF AMOUNT DEPOSITED IN THE BANK ACCOUNT. 3.1. THE BRIEF FACTS ARE THAT DURING THE COURSE OF ASSE SSMENT PROCEEDINGS IT WAS FOUND BY THE AO ON THE BASIS OF INFORMATION RECEIVED THROUGH AIR THAT THE ASSESSEE HAS DEPOSITED TOTAL AMOUNT OF CASH OF RS.16,86,33/- IN THE BANK ACCOUNT WITH HDFC BANK. HE ASKED THE ASSESSEE TO EX PLAIN NATURE AND SOURCES OF THE SAME. BEING NOT SATISFIED WITH RESPONSE OF THE ASSESSEE, THE ENTIRE AMOUNT OF RS.1 5,86,330/- WAS ADDED TO TOTAL INCOME OF THE ASSESSEE AS UNEXPL AINED CASH CREDIT U/S 68 OF THE ACT. PRAGNESH A. THAKKAR . 3 3.2 BEING AGGRIEVED, THE ASSESSEE FILED THE APPEAL BEF ORE THE LD. CIT(A) WHEREIN IT WAS SUBMITTED BY HIM THAT AMO UNT DEPOSITED AND WITHDRAWN FROM THE BANK ACCOUNT IS ON ACCOUNT OF HIS BUSINESS TRANSACTIONS. THE ASSESSEE SUBMITTE D DETAILED SUBMISSIONS ALONG WITH DOCUMENTARY EVIDENCES IN SUP PORT OF HIS CLAIM. 3.3. AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCE S OF THE CASE. LD. CIT(A) PARTLY ACCEPTED THE CLAIM OF T HE ASSESSEE AND REWORKED THE AMOUNT OF THE ADDITION. RELEVANT P ORTION OF HIS ORDER IS REPRODUCED BELOW: 3.1 DURING APPELLATE PROCEEDING THE APPELLANT ATTENDED HIMSELF AND FILED COPY OF BALANCE SHEET, PROFIT AND LOSS A/C AND THE BANK A/C STATEMENT IN H IS ACCOUNT MAINTAINED WITH HDFC BANK WHEREIN THE CASH WERE DEPOSITED BY THE APPELLANT. THE APPELLANT THEN SUBMITTED THAT HE IS PROPRIETOR OF M/S HINDUSTAN CHEMICALS AND PHARMACEUTICALS AND IS ACTUALLY WORKING AS AGENT BETWEEN THE DISTRIBUTING COMPANY AND ITS CLIENT, WHICH HE IS SHOWING AS HIS OWN TURN OVER IN ORDER TO AVAIL VAT BENEFIT BY REFLECTING THE SAM E IN FORM NO. F. IT HAS ALSO BEEN SUBMITTED THAT THE CAS H DEPOSITED IN HDFC BANK WERE NOT DISCLOSED IN THE BOOKS OF A/C BY THE PARTIES WHO HAS PURCHASED THE MATERIAL FROM HIM. FOR THE SAME HIS REGULAR A/C WAS USED FOR DEPOSITING THE SURPLUS CASH GENERATED IN T HE BUSINESS. IT HAS BEEN EXPLAINED BY THE APPELLANT TH AT THE CASH DEPOSITED ARE NOTHING BUT UNACCOUNTED SALE S PRAGNESH A. THAKKAR . 4 NOT REFLECTED IN THE BILLS WHICH THE DISTRIBUTOR DI D NOT WANT TO ACCEPT BY CHEQUE AND HENCE APPELLANT BEING THEIR AGENT WAS ASKED TO DEPOSIT IN HIS BANK ACCOUN T. IT HAS ALSO BEEN SAID THAT THESE DEPOSITS HAVE FINA LLY BEEN UTILIZED TO MAKE THE PAYMENT BY HIM BY CHEQUE. 3.2 I HAVE VERIFIED THE SUBMISSION MADE BY THE APPE LLANT AND FOUND THAT THE CASH DEPOSITED ARE WITHDRAWN BY CHEQUES ISSUED IN THE NAMES OF THE VARIOUS PARTIES. AS MAJORITY OF TOTAL DEPOSITS MADE DURING THE PREVIOUS YEAR AMOUNTING TO RS. 20,22,501/-; OUT OF WHICH AN AMOUN T RS19,01,991/- HAVE ACTUALLY BEEN PAID TO SUCH PARTI ES LEAVING THE CLOSING BALANCE OF RS. 1,30,286/- ONLY, I FIND THERE IS TRUTH IN THE SUBMISSION MADE BY THE APPELLANT THAT THEY ARE HIS BUSINESS RECEIPTS AND G ONE FOR BUSINESS EXPENSES ONLY , BOTH NOT DISCLOSED IN THE ACCOUNT. AS IT IS NOT DOUBTED THAT THE MONEY HAS BE EN PAID TO THOSE VERY PARTIES THROUGH A/C PAYEE CHEQUE S, THUS SOURCE OF GENERATION IS THE BUSINESS OF APPELL ANT ONLY. IN VIEW OF THE FACT THAT THESE ARE BUSINESS R ECEIPTS WHICH HAVE BEEN UTILIZED BY THE APPELLANT FOR HIS B USINESS PURPOSE ONLY, I AM OF THE VIEW THAT THE PROFIT MARG IN REFLECTED IN THE AUDITED RESULT SHOULD BE TAKEN AS APPELLANT'S INCOME. IT IS SEEN THAT THEIR GROSS PRO FIT ON THE SALES IS 4.5% AND HENCE APPELLANT'S INCOME ON T HE ENTIRE AMOUNT OF CASH DEPOSITED IS TAKEN AT THE RAT E 4.5%. THE TOTAL DEPOSITS MADE IN THE BANK DURING THE PERI OD RELEVANT TO A.Y. ARE RS.20,22,501/- AND HENCE THE PRAGNESH A. THAKKAR . 5 INCOME AT THE 4.5% IS TAKEN AT RS.91,012/- ACCORDINGLY ADDITION FOR RS. 91,012/ IS SUSTAINED AGAINST THE ADDITION MADE BYTHE A. 0. OF RS. 15,86,330/. THE GROUND TAKEN IN APPEAL IS PARTLY ALLOWED. 3.4. BEFORE US, THE ASSESSEE HAS RELIED UPON THE ORDER OF LD. CIT(A), WHEREAS THE DEPARTMENT HAS RELIED UPON THE ORDER OF LD. AO. IT IS NOTED BY US THAT LD. CIT(A) HAS TAKEN HOLISTIC VIEW OF THE MATTER. IN OUR VIEW ALSO WHOLE AMOUNT C OULD NOT HAVE BEEN TREATED AS INCOME FROM UNDISCLOSED SHARES . LD. CIT(A) HAS JUDICIOUSLY ESTIMATED THE PROFIT @ 4.5 % OF THE TOTAL DEPOSITS MADE IN THE BANK ACCOUNTS AND REWORKED THE ADDITION AT RS.91.012. THE ADDITIONS SUSTAINED BY T HE LD. CIT(A) HAVE BEEN ACCEPTED BY THE ASSESSEE TO BURY T HE LITIGATION. NOTHING CONTRARY HAS BEEN BROUGHT ON RE CORD BY THE LD. DR TO NEGATE THE WELL REASONED FINDINGS OF LD. CIT(A). WE UPHOLD THE SAME. ACCORDINGLY, GROUND RAISED BY THE REVENUE IS DISMISSED. 4 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2015. SD/- (JOGINDER SINGH) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER ! MUMBAI; % DATED ; 30/11/2015 CTX? P.S/. .. PRAGNESH A. THAKKAR . 6 #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. '() / THE APPELLANT 2. *+() / THE RESPONDENT. 3. , , - ( ' ) / THE CIT, MUMBAI. 4. , , - / CIT(A)- , MUMBAI 5. 01 *2 , , '# 2 3 , ! / DR, ITAT, MUMBAI 6. 45 6! / GUARD FILE. / BY ORDER, +0' * //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ! / ITAT, MUMBAI