Newpar Aromatiucs Pvt. Ltd., Surat V. The Jt.CIT, Navsari Range, Navsari

ITA 640/SRT/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7780 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 24-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Keywords: Reopening of assessment; Unexplained cash credit; Peak credit
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM ./ITA NO.206/SRT/2018 ( [ [ / ASSESSMENT YEAR: (2008-09) (VIRTUAL COURT HEARING) HARISH VELMAL BUDHANI, 303, NEELAM APARTMENT, SINDHI CAMP, NAVSARI 396445. VS. THE INCOME TAX OFFICER, WARD-2, NAVSARI. ./ ./ PAN/GIR NO.: AAMPB 8797 R (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI HIREN R. VEPARI - CA RESPONDENT BY : MS. ANUPAMA SINGLA SR. DR / DATE OF HEARING : 09/07/2021 /DATE OF PRONOUNCEMENT : 23/08/2021 / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO THE ASSESSMENT YEAR (A.Y.) 20008-09, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD.COMMISSIONER OF INCOME TAX(APPEALS), VALSAD DATED 02.02.2018, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961, ( HEREINAFTER REFERRED TO AS THE ACT), DATED 22.02.2016. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: (I) REOPENING OF ASSESSMENT: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING REOPENING OF THE ASSESSMENT WHEN NO INCOME HAD ESCAPED ASSESSMENT. PAGE | 2 ITA NO.206/SRT/2018 FOR A.Y. 2008-09 HARISH VELAMAL BUDHANI, NAVASARI. (II) ENHANCEMENT OF INCOME TO RS.11,49,200: (1) THE LEARNED CIT(A) ERRED IN ENHANCING THE ADDITION OF RS.3,51,108 (REFER GROUND NO. III) PARTICULARLY WHEN THE ASSESSEE IN NO UNCLEAR TERMS EXPLAINED THAT THE ENHANCEMENT WAS NOT JUSTIFIED. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ENHANCEMENT IS UNWARRANTED. (III) CASH DEPOSIT IN BANK RS.3,51,108: (1) WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) OUGHT TO HAVE DELETED THE ADDITION MADE BY THE A.O. OF RS.3,51,108. (2) THE ASSESSEE SUBMITS THAT ENTIRE DEPOSIT HAS BEEN MADE OUT OF CASH BOOK I.E. KNOWN SOURCE. (IV) MISCELLANEOUS: THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR VARY ANY OF THE GROUNDS OF APPEAL. 3. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION OF BANK ACCOUNT OF BANK OF BARODA (BOB) PRODUCED BY THE ASSESSEE, THE ASSESSING OFFICER FOUND THAT ASSESSEE HAS DEPOSITED CASH IN HIS BANK ACCOUNT OF BANK OF BARODA ACCOUNT NO. 06190100006105, BRANCH NAVSARI, AN AMOUNT OF RS. 11,49,200/- ON VARIOUS DATES. THE ASSESSEE WAS REQUESTED TO EXPLAIN THE SOURCE OF RECEIPT AND CONFIRMATION OF THE PARTIES FROM WHOM THE AMOUNT IS RECEIVED. HOWEVER, ASSESSEE HAS NOT FILED ANY EXPLANATION IN THIS REGARD BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER NOTED THAT TO JUSTIFY THE CASE, THE ASSESSEE HAS PRODUCED CERTIFICATE FROM CST AND SALES TAX DEPARTMENT WHICH CANNOT BE IGNORED THEREFORE, ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAS DONE THE RETAIL BUSINESS, BUT THE CASH DEPOSIT HAS NOT BEEN EXPLAINED BY ASSESSEE, THEREFORE A PEAK AMOUNT OF RS. 3,51,108/- IN THE BANK BALANCE WAS TAKEN AS UNEXPLAINED CASH CREDIT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. PAGE | 3 ITA NO.206/SRT/2018 FOR A.Y. 2008-09 HARISH VELAMAL BUDHANI, NAVASARI. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A) WHO HAS ENHANCED THE ADDITION FROM RS. 3,51,108/- TO RS. 11,49,200/-. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS BROUGHT ON RECORD. LEARNED COUNSEL SUBMITS BEFORE US THAT ASSESSEE IS A VERY SMALL RETAIL TRADER AND ALMOST HIS ENTIRE GROSS RECEIPTS ARE BEING HELD TO BE OF UNEXPLAINED NATURE BY LD CIT(A), WHICH IS UNFAIR. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE LD CIT(A), AND PLEADS THAT LD CIT(A) HAS RIGHTLY ENHANCED THE ASSESSMENT. WE NOTE THAT IN THE ASSESSMENT ORDER, THE AO HAS STATED THAT RS. 11,49,200/- WAS DEPOSITED IN THE SAVING BANK ACCOUNT BY WAY OF CASH ON VARIOUS DATES. AS THE ASSESSEE DID NOT EXPLAIN THE SOURCES OF RECEIPTS OF CASH AND THE CASH BOOKS WAS NOT MAINTAINED, THE AO CALCULATED PEAK CREDITS FROM THE TRANSACTIONS IN THE BANK ACCOUNT AT RS. 3,51,108/- AND THIS AMOUNT WAS ADDED AS UNEXPLAINED CASH CREDIT. LEARNED COUNSEL ARGUES BEFORE US THAT CASH BOOK AND BANK BOOKS WERE PRODUCED DURING ASSESSMENT PROCEEDINGS AND CASH DEPOSITS WERE DULY EXPLAINED FROM THE ENTRIES IN THE CASH BOOKS. WE NOTE THAT ASSESSEE IS A SMALL TRADER BASED IN NAVSARI WHO SELLS FIRECRACKERS, RAKHIS, HOLI COLOURS ETC, ON A SEASONAL BASIS. ALMOST HIS ENTIRE BUSINESS OCCURRED IN CASH DURING THE YEAR, AS MOST THE SUPPLIERS AND CUSTOMERS THAT HE DEALT WITH WERE UNDERSTANDABLY OF UNORGANIZED AND SMALL IN NATURE. THEREFORE, CONSIDERING THAT NATURE OF THE ASSESSEE`S BUSINESS WE RESTRICT THE ADDITION TO THE EXTENT OF PEAK CREDIT ( ADDITION MADE BY THE ASSESSING OFFICER) TO TUNE OF RS. 3,51,108/-. IT IS MADE CLEAR THAT INSTANT PAGE | 4 ITA NO.206/SRT/2018 FOR A.Y. 2008-09 HARISH VELAMAL BUDHANI, NAVASARI. ADJUDICATION SHALL NOT BE TREATED AS A PRECEDENT IN ANY PRECEDING OR SUCCEEDING ASSESSMENT YEAR. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN ABOVE TERMS. ORDER IS PRONOUNCED IN THE OPEN COURT ON 23/08/2021 BY PLACING THE RESULT ON THE NOTICE BOARD AS PER RULE 34(5) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULE 1963. SD/- SD/- (PAWAN SINGH) (DR. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT / / DATE: 23/08/2021 / SGR COPY OF THE ORDER FORWARDED TO 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A) 4. PR.CIT 5. DR/AR, ITAT, SURAT 6. GUARD FILE BY ORDER // TRUE COPY // / / TRUE COPY / / SENIOR PRIVATE SECRETARY ITAT, SURAT