Rosy Kakkar, New Delhi V. ITO, Ward-41(3), New Delhi

ITA 8197/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4237 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 15-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Income from undisclosed sources; Peak credit
• Section: 44AD; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-I NEW DELHI BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO.8197/DEL/2019 ASSESSMENT YEAR: 2011-2012 ROSY KAKKAR, G-66, PUSHKAR ENCLAVE, PASCHIM VIHAR, NEW DELHI. VS. ITO, WARD-41(3), NEW DELHI TAN/PAN: ALYPK8488M (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI R.S. SINGHVI, C.A. AND SATYAJEET GOEL, CA RESPONDENT BY: MS. RAKHI VIMAL, SR.D.R. DATE OF HEARING: 21 09 2020 DATE OF PRONOUNCEMENT: 22 10 2020 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 15.07.2019, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIV, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.147/143(3) FOR THE ASSESSMENT YEAR 2011-12. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF INITIATION OF PROCEEDINGS U/S.147/148 AND ADDITION OF RS. 13,61,3 00/- AGAINST RETURN OF INCOME OF RS.1,79,200/-. 2. THE FACTS IN BRIEF ARE THAT, THE ASSESSEE IS AN INDIVIDUAL AND THROUGH I-TAX NET PROVIDES THE LIST NON-FILERS OF INCOME TAX RETURN, WHEREIN THE ASSESSEES NAME HAD APPEARE D IN I.T.A. NO. 8197/DEL/2019 2 THAT LIST AND IT WAS FOUND THAT CASH TRANSACTION EX CEEDING RS.10 LAC HAS BEEN MADE DURING THE FINANCIAL YEAR 2 009-10. SINCE ASSESSEE HAD NOT FILED HER RETURN OF INCOME F OR ASSESSMENT YEAR 2010-11, A NOTICE U/S.148 WAS ISSUE D ON 27.03.2018. IN RESPONSE TO NOTICE, THE ASSESSEE HAS DECLARED INCOME OF RS.1,79,200/-. 3. BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAD F ILED PART SUBMISSION AND ALSO FILED OBJECTION FOR INITIATION O F PROCEEDINGS U/S.148 AND STATED THAT SHE HAS DECLARE D INCOME U/S.44AD AND SHE DOES NOT HAVE ANY DOCUMENTARY EVID ENCE IN SUPPORT OF BUSINESS ACTIVITIES CARRIED OUT BY DU RING THE YEAR. IT WAS STATED BY THE ASSESSEE THAT ENTIRE DEP OSITS OF RS.13,61,300/- IN THE BANK ACCOUNT CANNOT BE TREATE D AS TOTAL INCOME, BECAUSE THERE HAVE REGULAR WITHDRAWAL S FROM HER BANK ACCOUNT FOR THE BUSINESS PURPOSE. ALTERNAT IVELY, IT WAS SUBMITTED THAT SINCE THERE WAS WERE REGULAR DEP OSITS AND WITHDRAWALS, THEN IN THAT CASE ONLY EARLIER DEPOSIT S BE TREATED AS UNDISCLOSED INCOME AND SUBSEQUENT DEPOSITS MAY B E TREATED AS THE SOURCE FOR THESE DEPOSITS. REGARDING NATURE OF BUSINESS ASSESSEE EXPLAINED THAT, SHE WAS ENGAGED I N PROVIDING COACHING FACILITIES TO THE STUDENTS, BUSI NESS OF PURCHASE AND SALE OF ARTIFICIAL JEWELLERY, BED SHEE TS AND PILLOW COVERS, ETC. HOWEVER, THE ASSESSING OFFICER HELD TH AT THE ASSESSEE COULD NOT SUBSTANTIATE HER BUSINESS ACTIVI TIES NOR COULD EXPLAIN THE CASH DEPOSITS IN THE BANK ACCOUNT . ACCORDINGLY, HE TREATED THE ENTIRE CASH DEPOSITS AG GREGATING TO RS.13,61,300/- AS INCOME FROM UNDISCLOSED SOURCES. THE I.T.A. NO. 8197/DEL/2019 3 INCOME WAS ASSESSED AT RS.15,40,500/- INCLUDING THE RETURN OF INCOME OF RS1,79,200/- WHICH WAS SHOWN AS BUSINE SS INCOME. 4. LD. CIT (A) TOO HAS CONFIRMED THE SAID ADDITION ON THE GROUND THAT SOURCE OF CASH DEPOSITS CANNOT BE EXPLA INED IN THE ABSENCE OF CONTEMPORANEOUS EVIDENCE. THE LD. CI T (A) FROM THE PERUSAL OF THE BANK ACCOUNT HAD NOTED THAT THE CASH HAS BEEN DEPOSITED AT VARIOUS PLACES IN THE BANK AC COUNT OF THE ASSESSEE, LIKE FROM JHANSI, SOLAPUR, AJMER, ETC. HE OBSERVED THAT IF THE ASSESSEE HAD BEEN EARNING INCO ME FROM COACHING BUSINESS, THEN THE DEPOSITS OF CASH WOULD NOT HAVE BEEN MADE FROM MULTIPLE CITIES AND EVEN IF SHE WAS RUNNING OF BUSINESS OF PURCHASE AND SALE OF BED SHEETS, ARTIFI CIAL JEWELLERY ETC. IN DELHI STILL THE SOURCE OF CASH DEP OSITS OUTSIDE THE DELHI WAS NOT EXPLAINED. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE, MR. R.S. SINGHVI SUBMITTED THAT HERE IN THIS CASE THE ASSESS EE HAD FILED HER RETURN OF INCOME IN RESPONSE TO NOTICE U/ S.148 AS BUSINESS INCOME U/S.44AD. FROM A BARE PERUSAL OF TH E BANK ACCOUNT, IT CAN BE SEEN THAT ASSESSEE HAS BEEN RECE IVING CASH FROM VARIOUS CITIES INCLUDING DELHI AND THERE ARE R EGULAR WITHDRAWALS ALSO WHICH SHOWS THAT ASSESSEE HAS BEEN MAKING PURCHASE FROM VARIOUS VENDORS AND SELLING TO VARIOU S PLACES IN DIFFERENT CITIES. FURTHER, SHE HAS ALSO BEEN PAY ING GST, WHICH IS EVIDENT FROM THE BANK DETAILS ITSELF WHICH INDICATES THAT SHE WAS BUYING AND SELLING GOODS. MOREOVER, WH EN THE I.T.A. NO. 8197/DEL/2019 4 BUSINESS INCOME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER, I.E., HE HAS ACCEPTED THE RETURN OF INCOME THEN THE ENTIRE DEPOSITS CANNOT BE ADDED. 6. LD. DR, ON THE OTHER HAND, SUBMITTED THAT THE ON US IS UPON THE ASSESSEE TO PROVE THE SOURCE OF DEPOSIT AN D EXPLAINED THE NATURE OF BUSINESS WITH COGENT EVIDEN CES. NOT A SINGLE MATERIAL OR DOCUMENTS WAS FURNISHED TO SUBST ANTIATE THAT ASSESSEE CARRIED OUT ANY KIND OF BUSINESS CLAI MED BY HER. IN ABSENCE OF CORROBORATIVE EVIDENCE OR EXPLAN ATION FULLY SUPPORTED BY DOCUMENTS HER CLAIM FOR CARRYING OUT B USINESS ACTIVITIES CANNOT BE ACCEPTED. ACCORDINGLY, THE ENT IRE TAX DEPOSITS ARE UNDISCLOSED INCOME ONLY. REGARDING ALT ERNATIVE CLAIM OF ADDITION OF PEAK CREDIT, SHE SUBMITTED THA T THE SAME CAN BE MADE ONLY WHEN IT WAS FOUND THAT ASSESSEE IS CARRYING OUT SOME KIND OF BUSINESS ACTIVITY WHICH HERE IN TH IS CASE HAVE NOT BEEN FOUND. THE FACTUAL FOUNDATION FOR PLE A OF PEAK CREDIT HAS TO BE ESTABLISHED BY THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AN D THE MATERIAL REFERRED TO BEFORE US AT THE TIME OF HEARI NG. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11 AND THE ONLY RET URN WHICH WAS FILED, WAS IN RESPONSE TO NOTICE U/S.148 ON 27.08.2018. IN THE SAID RETURN OF INCOME, THE ASSES SEE HAD DECLARED INCOME OF RS.1,79,200/- WHICH WAS SHOWN AS BUSINESS INCOME U/S.44AD BASED ON THE TOTAL CASH DE POSITS I.T.A. NO. 8197/DEL/2019 5 APPEARING IN HER BANK ACCOUNT. SINCE ISSUE OF VALID ITY OF NOTICE U/S.148 AND U/S.147 HAS NOT BEEN ARGUED BY T HE LD. COUNSEL, THEREFORE, THE SAME ARE TREATED TO BE NOT PRESSED. 8. THE ASSESSEES PLEA ALL THROUGHOUT HAS BEEN THAT SHE HAS BEEN CARRYING OUT PETTY BUSINESS ACTIVITIES LIKE PU RCHASE AND SALE OF ARTIFICIAL JEWELLERY, BED-SHEETS AND OTHER I TEMS FROM VARIOUS PLACES AND ALSO GIVING COACHING TO THE STUD ENTS. THE AGGREGATE CASH DEPOSITS IN HER ACCOUNT FOR THE ENTI RE YEAR WAS RS. 13,61,300/- THOUGH NO COGENT MATERIAL OR EVIDEN CE HAS BEEN FILED IN SUPPORT OF BUSINESS ACTIVITIES. HOWEV ER, FROM A BARE PERUSAL OF THE BANK STATEMENT WHICH WAS BASIS FOR THE ADDITION, IT IS SEEN THAT ASSESSEE HAS RECEIVED CAS H FROM VARIOUS VENDORS/ PURCHASERS OUTSIDE THE DELHI AND T HE NARRATION GIVEN IN THE ACCOUNT MENTIONS BY CASH- J HANSI- SHIPRI BAZAR, BY CASH CASHUPL-SOLAPUR, BY CASH CASHUPL- JODHPUR, BY CASH AJMER, AND LIKEWISE WHEREIN CASH AMOUNT HAS BEEN DEPOSITED IN HER BANK ACCOUNT ON VARIOUS D ATES. HOWEVER, ONE VERY GLARING FEATURE FROM THE PERUSAL OF THE BANK ACCOUNT IS THAT THE ASSESSEE HAS BEEN PAYING V AT AND SUCH ENTRIES ARE APPEARING ALL THROUGHOUT THE YEAR ON VARIOUS DATES. PAYMENT OF VAT DOES INDICATE PURCHASE AND SA LE OF SOME GOODS, ITEMS OR SERVICES. ALL THESE FACTORS TH US, GO TO SHOW THAT SOME KIND OF BUSINESS ACTIVITY WAS CARRIE D OUT BY THE ASSESSEE. IF THE ASSESSEE HAD SHOWN INCOME U/S. 44AD WHICH IS PRESUMPTIVE BASIS FOR TAXATION AND LOOKING TO THE NATURE OF BANK ACCOUNT ENTRIES AND REGULAR CASH DEP OSITS AND WITHDRAWALS THIS SHOWS THAT ASSESSEE WAS DOING SOME KIND OF I.T.A. NO. 8197/DEL/2019 6 BUSINESS ACTIVITIES AND PREPONDERANCE OF PROBABILIT IES FOR SUCH ACTIVITIES IS DEFINITELY GOES IN FAVOUR OF THE ASSESSEE. MOREOVER, THE ASSESSING OFFICER HAS TACITLY ACCEPTE D THE BUSINESS INCOME BY ACCEPTING THE RETURN OF INCOME F ROM THE SAME DEPOSITS OF SUMS AGGREGATING TO RS.13,61,300/- . ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ACC EPT THE RETURN OF INCOME OF RS.1,79,200/- AS BUSINESS INCOM E. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. SD/- SD/- [ANIL CHATURVEDI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 22/10/2020 PKK: