BHOPSINGH MANGALSINGH SEBTA, MUMBAI V. ITO 14(1)(1), MUMBAI

ITA 7466/MUM/2013

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0708 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 18-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: THI S COMMON ONLY ISSUE RAISED
• Assessee Lawyers: DECIDED
• Keywords: Business income; Peak credit
• Section: 44AD; 201; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 7466/MUM/13 2009-10 SHRI BHOPSINGH MANGALSINGH SEBTA MAHALAXMI BANGLES, 25-C, 1 ST FLOOR, BIHARI BLDG, 3 RD BHOIWADA, MUMBAI [PAN: AAFPS8319F] ITO-14(1)(1), MUMBAI 7467/MUM/13 2010-11 APPELLANT B Y : SHRI SA SHI TULSIYAN, AR RESPONDENT B Y : SHRI R A JAT MITTAL , D R DATE OF HEARING : 1 5 - 0 4 - 201 9 DATE OF PRONOUNCEMENT : 09 - 07 - 201 9 O R D E R PER RAJESH KUMAR, A.M: THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST THE ORDER(S) OF THE COMMISSIONER OF INCOME TAX(APPEALS)-25, MUMBAI, DATED 21-10-2013, FOR THE AYS.2009-10 & 2010-11. SINCE COMMON ISSUES ARE INVO LVED IN BOTH THESE APPEALS, EXCEPT THE AMOUNTS MENTIONED TH EREIN, THESE APPEALS ARE HEARD TOGETHER AND DECIDED BY THI S COMMON ORDER. 2. THE ONLY ISSUE RAISED BY ASSESSEE IS AGAINST CON FIRMATION OF ADDITION OF RS.23,22,865/- BY THE CIT(A) AS MADE BY THE ITA NOS. 7466 & 7467/MUM/2013 : 2 : ASSESSING OFFICER (AO) U/S.68 OF THE INCOME TAX ACT (ACT) AS UN-EXPLAINED CASH CREDIT. 2.1. THE FACTS IN BRIEF ARE THAT THE AO RECEIVED AI R INFORMATION THAT ASSESSEE HAS DEPOSITED A SUM OF RS.23,22,865/- IN THE SB A/C WITH ICICI BANK. THE C ASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND DURING THE A SSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO EXPLAIN T HE SOURCES OF FUNDS ALONG WITH DOCUMENTARY EVIDENCES, WHICH WA S REPLIED BY ASSESSEE VIDE LETTER DT.26-12-2012, BY SUBMITTIN G AS UNDER: A) THE ASSESSEE HAS DEPOSITED RS.24,70,700/- IN THE BA NK LTD, ZAVERI BAZAR BRANCH HAVING A/C. NO. 026101505331 IS IN RELATION TO OUR BUSINESS OF BANGLES. WE ARE IN THE BUSINESS OF SUPPLY OF BANGLES TO VARIOUS PLACES IN THE STATE OF UP AND BIHAR.' B) THE CUSTOMER DEPOSIT THE SAID CASH IN OUR ACCOUNT A ND THEN WE SEND THE GOODS THROUGH TRANSPORT TO VARIOUS SUCH CU STOMERS UNDER THEIR INSTRUCTION. C) THE SAID DEPOSIT OF RS.24,70,000/- IS IN RELATION TO RECEIPTS AGAINST THE SALES MADE TO VARIOUS SUCH PARTIES AND THE SAME ARE DULY REFLECTED IN THE ACCOUNTS OF THE SAID BUSINESS SUBM ITTED HEREWITH FOR YOUR RECORD AND REFERENCE. D) FURTHER WE OFFER BUSINESS INCOME OF RS. 2,00,000/~ INSTEAD OF RS. 1,75,800/- AS MENTIONED IN THE ORIGINAL COMPUTATION BEING MORE TH AN 8% ON PRESUMPTIVE BASIS AS REQUIRED UNDER 44AD OF THE INCOME TAX ACT, 1962 ON THE TURNOVER OF RS. 24,70,000/- FOR THE PURPOSE OF THE ASSESSMENT. THUS WE ARE NOT LIABLE TO MAINTAIN ANY ACCOUNTING RECORDS ON OUR PART. E) WITH RESPECT TO THE REVISION, WE WOULD LIKE TO YOUR KIND NOTICE THAT SAID INCOME WAS INADVERTENTLY SHOWN AS INCOME FROM OTHER SOURCES AS COMMISSION INCOME IN THE ORIGINAL RETURN WHICH S HOULD HAVE BEEN SHOWN AS INCOME FROM BUSINESS SINCE THE SAME IS ACT UALLY FROM BUSINESS TRANSACTIONS AS CAN BE SEEN FROM THE FINAL ACCOUNTS ALREADY SUBMITTED WITH YOUR GOODSELF. F) FURTHER THE PEAK IN THE ACCOUNT IS ALSO ONLY RS. 1, 10,999/- WHICH IS LESS THAN THE INCOME OFFERED BY US OF RS. 2,00,000/-. ITA NOS. 7466 & 7467/MUM/2013 : 3 : 2.2. THUS, THE ASSESSEE SUBMITTED BEFORE THE AO THA T THE SAID CASH WAS DEPOSITED OUT OF RECEIPTS FROM BUSINE SS OF BANGLES TRADING. THE AO THEREAFTER OBSERVED THAT A SSESSEE HAS NOT DISCLOSED THE BUSINESS INCOME IN THE RETURN AND UPON ENQUIRY BY THE AO, ICICI BANK STATED THAT THE ACCOU NT IS CLOSED ON 24-12-2008 BY THE ASSESSEE. THE AO, THERE FORE, ADDED THE ENTIRE AMOUNT DEPOSITED INTO BANK AS UN - EXPLAINED CASH CREDIT. 2.3. IN THE APPELLATE PROCEEDINGS, LD.CIT(A) ALSO D ISMISSED THE APPEAL OF ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 5. I HAVE PERUSED THE ASSESSMENT ORDER, SUBMISSION S OF THE APPELLANT AND THE FACTS AND CIRCUMSTANCES OF THE CA SE. IT IS AN UNDISPUTED FACT THAT NO BUSINESS INCOME WAS DECLARE D BY THE APPELLANT. THE CONTENTION OF APPELLANT THAT THE INC OME FROM SALE OF BANGLES WAS OFFERED AS 'COMMISSION INCOME' UNDER TH E HEAD INCOME FROM OTHER SOURCES IS NOT ACCEPTABLE BY ANY STRETCH OF IMAGINATION, AND SEEMS TO BE A COOKED UP STORY. IF THE CONTENTIO N OF THE APPELLANT IS TO BE ACCEPTED, HE MUST HAVE PURCHASED GOODS FRO M SOME PARTIES, SOLD TO SOME OTHER PARTIES, AND ALSO MIGHT BE IN PO SSESSION OF SOME OPENING AND CLOSING STOCK. THE APPELLANT HAS NOT MA INTAINED ANY DETAILS AS TO THE COUNTER PARTIES FOR PURCHASES AND SALES MADE, AND ALSO ANY QUANTITATIVE DETAILS IN RESPECT OF THE ALL EGED BUSINESS OF BANGLES. FURTHER, THE RELIANCE OF THE APPELLANT ON SECTION 44AD ALSO CANNOT COME TO HIS RESCUE, SINCE THE SCOPE OF SECTI ON 44AD WAS EXTENDED BY FINANCE ACT, 2009 W.E.F. 01.04.2011, AN D PRIOR TO SUCH AMENDMENT IT WAS APPLICABLE ONLY TO 'CIVIL CONSTRUC TIONS ETC.', AND HENCE NOT APPLICABLE TO THE APPELLANT'S BUSINESS IN THE A.Y.2009-10. IN VIEW OF THE ABOVE, THE ADDITION MADE U/S.68 OF R S.23,22,865/- IS CONFIRMED AND THE GROUND OF APPEAL IS DISMISSED. 2.4. AFTER HEARING RIVAL CONTENTIONS AND PERUSING T HE MATERIAL ON RECORD, WE OBSERVE THAT THE AO MADE ADDITION U/S .68 OF THE ACT QUA THE CASH DEPOSITED BY THE ASSESSEE IN ICICI BANK WHICH ACCORDING TO THE AO, WAS NOT DISCLOSED TO THE DEPARTMENT NOR ANY BUSINESS, SHOWN FROM THE SAID B USINESS. ITA NOS. 7466 & 7467/MUM/2013 : 4 : AS PER THE ASSESSEE, THE SAID DEPOSITS WERE MADE OU T OF TRADING IN BANGLE BUSINESS. THE ASSESSEE SUBMITTED THAT EARLIER ASSESSEE WAS TRADING UNDER THE NAME AND STY LE OF M/S. MAHALAXMI BANGLES BUT THE SAME IS BEING DONE IN THE NAME OF M/S. SOVAN BANGLES. DURING THE YEAR, ASSESSEE FILED RETURN OF INCOME SHOWING THE INTEREST INCOME AND OTHER INCOME , AS UNDER: SR. NO. A.Y. DATE OF FILING OF RETURN PARTICULARS AMOUNT (RS) TOTAL INCOME (RS) 1. 2009-10 31.08.2009 (PAGE NO.01 TO 08 OF THE PAPER BOOK) INCOME FROM OTHER SOURCES 1) INTEREST (RS.2,297/-) 2) OTHER INCOME (RS.1,75,800/-) LESS: DEDUCTIONS UNDER CHP-VIA 1,77,318 44,938 1,32,380 2. 2010-11 26.07.2010 (PAGE NO.09 TO 12 OF THE PAPER BOOK) INCOME FROM OTHER SOURCES 1) INTEREST (RS.2,006/-) 2) OTHER INCOME (RS.2,46,017/-) LESS: DEDUCTIONS UNDER CHP-VIA 2,48,023 1,04,200 1,43,823 2.5. ASSESSEE HAS SHOWN THE INCOME FROM TRADING IN BANGLES AS OTHER INCOME, THE ASSESSEE IS ALSO NOT MAINTAINI NG BOOKS OF ACCOUNT ON THE GROUND THAT INCOME IS BEING SHOWN U/ S.44AD OF THE ACT AND THEREFORE, NO BOOKS OF ACCOUNT ARE R EQUIRED TO BE MAINTAINED. WE OBSERVE THAT ASSESSEE HAS FILED R EVISED COMPUTATION OF INCOME, P&L A/C AND BALANCE SHEET BE FORE THE AO AND STATED THAT THE SAID DEPOSITS WERE INADVERTE NTLY SHOWN AS COMMISSION INCOME IN THE RETURN OF INCOME AS A DVISED BY ITA NOS. 7466 & 7467/MUM/2013 : 5 : THE LEGAL ADVISOR OF THE ASSESSEE AND OFFERED THAT THE SAID DEPOSITS MAY BE TAXED @8% IN BOTH THE YEARS U/S.44A F OF THE ACT. HOWEVER, THE SAME WAS NOT ACCEPTED BY THE AO. THE ASSESSEE EVEN SUBMITTED THAT THE INCOME MAY BE TAXE D ON THE PEAK BALANCE BASIS WHICH IN AY.2009-10 WAS RS.1,10, 999/- AND IN AY.2010-11 WAS RS.1,51,744/-. HOWEVER, AO DID NOT ACCEPT THE SUBMISSIONS OF ASSESSEE AND ADDED THE EN TIRE INCOME TO THE INCOME OF ASSESSEE. SIMILARLY, CIT(A ) UPHELD THE SAME. NOW, AFTER PERUSING THE BANK DETAILS, BANK S TATEMENT AND BACKGROUND OF ASSESSEE, WE ARE OF THE OPINION T HAT THE ENTIRE DEPOSITS INTO BANK CANNOT BE ADDED TO THE IN COME OF THE ASSESSEE AND AT THE MOST BY FOLLOWING THE PEAK CRE DIT I.E., HIGHEST BALANCE THEORY DURING THE YEAR IN THE BAN K ACCOUNT CAN ONLY BE ADDED AS INCOME OF ASSESSEE. WE ALSO F IND MERIT IN THE CONTENTIONS OF LD.AR THAT THE ADDITION U/S.6 8 OF THE ACT CANNOT BE MADE WHEN THE ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT AND THE SUM IS NOT CREDITED IN THE BOOKS OF ASSESSEE. THE ASSESSEE RELIED ON A COUPLE OF DECIS IONS VIZ., BALADIN RAM VS. CIT [71 ITR 427], CIT VS. BHICHAND GANDHI [141 ITR 0067] (BOM) AND MS. MAYAWATI VS. DCIT [19 SOT 460] (BOM). WE ARE FULLY IN AGREEMENT WITH THE ARG UMENTS OF LD.AR, THE AMOUNTS WERE NOT CREDITED IN THE BOOKS O F ACCOUNT OF ASSESSEE, THE SAME CANNOT BE ADDED U/S.68 OF THE ACT. SECTION 68 OF THE ACT CONTEMPLATES THAT ANY SUM OF MONEY, WHICH IS FOUND TO BE CREDITED IN THE BOOKS OF ACCOU NT CAN ONLY BE ADDED IN THE INCOME OF ASSESSEE. FINALLY, IN THI S TYPE OF CIRCUMSTANCES, ONLY PEAK BALANCE CAN ONLY BE ADDED TO THE INCOME OF ASSESSEE. WE, THEREFORE, ARE NOT IN AGREE MENT WITH THE CONCLUSION OF LD. CIT(A) ON THIS ISSUE AND HOLD THAT PEAK ITA NOS. 7466 & 7467/MUM/2013 : 6 : BALANCE CAN ONLY BE BROUGHT TO TAX. ACCORDINGLY, WE DIRECT THE AO TO ADD RS.1,10,999/- AS INCOME ON PEAK CREDIT BA SIS AND ASSESSEE GETS A RELIEF OF RS. 22,11,866/-. THE GR OUND RAISED BY ASSESSEE IS PARTLY ALLOWED. 3. IN THE RESULT, THIS APPEAL OF ASSESSEE IS PARTLY ALLOWED. 4. AS FAR AS THE APPEAL OF ASSESSEE FOR THE AY.2010 -11 IS CONCERNED, SINCE THE IDENTICAL ISSUE HAS BEEN DECID ED BY US IN ITA NO. 7466/MUM/2013 AY.2009-10 BY HOLDING THAT THE ONLY PEAK BALANCE HAS TO BE ADDED TO THE INCOME OF ASSESSEE. ACCORDINGLY, OUR DECISION IN THE SAID DECISION WOUL D, MUTATIS MUTANDI, APPLY TO THIS ASSESSMENT YEAR ALSO. ACCOR DINGLY, WE DIRECT THE AO TO ADD A SUM OF RS.1,51,744/- TO THE INCOME OF ASSESSEE, AS INCOME ON PEAK CREDIT BASIS AND ASSESS EE GETS RELIEF OF RS.31,72,991/-. THE GROUND RAISED BY ASS ESSEE IS PARTLY ALLOWED. 5. IN THE RESULT, THIS APPEAL OF ASSESSEE IS PARTLY ALLOWED. 6. TO SUM-UP, BOTH THE APPEALS OF ASSESSEE ARE PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JULY, 2019 SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI; /DATED : 9 TH JULY, 2019 TNMM ITA NOS. 7466 & 7467/MUM/2013 : 7 : / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A), MUMBAI 4. / CIT, MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, //TRUE COPY// / (DY./ASST. REGISTRAR) , / ITAT, MUMBAI