BRIJMOHAN P. RATHI, MUMBAI V. ITO - 32(1)(3), MUMBAI

ITA 5976/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1064 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 07-10-2016
• Court: TRIBUNAL
• Department Lawyers: BHARTI SINGH
• Assessee Lawyers: SUBODH RATNAPARKHI

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 5976 /MUM/ 201 6 (ASSESSMENT YEAR 20 1 0 - 1 1 ) BRIJMOHAN P. RATHI 20, BORIVALI SHILPAR CHS LTD. ROAD NO. 7,DAULAT NAGAR BORIVALI (EAST) MUMBAI - 400 066. PAN NO. AA DPR9094A VS. ITO 23(1)3) C - 10, 308, PRATYAKSH KAR BHAVAN BANDRA KURLA COMPLEX, BANDRA EAST MUMBAI - 400 051. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI SUBODH RATNAPARKHI DEPARTMENT BY M ISS BHARTI SINGH DATE OF HEARING 3 . 5. 201 7 DATE OF PRONOUN CEMENT 3 .5 . 201 7 O R D E R THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 10 - 08 - 2016 PASSED BY LD CIT(A) - 44, CONFIRMING THE ADDITION OF RS.27,08,732/ - RELATING TO UNEXPLAINED BANK DEPOSITS MADE BY THE AO IN ASSESSMENT YEAR 2010 - 11. 2 . THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.1,33,820/ - IN AY 2010 - 11 CONSISTING OF SALARY, COMMISSION AND OTHER SOURCES INCOME. THE AO RECEIVED INFORMATION THAT THE ASSESSEE HAS MADE CASH DEPOSITS AGGREGATING TO RS.19,69,75 5/ - INTO HIS BANK ACCOUNT. WHEN QUESTIONED, THE ASSESSEE SUBMITTED THAT HE WAS CARRYING ON RETAIL TRADE IN FABRICS AND THE DEPOSITS REPRESENT SALE PROCEEDS OF THE BUSINESS. HE FURTHER SUBMITTED THAT HE HAS ALSO DEPOSITED CHEQUES/TRANSFER DEPOSITS AGGREGA TING TO RS.7,38,895/ - AND THE SAID DEPOSITS ALSO REPRESENTS SALE PROCEEDS OF FABRICS. SINCE THE ASSESSEE DID NOT SUBSTANTIATE THE SAID CLAIM, THE AO ASSESSED AGGREGATE AMOUNT OF RS.27,08,732/ - AS INCOME OF THE ASSESSEE. BEFORE THE AO THE ASSESSEE REQUEST ED TO ASSESS 5% OF THE RS.27,08,732/ - AS INCOME OF THE ASSESSEE AS PER MR. BRIJMOHAN P RATHI 2 THE PROVISIONS OF SEC. 44AF OF THE ACT, BUT THE SAME WAS REJECTED BY THE AO. THE LD CIT(A) CONFIRMED THE ORDER OF THE AO AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 3. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS FURNISHED CERTAIN PURCHASE BILLS AND ALSO OBTAINED CONFIRMATION FROM M/S PARSHWANATH FABRICS REGARDING PURCHASE OF FABRICS TO THE EXTENT OF RS.15.65 LAKHS. ACCORDINGLY HE SUBMITTED THAT THE ASSESSEE HAS PROVED M AJORITY OF PURCHASES. HE SUBMITTED THAT THE ASSESSEES CLAIM HAS NOT BEEN ACCEPTED BY THE TAX AUTHORITIES MAINLY FOR THE REASON THAT THE ASSESSEE DID NOT DECLARE THE BUSINESS ACTIVITIES IN THE RETURN OF INCOME. SINCE THE ASSESSEE WAS DOING RETAIL SALES, HE COULD NOT FURNISH THE NAMES OF THE PARTIES TO WHOM THE GOODS WERE SOLD. ACCORDINGLY HE SUBMITTED THAT A REASONABLE INCOME MAY BE ESTIMATED FROM THE DEPOSITS MADE BY THE ASSESSEE. 4. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE HAS FAILE D TO PROVE THAT THE DEPOSITS REPRESENT SALE PROCEEDS. FURTHER THE ASSESSEE HAS COME FORWARD WITH THE ABOVE SAID EXPLANATION AFTER ITS DETECTION BY THE AO. 5. I HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. I NOTICE THAT THE ASSESSEE HAS OBTAI NED CONFIRMATION LETTER FOR THE PURCHASE VALUE OF RS.15.65 LAKHS FROM A PARTY NAMED M/S PARSHWANATH FABRICS. THE SAID PARTY HAS ALSO FURNISHED COPY OF ITS RETURNS. I NOTICE THAT THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE SAID CONFIRMA TION LETTER WAS WRONG. SINCE THE ASSESSEE HAS PROVED PART OF PURCHASES, IT WOULD BE REASONABLE TO PRESUME THAT THE ASSESSEE WAS CARRYING ON BUSINESS ACTIVITIES. HOWEVER, WITH REGARD TO THE CHEQUE DEPOSITS AND TRANSFER DEPOSITS, THE EXPLANATION OF THE ASS ESSEE THAT THE SAME ALSO REPRESENT SALE PROCEEDS OF FABRICS IS DIFFICULT TO ACCEPT. HAD IT BEEN THE CASE, THE ASSESSEE SHOULD HAVE BEEN IN A POSITION TO GIVE THE NAME AND MR. BRIJMOHAN P RATHI 3 ADDRESSES OF THE CUSTOMERS, CONFIRMATION FROM CUSTOMERS ETC. SINCE THE BUSINESS ACT IVITIES HAS BEEN ACCEPTED, IT MAY BE REASONABLE TO PRESUME THAT THE CHEQUE DEPOSITS/TRANSFER DEPOSITS MAY ALSO REPRESENT PROCEEDS FROM SOME OTHER BUSINESS ACTIVITIES. UNDER THESE SET OF FACTS, I AM OF THE VIEW THAT THIS ISSUE MAY BE SETTLED BY ESTIMATING INCOME FROM THE DEPOSITS. ACCORDINGLY I DIRECT THE AO ESTIMATE THE INCOME AT 10% OF CASH AMOUNT OF DEPOSITS AND AT 20% IN RESPECT OF CHEQUE AMOUNT OF DEPOSITS. I ORDER ACCORDINGLY. THE ORDER PASSED BY LD CIT(A) WOULD STAND MODIFIED ACCORDINGLY. 6. I N THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 3 . 5 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 3 / 5 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI