ASHOK V. GOKANI, MUMBAI V. ITO 25(3)(3), MUMBAI

ITA 820/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75218 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 07-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Keywords: Peak credit
• Section: 68; 6

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , !'#$ , % & BEFORE SHRI B.R. MITTAL, JM AND SHRI N.K. BILLAIYA, AM ./ I.T.A. NO.820/MUM/2012 ( ' ' ' ' / ASSESSMENT YEAR :2008-09 MR. ASHOK V GOKANI, F-401, PUSHPA HERITAGE, OFF GOKHALE ROAD, KANDIVLI (W), MUMBAI-400 067 / VS. THE ITO-25(3)(3), C-11, PRATYAKSHAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI ( % ./ )* ./ PAN/GIR NO. : AABPG 4393D ( (+ / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY: SHRI NITESH JOSHI ,-(+ / . / RESPONDENT BY: SHRI M.L. PERUMAL / 01% / DATE OF HEARING : 30.12.2013 23' / 01% / DATE OF PRONOUNCEMENT :03.01.2014 4 / O R D E R PER N.K. BILLAIYA, AM: WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A)-35, MUMBAI DT.14.11.2011 P ERTAINING TO A.Y. 2008-09. 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE AS SESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY WAY OF CASH CREDIT U/S. 68 AMOUNTING TO RS. 12,07,062/-. ITA NO. 820/M/2012 2 3. THE ASSESSEE IS A TRADER IN BEARINGS. THE RETU RN OF INCOME DECLARING TOTAL INCOME AT RS. 92,765/- WAS FILED ON 31.3.2009. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGL Y STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING T HE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER CONFRONTED TO THE ASSESSEE AIR INFORMATION REGARDING CASH DEPOSITS TO THE TUNE OF RS. 12,30,167/- IN THE SAVINGS BANK ACCOUNT MAINTAINED WITH IDBI BANK LTD. THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS OF CAS H DEPOSIT IN THE SAID BANK ACCOUNT ALONGWITH NECESSARY DOCUMENTARY EVIDEN CE. ON RECEIVING NO REPLY, THE AO ONCE AGAIN ASKED THE ASSESSEE TO F URNISH EXPLANATION REGARDING CASH DEPOSITS IN THE SAID BANK ACCOUNT. THE ASSESSEE SUBMITTED THE EXPLANATION ON 9.12.2010 STATING THAT THE ACCOU NTS CONTAINS THE RECEIPTS FROM THE OTHER STATES RELATED TO THE TRAD ING BUSINESS. THE AMOUNT HAS BEEN WITHDRAWN IN MUMBAI. THE TOTAL CASH SALES SHOWN BY THE ASSESSEE ARE TO THE TUNE OF RS. 3,48,400/-. 3.1. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSES SEE, THE AO NOTICED THAT OUT OF CASH SALES ONLY AN AMOUNT OF RS. 23,105 /- WAS DEPOSITED IN THE IDBI ACCOUNT. ACCORDING TO THE AO, IT WAS CLEAR FR OM THE FACTS THAT THE ASSESSEE HAD NO VALID EXPLANATION FOR THE CASH DEPO SIT TO THE TUNE OF RS. 3,25,295/- AND FOR THE BALANCE CASH DEPOSITS AMOUNT ING TO RS. 8,81,767/- THE ASSESSEE DID NOT OFFER ANY EXPLANATION. THE AO WENT ON TO TREAT RS. 12,07,062/- WHICH RS. 8,81,767/- + 3,25,295/- AS UN EXPLAINED CASH CREDIT U/S. 68 OF THE ACT. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND SUBMITTED THAT CASH DEPOSITS IN THE SAID BANK ACCO UNTS WERE OF SMALL DENOMINATION AND FROM DIFFERENT PLACES AND MAINLY F ROM ERODE. IT WAS EXPLAINED THAT THE DEPOSITS WERE MADE BY DIFFERENT CLIENTS AGAINST THE ITA NO. 820/M/2012 3 SALES MADE TO THEM. IT WAS FURTHER EXPLAINED THAT A GAINST THE DEPOSITS, THE TOTAL WITHDRAWALS WERE RS. 10,52,800/-. IT WAS STR ONGLY CONTENDED BEFORE THE LD. CIT(A) THAT THE RECEIPTS AND PAYMENTS WERE RELATED TO TRADING BUSINESS. AFTER CONSIDERING THE FACTS AND SUBMISS IONS OF THE ASSESSEE, THE LD. CIT(A) WAS CONVINCED THAT THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION FOR CASH DEPOSITS OF RS. 8,81,767/- AND ALSO FAILED TO EXPLAIN THE CASH DEPOSITS OF RS. 3,48,400/- FROM CASH SALE PROCEEDS. THE LD. CIT(A) ALSO DENIED THE BENEFIT OF PEAK CREDIT AS NO EFFORT WAS MADE BY THE ASSESSEE TO CLAIM PEAK CREDIT. 5. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE PUT FORTH 4 PROPOSITIONS: 1) SECTION 68 IS NOT APPLICABLE AS THE AMOUNT WAS FOUN D CREDITED IN THE BANK AND THE BANK STATEMENT CANNOT BE CONSTRUED AS BOOK OF THE ASSESSEE. THE LD. COUNSEL RELIED UPON THE DECISION OF LUCKNOW BENCH OF ITAT 143 ITD 686 AND ON THE DECISION OF TH E JURISDICTIONAL HIGH COURT IN THE CASE OF BHAICHAND H. GANDHI 141 ITR 67. 2) ONLY PEAK CREDIT SHOULD HAVE BEEN ADDED WHICH WAS O N 30 TH SEPTEMBER, 2007 AT RS. 1,61,074/- 3) THE ASSESSEE SHOULD ALSO GET THE BENEFIT OF CASH SA LES AMOUNTING TO RS. 3,48,400/-. 4) SINCE THE ASSESSEE IS A TRADER AND THE DEPOSITS AND WITHDRAWALS IN THE SAID BANK ACCOUNT RELATE TO THE TRADING BUSINES S OF THE ASSESSEE ONLY GROSS PROFIT SHOULD HAVE BEEN ADDED. 6. FOR THESE PROPOSITIONS, THE LD. DEPARTMENTAL REP RESENTATIVE RESPONDED ITA NO. 820/M/2012 4 A) THE BANK ACCOUNT WAS NOT DISCLOSED BY THE ASSESS EE IN ITS REGULAR BOOKS OF ACCOUNT THEREFORE CREDITS IN THE B ANK ACCOUNTS VERY MUCH ATTRACT THE PROVISIONS OF SEC. 6 8 AND THE CASES RELIED UPON BY THE ASSESSEE ARE DISTINGUISHAB LE ON FACTS. B) BENEFIT OF PEAK CASH CREDIT CANNOT BE GIVEN TO T HE ASSESSEE AS THE AMOUNTS WERE DEPOSITED AT DIFFERENT CITIES WHER EAS THE WITHDRAWALS WERE MADE ONLY AT MUMBAI. C) THE BENEFIT OF CASH SALES TO THE EXTENT OF RS. 2 3,105/- HAS ALREADY BEEN GIVEN BY THE AO AFTER FULLY VERIFYING THE CASH SALES. D) THE BENEFIT OF GROSS PROFIT RATE CAN BE GIVEN ON LY IF THE ASSESSEE WAS DOING BUSINESS IN ITS BOOKS OF ACCOUNT . ALL THE TRANSACTIONS IN THE SAID BANK ACCOUNT ARE OUTSIDE T HE BOOKS OF ACCOUNT THEREFORE IT CANNOT BE CONSTRUED AS LEGITIM ATE BUSINESS TRANSACTION. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE RELEVAN T MATERIAL EVIDENCES BROUGHT ON RECORD BEFORE US. IT IS NOT IN DISPUTE THAT THE IMPUGNED BANK ACCOUNT WAS NOT REFLECTED IN THE REGULAR BOOKS OF A CCOUNT OF THE ASSESSEE. THEREFORE, THE ONUS WAS SQUARELY UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF DEPOSITS IN THE SAID BANK ACCOUNT. T HE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY TO EXPLAIN THE NATURE AND SO URCE. THE ONLY EXPLANATION CAME FROM THE ASSESSEE WAS THAT THE BEN EFIT OF CASH SALES SHOULD HAVE BEEN GIVEN. WE FIND THAT THE AO HAS VE RIFIED THE CASH SALES VIS--VIS CASH DEPOSITS IN THE SAID BANK ACCOUNT. WE ALSO FIND THAT THE AO HAS ALREADY GIVEN THE BENEFIT OF RS. 23,105/- AS FOUND EXPLAINED. AS THE ASSESSEE COULD NOT BRING ANY MATERIAL EVIDENCE ON RECORD WHICH COULD ITA NO. 820/M/2012 5 SUGGEST THAT THE ENTIRE CASH SALES HAVE BEEN DEPOSI TED IN THE SAID BANK ACCOUNT, THE FINDINGS OF THE AO WHICH HAVE BEEN CON FIRMED BY THE LD. CIT(A) DO NOT CALL FOR ANY INTERFERENCE. 7.1. AS REGARDS REMAINING CASH DEPOSITS OF RS. 8,81 2,767/-, IT IS ALSO NOT IN DISPUTE THAT THE AMOUNTS WERE DEPOSITED IN THE B ANK ACCOUNT FROM VARIOUS PLACES LIKE ERODE, BHUVANESHWAR, KANPUR AND THE WITHDRAWALS HAVE BEEN MADE MAINLY AT MUMBAI THEREFORE, IT CANNO T BE SAID THAT THE AMOUNTS WITHDRAWN WERE DEPOSITED IN THE SAID BANK ACCOUNT. THE ASSESSEE HAS ALSO GROSSLY FAILED IN CO-RELATING T HE DEPOSITS MADE AT VARIOUS CITIES BY SHOWING THAT THE DEPOSITS RELATE D TO THE BUSINESS TRANSACTIONS DONE BY THE ASSESSEE AT THOSE CITIES A S NO SUCH EVIDENCE WAS PLACED BEFORE THE REVENUE AUTHORITIES NOR BEFORE US . SINCE THE ENTIRE TRANSACTIONS HAVE BEEN DONE OUTSIDE THE BOOKS, IT C ANNOT BE TERMED AS LEGITIMATE BUSINESS TRANSACTION THEREFORE THE BENEF IT OF ADDITIONS OF ONLY THE GROSS PROFIT CANNOT BE GIVEN TO THE ASSESSEE. CONSIDERING THE ENTIRE FACTS ON RECORD, WE FIND THAT THE ASSESSEE HAS FAIL ED TO EXPLAIN THE DEPOSITS IN THE SAID BANK ACCOUNT AS NO EVIDENCE WAS BROUGHT BEFORE THE REVENUE AUTHORITIES NOR BEFORE US THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). WE ACCORDINGLY CONFIRM THE ORDER OF THE LD. CIT(A). 8. BEFORE CLOSING THE RELIANCE ON THE DECISION OF T HE BOMBAY HIGH COURT [ SUPRA] IS MISPLACED AS IN THAT CASE THE ISS UE WAS WHETHER THE ADDITION CAN BE MADE IN THE FINANCIAL YEAR OF DEPOS IT OR THE ACCOUNTING YEAR OF DEPOSIT. AND THE DECISION OF LUCKNOW BENCH OF ITAT WOULD ALSO NOT SUPPORT THE ASSESSEE AS THE BANK ACCOUNT IS NOT REFLECTED IN THE REGULAR BOOKS OF THE ASSESSEE. ITA NO. 820/M/2012 6 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.01.2014 . 4 / 3' % 5 67 03.01.2014 3 / 8 SD/- SD/- (B.R. MITTAL ) (N.K. BILLAIYA) /JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 6 DATED 03.01.2014 . . ./ RJ , SR. PS 4 4 4 4 / // / ,0! ,0! ,0! ,0! 9!'0 9!'0 9!'0 9!'0 / COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. !;8 ,0 , , / DR, ITAT, MUMBAI 6. 8< = / GUARD FILE. 4 4 4 4 / BY ORDER, -!0 ,0 //TRUE COPY// > >> > / ? ? ? ? ) ) ) ) (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI