ITO, Ward-2(1), Midnapore, Paschim Medinipur V. Shri Chanchal Das, Paschim Medinipur

ITA 753/KOL/2011

• Counselvise Citation: 75323514 RSA 2011
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SADHAN BHATTACHARYA
• Assessee Lawyers: M D SHAH
• Keywords: Business income; Peak credit

Judgement Text

I.T.A. NO.: 753/KOL./2011 AS SESSMENT YEAR : 2005-06 PAGE 1 TO 4 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ABRAHAM P. GEORGE (ACCOUNTANT MEMBER) I.T.A. NO.: 753/KOL./ 2011 ASSESSMENT YEAR : 2005-2006 INCOME TAX OFFICER,................................ ...........APPELLANT WARD-2(1), MIDNAPORE, SAHOO BHAWAN, KSHUDIRAM NAGAR, P.O. MIDNAPORE, DIST. MIDNAPORE (WEST) -VS.- SRI CHANCHAL DAS,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.. .......................RESPONDENT BAITABAZAR, MOHANPUR, MIDNAPORE(WEST) [PAN : ADQPD 6675 H] APPEARANCES BY: SHRI SADHAN BHATTACHARYA, ADDL. CIT, SR. D.R., FOR THE DEPARTMENT SHRI M.D. SHAH, A.R., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JANUARY 09, 2014 DATE OF PRONOUNCING THE ORDER : JANUARY 10, 2014 O R D E R PER ABRAHAM P. GEROGE: 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST AN O RDER DATED 02.03.2011 OF COMMISSIONER OF INCOME TAX (APPEALS)- XXXVI, KOLKATA FOR THE ASSESSMENT YEAR 2006-07. GRIEVANCE OF REVENUE I S THAT LD. CIT(APPEALS) SCALED DOWN THE ADDITION OF RS.24,00,0 00/- MADE BY THE ASSESSING OFFICER, TO RS.3,37,500/-. ADDITION WAS M ADE BY THE ASSESSING OFFICER FOR CERTAIN DEPOSITS IN THE ACCOUNT OF ASSE SSEE WITH M/S. AXIS BANK LIMITED, DALHOUSIE SQUARE BRANCH, DALHOUSIE, KOLKAT A. 2. FACTS APROPOS ARE THAT ASSESSEE ENGAGED IN RETAI L BUSINESS OF HARDWARE GOODS HAD FILED ITS RETURN FOR THE IMPUGNE D ASSESSMENT YEAR, DECLARING INCOME OF RS.1,06,100/-. ASSESSING OFFICE R WAS HAVING AIR INFORMATION, THAT ASSESSEE HAD DEPOSITS EXCEEDING R S.10,00,000/- IN HIS I.T.A. NO.: 753/KOL./2011 AS SESSMENT YEAR : 2005-06 PAGE 1 TO 4 2 BANK ACCOUNT WITH AXIS BANK LTD. ASSESSEE WAS REQUI RED TO EXPLAIN THE SOURCE OF DEPOSITS. EXPLANATION OF THE ASSESSEE WAS THAT HE WAS ALSO ENGAGED IN THE BUSINESS OF DRY FLOWERS AND SALE PRO CEEDS OF THE DRY FLOWERS BUSINESS WERE DEPOSITED IN THE SAVINGS BANK ACCOUNT WITH AXIS BANK LTD. HOWEVER, ASSESSEE HAD NOT DISCLOSED EXIST ENCE OF THE DRY FLOWER BUSINESS IN HIS RETURN OF INCOME. ASSESSING OFFICER ALSO NOTED THAT ASSESSEE WAS NOT HAVING ANY BOOKS OF ACCOUNTS OR TR ADE LICENCE FOR THE DRY FLOWER BUSINESS. ASSESSING OFFICER THUS CAME TO A CONCLUSION THAT ASSESSEE HAD CONCEALED HIS INCOME FROM RETAIL BUSIN ESS OF DRY FLOWER. HE TOOK THE CASH DEPOSIT OF RS.24,00,000/- IN THE SAVI NGS BANK ACCOUNT WITH AXIS BANK LTD. AS UNEXPLAINED. AN ADDITION OF RS.24 ,00,000/- WAS MADE. 3. IN HIS APPEAL BEFORE THE LD. CIT(APPEALS) SUBMIS SION OF THE ASSESSEE ACCEPTED THAT HE HAD FAILED TO SHOW IN HIS RETURN T HE EXISTENCE OF THE BUSINESS OF DRY FLOWERS. AS PER THE ASSESSEE HE WAS UNDER THE IMPRESSION THAT INCOME FROM TRADING IN AGRICULTURAL PRODUCE WA S EXEMPT AND NOT REQUIRED TO BE SHOWN. ASSESSEE ALSO POINTED OUT THA T CREDIT OF RS.24,00,000/- IN THE BANK ACCOUNT, ADDED BY THE AS SESSING OFFICER, INTER ALIA, INCLUDED A CHEQUE OF RS.1,50,000/- WHICH WAS DISHONOURED FOR WHICH REVERSAL ENTRY WAS PASSED BY THE BANK. ACCORDING TO HIM, IT WAS UNFAIR TO TREAT ALL THE DEPOSITS AS UNEXPLAINED, IGNORING THE WITHDRAWALS. 4. LD. CIT(APPEALS) SOUGHT A REMAND REPORT FROM THE ASSESSING OFFICER. ASSESSING OFFICER IN THE REMAND PROCEEDING S ISSUED LETTERS TO EIGHT PARTIES, FOR WHICH ONLY ONE REPLIED. EVEN THE ONE WHO REPLIED, DENIED HAVING ANY BUSINESS WITH THE ASSESSEE. LD. C IT(APPEALS) AFTER GOING THROUGH THE SUBMISSIONS OF ASSESSEE NOTED THA T THERE WERE WITHDRAWALS ALSO FROM SAME BANK ACCOUNT. ACCORDING TO HIM, WHEN THERE WERE BOTH DEPOSITS AND WITHDRAWALS, ENTIRE DEPOSITS COULD NOT BE CONSIDERED AS SUCH FOR AN ADDITION. AS PER LD. CIT( APPEALS) TRANSACTIONS IN THE BANK ACCOUNT DID GIVE INDICATION THAT THE SA ID ACCOUNT WAS BEING USED FOR BUSINESS PURPOSES. HE, THEREFORE, DIRECTED THE ASSESSING OFFICER I.T.A. NO.: 753/KOL./2011 AS SESSMENT YEAR : 2005-06 PAGE 1 TO 4 3 TO CONSIDER 10% OF THE TOTAL DEPOSITS AS INITIAL CA PITAL INVESTMENT OF THE ASSESSEE FOR DRY FLOWER BUSINESS AND 5% OF THE DEPO SITS AS BUSINESS INCOME. IN OTHER WORDS, OUT OF THE TOTAL ADDITION O F RS.24,00,000/- MADE BY THE ASSESSING OFFICER, LD. CIT(APPEALS) SUSTAINE D ONLY RS.3,37,500/-. 5. NOW BEFORE US LD. D.R. STRONGLY ASSAILING THE OR DER OF LD. CIT(APPEALS) SUBMITTED THAT ASSESSEE COULD NOT PROD UCE ANY EVIDENCE FOR DRY FLOWER BUSINESS. LD. CIT(APPEALS) HAD SIMPLY AC CEPTED THE SUBMISSION OF ASSESSEE. NONE OF THE PARTIES WITH WH OM ASSESSEE HAD CLAIMED DRY FLOWER BUSINESS TRANSACTIONS, EVER CONF IRMED ANY TRANSACTION WHATSOEVER. HENCE, PRESUMPTION TAKEN BY LD. CIT(AP PEALS) THAT DEPOSITS IN THE AXIS BANK ACCOUNT OF THE ASSESSEE CAME OUT O F THE DRY FLOWER BUSINESS, IN HIS OPINION, COULD NOT BE SUSTAINED. A SSESSEE WAS UNABLE TO EXPLAIN THE SOURCE OF THE DEPOSITS AND, THEREFORE, AS PER THE LD. D.R. ADDITION WAS RIGHTLY DONE BY THE ASSESSING OFFICER. 6. PER CONTRA LD. A.R. SUBMITTED THAT EXISTENCE OF DRY FLOWER BUSINESS WAS A FACT ACCEPTED BY THE ASSESSING OFFICER. HENCE , CONCLUSION IN THIS REGARD DRAWN BY THE LD. CIT(APPEALS) WAS, ACCORDING TO LD. A.R., FAIR AND JUSTIFIED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ASSESSING OFFICER IN THE ASSES SMENT ORDER MENTIONS THE NATURE OF BUSINESS OF THE ASSESSEE AS INCOME F ROM RETAIL BUSINESS OF HARDWARE AND DRY FLOWER. AT PAGE 2 OF THE ASSESSME NT ORDER, IT IS STATED BY THE ASSESSING OFFICER THAT ASSESSEE HAD CONCEALE D HIS INCOME FROM RETAIL BUSINESS OF DRY FLOWER. THEREFORE, THERE IS GREAT STRENGTH IN THE SUBMISSIONS OF THE LD. A.R., ASSESSING OFFICER HAD ACCEPTED THE FACTUM OF A DRY FLOWER BUSINESS BEING CARRIED OUT BY ASSESSEE. LD. CIT(APPEALS) AFTER VERIFYING THE SAVINGS BANK ACCOUNT MAINTAINED BY AS SESESE WITH M/S, AXIS BANK LTD., REACHED A CONCLUSION THAT, THE TRANSACTI ONS THEREIN DID INDICATE SOME BUSINESS PURPOSES. LD. D.R. WAS UNABLE TO PROD UCE BEFORE US THE I.T.A. NO.: 753/KOL./2011 AS SESSMENT YEAR : 2005-06 PAGE 1 TO 4 4 COPY OF THE BANK ACCOUNT AND SHOW HOW THIS CONCLUSI ON DRAWN BY LD CIT(APPEALS) WAS WRONG OR ERRONEOUS. IT IS AN ADMIT TED POSITION THAT THERE WERE CHEQUE WITHDRAWALS TOTALLING TO RS.20.31 LAKHS AND CASH WITHDRAWAL TOTALLING TO RS.2.95 LAKHS. OUT OF THE D EPOSITS OF RS.24,00,000/-, ONE DEPOSIT OF RS.1,50,000/- WAS CR EDIT FOR A DISHONOURED CHEQUE WHICH WAS REVERSED BY THE BANK. EVEN IF WE G O BY THE PEAK CREDIT PRINCIPLE THE TOTAL DEPOSITS OF RS.22,50,000/- STOO D EXPLAINED BY THE WITHDRAWALS. IN SUCH A SITUATION WE CANNOT FAULT TH E DIRECTIONS OF THE LD. CIT(APPEALS) WHEREBY HE ESTIMATED THE INVESTMENTS I N DRY FLOWER BUSINESS CONSIDERING 10% OF THE TOTAL DEPOSITS OF R S.22,50,000/-, AND INCOME FROM SUCH BUSINESS AT 5% OF RS.22,50,000/-. WE ARE OF THE OPINION THAT LD. CIT(APPEALS) HAD FOLLOWED A FAIR AND JUSTI FIABLE METHOD IN ESTIMATING THE INCOME OF ASSESSEE. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY REASON TO INTERFERE WI TH THE ORDER OF LD. CIT(APPEALS). 8. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH DAY OF JANUARY, 2014. SD/- SD/- MAHAVIR SINGH ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 10 TH DAY OF JANUARY, 2014 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.