Mr. Brijesh Kumar, Faridabad V. ITO, Faridabad

ITA 825/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6568 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 26-10-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 16-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: S K BANSAL
• Keywords: Business income; Peak credit; Source of fund
• Section: 44AD; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-1, NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO.825/DEL/2016 ASSESSMENT YEAR : 2011-12 BRIJESH KUMAR, C/O CA, S.K. BANSAL SANMARKS & ASSOCIATES, 5 TH FLOOR, OFFICE NO.6, OZONE CENTRE, SECTOR-12, OPPOSITE TOWN PARK, FARIDABAD. VS. ITO, WARD 1(1), FARIDABAD PAN : BCPPK 2250 Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. K. BANSAL, CA RESPONDENT BY : SHRI S. K. JAIN, SR. DR DATE OF HEARING : 26-10-2016 DATE OF PRONOUNCEMENT : 01-12-2016 O R D E R PER S.V. MEHROTRA, A.M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 01.12.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS), FARIDABAD, U/S 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) RELATING TO A.Y. 2011-12. 2. BRIEF FACTS OF THE CASE ARE THAT IN THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING OF OLD DHOTI AND OLD GARMENTS. HE FILED HIS RETURN OF INCOME U/S 44AD D ECLARING NET PROFIT OF RS.1,58,240/-. IN COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER 2 ITA NO.825/DEL/2016 NOTED THAT ASSESSEE WAS MAINTAINING SAVING BANK ACC OUNT WITH IDBI BANK, PALWAL, IN WHICH, AS PER AIR, HE HAD DEPOSITED RS.2 8,62,700/- IN CASH. HE, FURTHER, NOTICED THAT RS.5 LAKHS WAS ALSO CREDITED BY CHEQUE IN SAVING BANK ACCOUNT MAINTAINED WITH IDBI. ACCORDINGLY, HE OBTA INED COPIES OF BANK STATEMENTS FROM THE BANK AS WELL AS FROM THE ASSESS EE AND REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH DEPOSITED IN THESE BANK ACCOUNTS ALONG WITH DOCUMENTARY EVIDENCES. THE ASSESSEE IN HIS REPLY ENCLOSED THE COPY OF CASH BOOK AND ALSO POINTED OUT THAT ALL THE CASH DEPOSITED IN THE BANK WAS OUT OF SALE PROCEEDS. THE ASSESSING OFFIC ER OBSERVED IN PARA 3.1 AS UNDER :- 3.1 IN THE AFORESAID REPLY THE ASSESSEE HAS STATED THAT ALL THE CASH HAS BEEN DEPOSITED IN BANK OUT OF SALE PROCEEDS. BOOK IS ENC LOSED BUT NO CASH BOOK WAS ENCLOSED AND IT WAS ALSO STATED THAT ALL THE CASH D EPOSITED IN THIS BANK ACCOUNT OUT OF SALE PROCEEDS. FURTHER THE ASSESSEE VIDE OR DER SHEET ENTRY DATED 27.02.2014, WAS AGAIN INTERALIA, ASKED TO EXPLAIN A ND FURNISH THE FOLLOWING ALONGWITH DOCUMENTARY EVIDENCES IN SUPPORT CLAIM MA DE BY HIM. S.NO. AMOUNT DATE REMARKS 1 2,00,000/- 07.08.2010 A/C OPEN WITH THIS AMOUNT. 1 5,00,000/- 07.08.2010 DEPOSIT BY RAKESH KUMAR 2 200/- 14.09.2010 CASH DEPOSIT 3 74,000/- 20.09.2010 CASH DEPOSIT 4 7,55,000/- 28.09.2010 CASH DEPOSIT 5 1,50,000/- 06.10.2010 CASH DEPOSIT 6 99,000/- 08.10.2010 CASH DEPOSIT THEREFORE, PEAK CREDIT BALANCE WAS REFLECTED AT RS. 10,30,116/- ON 08.10.2010. THE ASSESSEE IS ASKED TO EXPLAIN THE SOURCE OF AFOR ESAID CASH DEPOSITS IN THE BANK ACCOUNT ALONGWITH EVIDENCES. 3. THE ASSESSING OFFICER, FURTHER, REQUIRED THE ASS ESSEE TO EXPLAIN THE SOURCE OF CLOSING BALANCE OF CASH IN HAND OF RS.2,0 5,400/- AS ON 31.03.2010 3 ITA NO.825/DEL/2016 AND OPENING OF 01.04.2010. AFTER CONSIDERING THE A SSESSEES SUBMISSIONS AS NOTED IN PARA 3.2 OF HIS ORDER, THE ASSESSING OFFIC ER MADE AN ADDITION OF RS.25,82,600/- OBSERVING IN PARA 3.9 AS UNDER :- 3.9 FROM THE PERUSAL OF DETAILS OF ABOVE BANK ACCO UNTS, IT IS NOTICED THAT THE ASSESSEE HAS DEPOSITED RS.30,62,000/- IN CASH IN HI S BANK ACCOUNT WHEREAS ON PERUSAL OF RETURN OF THE ASSESSEE IT IS FOUND THAT HE HAS EARNED ONLY BUSINESS INCOME OF RS.1,58,237/- DURING THE YEAR CONSIDERATI ON. HOWEVER, THERE ARE VARIOUS HEAVY DEPOSITS REGARDING WHICH NO DETAIL HA S BEEN FURNISHED. CLEARLY, THESE DEPOSITS CANNOT PERTAIN TO BUSINESS SINCE NO REGULAR PATTERN OF BUSINESS IS REFLECTED IN THE BANK STATEMENT BUT LUMP-SUM DEPOSI TS. THE ASSESSEE HAS NOT FURNISHED ANY DETAILS OR DESCRIPTION OF THE BANK TR ANSACTIONS, I.E., DEPOSITS AND WITHDRAWALS. IN VIEW OF THE SUBMISSION OF THE ASSE SSEE, HIS RETURN OF INCOME IT WILL MEET AND OF JUSTICE, IF THE BENEFIT OF OPENING CASH IN HAND OF RS.2,05,400/- AND INITIAL DEPOSIT OF RS.2,00,000/- ON 07.08.2010 FOR OPENING OF ACCOUNT & RS.74,000/- ON 20.09.2010 IS ALLOWED MEANS THEREBY SOURCE OF BALANCE AMOUNT OF RS.25,82,600/- UNEXPLAINED & UNSUBSTANTIATED. IN T HE ABSENCE OF CONCRETE EVIDENCE, SOLID REASONS, PARTICULARLY AMOUNT OF RS. 25,82,600/- REMAINED UNEXPLAINED. FROM THE ABOVE FACTS, IT IS CLEAR THA T THE ASSESSEE HAS MORE SOURCES OF INCOME WHICH ARE NOT DECLARED IN HER RETURN OF I NCOME DELIBERATELY. THE ASSESSEE HAS NOT PRODUCED HIS BOOKS OF GET HIS BUSI NESS INCOME VERIFIED. ACCORDINGLY, THE RESULTS CANNOT BE ACCEPTED. HOWEV ER, NO SEPARATE ADDITION IS MADE ON THIS ACCOUNT SINCE DETAILS OF NO OTHER INVE STMENT OTHER THAN RS.25,82,600/- IS AVAILABLE AND THE UNACCOUNTED INC OME FROM THE BUSINESS IS DEEMED TO HAVE BEEN DEPLOYED IN THE IMPUGNED BANK A CCOUNT ONLY. 4. LD. CIT(A) CONFIRMED THE ADDITION OF RS.8,79,000 /- OBSERVING IN PARA 14 AND 15 OF HIS ORDER AS UNDER :- 14. A PERUSAL OF THE APPELLANTS SUBMISSION REVEAL S THAT THE APPELLANT HAS MADE TWO DIFFERENT APPROACHES TO EXPLAIN THE SOURCE OF CASH DEPOSITS IN HIS BANK ACCOUNT. THE FIRST BEING, THAT THE CASH WITHDRAWN HAS BEEN DEPOSITED IS OUT OF SALE PROCEEDS OF THE BUSINESS, AND THE SECOND THAT THE CASH DEPOSITED IN THE BANK ACCOUNT IS FROM THE CASH WITHDRAWALS FROM THE SAME BANK ACCOUNT. 15. THE APPELLANTS EXPLANATION REGARDING THE DEPOS IT OF SALE PROCEEDS OF RS.3,23,000/- IN THE BANK ACCOUNT OUT OF THE TOTAL SALES PROCEEDS OF RS.28,66,780/- IS NOT ACCEPTED AS THE APPELLANT HAS BEEN UNABLE TO PROVIDE ANY JUSTIFICATION AS TO WHY ONLY RS.3,23,000/- WERE DEP OSITED IN THE BANK OUT OF THE TOTAL SALE PROCEEDS OF RS.28,66,780/-. THE APPELLA NT HAS ALSO BEEN UNABLE TO JUSTIFY AS TO WHERE THE REST OF THE SALE PROCEEDS W ERE UTILIZED. THE SAME 4 ITA NO.825/DEL/2016 REASONING HOLD TRUE FOR MY DISMISSING THE APPELLANT S EXPLANATION FOR DEPOSIT OF RS.99,000/- ON 08.10.2010. WITH THESE REMARKS, THE ADDITION ON RS.8,79,000/- IS CONFIRMED, AS UNEXPLAINED INCOME OF THE APPELLANT D EPOSITED IN HIS BANK ACCOUNT U/S 68. THUS THIS GROUND OF THE APPEAL IS PARTLY A LLOWED. 5. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US AND HAS TAKEN FOLLOWING EFFECTIVE GROUND OF APPEAL :- 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) FARIDABAD ERRED IN CONFIRMING THE ADDITION OF RS.8,79,000/- U/S 68 OF THE INCOME TAX ACT, 1961 IN UTTER DISREGARD OF THE ACTUAL FACTS AND SUBMISSION MADE. 6. LD. COUNSEL REFERRED TO PAGE 14 OF THE LD. CIT(A )S ORDER WHEREIN HE HAS CONFIRMED THE ADDITION OF RS.7,55,000/- OBSERVI NG AS UNDER :- SR.NO.2 THERE IS A CASH DEPOSIT OF RS.7,55,000/- O N 28.09.2010. AS PER THE LD. AR, AS AGAINST THIS THERE IS A CASH WITHDRAWAL AS PER THE APPELLANT ON 30.08.2010 FOR RS.6,00,000/- AND OTHER CASH WITHDRA WALS OF RS.10,000/- ON 27.09.2010 AND RS.15,000/- ON 15.09.2010. PERUSAL OF THE BANK ACCOUNTS REVEALS THAT AN AMOUNT OF RS.6,00,000/- HAS NOT BEEN WITHDR AWN IN CASH, AND IT IS INFACT THE PAYMENT OF RS.6,00,000/- VIDE CHEQUE NO.14676 T O ONE SH. RAKESH SHARMA. BESIDES THIS THERE IS NO JUSTIFICATION FOR WITHDRAW ING A SMALL SUM OF RS.10,000/- ON 27.09.2010 AND DEPOSITING THE SAME ON 28.09.2010 . THUS IN VIEW OF THESE FACTS THE APPELLANTS JUSTIFICATION FOR THIS BANK E NTRY IS REJECTED AND ADDITION OF RS.755000/- FOR CASH DEPOSIT ON 28.09.2010 IS CONFI RMED. 7. LD. COUNSEL POINTED OUT THAT THE MAIN REASON FOR CONFIRMING THE ADDITION WAS THAT THE LD. CIT(A) WAS OF THE OPINION THAT THE CLAIM OF ASSESSEE OF WITHDRAWING RS.6,00,000/- FROM BANK WAS NOT CORRECT BECAUSE CHEQUE NO.14676 WAS IN THE NAME OF SHRI RAKESH SHAR MA. IN THIS REGARD, LD. COUNSEL REFERRED PAGE 7 OF PAPER BOOK WHEREIN T HE CERTIFICATE FROM IDBI BANK IS CONTAINED, WHICH READS AS UNDER :- 5 ITA NO.825/DEL/2016 TO WHOMSOEVER IT MAY CONCERN DATE 28.10.2015 THIS IS TO CERTIFY THAT OUR CUSTOMER MR. BRIJESH KU MAR (ACCOUNT NO.343104000014340) HAS WITHDRAWN CASH OF RS.600000 FROM HIS ACCOUNT ON 30.08.2010 CHEQUE NO.14676. THE CHEQUE IS IN THE N AME RAKESH SHARMA. THIS LETTER IS ISSUED ON SPECIFIC REQUEST OF CUSTOM ER AND BANK BEARS NO RISK OR RESPONSIBILITY FOR IT. FOR IDBI BANK LTD. 8. LD. COUNSEL FURTHER REFERRED TO PAGE 5 6 OF PA PER BOOK WHEREIN THE BANK ACCOUNT OF ASSESSEE IS CONTAINED IN WHICH RS.6 ,00,000/- HAS BEEN SHOWN AS BEING WITHDRAWN IN THE NAME OF PALWAL R AKESH SHARMA ON 30.08.2010. HE, THEREFORE, SUBMITTED THAT THE VERY PREMISE ON WHICH LD. CIT(A) GIVES HIS FINDING, WAS NOT CORRECT. LD. COU NSEL FURTHER REFERRED TO PAGE 3 OF LD. CIT(A)S ORDER WHEREIN IT WAS STATED THAT SUM OF RS.74,000/- WAS DEPOSITED ON 28.09.2010 OUT OF CASH WITHDRAWN F ROM THE BANK ON 30.08.2010 AMOUNTING TO RS.6,00,000/-. HE FURTHER REFERRED TO PAGE 4 OF LD. CIT(A)S ORDER WHEREIN A SUM OF RS.7,55,000/- DEPOS ITED ON 28.09.2010 WAS EXPLAINED, WHICH READS AS UNDER :- RS.5,26,000/- (BEING RS.600000-74000 AS PER 3 ABOV E) OUT OF CASH WITHDRAWN ON 30-08-2010 + CASH WITHDRAWN RS.15000 ON 18-9-201 0 + RS.10,000 WITHDRAWN ON 27-09-2010 AND RS.2,04,000/- OUT OF SA LES PROCEEDS. 9. LD. COUNSEL POINTED OUT THAT ONCE THE WITHDRAWAL OF RS.74,000/- WAS ACCEPTED OUT OF RS.6,00,000/- THEN LD. CIT(A) COULD NOT HAVE GIVEN A CONTRADICTORY FINDING OF CASH BEING NOT WITHDRAWN. 6 ITA NO.825/DEL/2016 10. AS REGARDS THE OPENING BALANCE OF RS.2,05,400/- , LD. COUNSEL REFERRED TO PAGE 2 3 OF PAPER BOOK WHEREIN THE COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2011-12 IS CONTAINED ALONG WITH BAL ANCE AS ON 31.03.2010 (PAPER BOOK PAGE 3) WHEREIN CASH IN HAND HAS BEEN S HOWN AT RS.2,05,400/-. HE, THEREFORE, SUBMITTED THAT THIS ADDITION COULD N OT BE MADE IN THE CURRENT YEAR. LD. DR SUBMITTED THAT LD. CIT(A) CONSIDERED ALL ASPECTS AND THEREFORE NO INTERFERENCE IS CALLED FOR. 11. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE RECORD OF THE CASE. THE ASSESSEE HAS FILED A CERTI FICATE FROM IDBI BANK CONTAINED AT PAGE 7 OF PAPER BOOK, REPRODUCED EARLI ER, WHICH CLEARLY SHOWS THAT THE AMOUNT HAD BEEN WITHDRAWN IN CASH OF RS.6, 00,000/- FROM ACCOUNT OF ASSESSEE AND THE CHEQUE WAS IN THE NAME OF SHRI RAKESH SHARMA. UNDER SUCH CIRCUMSTANCES, WITHOUT FURTHER ENQUIRIES IT CO ULD NOT BE INFERRED THAT THE PAYMENT WAS MADE TO SHRI RAKESH SHARMA. HE WAS THE PERSON WHO HAD WITHDRAWN THE CASH. MANY TIMES A CHEQUE IS DRAWN I N THE NAME OF THE PERSON WHO IS SENT FOR WITHDRAWING THE CASH. THE F ACT WHETHER THE AMOUNT WAS TOWARDS ANY PAYMENT DUE FROM THE ASSESSEE TO SH RI RAKESH SHARMA OR NO IS NOT COMING OUT FROM THE RECORDS AND, THEREFOR E, THIS ASPECT NEEDS VERIFICATION BY ASSESSING OFFICER. THE ASSESSING O FFICER WILL ALSO VERIFY THE CONTENTS OF BANKS CERTIFICATE. ACCORDINGLY, T HE MATTER IS RESTORED ON THIS COUNT TO THE FILE OF ASSESSING OFFICER FOR VERIFICA TION. 7 ITA NO.825/DEL/2016 12. AS FAR AS THE ADDITION OUT OF OPENING BALANCE I S CONCERNED, SINCE THE OPENING BALANCE IS FROM EARLIER YEAR, THEREFORE, AD DITION CANNOT BE MADE IN THE YEAR UNDER CONSIDERATION. THEREFORE, THE ADDIT ION TO THE EXTENT OF RS.2,05,400/- IS DELETED. 13. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 01 ST DAY OF DECEMBER, 2016. SD/- SD/- (SUDHANSHU SRIVASTAVA) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 01-12-2016. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI