ITO, New Delhi V. Shri Surinder Singh, Delhi

ITA 5932/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91203 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 20-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 29-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Peak credit; Corroborative evidences
• Section: 143(3); 133(6); 68

Judgement Text

DELHI BENCH G NEW DELHI BEFORE SHRI S. V. MEHROTRA ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 5932 /DEL/201 2 ASST. YEAR 2009 - 2010 INCOME TAX OFFICER, WARD 30(4), ROOM NO. 113, DRUM SHAPED BUILDING, IP ESTATE, NEW DELHI 110 002 VS. SH. SURINDER SINGH, 670, OLD LAJPAT RAI MARKET, DELHI 110 006 (PAN : APXPS 4486C) (APPELLANT) (RESPONDENT) DATE OF HEARING 20 . 05. 2015 DATE OF PRONOUNCEMENT 24 .06 .2015 O R D E R PER A. T. VARKEY, JUDICIAL MEMBER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 24 . 9 .201 2 PASSED BY THE LD. CIT(A) - XXV, NEW DELHI PERTAINING TO ASSESSMENT YEAR 200 9 - 10 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: - 1. WHETHER THE LD. CIT(A) IS CORRECT IN RESTRICTING THE ADDITION OF RS.48,69,490/ - TO RS.6,96,236/ - WITHOUT BRINGING ANY MATERIAL ON RECORD OR ANY EVIDENCE TO PROVE THAT THE CASH DEPOSITS WERE ON ACCOUNT OF SALES OF THE BUSINESS OF THE ASSESSEE WHICH WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS BY THE ASSESSEE AS ADMITTED BY HIM DURING THE ASSESSMENT PROCEEDING. 2. WHETHER THE L D. CIT(A) IS CORRECT IN ALLOWING RELIEF OF RS.42,63,254/ - ON THE ABOVE NOTED AMOUNT BY APPLYING THE PEAK CREDIT THEORY WHICH WAS NEITHER RAISED IN GROUNDS OF APPEAL BY APPELLANT BY : SH B . R . R . KUMAR, SR.DR RESPONDENT BY : SH K . SAMPATH , ADV. ITA NO. 5932/ DEL/ 2012 2 THE ASSESSEE BEFORE APPELLATE AUTHORITY NOR SUCH STAND WAS TAKEN BEFORE THE AO. 3. WITH OUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) SHOULD HAVE APPLIED THE GP RATE OF 5.99% ON THE UNDISCLOSED INVESTMENT OF RS.48,69,490/ - EVEN IF HE HAD DISAGREED WITH THE FINDING OF THE AO. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DUR ING THE HEARING OF THIS APPEAL. 3. THE SOLE GROUND OF THE REVENUE IS IN RESPECT OF DELETION OF RS.42,63,254/ . 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE FILED ITS RETURN O F INCOME ON 7 . 7 .2009 DECLARING INCOME OF RS. 6,40,430/ - , WHICH WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 ( HEREIN AFTER THE ACT ) ON 29.3.2011. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. THE ASSESSEE HAS SHOWN INCOME FROM BUSINESS AND LONG TERM CAPITAL GAIN AND FROM OTHER SOURCES AS INTEREST ON BANKS AND NSC. A S PER ITS INFORMATION WITH THE DEPARTMENT THE ASSESSE E HAS DEPOSITED CASH OF RS. 48, 59,495/ - IN PUNJAB NATIONAL BANK DURING THE PERIOD 1. 0 4.2008 TO 31. 0 3 .2009. THE COPY OF BANK ACCOUNT WAS SOUGHT FROM PUNJAB NATIONAL BANK, CIRCL E OFFICE U/S. 133(6) OF THE ACT . THE ASSESSEE WAS ASKED TO EXPLAIN TH E SOURCE OF ABOVE CASH DEPOSITS. THE ASSESSEE EXPLAINED THAT THE SAID DEPOSITS BELONGS TO SALES MADE BY HIM TH ROUGH SMALL DEALERS AND NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS AND OFFERED PROFIT OF RS. 2,91,084/ - AS GP @5.99% WHICH ACCORDING TO HIM HAS ALREADY BEEN REFLECTED IN T HE REGULAR BOOKS OF ACCOUNTS OF HIS BUSINESS. THE AO DID NOT ACCEPT THE EXPLANATIO N GIVEN BY THE ASSESSEE BECAUSE ASSESSEE FAILED TO PRODUCE ANY SUPPORTING EVIDENCE IN THE FORM OF S ALE BILLS OR SUBMITTED ANY EVIDENCE REGARDING GENUINENESS OF SALES MADE THROUGH RETAIL TRADERS. THE AO TAKING NOTE THAT T HE TOTAL TRANSACTION IN THIS ACCOUNT ARE OF RS.48,59,495/ - AND IN THE ABSENCE OF SUPPORTING EVIDENCE TO ESTABLISH TRADING TRANSACTION, THE AMOUNT OF RS. 48,5 9,495/ - WAS TREATED BY HIM AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT, AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE WHILE COMPLET ING THE ASSESSMENT U/S. 143(3) VIDE HIS ORDER DATED 30 .12.2011 . ITA NO. 5932/ DEL/ 2012 3 5 . AGAINST THE AFORESAID ORDER OF THE ASSESSING OFFICER , ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS ORDER DATED 24 . 0 9 .201 2 WAS PLEASED TO ALLOW THE SAME . 6 . AGGRIEVED BY TH E ORDER OF THE LD. CIT(A), NO W THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7 . LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTION RAISED IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS FI LED RETURN OF INCOME SHOWING INCOME FROM BUSINESS AND LONG TERM CAPITAL GAIN AND OTHER SOURCES A S INTEREST ON BANKS AND NSC. AS PER ITS INFORMATION, THE DEPARTMENT GOT , THE ASSESSEE HAS DEPOSITED CASH OF RS. 48,59,495/ - IN PUNJAB NATIONAL BANK DURING THE PERIOD 0 1. 0 4.2008 TO 31.3.2009. THE COPY OF BANK ACCOUNT WAS SOUGHT FROM PUNJAB NATIONAL BANK, CIRCLE OFFICE U/S. 133(6) OF THE I.T. ACT, 1961. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF ABOVE CASH DEPOSITS AND GIVEN SHOW CAUSE NOTICE AS PER LETTER DATED 1.12.2011 . TO THE SAID SHOWN CAUSE NOTICE THE ASSESSEE EXPLAINED THAT THE SAID DEPOSITS BELONGS TO SALES MADE BY HIM THROUGH SMALL DEALERS AND NOT RECORDED IN T HE REGULAR BOOKS OF ACCOUNTS. HOWEVER HE OFFERED PROFIT OF RS. 2,91,084/ - AS GP @5.99% WHICH COULD NOT BE ACCEPTED BY THE AO BECAUSE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE IN THE FORM OF SALE BILLS AND FAILED TO SUBMIT ANY EVIDENCE REGARDING GENUINENESS OF SALES MADE THROUGH RETAIL TRADERS. SINCE T HE TOTAL TRANSACTION IN THE ASSESSMENT YEAR IN THIS ACCOUNT OF THE ASSESSEE ARE OF RS.48,59,495/ - AND IN THE ABSENCE OF ANY SUPPORTING EVIDENCE TO ESTABLISH TRADING TRANSACTION, THE AMOUNT OF RS. 48,59,495/ - WAS RI GHTLY TREATED AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT, AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN VIEW OF THE ABOVE, LD. D.R. CONTENTED THAT THE ORDER OF THE LD. CIT(A) BE SET - ASIDE AND THE ORDER OF THE AO MAY BE RESTORED . 8 . ON THE CO NTRARY, LD. COUNSEL OF THE ASSESSEE HAS RELIED UPON THE ORDER OF THE LD. CIT(A) AND DEFENDED THAT THE SAME AND D OES NOT WANT US TO INTERFERE IN THE SAME. 9 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WITH REGARD TO GROUND NO. 1 , 2 & 3 ARE CONCERNED, IT IS OBSERVED THAT THEY ARE INTER - LINKED ITA NO. 5932/ DEL/ 2012 4 AND ACCORDINGLY THE SAME ARE TAKEN TOGETHER FOR THE SAKE OF CONVENIENCE. WE FIND THAT THE LD. CIT(A) HAS OBSERVED THAT THE ASSESEE IS THE PROPRIETOR OF M/S SURENDRA ELECTRONICS AND IS ENGAGED IN THE BUSINESS OF ELECTRONIC GOODS. THE ASSESSEE HAS DECLARED THE TURNOVER OF RS. 14,30,975/ - , THE GP @5.99% OF RS. 84,160/ - AND THE NP OF RS. 2,06,227/ - AND HAS FILED THE RETURN OF INCOME OF RS. 6,40,430/ - WHICH INCLUDES CAPITAL GAIN INCOME ALSO. A S PER RECORD, THE AO HAD RECEIVED AIR INFORMATION THAT THE ASSESSEE HAS DEPOSITED THE CASH OF RS. 48,59,495/ - IN AN UNDISCLOSED BANK ACCOUNT WITH PUNJAB NATIONAL BANK. THE AO HAS MADE THE ADDITION OF THE ENTIRE CASH DEPOSITS OF RS. 48,59,490/ - U/S. 68 O F THE ACT. LD. COUNSEL OF THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT THE AO WAS NOT JUSTIFIED TO MAKE THE ADDITION OF THE ENTIRE CASH DEPOSITS WHICH ARE MADE ON VARIOUS DATES. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE OUT OF THE SALES OF THE BUSINESS AND THE CASH IS ALSO WITHDRAWN FROM THE SAME BANK ACCOUNT FOR THE PURPOSE OF BUSINESS AND SO THERE IS NO JUSTIFICATION FOR MAKING THE ADDITION OF THE ENTIRE CASH DEPOSITS. IT WAS FURTHER SUBMITTED THAT THE TRANSACTIONS IN THE UNDISCLOSED BANK ACCOUNT HAS BEEN MADE OUT OF THE BUSINESS SALES AND THE AO SHOULD HAVE TAKEN THE GP OF THE DECLARED TURNOVER WHICH IS @5.99% WHICH COMES TO RS. 2,91,084/ - WHICH WAS OFFERED DURING THE COURSE OF ASSE SSMENT PROCEEDINGS BUT THE AO HAS NOT ACCEPTED THE SAME. IN VIEW OF THE ABOVE, LD. CIT(A) WAS OF THE OPINION THAT THE AO WAS NOT JUSTIFIED TO MAKE THE ADDITION OF THE TOTAL OR ACCUMULATED CASH DEPOSITS WITHOUT CONSIDERING THE SIMULTANEOUS OR CORRESPONDIN G CASH WITHDRAWALS. T HE LD. CIT(A) HAS OBSERVED THAT IT IS NOT UNCOMMON FOR THE SMALL BUSINESS PEOPLE TO MAKE FREQUENT CASH DEPOSITS AND WITHDRAWALS IN THE BANK ACCOUNTS OUT OF THE SALE PROCEEDS AS PER THE REQUIREM ENT OF THE BUSINESS CONVENIENCE AND APPL IED THE PEAK CREDIT THEORY AND TOOK THE PEAK CREDIT BALANCE IN THE ACCOUNT AS ON 16.7.2008 AS RS. 6,96,236/ - AND TREATED THIS AMOUNT AS PEAK CREDIT INCOME. THEREFORE, LD. CIT(A) WAS OF THE VIEW THAT THERE IS NO PROPER JUSTIFICATION OF MAKING THE ADDITIO N OF RS.48,59,490/ - OF THE TOTAL CASH DEPOSITS AND DIRECTED TO ACCEPT THE PEAK CREDIT AMOUNT AS INCOME OF THE ASSESSEE ACCORDINGLY, THE ADDITION TO THE ITA NO. 5932/ DEL/ 2012 5 EXTENT OF AMOUNT OF RS. 6,96,236/ - WAS CONFIRMED AND THE BALANCE ADDITION OF RS. 41,63,254 (RS. 48,59,49 0/ - ( - ) RS. 6,96,236/) WAS DELETED. WE FIND THAT THE ENTIRE AMOUNT WHICH WAS DEPOSITED IN THE ACCOUNT OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION WAS ADDED WITHOUT TAKING IN TO CONSIDERATION THE WITHDRAWALS MADE BY THE ASSESSEE IS NOT JUSTIFIED AND THE LD CIT (A)HAS RIGHTLY APPLIED THE PEAK CREDIT THEORY AND DIRECTED THE ADDITION OF RS 6,96,236/ - . WE DO NOT FIND ANY INFIRMITY IN THE O RDER PASSED BY THE LD. CIT(A) . IN OUR VIEW, THE SAME DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD T HE SAME. THEREFORE, THE ISSUE INVOLVED IN GROUND NO. 1 , 2 & 3 RAISED BY REVENUE ARE DISMIS SED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 4 / 0 6 /2015. - S D / - - S D / - ( S.V. MEHROTRA ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 4 / 0 6 / 2015 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI