Income Tax Officer, Ward -1(1), Panaji., Panaji V. Shri Javed Motiwala., Panaji

ITA 87/PAN/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1402 (ITAT-PANAJI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 11-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND S MARATHE
• Assessee Lawyers: AMINA SHAIKH
• Keywords: Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 87 /PNJ/201 5 (ASST. YEAR : 200 9 - 1 0 ) ITO, WARD - 1(1), PANAJI. VS. SHRI JAVED MOTIWALA, RAYAN TEXTILES MARKET, PANAJI - GOA. PAN NO. AIGPM 7863 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMINA SHAIKH ADV. DEPARTMENT BY : SHRI ANAND S. MARATHE - D R DATE OF HEARING : 19 / 0 8 /2015 . DATE OF PRONOUNCEMENT : 1 9 / 0 8 /201 5 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , PANAJI , DATED 0 4 / 12 /201 4 PASSED IN ASSESSMENT YEAR 2009 - 10 . 2. THE SOLE ISSUE INVOLVED IN TH IS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF 25,54,000/ - ON ACCOUNT OF CASH DEPOSITS WHEN THE ASSESSEE FAILED TO PROVE WITH THE EVIDENCE THAT THE CASH DEPOSITS ARE FROM UNDISCLOSED BUSINESS IN PLASTIC MAT ERIAL. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAS MADE CASH 2 ITA NO. 87 /PNJ/201 5 DEPOSITS OF 27,81,500/ - IN SB ACCOUNT OF BANK OF INDIA . THE ACCOUNT EXTRACT OF THE ASSESSEES BANK ACCOUNT WAS OBTAINED FROM THE BANK . THE ASSESSEE IS MAINTAINING SB ACCOUNT NO. 1020101100002687 IN THE BANK OF INDIA , C A MPAL, PANAJI WHERE CASH DEPOSITS OF 27,81,500/ - WERE MADE DURING THE YEAR. WHEN THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF CASH DEPOSITS AND TO EXPLAIN THE SOURCE OF IT, THE ASSESSEE SUBMITTED THAT IT WAS IN THE BUSINESS OF RET A IL TRADE IN CLOTH MATERIAL IN THE NAME OF RYAN TEXTILES AND INCOME FROM THIS BUSINESS HAS BEEN DECLARED IN THE RETURN OF INCOME. OVER AND ABOVE THIS, HE IS DOING THE BUSINESS OF WHOLESALE IN PL A STIC MATERIAL WHICH HAS NOT BEEN SHOWN IN THE RETURN OF INCOME. WHOLE OF SALE PROCEEDS, WHETHER CASH OR CHEQUE WERE DEPOSITED IN THE SAID SB ACCOUNT . HIS TOTAL TURNOVER AMOUNTED TO 46.60 LAC APPROXIMATELY DURING THE FINANCIAL YEAR 2008 - 09 . MANY A TIMES, TRADERS FROM NEIGHBOURING STATES USED TO BUY THIS MATERIAL FROM HIM AND SINCE HE DID NOT KNOW THEM, HE INSISTED ON CASH PAYMENTS. MANY A TIMES , WHEN SALES WERE MADE TO NON GOAN TRA DERS AROUND 2 TO 3 TRADERS FROM ONE PLACE USED TO COME TOGETHER AS IT WOULD HELP THEM SAVE TRANSPORT CHARGES IN SENDING THE MATERIAL FROM PANAJI TO THEIR P L ACE OF BUSINESS . IT WAS BECAUSE OF THIS, THAT HUGE CASH DEPOSITS AT ONE TIME WAS DEPOSITED IN HIS ABOVE MENTIONED ACCOUNT. THE PURCHASES WERE MOSTLY PAID BY CHEQUES AS NOTICED FROM THE BANK STATEMENT. HE, THEREFORE, SUBMIT T ED THAT HE WAS OFF E R ING TO TAX 20% OF THE SALE PROCEEDS AS HIS PROFIT FROM THE WHOLESALE BUSINESS TO BUY PEACE WITH THE DEPARTMENT. 4 . THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE IN SUPPORT OF HIS CLAIM. ACCORDING TO THE ASSESSING OFFICER , THE CONTENTION OF THE ASSESSEE OF DOING BUSINESS OF WHOLESALE IN PLASTIC MATERIAL IS NOT CONVINCING AS THE ASSESSEE H AD NOT SHOWN ANY RECEIPTS OF THIS BUSINESS . THE ASSESSEE WAS TRYING TO EXPLAIN THE CASH DEPOSITS WITH OTHER BUSINESS . NO CASH BOOK WAS PRODUCED FOR VERIFICATION. HE, 3 ITA NO. 87 /PNJ/201 5 THEREFORE , WORKED OUT THE PEAK DEPOSIT IN THE BANK ACCOUNT AND MADE THE ADDITION OF 25,54,000/ - TO THE INCOME OF THE ASSESSEE. 5. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS , ASSESSEE SUBMITTED THAT HE WAS RUNNING RETAIL AS WELL AS WHOLESALE BUSINESS AND WAS DEPOSITING BUSINESS CASH IN THE ACCOUNT . SINCE HE WAS A SMALL BUSINESSMAN, BY MISTAKE HE HAD NOT INCLUDE D HIS INCOME FROM WHOLESALE BUSINESS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , HE ACCEPTED HIS MISTAKES AND EXPLAINED ALL THE FACTS TO THE ASSESSING OFFICER. HE ALSO OFFERED 20% OF DEPOSITS IN THE BANK ACCOUNT AS HIS INCOME, WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE COMMISSI ONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT THERE ARE DEPOSITS AND WITHDRAWAL FROM THE SAID ACCOUNT. THE ASSESSING OFFICER HAS ALSO NOT BROUGHT OUT ANY OTHER FACT SHOWING THAT THE ASSESSEE EARNED FROM ANY OTHER SOURCE ALSO . IT IS AN ESTABLISHED RU L E THAT FOR MAKING SALES, THERE H AS TO BE PURCHASES AS WELL . HE, THEREFORE, HELD THAT THE ADDITION OF ENTIRE PEAK CREDIT BY THE ASSESSING OFFICER IS HARSH AND OFFER OF 20% AS INCOME ON DEPOSITS BY WAY OF SALE IS REASONABLE. IN VIEW OF THESE FACTS, HE ESTIMATED THE INCOME AT 20% OF THE GROSS DEPOSITS OF 27,81,500/ - AND RESTRICTED THE ADDITION TO 5,56,300/ - IN PLACE OF 25,54,000/ - MADE BY THE ASSESSING OFFICER AND THEREBY DELETED THE BALANCE ADDITION OF 19,97,70 0/ - . 6 . DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER WHEREAS AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 7 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWERS AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. I N THE INSTANT CASE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS MADE CASH DEPOSITS OF 27,81,500/ - IN HIS SAVINGS BANK ACCOUNT NO. 1 02010110002687 4 ITA NO. 87 /PNJ/201 5 MAINTAINED WITH BANK OF INDIA , CAMPAL, PANAJI . ASSESSEE SUBMITTED THAT THE DEPOSITS IN THE BANK ACCOUNT WERE SALE PROCEEDS OF HIS WHOLESALE BUSINESS IN PLASTIC MATERIAL. HE SUBMITTED THAT BY MISTAKE, THE INCOME FROM THE SAME REMAINED TO BE INCLUDED IN THE RETURN OF INCOME FILED BY HIM AND OFFERED 20% OF THE SAID DEPOSITS AS HIS INCOME FROM WHOLESALE BUSINESS IN PLASTIC MATERIAL. THE ASSESSIN G OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAD NOT SHOWN ANY RECEIPTS FROM THIS BUSINESS AND, THEREFORE, THE EXPLANATION OF THE ASSESSEE WAS NOT CONVINC ING . 8 . O N APPEAL, COMMISSIONER OF INCOME TAX (APPEALS ) FOUND THAT THERE WERE REGULAR DEPOSITS AND WITHDRAWALS FROM THE SAID BANK ACCOUNT. THE ASSESSING OFFICER HAS NOT BROUGH T ANY OTHER FACT SHOWING THAT THE ASSESSEE EARNED INCOME FROM ANY OTHER SOURCE. HE OBSERVED THAT IN THE ABOVE CIRCUMSTANCES, IT WOULD NOT BE JUSTIFIED TO MAKE ADDITION OF PEAK DEPOSITS IN THE BANK ACCOUNT . HE OBSERVED THAT REGULARITY OF DEPOSITS AND WITHDRAWALS BEING MADE IN THE SAID BANK ACCOUNT SHOWS THAT THE ASSESSEE WAS MAKING DEPOSITS IN THE BANK ACCOUNT OUT OF HIS SALE PROCEEDS FROM THE BUSINESS. THE ENTIRE RECEIPTS CANNOT BE SUBJECT ED TO INCOME TAX AND IT IS ONLY THE INCOME EMBEDDED IN SUCH RECEIPTS SHOULD BE BROUGHT TO TAX. HE OBSERVED T HAT OUT OF THE RECEIPTS, PURCHASE S HA VE TO BE SUBTRACTED AND THE NET INCOME HAS TO BE ADDED TO THE INCOME OF THE ASSESSEE. HE OBSERVED THAT 20% OF THE DEPOSITS WOULD BE REASONABLE AMOUNT OF ESTIMATE OF INCOME FROM DEPOSITS MADE IN THE BANK ACCOUNT AND THE REFORE, HE DIRECTED THE ASSESSING OFFICER TO TAX 20% OF THE GROSS DEPOSITS OF 27,81,500/ - , WHICH WORKED OUT TO 5,56,300 AS INCOME OF THE ASSESSEE FROM WHOLESALE BUSINESS IN PLASTIC MATERIAL AND DELETED THE BALANCE AMOUNT OF ADDITION OF 19,97,700/ - . 5 ITA NO. 87 /PNJ/201 5 9. WE FIND THAT THE LUCKNOW COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. SHRI VISHAN LAL IN I.T.A.NO. 634/LKW/2014 FOR ASSESSMENT YEAR 2005 - 06 VIDE ORDER DATED 22/06/2015 , HELD AS UNDER: - 4.1 FROM THE ABOVE PARAS FROM THE ORDER OF LEARNED CIT(A), IT IS SEEN THAT A CLEAR FINDING HAS BEEN GIVEN THAT ON PERUSAL OF THE ENTRIES REFLECTED IN THE SAID BANK ACCOUNT, IT WAS REVEALED THAT THE CASH DEPOSITS AND WITHDRAWALS WERE MADE REGULARLY DURING THE YEAR AND THEREFORE THE ASSESSING OFFICER WAS NO T JUSTIFIED IN MAKING THE ADDITI ON OF RS.15,68,500/ - . CONSIDERING THESE FACTS, LEARNED CIT(A) HAS HELD THAT THESE RECEIPTS SHOULD BE TREATED AS TURNOVER OF THE ASSESSEE FROM TRADING OF CLOTH AND HAS DIRECTED THE ASSESSING OFFICER TO MAKE ADDITION OF PROFIT FROM SUCH TURNOVER OUTSIDE THE BOOKS AT GROSS PROFIT RATE OF 13% OF THIS TURNOVER. CONSIDERING THE FACTS, AS DISCUSSED ABOVE THAT THE CASH DEPOSIT AND WITHDRAWAL IN THE BANK ACCOUNT WAS MADE REGULARLY BY THE ASSESSEE DURING THE YEAR, IT IS VERY REASONABLE TO SAY THAT THE SAME WAS BUSINESS TURNOVER OUTSIDE BOOKS AND THEREFORE, ONLY GROSS PROFIT ADDITION IS JUSTIFIED IN THE FACTS OF THE PRESENT CASE. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) AND THEREFORE, WE DECLINE TO INTERFERE IN THE SAME. 10 . THUS, WE FIND THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) FINDS SUPPORT FROM THE DECISION OF THE COORDINATE LUCKNOW BENCH OF THIS TRIBUNAL IN THE ABOVE REFERRED TO CASE. THEREFORE, W E FIND NO INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 11 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 1 9 TH DAY OF AUGUST , 201 5 AT GOA . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 1 9 TH AUGUST , 201 5 . 6 ITA NO. 87 /PNJ/201 5 VR/ - COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 7 ITA NO. 87 /PNJ/201 5 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 1 9 .0 8 .2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 19 .08 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 19 /08 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 19 /0 8 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 19 /08 /2015 SR.PS 6. DATE OF PRONOUNCEMENT 19 /0 8 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 1 9 /08 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER