Smt Soma Saha, Kolkata V. ITO, Wd-51(3), Kolkata, Kolkata

ITA 603/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4608 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 23-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2014
• Court: TRIBUNAL
• Department Lawyers: AMITABH BHATTACHARYA
• Assessee Lawyers: MANOJ KUMAR TIWARI
• Keywords: Unexplained investment
• Section: 144

Judgement Text

ITA NO.603/KOL/2014-SMT. SOMA SAHA. A.Y.2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BE NCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM ] I.T.A NO.603/KOL/2014 ASSESSMENT YEAR : 2009- 10 SMT. SOMA SAHA -VS.- I.T.O., WARD-51 (3) KOLKATA KOLKATA (PAN:AZQPS 0735 B) (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI MANOJ KUMAR TIWARI, FCA FOR THE RESPONDENT : SHRI AMITABH BHATTA CHARYA, JCIT DATE OF HEARING : 23.08.2016. DATE OF PRONOUNCEMENT : 02.09.2016. ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 06.12.2013 OF CIT(A)-XXXII, KOLKATA, RELATING TO AY 2009-10. 2. EXCEPT GROUND NOS. 1 AND 2 ALL THE OTHER GROUND S WERE NOT PRESSED. THE LEARNED COUNSEL FOR THE ASSESSEE MADE AN ENDORSEMENT TO THA T EFFECT IN THE ORIGINAL GROUNDS OF APPEAL FILED BEFORE THE TRIBUNAL. HENCE, GROUNDS O THER THAN GROUNDS NOS. 1 & 2 ARE DISMISSED AS NOT PRESSED. GROUND NOS. 1 AND 2 RAIS ED BY THE ASSESSEE READ AS FOLLOW: 1. FOR THAT, THE ADDITIONS AND DISALLOWANCES ARE P ERVERSE, RATHER AGAINST EVIDENCE AND MATERIAL ON RECORD AND WITHOUT AN IOTA OF MATERIAL OR EVIDENCE TO SUPPORT AND SUSTAIN THE SAME. 2. FOR THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE IMPUGNED ADDITION ON ACCOUNT OF UNDISCLOSED CASH CREDIT AMOUNTING TO RS. 32,63,500/- (RUPEES THIRTY TWO LAKH SIXTY THREE THOUSAND AND FIVE HUNDRED ONLY) MA DE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. COMMISSIONER OF INCOME-TAX (AP PEALS0-XXXII/KOLKATA WAS DEVOID OF ANY LOGIC AND IT WAS LIABLE TO BE DELETED IN FUL L BECAUSE IT IS BASED ON SURMISES, SUSPICION AND CONJECTURES. 3. THE ASSESSEE IS AN INDIVIDUAL. SHE DERIVES INC OME FROM THE BUSINESS OF TRADING IN READYMADE GARMENTS. THE ASSESSMENT PROCEEDINGS BEFO RE AO WERE COMPLETED EXPARTE ITA NO.603/KOL/2014-SMT. SOMA SAHA. A.Y.2009-10 2 U/S 144 OF THE INCOME TAX ACT, 1961 (ACT). IN THE C OURSE OF ASSESSMENT PROCEEDINGS THE AO CALLED UPON THE ASSESSEE TO EXPLAIN THE SOUR CE OF CASH DEPOSIT IN THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH BANK OF BAR ODA, SODEPUR BRANCH, KOLKATA- 10. THIS BANK ACCOUNT WAS ALSO NOT DISCLOSED BY THE ASSESSE TO THE DEPARTMENT AND THE AO DISCOVERED THE EXISTENCE OF THIS BANK ACCOUNT BY HIS OWN ENQUIRY. THE AO CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY THE CASH DEPOSIT IN THE SAID BANK ACCOUNT OF RS.32,63,500/- SHOULD NOT BE ADDED TO THE UNDISCLOS ED SOURCES. ACCORDING TO THE AO THE ASSESSEE HAD NOT OFFERED ANY EXPLANATION AND TH EREFORE A SUM OF RS.32,63,500/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS IN COME FROM OTHER SOURCES. 4. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT T HE ASSESSEE MAINTAINED AN UNDISCLOSED BANK ACCOUNT [A/C NO. 00400100022522] W ITH BANK OF BARODA, SODEPUR BRANCH. DURING THE FINANCIAL YEAR: 2008-200 9, DEPOSITS IN THE SAID ACCOUNT IN CASH WERE MADE TOTALING RS.32,63,500/- WITHIN A PERIOD OF 11 DAYS (FROM 02.04.2008 TO 12.04.2008). THE AMOUNTS WERE ALSO WI THDRAWN DURING THE RELEVANT PREVIOUS YEAR. THE ASSESSEE ADMITTED THAT HE COULD NOT EXPLAIN EITHER DEPOSITS AMOUNTING TO RS.32,63,500/- OR WITHDRAWAL AMOUNTING TO RS.48,08,391/- FROM THE VERY SAME BANK ACCOUNT, WHICH WERE TRANSFERRED INTO OR FROM THE SAID ACCOUNT. THE ASSESSEE CLAIMED THAT IN THE GIVEN CIRCUMSTANCES, T HE CASH DEPOSITS WHICH WERE NOTHING BUT UNDISCLOSED SALE FROM THE BUSINESS OF T RADING IN READY-MADE GARMENTS, ONLY A PERCENTAGE OF GROSS PROFIT ON UNDISCLOSED SA LE OF RS.32,63,500 OUGHT TO HAVE BEEN MADE TO THE TOTAL INCOME. THOUGH SUCH SPECIFI C SUBMISSION WAS MADE BUT THE PLEA OF THE ASSESSEE IN EFFECT WAS THAT CASH DEPOSI T WAS UNACCOUNT SALE OF READY MADE GARMENTS. DIRECT THE ASSESSEE SUBMITTED THAT THE E NTIRE SUM OF RS.32,63,500 COULD NOT HAVE BEEN ADDED AS INCOME OF THE ASSESSEE. THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN SUPPORT OF HIS CO NTENTION THAT AVERAGE G. P. RATE SHOULD BE APPLIED ON UNDISCLOSED SALE AND ONLY THE RESULTANT SUM SHOULD ADDED AS INCOME OF THE ASSESSEE AND NOT THE ENTIRE DEPOSITS AMOUNTING TO RS.32,63,500/- (DECISION OF GUJARAT HIGH COURT IN THE CASE OF CIT VS. PRESIDENT INDUSTRIES LIMITED [258 ITR 654 (GUJ.)]. THE ASSESSEE SUBMITTED THAT T HERE WERE DEPOSITS OF CASH FOR THE PERIOD FROM 02.04.2008 TO 12.04.2008 (11 DAYS) OF S UM OF CASH TOTALLING ITA NO.603/KOL/2014-SMT. SOMA SAHA. A.Y.2009-10 3 RS.32,63,500/- IN THE BANK ACCOUNT REFERRED TO BY T HE AO IN THE ORDER OF ASSESSMENT. THE ASSESSEE POINTED THAT IT ALSO WITHDREW A SUM OF RS.48,08,391/- FROM THE SAID BANK ACCOUNT. THE ASSESSEE ALSO FILED A REVISED PROFIT A ND LOSS ACCOUNT AND BALANCE SHEET IN WHICH THE ASSESSEE DECLARED ADDITIONAL SALES OF RS. 32,63,500/- AND PURCHASES AT RS.33,59,941/-. THE TURN OVER ORIGINALLY DECLARED B Y THE ASSESSEE WAS RS.6,05,918/- AND THE CORRESPONDING PURCHASES DECLARED WAS RS.7,0 2,359/-. AS ALREADY STATED, THE ASSESSEE RELIED ON THE DECISION OF THE HON;BLE GUJA RAT HIGH COURT IN THE CASE OF CIT VS PRESIDENT INDUSTRIES LTD. 258 ITR 654(GUJ) AND C IT VS BALCHAND AJIT KUMAR (2003) 263 ITR 610(MP) WHEREIN IT HAS BEEN HELD THA T THE TOTAL SALE CANNOT BE REPRESENTED AS PROFIT AND ONLY THE NET PROFIT RATE HAS TO BE APPLIED ON THE TOTAL SALES. THE ASSESSEE GAVE AN AVERAGE PERCENTAGE OF GROSS PR OFIT IN THE PAST THREE ASSESSMENT YEARS AS FOLLOWS :- FOR THE YEAR ENDING SALES (IN RS.) GROSS PROFIT (RS.) GROSS PROFIT RATIO = GROSS PROFIT/SALES X 100 31 ST MARCH, 2009 6,05,918 36,606 36,606/6,05,918 X 100 = 6.04% 31 ST MARCH, 2008 21,20,543 2,59,571 2,59,571/21,20,543 X 100 = 12.24% 31 ST MARCH, 2007 22,15,137 2,75,360 2,75,360/22,15,137 X 100 = 12.43% AVERAGE GROSS PROFIT RATIO : = 10.23% 5. THE CIT(A) CONSIDERED THE ABOVE SUBMISSIONS OF THE ASSESSEE AND DID NOT AGREE WITH THOSE SUBMISSIONS. THE FOLLOWING WERE THE REAS ONS ASSIGNED BY CIT(A) IN HIS ORDER :- THESE GROUNDS ESSENTIALLY DISPUTE THE ADDITION OF RS.32,63,500/- & RS.43,416/- MADE BY THE AO ON ACCOUNT OF UNACCOUNTE D MONEY FOUND DEPOSITED IN THE UNDISCLOSED BANK ACCOUNT OF THE AS SESSEE AND THE INTEREST EARNED THEREON RESPECTIVELY. AS THE DECLARED TURNOV ER OF THE ASSESSEE IS ONLY RS.6,05,918/-, THE DEPOSITS MADE IN THE BANK ACCOUN T ARE HELD URN-ELATED TO THE BUSINESS OF THE ASSESSEE. AN ANALYSIS OF THE BANK S TATEMENT IS REVEALING AS UNDER: (I) ALL THE DEPOSITS ARE MADE IN CASH. (II) THE ENTIRE SET OF DEPOSITS TOTALING RS.32,63,5 00/- WAS MADE ONLY BETWEEN 02.04.2008 TO 12.04.2008 I.E. IN A SPAN OF 11 DAYS. ITA NO.603/KOL/2014-SMT. SOMA SAHA. A.Y.2009-10 4 (III) THE ASSESSE HAD HERSELF WITHDRAWN A SUM OF RS .2,00,000/- & RS.L,00,000/- BY CHEQUE ON 16.04.2008 AND A FURTHER SUM OF RS.L,0 0,000/- ON 07.05.2008. (IV) THE CUMULATIVE DEPOSITS COMING OVER IN THE ACC OUNT FROM 30.10.2007 ONWARDS WAS WITHDRAWN BY CHEQUE ON 09.07.2008. THIS WITHDRAW OF RS.48,08,391/- AS ALSO THE OTHER WITHDRAWALS REMAIN UNEXPLAINED, THE ASSESSEE HAS REFUSED TO EXPLAIN THE END DESTINATION OF THE W ITHDRAWAL. UNDER THE CIRCUMSTANCES, THE WITHDRAWAL CAN ONLY BE HELD TO B E FOR SOME UNACCOUNTED INVESTMENT PURPOSES, THE ABOVE DETAIL INDICATES A PURPOSEFUL STRATEGY ON THE PART OF THE ASSESSEE TO COLLECT A SIZEABLE DEPOSIT BEFORE INVESTING IT SOME WHERE ELSE, AS THE ASSESSEE HAS NO EXPLANATION OR PROOF OF THE SOURCE OF THESE DEPOSITS, THE AO RIGHTLY HELD THE SAME TO REPRESENT UNEXPLAINED INVESTMENT OR MON EY AS PER SECTION 69/69 A OF THE ACT. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE FILE D A 'REVISED' PROFIT & LOSS ACCOUNT DECLARING A SALE TURNOVER OF RS,32,63,500/- BUT THE NET PROFIT FIGURE WAS STILL MAINTAINED AT RS.35,606/-, THE ASSESSEE C LAIMED PURCHASES AT RS,33,59,941/-INSTEAD OF RS,7,02,359/- DISCLOSED IN HER ORIGINAL PROFIT & LOSS ACCOUNT. IN THE 'REVISED' BALANCE SHEET, THE ASSESS EE HAS DECLARED HITHERTO UNDISCLOSED INTEREST ON SAVING BANK AT RS.1,00,663/ - AND HAS ALSO CLAIMED HIGHER DRAWINGS, THE BULK OF THE BALANCE SHEET IS T HE SAME AS EARLIER WITH MINOR VARIATION IN CASH IN HAND & SUNDRY CREDITORS, THE CONTENTION OF THE ASSESSEE THAT BY FILING A 'RE VISED' SET OF FINAL ACCOUNTS, THE ENTIRE TRANSACTIONS CONTAINED IN THE UNDISCLOSE D BANK ACCOUNT CAN GET EXPLAINED IS MISPLACED, IT HAS ALREADY BEEN COMMENT ED ABOVE THAT THE UNIQUE PERIODICITY OF THE CASH DEPOSITS & WITHDRAWALS CANN OT BE EXPLAINED AS RELATING TO ANY SORT OF TRADING ACTIVITY. THE TOTAL SILENCE OF THE ASSESSEE IN THE ENTIRE MATTER AND HER POLICY OF NOT COMMITTING ANYTHING IN WRITING AT ANY STAGE OF THE PROCEEDINGS SO FAR LEAVES NO DOUBT IN THE MIND THAT THE ASSESSEE'S IS ONLY RESORTING TO SUBTERFUGE AND HAS NO EXPLANATION AT A LL. AS A RESULT OF THE ABOVE DISCUSSION, IT IS HELD THA T THE ASSESSEES' GROUNDS OF APPEAL NO.1,2 & 3 ARE UNFOUNDED, BASELESS AND ARE D ISMISSED. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS P REFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE REVENUE AUTHORITIES. HE FURTHER RELIED ON THE DECIS ION OF ITAT, KOLKATA BENCH IN THE CASE OF ACIT VS SUBASISH ACHARYYA VIDE ITA NO.1050/ .KOL/2013 DATED 15.04.2016 AND LUCKNOW BENCH OF ITAT IN THE CASE OF ITO VS SHR I VISHAN LAL VIDE ITA NO.634/LKW/2014 ORDER DATED 22.06.2015. IN BOTH THE AFORESAID DECISIONS THE ITA NO.603/KOL/2014-SMT. SOMA SAHA. A.Y.2009-10 5 TRIBUNAL APPLIED THE GROSS PROFIT RATE ON AN UNDISC LOSED TURN OVER AND HELD THAT THE ENTIRE TURN OVER CANNOT BE ADDED AS INCOME. IN BOTH THE AFORESAID CASES THE CASH WAS DEPOSITED IN THE BANK ACCOUNT WHICH WERE EXPLAINED BY THE ASSESSEE AS BUSINESS TURN OVER AND THE ASSESSEE HAD PLEADED THAT THE ENTIRE T URN OVER CANNOT BE ADDED AS INCOME BUT ONLY THE PROFIT EARNED FROM UNDISCLOSED TURN OV ER THAT SHOULD BE TAXED AS INCOME. 7. THE LD. DR RELIED ON THE FINDINGS OF CIT(A). HE BROUGHT TO MY NOTICE THAT CASH WAS DEPOSITED IN A SPAN OF 11 DAYS AND IT WAS NOT POSSI BLE TO BELIEVE THAT THE ASESSEE WOULD HAVE DONE SUCH HUGE TURN OVER IN JUST 11 DAYS . HE RELIED ON THE ORDER OF CIT(A). 8. I HAVE GIVEN A VERY CAREFUL CONSIDERATION TO TH E RIVAL SUBMISSIONS. THE PROCEEDINGS BEFORE AO WERE COMPLETED U/S 144 OF THE ACT EXPARTE ASSESSEE. THEREFORE THERE WAS NO OCCASION TO EXPLAIN THE SOURCE OF DEPOSIT OF CAS H IN THE BANK ACCOUNT. BEFORE CIT(A) THE ASSESSEE CLAIMED THAT THE SUM IN QUESTIO N WAS NOTHING BUT SALE PROCEEDS OF READYMADE GARMENTS AND FURTHER CLAIMED THAT IN RESP ECT OF SALE OF RS.32,63,500/- THERE WERE CORRESPONDING PURCHASES TO THE TUNE OF RS.33,5 9,941/-. A COPY OF THE BANK STATEMENT OF THE ASSESSEE IS PLACED AT PAGES 3 TO 5 OF THE ASSESSEES PAPER BOOK. THE SAME IS GIVEN AS ANNEXURE TO THIS ORDER. A PERUSAL OF THE SAME SHOWS THAT THE RE WERE CASH DEPOSITS AS WELL AS WITHDRAWALS FROM THE BANK ACCOUNT. THE CREDIT BALANCE AS ON 3.10.2007 WAS JUST RS.1500/-. BETWEEN 22.11.2007 TO 5.12.2007 THERE ARE DEPOSIT OF CASH TOTALLING RS.7,67,075/- INTO THIS BANK ACCOUNT . THERE WAS WITHDRAWAL OF CASH FROM THIS BANK ACCOUNT TOTALLING RS.7,69,900/- BETW EEN 21.1.2008 TILL 8.2.2008. BETWEEN 13.3.2008 TILL 12.4.2008 THERE WAS DEPOSIT OF CASH INTO THIS ACCOUNT OF RS.50,09,000/-. A SUM OF RS.3,00,000 WAS WITHDRAWN FROM THIS ACCOUNT ON 16.4.2008. AFTER DEPOSIT OF RS.15,332/- ON 5.5.200 8, CASH OF RS.49,23,007 WAS WITHDRAWN BETWEEN 7.5.2008 TILL 11.11.2008. AS R IGHTLY OBSERVED BY THE CIT(A) THERE IS UNIFORM PATTERN OF DEPOSIT AND WITHDRAWAL, WHICH RENDERS THE PLEA OF THE ASSESSEE THAT THESE REPRESENTS SALE PROCEEDS OF UNA CCOUNTED BUSINESS IN READYMADE GARMENTS. IN FACT THE ASSESSEE HAS NOT MADE SUCH S UBMISSION AT ANY STAGE OF THE PROCEEDINGS BUT BY IMPLICATION, THE ASSESSEES PLEA HAS TO BE CONSTRUED ONLY THAT WAY. ITA NO.603/KOL/2014-SMT. SOMA SAHA. A.Y.2009-10 6 THERE IS NO WHISPER OF HOW THE UNACCOUNTED TRANSACT IONS WERE CARRIED OUT WHAT IS THE QUANTITY OF PURCHASE AND SALE, WHAT IS THE CLOSING STOCK AS ON THE LAST OF PREVIOUS YEAR ETC. AS RIGHTLY OBSERVED BY THE CIT(A), THE PERIOD ICITY OF THE DEPOSIT AND WITHDRAWAL RENDERS THE PLEA OF THE ASSESSEE THAT THE CASH DEPO SITED WAS SALE PROCEEDS OF UNACCOUNTED TRANSACTION OF SALE OF READYMADE GARMEN TS, IMPROBABLE. THE DECISIONS REFERRED BY THE LEARNED COUNSEL FOR THE ASSESSEE WI LL NOT BE OF ANY ASSISTANCE TO THE PLEA OF THE ASSESSEE, AS THE PLEA OF THE ASSESSEE T HAT THE CASH DEPOSITED WAS OUT OF SALE PROCEEDS OF READYMADE GARMENTS IS HELD TO BE N OT SUBSTANTIATED. IT IS ONLY WHEN IT IS HELD THAT THERE WAS UNACCOUNTED SALE THAT THE QU ESTION WHETHER TO ASSESSEE GROSS PROFIT OR THE ENTIRE SALE PROCEEDS WILL ARISE FOR C ONSIDERATION. ON THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, I AM OF THE VIEW THAT THE CONCLUSIONS DRAWN BY THE CIT(A) IS JUST AND PROPER AND CALLS FOR NO INTERFER ENCE. ACCORDINGLY, THE RELEVANT GROUNDS OF APPEAL ARE DISMISSED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 02.09.2016. SD/- [ N.V.VASUDEVAN ] JU DICIAL MEMBER DATED : 02.09.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.SMT. SOMA SAHA, 53, RAILWAY PARK, ISWAR CHATTERJE E ROAD, SODEPUR, KOLKATA-700 110. 2. I.T.O., WARD-51(3), KOLKATA. 3. CIT(A)-XXXXII, KOLKATA. 4. CIT-XVII, KOLK ATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER A SSTT.REGISTRAR, ITAT, KOLKATA BENCHES ITA NO.603/KOL/2014-SMT. SOMA SAHA. A.Y.2009-10 7