HARISH BABURAM VIJAN, MUMBAI V. ITO 21(2)(1), MUMBAI

ITA 7557/MUM/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3315 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 23-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIDYA BHASKAR JAKKA
• Keywords: Business income; Business expenditure; Agreed addition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI M. BALAGANESH , AM & SHRI RAM LAL NEGI , JM ITA NO. 7557 / MUM/20 1 6 ( ASSESSMENT YEAR : 2009 - 10 ) SHRI HARISH BABURAM VIJAN PAHANAWA, SHOP NO.69, MAHATMA GANDHI MARKET, KING CIRCLE, MU MBAI 400 022 VS. INCOME TAX OFFICER 21(2)(1) PRATYAKSHA KAR BHAWAN BANDRA KURLA COMPLEX BANDRA (E) MUMBAI 400 051 PAN/GIR NO. AAYPV2863L ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI PARAS JAIN REVENUE BY SHRI VIDYA BHASKAR JAKKA DATE OF HEA RING 06 / 02 /201 9 DATE OF PRONOUNCEMENT 15 / 02 /201 9 / O R D E R PER M. BALAGANESH (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 38 [HEREINAFTER REFERRED TO AS T HE LD CITA] DATED 16/06/2016 FOR A.Y.2009 - 10 IN THE MATTER OF PENALTY IMPOSED U/S.271(1)(C) OF THE IT ACT. 2. AT THE OUTSET, WE FIND THAT THERE IS A DELAY OF 107 DAYS IN FILING THE APPEAL BY THE ASSESSEE BEFORE US. THE ASSESSEE HAS FILED AN AFFIDAVIT ON RE CORD STATING THAT ORIGINAL LD. CIT(A)S ORDER WAS NEVER SERVED ON ASSESSEE AND THAT EVEN THIS APPEAL BEFORE THE TRIBUNAL WAS FILED BASED ON ITA NO. 7557/MUM/20 16 SHRI HARISH BABURAM VIJAN 2 X EROX COPY OF LD. CIT(A)S ORDER WHICH WAS RECEIVED AT A MUCH LATER DATE FROM THE LD. CIT(A)S OFFICE. WE FIND THIS R EASON TO BE FAIR AND SUFFICIENT JUSTIFYING THE DELAY AND ACCORDINGLY, WE ARE INCLINED TO CONDONE THE DELAY IN FILING OF APPEAL BEFORE US AND ADMIT THE APPEAL OF THE ASSESSEE FOR ADJUDICATION. 2.1. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETH ER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT IN THE SUM OF RS.4,76,700/ - IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y. 2009 - 10 ON 21/10/2009 DECLARING TOTAL INCOME OF RS.2,05,430/ - . THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF WHOLESALE DEALER OF LADIES PUNJABI DRESS MATERIALS THROUGH HIS PROPRIETARY CONCERN M/S. PEHNAWA. THE ASSESSEE HAD DECLARED INCOME FROM BUSINESS AND INCOME FROM OTHER SOURCES IN HIS RETURN OF INCOME. THE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS SOUGHT FOR THE COPY OF BANK STATEMENTS OF THE ASSESSEE AND ASSESSEE FURNISHED THE BANK STATEMENTS MAINTAINED WITH PUNJAB AND MAH ARASHTRA CO - OPERATIVE BANK LTD (PMC BANK IN SHORT) . THE LD. AO OBSERVED THAT ASSESSEE HAD MAINTAINED YET ANOTHER BANK ACCOUNT WITH ICICI BANK WHEREIN DEPOSITS TO THE TUNE OF RS.15,30,494/ - WERE MADE IN SAVING S BANK ACCOUNT OF THE ASSESSEE WHICH INFORMATION WAS OBT AINED BY THE LD. AO FROM CIB (CENTRAL INFORMATION BRANCH) OF THE INCOME TAX DEPARTMENT. THE ASSESSEE WHEN CONFRONTED ITA NO. 7557/MUM/20 16 SHRI HARISH BABURAM VIJAN 3 WITH REGARD TO THE TRANSACTION S IN ICICI BANK ACCOUNT STATED VIDE LETTER DATED 12/11/2012 BEFORE THE LD. AO THAT THE SAID BANK ACCOUNT WAS OPENED WITH ICICI BANK, MATUNGA BRANCH IN ORDER TO GET MORE BANKING FACILITIES FROM ICICI BANK LIKE ATM, INTERNET BANKING, MONEY TRANSFER, DEBIT CARD FACILITY AND MANY MORE AND ASSESSEE STATED THAT THE SALES MADE BY HIM ARE IN CASH AND THAT THE SAID CASH W AS WITHDRAWN FROM M/S. PEHNAWA AND DEPOSITED IN ICICI BANK ACCOUNT. THE ASSESSEE ALSO STATED THAT THE CASH DEPOSITS IN THE SAID BANK ACCOUNT WITH ICICI BANK REPRESENTS C ASH SALES OF THE ASSESSEE OR DEPOSITS MADE OUT OF CASH WITHDRAWALS FROM HIS DISCLOSED B ANK ACCOUNT. 3.1. THE ASSESSEE ALSO FILED YET ANOTHER LETTER DATED 14/02/2013 BEFORE THE LD. AO IN THE COURSE OF ASSESSMENT PROCEEDINGS STATING THAT THE CUSTOMERS WHO ARE STAYING OUT OF MUMBAI WOULD FIRST DEPOSIT MONEY IN HIS ICICI BANK ACCOUNT AND THEREAF TER , THE ASSESSEE USED TO SEND THE CLOTHES TO THOSE CUSTOMERS. IT WAS ALSO PLEADED THAT THE WITHDRAWALS IN THE SAID BANK ACCOUNT ARE TOWARDS PURCHASE OF DRESS MATERIALS AND OTHER BUSINESS EXPENSES OF THE ASSESSEE . THE ASSESSEE FURTHER PLEADED THAT HE IS NO T A QUALIFIED ACCOUNTANT AND HE IS ONLY A SMALL TRADER AND HE IS NOT CONVERSANT WITH ACCOUNTANCY AND INCOME TAX MATTERS AND THAT IN ORDER TO PURCHASE PEACE FROM THE DEPARTMENT, CAME FORWARD TO OFFER THE SAID SUM OF RS.15,30,494/ - AS HIS INCOME EVEN THOUGH HE IS NOT OBLIGED TO DO SO, WITH A REQUEST , THAT NO PENALTY SHALL BE CHARGED ON HIM. ITA NO. 7557/MUM/20 16 SHRI HARISH BABURAM VIJAN 4 3.2. THIS REPLY NOT PROVING SATISFACTORY, THE LD. AO HOWEVER PROCEEDED TO ADD A SUM OF RS.15,30,494/ - REPRESENTING CASH DEPOSITS AS UNEXPLAINED INCOME OF THE ASSESSEE IN THE ASSESSMENT AND COMPLETED THE ASSESSMENT. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WERE INITIATED. THE ASSESSEE DID NOT PREFER ANY APP EAL AGAINST THE SAID ASSESSMENT ON THE FIRM BELIEF THAT NO PENALTY WOULD BE EXIGIBLE ON AN AGREED ADDITION IN THE CIRCUMSTANCES NARRATED ABOVE. 3.3. THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. AO EVEN IN THE PENALTY PROCEEDINGS BY STATING THAT THE SAID SUM OF RS.15,30,494/ - APPARENTLY DOES NOT REPRESENT ANY INCOME OF THE ASSESSEE AND THAT THEY ONLY RE PRESENT THE SALE PROCEEDS OF THE ASSESSEES BUSINESS OR THE CASH DEPOSITS WERE ACTUALLY EXPLAINED BY THE CASH WITHDRAWAL S MADE FROM YET ANOTHER BANK ACCOUNT WHICH IS ALREADY DISCLOSED TO THE DEPARTMENT. HOWEVER, THE ASSESSEE FURTHER PLEADED THAT THE SAID S UM WAS OFFERED TO TAX IN THE ASSESSMENT ONLY FOR THE REASON THAT HE IS NOT CONVERSANT WITH INCOME TAX MATTERS AND THAT IN ORDER TO PUT AN END TO PROTRACTED LITIGATION AND TO BUY PEACE FROM THE DEPARTMENT, HE CAME FORWARD TO OFFER THE SAID SUM AND THAT NO P ENALTY SHALL BE LEVIED ON AN AGREED ADDITION. THE LD. AO HOWEVER DID NOT HEED TO THE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO LEVY PENALTY IN THE SUM OF RS.4,76,700/ - U/S.271(1)(C) OF THE ACT WHICH WAS UPHELD BY THE LD. CIT(A). 4. AGGRIEVED, THE ASSESS EE IS IN APPEAL BEFORE US. ITA NO. 7557/MUM/20 16 SHRI HARISH BABURAM VIJAN 5 5. WE HAVE HEARD RIVAL SUBMISSIONS. AT THE OUTSET, WE FIND THAT TOTAL TURNOVER OF THE ASSESSEE IS ONLY RS.35,01,993/ - . THE ASSESSEE HAD REPORTED GROSS PROFIT OF RS.4,77,254/ - AND NET PROFIT OF RS.2,98,440/ - WHICH WORKS OUT TO 13. 63% AND 8.52% RESPECTIVELY. 5.1. THE LD. AR BEFORE US PRODUCED THE ENTIRE FUND FLOW STATEMENT OF BOTH PUNJAB AND MAHARASHTRA CO - OPERATIVE BANK (PMC BANK) AS WELL AS ICICI BANK TOGETHER WITH THE COPY OF RELEVANT BANK STATEMENTS AND STATED THAT THE CASH DEPO SITS IN ICICI BANK ARE NOT INDEPENDENT TRANSACTIONS AND THAT THEY ARE ONLY SALE PROCEEDS REALIZATION AND HENCE, THERE CANNOT BE ANY CONCEALMENT THAT COULD BE ALLEGED ON THE PART OF THE ASSESSEE. WE HAVE GONE THROUGH THE FUND FLOW STATEMENT OF THE ASSESSEE AS SUBMITTED BY THE LD. AR BEFORE US WHICH IS REPRODUCED FOR THE SAKE OF CONVENIENCE: - ITA NO. 7557/MUM/20 16 SHRI HARISH BABURAM VIJAN 6 5.2. FROM THE AFORESAID SUMMARY OF BANK ACCOUNTS , WE FIND THAT EVEN IF THE DEPOSITS IN ICICI BANK ACCOUNT ARE INCLUDED, IT IS WELL WITHIN THE TOTAL TURNOVER OF THE AS SESSEE AMOUNTING TO RS.35,01,993/ - . THIS GOES TO PROVE THAT THE DEPOSITS IN ICICI BANK ACCOUNT REPRESENT BUSINESS RECEIPTS OF THE ASSESSEE ONLY. HENCE, AT THE FIRST INSTANCE, WE WOULD LIKE TO HOLD THAT THERE IS NO NEED TO OFFER ANY INCOME IN THE SUM OF RS. 15,30,494/ - BY THE ASSESSEE. HOWEVER, WE FIND THAT THE ASSESSEE HAD OFFERED THE SAME AND HAD NOT PREFERRED ANY APPEAL IN THE ORIGINAL ASSESSMENT FRAMED BY THE LD. AO. IN THIS SCENARIO, WE CANNOT HOLD ANY CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. T HE TOTAL TURNOVER OF THE ASSESSEE IS WELL WITHIN ITA NO. 7557/MUM/20 16 SHRI HARISH BABURAM VIJAN 7 THE LIMITS PRESCRIBED U/S.44 A D OF THE ACT AND THE ASSESSEE IS ALSO NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE M WE FIND THAT TH IS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT AND ACCORDINGLY, WE DIRECT THE LD. AO TO CANCEL THE PENALTY. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON THIS 15 / 02 /201 9 SD/ - ( RAM LAL NEGI ) SD/ - ( M. BALAGANESH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 15 / 02 /201 9 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//