Vedagiri Ganesh, Vellore V. ACIT, Vellore

ITA 668/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6354 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 08-08-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 20-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHISH TRIPATHIJCIT
• Assessee Lawyers: S VENUGOPALAN
• Keywords: Unexplained cash credit; Income from undisclosed sources

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI ... , , # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 668/MDS/2017 / ASSESSMENT YEAR : 2012-13 SHRI VEDAGIRI GANESH, NO. 296-1/2, INDIRA NAGAR, PERUMUGAI, VELLORE 632 009. [PAN: AADPG 2907P] VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1, VELLORE. ( / APPELLANT) ( / RESPONDENT) % & / APPELLANT BY : SHRI. S. VENUGOPALAN, CA )*% & / RESPONDENT BY : SHRI. ASHISH TRIPATHI, JCIT & /DATE OF HEARING : 08.08.2017 & /DATE OF PRONOUNCEMENT : 14.08.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-13, CHENNAI IN ITA NO. 11/CIT( A)-13/AY 12-13 DATED 28.02.2017. :-2-: I.T.A. N0. 668/MDS/2017 2. SHRI VEDAGIRI GANESH, THE ASSESSEE, IS IN THE BU SINESS OF THREE AND FOUR WHEELER DIESEL AUTO RICKSHAW VEHICLE, PURC HASE & SALES, APART FROM PURCHASING AND SELLING SPARE PARTS. IN THE ASSESSM ENT MADE FOR ASSESSMENT YEAR 2012-13, THE AO FOUND THAT THE ASSESSEE MAINTA INED SAVINGS BANK ACCOUNT WITH AXIS BANK, IN WHICH RS. 59,55,802/- TO TAL CASH DEPOSITS WERE MADE DURING THE PERIOD RELEVANT TO THIS ASSESSMENT YEAR. ON VERIFICATION, THE SOURCES FOR THESE CASH DEPOSITS WERE NOT FOUND IN T HE CASH BOOK. THE AO POINTED OUT THIS ASPECT TO THE ASSESSEE, REQUIRED H IM TO EXPLAIN THE SOURCES. THE AO ASSESSED RS. 59,55,802/- AS UNEXPLAINED CASH CREDITS STATING THAT THE ASSESSEE HAD ADMITTED THE SAME U/S. 68. FURTHER, T HE AO FOUND THAT THE ASSESSEE RECEIVED ADVANCE FROM VARIOUS PERSONS TOWA RDS BOOKING OF AUTO VEHICLES WHICH WERE SHOWN UNDER THE HEAD SUNDRY ADV ANCES. THE ASSESSEE COULD NOT SUBSTANTIATE SMALLER AMOUNTS OF SUCH CRED ITS AT RS. 13,45,533/- AND HENCE ADDED IT STARTING THAT THE ASSESSEE ADMITTED IT. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CI T(A) CALLED FOR REMAND REPORTS TWICE FROM THE ASSESSING OFFICER, SHARED SU CH DETAILS WITH THE ASSESSEE AND AFTERWARD CONSIDERING ASSESSEES SUBMI SSIONS CONFIRMED THE ADDITIONS. AGGRIEVED, THE ASSESSEE FILED THIS APPE AL PLEADING THAT THE CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE ERRED IN CONFIRMING THE ADDITION OF RS. 59,55,802/- AS UNEXPLAINED CASH CREDITS. THE C IT(A) ALSO ERRED IN CONFIRMING THE ADDITION OF RS. 13,45,533/- OUT OF S UNDRY CREDITORS EVEN AFTER :-3-: I.T.A. N0. 668/MDS/2017 PRODUCTION OF CONFIRMATION LETTERS FROM THE SUNDRY CREDITORS WHICH WAS ALSO CONFIRMED BY THE ASSESSING OFFICER IN HIS REPORT ET C. 3. THE AR SUBMITTED THAT THE AO MADE ADDITION TOWAR DS UNEXPLAINED CASH CREDITS WITHOUT ANY BASIS AND PROB ABLY ON THE BASIS OF PREVIOUS ASSESSMENTS. THE ASSESSEE IS HAVING THE C ASH, WHICH COULD BE FROM THE INCOME FROM THE EARLIER YEARS ADDITIONS MADE IN THE ASSESSMENTS TOWARDS UNEXPLAINED CREDITS AND SUNDRY CREDITS WHICH WERE T O THE EXTENT OF MORE THAN ONE CRORE RUPEES. THE AR FURTHER SUBMITTED IN THE SAME ACCOUNT, THERE ARE LOT OF DEBITS WHICH WERE NOT CONSIDERED BY THE AO. THE BANK ACCOUNT HAS AN OPENING BALANCE OF RS. 12,46,487/- AND ITS CLOSING BALANCE AT THE YEAR END WAS ONLY RS. 10,94,177/-. THUS, THE ADDITION MADE IS UNWARRANTED. PER CONTRA, THE DR SUBMITTED THAT THE ASSESSEE HAD AN U NDISCLOSED SAVINGS BANK ACCOUNT IN AXIS BANK IN WHICH THE TOTAL CASH DEPOSI TS MADE DURING THE YEARS WAS RS. 59,54,802/-, THE ASSESSEE COULD NOT EXPLAIN THE NATURE AND SOURCES OF THESE CREDITS, EVEN AFTER THE CIT(A) HAS GIVEN TWO REMAND PROCEEDINGS AND FURNISHED REPORTS OF THE REMAND PROCEEDINGS TO THE ASSESSEE. THE DAY BOOKS, LEDGER ETC PRODUCED BY THE ASSESSEE WERE VERIFIED B Y THE AO AND HE FOUND THAT THE ASSESSEE HAS NOT MADE CASH WITHDRAWAL BY W HICH THE SOURCES FOR THOSE DEPOSITS COULD BE EXPLAINED. IN OTHER WORDS, THERE WAS NO CASH WITHDRAWALS. HENCE, IT CANNOT BE STATED THAT THE C ASH WITHDRAWN FROM THE BUSINESS BOOKS ARE DEPOSITED IN THE AXIS BANK ACCOU NT. FOR THE REASONS :-4-: I.T.A. N0. 668/MDS/2017 STATED BY THE CIT(A), THE ADDITION CONFIRMED BY THE CIT(A) IS WARRANTED. THE AR SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS O F PURCHASE AND SALE OF THREE AND FOUR WHEELERS DIESEL AUTO RICKSHAW VEHICL E AND SPARE PARTS. THE ASSESSEE COLLECTS CASH FROM THE CUSTOMERS TOWARDS R EGISTRATION, INSURANCE INCIDENTALS ETC., WHICH ARE DEPOSITED IN THE AXIS B ANK ACCOUNT AND THEY ARE WITHDRAWN AND USED FOR THE PURPOSE OF THE REGISTRAT ION, INSURANCE, INCIDENTALS ETC. SINCE, THE ASSESSEE HAS ADMITTED UNACCOUNTED INCOME IN THE EARLIER YEARS, THE AO USING THE SAME ADMISSION, CONTINUED T O MAKE ADDITION THIS YEAR ALSO, WHEN THE ASSESSEE HAS NOT ADMITTED THESE CRED ITS IN THIS YEAR. THE ASSESSEES ADMITTED INCOME UNDER THE HEAD UNEXPLAIN ED CASH CREDITS AND SUNDRY CREDITORS IN THE EARLIER YEARS WHICH AMOUNTS TO MORE THAN ONE CRORE ITSELF COULD BE A SOURCE FOR THESE DEPOSITS. 4. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDE RS OF THE AO AND THE CIT(A). THE ASSESSEE HAS NOT DISCLOSED THE SAVING BANK ACCOUNT WITH AXIS BANK WHICH HAD CASH DEPOSITS OF RS. 59,55,802/ -. THE ASSESSEE PLEADS THAT THE NATURE OF ITS BUSINESS REQUIRES RECEIPT OF CASH FROM THE CUSTOMERS TOWARDS REGISTRATION, INSURANCE, INCIDENTALS ETC WH ICH WERE CREDITED IN THAT ACCOUNT AND USED FOR SUCH PURPOSES. FURTHER, IT PLE ADS THAT THE ASSESSEE ADMITTED UNDISCLOSED INCOME UNDER THE HEAD CASH CRE DITS AND SUNDRY CREDITOR IN THE EARLIER YEARS ITSELF IS MORE THAN ONE CRORE WHICH COULD ALSO EXPLAIN THE SOURCES TOWARDS THESE DEPOSITS. IT APPEARS NEITHER THE AO NOR THE CIT(A) :-5-: I.T.A. N0. 668/MDS/2017 CONSIDERED THESE SUBMISSIONS WHILE EXAMINING THE AS SESSEES CLAIM. ON THE OTHER HAND, IT APPEARS THAT THE AO EXAMINED THE CAS H BOOKS, LEDGER ETC OF THE BUSINESS AND RECORDED A FINDING THAT THERE WERE NO CASH WITHDRAWALS FROM THE DISCLOSED BUSINESS RESULTS FROM WHICH THE SOURCES O F THE IMPUGNED DEPOSITS COULD BE EXPLAINED. IN THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THIS ISSUE HAS TO BE SET ASIDE AND ACCORDINGLY WE S ET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE ISSUE TO THE AO FOR FRESH EXAM INATION. THE AO SHALL REQUIRE THE ASSESSEE TO FURNISH RELEVANT MATERIALS AS TO WHETHER THE DEPOSITS APPEARING IN THE SAVINGS BANK ACCOUNT IN AXIS BANK COULD BE THE SUM COLLECTED FROM THE CUSTOMERS OF THE THREE/FOUR DIES EL VEHICLES TOWARDS REGISTRATION, INSURANCE, INCIDENTALS ETC., AND EXAM INE THEM. IF IT IS ESTABLISHED SO, HOW MUCH WAS THE INCOME, THE ASSESSEE COULD HAV E EARNED FROM THESE TRANSACTIONS MAY BE ASSESSED AS INCOME. IF THE AO IS NOT SATISFIED ABOUT THE IMPUGNED DEPOSITS ON THE BASIS OF THE ABOVE MATERIA L ETC., THEN THE AO MAY ALSO CONSIDER WHETHER THE ASSESSEE HAD SOURCES FROM THE ADDITIONS MADE IN THE EARLIER ASSESSMENT YEARS ETC., TO EXPLAIN THE S OURCES OF THE IMPUGNED DEPOSITS. THUS, THE AO SHALL RE-EXAMINE THE ABOVE ISSUES AFRESH, AFTER AFFORDING REASONABLE OPPORTUNITY TO THE ASSESSEE AN D THEN PASS A SPEAKING ORDER. 5. THE NEXT ISSUE IS ADDITION OF RS. 13,45,533/- TOWARDS UNPROVED SUNDRY CREDITORS. THE AR SUBMITTED THAT THE ASSESS EE IS IN THE BUSINESS OF AUTOMOBILES. AT THE TIME OF BOOKING, HE WILL GET A DVANCES FROM CUSTOMERS :-6-: I.T.A. N0. 668/MDS/2017 WHICH WOULD BE ADJUSTED IN THE FINAL BILLING. THE ASSESSEE HAS PRODUCED THE DETAILS OF EVIDENCE TO SHOW SUCH ADJUSTMENTS IN THE BILLING. SOMETIMES, THE WAITING PERIOD FOR THE VEHICLE WILL RANGE FROM THRE E TO FOUR MONTHS AND THE ADVANCES RECEIVED FROM THEM ALSO VARY FROM RS. 25,0 00/- TO RS. 50,000/- AND ON AN AVERAGE THERE WILL BE MORE THAN 50-100 CUSTOM ERS ON THE WAITING LIST. WITHOUT TAKING THESE ASPECTS INTO CONSIDERATION, TH E ASSESSING OFFICER MADE THE IMPUGNED ADDITION AS WAS MADE IN THE EARLIER YE ARS. PER CONTRA, THE DR SUBMITTED THAT THE CIT(A) HAS GIVEN OPPORTUNITY TO ASSESSEE TWICE BY REMITTING THE ISSUES TO THE ASSESSING OFFICER AND F URNISHED THE COPIES OF THE ASSESSING OFFICERS REPORT TO THE ASSESSEE. THE AS SESSEE COULD NOT SUBSTANTIATE SMALL CREDITS OF RS. 13,45,533/-. THE CIT(A) HAS EXTRACTED THE ORDER SHEET NOTINGS IN ITS ENTIRETY, WHEREIN, THE ASSESSEE AND HIS AUTHORIZED REPRESENTATIVE AGREED FOR SUCH ADDITION AND THEN CO NFIRMED THE ADDITION IN THE APPEAL ORDER. IN THE FACTS AND CIRCUMSTANCES, THE ADDITION MADE NEEDS TO BE CONFIRMED. 6. WE HEARD THE RIVAL SUBMISSIONS, GONE THROUGH TH E ORDERS. FROM THE ORDER OF THE CIT(A), WE FIND THAT THE ASSESSEE AND HIS AUTHORIZED REPRESENTATIVE HAVE AGREED FOR THE DISALLOWANCE OF RS. 13,45,533/-- COMPRISING THE SMALLER AMOUNTS OF SUNDRY CREDITORS AND HENCE, WE DO NOT FIND ANY MERIT IN THE GROUNDS OF THE APPEAL ON THIS ISSU E AND HENCE THIS ISSUE IS DISMISSED. :-7-: I.T.A. N0. 668/MDS/2017 7. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON MONDAY, THE 14 TH DAY OF AUGUST, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) ! ' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 14 TH AUGUST, 2017 JPV & )12 32 /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. 4 ( )/CIT(A) 4. 4 /CIT 5. 2 ) /DR 6. 7 /GF