BABAN B. LANDAGE , MUMBAI V. ITO 27 (1)(2), MUMBAI

ITA 6762/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5266 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 04-11-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIKLD
• Assessee Lawyers: BHARAT KUMAR LD
• Keywords: Peak credit; Earning of tax free income; Additional evidence; Capital receipt; Reassessment proceedings
• Section: 143(3); 142(1); 143(2); 148

Judgement Text

ITA NO.6762/MUM/2019 BABAN B. LANDAGE ASSESSMENT YEAR :2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO 6762/MUM/2019 ( / ASSESSMENT YEAR : 2013-14 ) BABAN B. LANDAGE, D-305, MM ESTATE VIKRAM APARTMENT, LBS MARG, GHATKOPAR, MUMBAI 400086 / VS. ITO - 27(1)(2), VASHI RAILWAY STATION COMPLEX VASHI NAVI MUMBAI 400703. %& ./ ./PAN/GIR NO. AAAPL-7213-L ( &( /APPELLANT ) : ( )*&( / RESPONDENT ) ASSESSEE BY : SHRI BHARAT KUMAR- LD. AR REVENUE BY : MS. KAVITA P. KAUSHIK-LD.DR / DATE OF HEARING : 23/01/2020 / DATE OF PRONOUNCEMENT : 20/02/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1.1 AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEA R [IN SHORT REFERRED TO AS AY] 2013-14 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX (APPEALS)-26, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-26/IT/10441/2017-18 DATED 04/10/2 019 ON CERTAIN GROUNDS OF APPEAL. ITA NO.6762/MUM/2019 BABAN B. LANDAGE ASSESSMENT YEAR :2013-14 2 1.2 THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE (AR), AT THE OUTSET SUBMITTED THAT ONLY GROUND NO. 3 OF THE APPEAL IS B EING PRESSED. THE SAME READ AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.47,95,403/- MADE BY T HE LD. AO. 1.3 AT THE SAME TIME, LD. AR PRESSED FOR ADDITIONAL GROUND OF APPEAL FILED ON 03/12/2019, WHICH READ AS UNDER: - ON THE FACTS AND CIRCUMSTANCES IN THE CASE IN LAW, LD. AO ERRED IN NOT PROVIDING CREDIT OF TCS OF RS.2,71,726/- WHICH IS APPEARING I N 26AS. SINCE THE ASSESSEE SEEK ONLY A DIRECTION IN THE MAT TER, THE ADDITIONAL GROUND WAS ADMITTED. 1.4 WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS A ND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS PLA CED IN THE PAPER- BOOK. OUR ADJUDICATION TO THE SUBJECT MATTER OF PRE SENT APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 2.1 FACTS ON RECORD FACTS ON RECORD WOULD REVEAL TH AT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN O PERATING WINE SHOP, WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S 143(3 ) R.W.S. 147 ON 28/12/2017 WHEREIN THE INCOME OF THE ASSESSEE WAS D ETERMINED AT RS.61.09 LACS AFTER SOLE ADDITION OF UNEXPLAINED IN VESTMENTS FOR RS.49.95 LACS AS AGAINST ASSESSED INCOME OF RS.11. 14 LACS U/S 143(3) VIDE ORDER DATED 29/02/2016. 2.2 THE REASSESSMENT PROCEEDINGS WERE TRIGGERED UPO N RECEIPT OF CERTAIN INFORMATION THAT THE ASSESSEE MADE CASH DEP OSIT OF RS.10 LACS IN SARASWAT BANK AND ANOTHER CASH DEPOSIT OF RS.14. 10 LACS IN ITA NO.6762/MUM/2019 BABAN B. LANDAGE ASSESSMENT YEAR :2013-14 3 ALLAHABAD BANK. ACCORDINGLY, NOTICE U/S 148 WAS ISS UED ON 02/03/2017, AS PER DUE PROCESS OF LAW, WHICH WAS FOLLOWED BY NO TICES U/S 143(2) AND 142(1) WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTAN TIATE THE DEPOSIT OF CASH. IT WAS FOUND THAT THE TWO ACCOUNTS WERE NOT D ISCLOSED IN THE BALANCE SHEET. THE COPIES OF BANK STATEMENTS WERE O BTAINED FROM RESPECTIVE BANKS. ON THE BASIS OF SAID MATERIAL, LD . AO PROCEEDED TO ADD THE SAME TO THE INCOME OF THE ASSESSEE AS UNEXP LAINED INVESTMENT. 2.3 DURING REGULAR ASSESSMENT PROCEEDINGS, THE ASSE SSEE HAD GIVEN THE AFFIDAVIT THAT THE SAID BANK ACCOUNTS WERE NEIT HER OPENED BY THE ASSESSEE NOR OPERATED BY THE ASSESSEE AND ACCORDING LY, NO ADDITIONS WERE MADE IN REGULAR ASSESSMENT PROCEEDINGS. HOWEVE R, UPON RECEIPT OF BANK STATEMENTS FROM RESPECTIVE BANKS, IT TRANSP IRED THAT THE ASSESSEE WAS HAVING SAVINGS ACCOUNT WITH CHEMBUR BRANCH OF SARASWAT BANK AND ANOTHER ACCOUNT WITH GHATKOPAR BRANCH OF ALLAHABAD BANK. THE COPIES OF STATEMENTS WERE FORWARDED TO ASSESSEE FOR EXPLANATION. 2.4 IN RESPONSE, THE ASSESSEE VIDE REPLY DATED 07/1 2/2007 FILED DOCUMENTS TOWARDS SUPPLY OF SUGARCANE TO SUGAR FACT ORY (VIGHANAHAR SUGAR FACTORY) FOR RS.10.60 LACS AND DETAIL OF SALE OF MILK AMOUNTING TO RS.4.96 LACS TO BIROBA MAHARAJA MILK PRODUCTION SANSTHA LTD. VIDE OTHER SUBMISSIONS DATED 20/12/2017, THE ASSESSEE SU BMITTED THAT THE ASSESSEES FATHER HAD AGRICULTURAL LAND AND DERIVED AGRICULTURAL INCOME BY SELLING SUGARCANE, MILK AND OTHER SEASONAL VEGET ABLES WHICH WAS SOLD ON CASH BASIS AND CASH WAS DEPOSITED IN THE BA NK ACCOUNTS. THE SALE OF SUPPLY OF SUGARCANE WAS REFLECTED FOR RS.10 .60 LACS, SALE OF MILK WAS REFLECTED AS RS.9.77 LACS AND SALE OF SEASONAL CROP WAS REFLECTED ITA NO.6762/MUM/2019 BABAN B. LANDAGE ASSESSMENT YEAR :2013-14 4 AS RS.3.71 LACS. IN SUPPORT, COPY OF 7/12 EXTRACT O F AGRICULTURAL LAND IN THE NAME OF ASSESSEE WAS ALSO FURNISHED. 2.5 HOWEVER, MANY DISCREPANCIES WERE NOTED IN THE D OCUMENTS SUBMITTED BY THE ASSESSEE. THE CERTIFICATE ISSUE BY PURCHASING ORGANIZATION WAS FOUND TO BE UNDATED. NO SUPPORTING BILLS WERE SUBMITTED. THEREFORE, A CONCLUSION WAS DRAWN THAT T HE ENTIRE EXERCISE WAS A MERE AFTER THOUGHT. FINALLY, CREDIT ENTRIES A GGREGATING TO RS.49.95 LACS WAS ADDED TO THE INCOME OF THE ASSESSEE. 3.1 BEFORE LD. CIT(A), THE ASSESSEE, INTER-ALIA, REITERATED THAT AGRICULTURAL RECEIPTS AS WELL AS CAPITAL RECEIPTS S HOULD BE EXCLUDED AND THE TAXABLE INCOME SHOULD BE CONSIDERED BY FOLLOWIN G PEAK CREDIT METHOD AFTER GIVING BENEFIT OF TELESCOPING. THE WORKING OF THE SAME WAS PROVIDED TO LD. CIT(A) WHICH HAS ALREADY BEEN EXTRA CTED AT PAGE NO. 3 OF THE IMPUGNED ORDER. HOWEVER, LD. CIT(A) PROVIDE REL IEF TO THE EXTENT OF RS.2.06 LACS ONLY AND CONFIRMED THE BALANCE ADDITIO NS OF RS.47.89 LACS. AGGRIEVED, THE ASSESSEE IS UNDER FURTHER APPE AL BEFORE US. 4. BEFORE US, LD. AR HAS RAISED SIMILAR PLEA OF WOR KING OUT THE ADDITIONS ON THE BASIS OF PEAK CREDIT THEORY AFTER REDUCING CAPITAL RECEIPTS AND NON-TAXABLE RECEIPTS. THE LD. DR HAS O PPOSED THE SAME ON THE PLEA THAT THE BANK ACCOUNTS WERE NEVER DISCLOSE D AND THE CREDIT EARNED BY THE ASSESSEE IN THOSE ACCOUNTS WAS RIGHTL Y BROUGHT TO TAX. DURING THE COURSE OF HEARING, LD. AR FILED SUMMARY IN RESPECT OF BANK DEPOSITS AS UNDER: - ITA NO.6762/MUM/2019 BABAN B. LANDAGE ASSESSMENT YEAR :2013-14 5 CASH DEPOSITED IN B OTH BANK STATEMENTS 24,10,000/ - A DETAILS CASH RECEIPT DURING THE PERIOD AS UNDER: SALES OF SUGAR CAN OF RS. 10,60,352/- SALES OF MILK RS. 4,96,582/- RECEIVED FROM GOVIND LOKE RS. 76,0 00/- RECEIVED FROM SON-SAGAR B LANDGE RS.51,400/- CASH WITHDRAWAL RE-DEPOSITED OF RS.6,25,000 /-* SALES OF SEASONABLE CROPS OF RS.3,50,0 00/-** 26,59,334/- B TOT AL BALANCE OF CASH OUTSTANDING 2,49, 334/ - B - A=C OTHER RECEIPT IN TWO BANK STATEMENTS 23,79,187/ - D 1. DETAILS OF OTHER BANKS RECEIPTS IN ALLAHABAD BAN K AS UNDER: - RECEIPTS WITH NO NARRATION OF RS.4,35,000/- INTEREST INCOME OF RS.1,21,109/- TOTAL OTHER RECEIPT IN ALLAHABAD BANK 5,56,109/- E 2. DETAILS OF OTHER BANKS RECEIPTS IN SARASWAT BANK AS UNDER: - DIVIDEND OF RS.3,200/- INTEREST OF RS.1,16,886/- PAY ORDER REVERSAL OF RS.1,895/- SAGAR B LANDGE (SON) OF RS. 2,90,000/- REVERSAL BY BANK OF EARLIER TIME RS .2,63,461/- MISCELLANEOUS RECEIPT RS.11,47,636/- TOTAL OTHER RECEIPT IN SARASWAT BANK 18,23,187/- F TOTAL ADDITION CONFIRMED BY CIT(A) 47,89,187/ - G=A+D ON THE BASIS OF AFORESAID TABULATION, LD. AR PLEADE D FOR EXCLUSION OF CAPITAL RECEIPTS, CASH-REDEPOSITED IN THE BANK ACCO UNT AND EXEMPT INCOME. 5. AFTER CAREFUL CONSIDERATION, THE UNDISPUTED POSI TION THAT EMERGES IS THAT CERTAIN CASH IS FOUND TO HAVE BEEN DEPOSITED I N TWO BANK ACCOUNTS. THESE ACCOUNTS WERE NOT DISCLOSED IN THE FINANCIAL STATEMENTS. THEREFORE, THE ONUS WAS ON ASSESSEE TO PROVE THAT T HE CREDIT ENTRIES APPEARING THEREIN WERE NOT IN THE NATURE OF INCOME. IT ALSO EMERGES THAT THE ASSESSEE COULD NOT FILE PLAUSIBLE EXPLANATION F OR CREDIT ENTRIES BEFORE LOWER AUTHORITIES. MANY DISCREPANCIES WERE FOUND IN DOCUMENTARY ITA NO.6762/MUM/2019 BABAN B. LANDAGE ASSESSMENT YEAR :2013-14 6 EVIDENCES SUBMITTED BY THE ASSESSEE IN SUPPORT OF T HE FACT THAT CASH DEPOSITS WERE OUT OF PROCEEDS OF AGRICULTURAL PRODU CE. SIMILAR IS THE POSITION BEFORE US WHEREIN THE ASSESSEE IS UNABLE T O FILE ANY ADDITIONAL EVIDENCE TO SUPPORT THE SAID FACT. THE PERUSAL OF C OMPUTATION OF INCOME WOULD SHOW THAT THE ASSESSEE HAS ALREADY REFLECTED AGRICULTURAL INCOME OF RS.0.73 LACS IN THE RETURN OF INCOME. THEREFORE, THE PLEA THE CASH DEPOSITS WERE SOURCED OUT OF AGRICULTURAL INCOME CO ULD NOT BE ACCEPTED. 6. HAVING SAID SO, EQUITY WOULD DEMAND THAT ITEMS W HICH ARE CAPITAL IN NATURE OR THE TRANSACTIONS WHICH DO NOT GIVE RIS E TO ANY TAXABLE INCOME SHOULD NOT BE CONSIDERED AS ASSESSEES INCOME SINCE ONLY TRUE INCOME WAS TO BE BROUGHT TO TAX. FURTHER, THE BENEFIT OF C ASH WITHDRAWALS FROM THE SAID BANK ACCOUNTS SHOULD BE GRANTED TO THE ASS ESSEE. THEREFORE, AFTER CONSIDERING THE SUMMARY OF BANK ACCOUNTS AS P RODUCED BEFORE US, WE DIRECT FOR EXCLUSION OF FOLLOWING CREDIT ENTRIES FROM ADDITION OF RS.47.89 LACS AS ESTIMATED BY LD. CIT(A): - NO. PARTICU LARS AMOUNT (RS . ) 1. RECEIVED FROM GOVIND LOKE 76,000/- 2. AMOUNT CASH RECEIVED FROM SON 51,400/- 3. CASH WITHDRAWALS RE-DEPOSITED 6,25,000/- 4. PAY ORDER REVERSALS 1,895/- 5. SAGAR B.LANDGE (SON) 2,90,000/- 6. REVERSALS BY BANK 2,63,461/- TOTAL 13,07,756/ - FURTHER ENTIRE CREDIT RECEIVED THROUGH BANKING CHAN NELS AGGREGATING TO RS.15,82,636/- (RS.4,35,000/- & RS.11,47,636/-) COU LD NOT BE CONSIDERED AS ASSESSEES INCOME SINCE OUTWARD PAYMENTS HAVE AL SO BEEN MADE FROM THE SAID BANK ACCOUNTS. IT IS NOTED THAT BESID ES RENTAL INCOME & AGRICULTURAL INCOME, THE ONLY SOURCE OF INCOME FOR THE ASSESSEE WAS EARNINGS FROM SHOP. CONSIDERING THIS FACT, WE ARE O F THE OPINION THAT A ITA NO.6762/MUM/2019 BABAN B. LANDAGE ASSESSMENT YEAR :2013-14 7 REASONABLE ESTIMATION OF PROFIT AGAINST THESE RECEI PTS WOULD MEET THE END OF JUSTICE. WE ESTIMATE THE SAME @ 10% WHICH COMES TO RS.1,58,264/-. THE BALANCE ADDITION OF RS.20,57,059 /- SHALL STAND CONFIRMED. THE GROUND RAISED BY THE ASSESSEE STAND PARTLY ALLOWED. 7. IN ADDITIONAL GROUND, THE ASSESSEE IS SEEKING DI RECTION FOR GRANT OF TCS CREDIT OF RS.2,71,726/- WHICH IS REFLECTED IN F ORM 26AS. ACCORDINGLY, LD. AO IS DIRECTED TO VERIFY THE SAME AND GRANT DUE CREDIT OF TCS AS PER LAW. THE ADDITIONAL GROUND STAND ALLOWED FOR STATISTICAL PURPOSES. 8. THE APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH FEBRUARY, 2020. SD/- SD/- (MAHAVIR SINGH) (MA NOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 20/02/2020 SR.PS, JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )*&( / THE RESPONDENT 3. 1 ( ) / THE CIT(A) 4. 1 / CIT CONCERNED 5. 23),4 , 4 , / DR, ITAT, MUMBAI 6. 3567 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.