RAVIKUMAR RAJAN PANDAYAN, MUMBAI V. ITO WD 22(2)(2), NAVI MUMBAI

ITA 6078/MUM/2012

• Counselvise Citation: 607819914 RSA 2012
• Duration Of Justice: 2 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 11-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UDAY BHASKAR JAKKA
• Assessee Lawyers: SHRIRAM BAJAJ
• Keywords: Business income; Peak credit
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.6078/M/2012 ASSESSMENT YEAR: 2009-10 MR. RAVIKUMAR RAJAN PANDAYAN, ARFA HOUSE, OPP MANISH VIJAY COMPLEX, R.C. MARG, VASHI NAKA, CHUMBUR (EAST), MUMBAI 400 074 PAN: ALZPP 3150A VS. INCOME TAX OFFICER, WARD 22(2)-2, VASHI INCOME TAX OFFICE, TOWER NO.6, 4 TH FLOOR, VASHI, NAVI MUMBAI 400 705 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI SHRIRAM BAJAJ, A.R. REVENUE BY : SHRI UDAY BHASKAR JAKKA, D.R. DATE OF HEARING : 04.06.2015 DATE OF PRONOUNCEMENT : 31.08 .2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 31.07.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2009-10. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LEARNED CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.17,53,689/- OUT OF THE ADDITION OF RS.19,85,000/- MADE U/S.69 OF THE ACT BY THE AO, AS ALLEGED UNEXPLAINED CASH DEPOSITS IN BANK ACCOUNT WITH BHARAT CO-OP BANK LTD . THE LEARNED CIT(A) ERRED IN REJECTING THE APPELLANT'S EXPLANATION THAT THE CASH DEPOSITS WERE OUT OF THE SALE PROCEEDS OF THE APPELLANT'S BUSINESS FO R WHICH PROFIT WAS DECLARED U/S.44AF OF THE ACT. THE APPELLANT, THEREFORE, PRAY S THAT THE ADDITION SUSTAINED BY THE LEARNED CIT(A) BE DELETED. 2. WITHOUT PREJUDICE, THE APPELLANT FURTHER SUBMITS THAT WHEN THE ITA NO.6078/M/2012 MR. RAVIKUMAR RAJAN PANDAYAN 2 APPELLANT'S EXPLANATION OF BUSINESS RECEIPTS WAS RE JECTED ON THE GROUND THAT NO EVIDENCE WAS ADDUCED IN SUPPORT OF CARRYING ON O F THE BUSINESS, THEN THE BUSINESS PROFIT OF RS.5,97,658/- OFFERED TO TAX BY THE APPELLANT OUGHT NOT TO HAVE BEEN ASSESSED AS SUCH, OR ALTERNATIVELY, SUITA BLE CREDIT FOR THE SAME OUGHT TO HAVE BEEN GIVEN FOR-THIS SUM WHILE MAKING ADDITION ON ACCOUNT OF ALLEGED UNEXPLAINED CASH DEPOSITS. THE APPELLANT, T HEREFORE, PRAYS FOR THE RELIEF OF RS.5,97,658/-. YOUR APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIFY OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL, OR TO ADD ONE OR MORE ADDI TIONAL GROUND(S), AT OR BEFORE THE HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, AN INDIVIDUAL, HAS BEEN ENGAGED IN THE BUSINESS OF PRINTING AND BINDIN G. ASSESSEE DECLARED INCOME FROM HIS PROPRIETARY CONCERN AT RS.5,97,658/ -. HOWEVER, HE DEPOSITED CASH OF RS.19,85,000/- IN SAVINGS BANK AC COUNT WITH THE BHARAT CO-OP. BANK, CHEMBUR BRANCH. ON BEING ASKED TO EXP LAIN IN THIS RESPECT, THE LD. A.R. OF THE ASSESSEE SUBMITTED BEFORE THE A SSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) THAT THE SAID D EPOSITS REPRESENTED THE SALES PROCEEDS OF BUSINESS TURNOVER AND THE TAX ON THE SAID AMOUNT HAD ALREADY BEEN PAID WHICH WAS MORE THAN 5% OF HIS TOT AL TURNOVER. THE AO, HOWEVER, OBSERVED THAT THE ASSESSEE, IN ITS RE TURN, HAD NOT MENTIONED THE TOTAL TURNOVER. THE ASSESSEE, NEITHER IN THE O RIGINAL RETURN NOR AT THE STAGE OF ASSESSMENT PROCEEDINGS, HAD PLEADED THAT T HE CASH DEPOSITS WERE OUT OF BUSINESS SALES PROCEEDS TILL THE FACT OF T HE SAID DEPOSIT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE. NO EVIDENCE IN RESPECT OF SALES BILLS, NAMES AND ADDRESSES OF THE PARTIES FROM WHOM THE SALES PROCEEDS WERE RECEIVED WAS FURNISHED. HENCE, THE AO HELD TH E SAID DEPOSITS AS INCOME FROM UNDISCLOSED SOURCE AND TAXED ACCORDINGL Y. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED APPEAL BEFORE THE LD. CIT(A). 4. BEFORE THE LD. CIT(A), IT HAD BEEN CONTENDED THAT AS PER SECTION 44AF OF THE ACT INSERTED FROM 01.04.1998, WHERE AN ASSES SEE IS ENGAGED IN THE ITA NO.6078/M/2012 MR. RAVIKUMAR RAJAN PANDAYAN 3 BUSINESS OF RETAIL BUSINESS, INCOME SHALL BE ESTIMA TED AT 5% OF GROSS RECEIPTS IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BUSINESS OR A SUM HIGHER THAN THE SAID AMOUNT AS MAY BE DECLARED BY THE ASSESSEE IN HIS RE TURN OF INCOME NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 28 TO 43C OF THE ACT. HE ALSO SUBMITTED THAT SINCE THE TURNOVER OF B USINESS DID NOT EXCEED RS.40,00,000/-, THERE WAS NO NEED OF AUDITING THE A CCOUNTS SINCE THE ASSESSEE WAS IN RETAIL BUSINESS AND IT WAS NOT NECESSARY FOR THE ASSESSEE TO MAINTAIN ANY BOOKS OF ACCOUNTS. THE LD. CIT(A), HOWEVER DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE. HE HOWEVER OBSERVED THAT IN AY. 20 07-08, SIMILAR TYPE OF DEPOSITS WERE FOUND IN THE ACCOUNT OF THE ASSESSEE. THE MATTER TRAVELLED UPTO THE LEVEL OF THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 15.6.2012 HELD THAT THE WHOLE OF THE TRANSACTIONS IN THE BANK ACCOUNT CAN N OT BE ADDED BUT ONLY THE PEAK CREDIT AMOUNT. HE FURTHER RELIED UPON THE DECI SION OF HIS PREDECESSOR FOR AY 2008-09 WHEREIN ALSO THE ADDITION WAS RESTRICTE D TO PEAK CREDITS IN THE BANK ACCOUNT. HE ACCORDINGLY RESTRICTED THE ADDITIO N FOR THIS YEAR ALSO TO THE PEAK CREDIT AMOUNT IN THE BANK ACCOUNT AT RS.17,53 ,689/-. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORD. THE LD. AR OF THE ASSESSEE COULD NOT CONVINCE US AS TO ON WHAT ASPECTS THE FACTS OF THIS YEAR ARE DISTINGUISHABLE FROM EAR LIER ASSESSMENT YEARS. THE ASSESSEE HAD NOT BROUGHT ON RECORD ANY EVIDENCE OF RUNNING OF BUSINESS OR SALE AND PURCHASE OF PRODUCTS. EVEN THE DEPOSITS HAVE NO T BEEN MADE THROUGHOUT THE YEAR BUT ONLY LAST TWO THREE MONTHS OF THE YEAR WHI CH ALSO NULLIFIES THE THEORY OF DEPOSITS FROM THE TURNOVER OF THE BUSINESS. HOWE VER WE FIND SOME FORCE IN THE ALTERNATE CONTENTION OF THE ASSESSEE THAT HE SH OULD BE GIVEN CREDIT OF THE BUSINESS INCOME ALREADY DECLARED BY THE ASSESSEE. T HE ASSESSEE HAS DECLARED THE BUSINESS INCOME OF RS.5,97,658/-. BUT IT CANNOT BE PRESUMED THAT THE ASSESSEE WOULD HAVE DEPOSITED THE ENTIRE AMOUNT OF INCOME IN HIS BANK ACCOUNT. HENCE A REASONABLE APPROPRIATION IS TO BE MADE. IN OUR VIEW, AFTER ITA NO.6078/M/2012 MR. RAVIKUMAR RAJAN PANDAYAN 4 DEDUCTION OF 1/3 RD OF THE TOTAL INCOME TOWARDS ROUTINE AND LIVELIHOOD EXPENDITURE, THE ASSESSEE IS ENTITLED TO THE BENEFI T OF REMAINING 2/3 RD OF THE DECLARED INCOME. HENCE WE DIRECT THAT OUT OF THE TO TAL ADDITION OF RS. 17,53,689/- AN AMOUNT EQUAL TO 2/3 RD OF THE INCOME ALREADY DECLARED BY THE ASSESSEE BE DEDUCTED AND THE ADDITION OF THE BALANC E AMOUNT IS CONFIRMED. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.08.2015. SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 31.08.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.