ITO, Ward-53(4), Kolkata, Kolkata V. Shri Badal Krishna Saha, Kolkata

ITA 884/KOL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2052 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 06-06-2012
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE
• Assessee Lawyers: K M ROY
• Keywords: Rejection of books of accounts; Business income; Peak credit
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [BEFORE SHRI M.BALAGANESH, AM & SHRI S.S.VISWANET HRA RAVI, JM] ITA NO.884/KOL/2012 ASSESSMENT YEAR : 2008-09 ( APPELLANT ) (RESPONDENT) I.T.O., WARD-53(4), -VERSUS- SRI BADAL KRISHNA S AHA, KOLKATA KOLKATA (PAN:AJEPS 3580 N) FOR THE APPELLANT : SHRI PINAKI MUKHERJEE, JCIT FOR THE RESPONDENT : SHRI K.M.ROY, FCA DATE OF HEARING : 01.10.2015. DATE OF PRONOUNCEMENT : 08.10.2015. ORDER PER SHRI M.BALAGANESH, AM 1. THIS APPEAL OF THE REVENUE ARISES OUT OF TH E ORDER OF THE LEARNED CIT(A) IN APPEAL NO. 104/CIT(A)-XXXIII/ITO.WD-53(4),KOLKATA/1 0-11 DATED 15.03.2012 FOR THE ASST YEAR 2008-09 ARISING OUT OF THE ORDER OF T HE LEARNED ASSESSING OFFICER FRAMED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT). 2. SHRI.PINAKI MUKHERJEE, JCIT, THE LEARNED DR ARG UED ON BEHALF OF THE REVENUE. SHRI.K.M.ROY, FCA, THE LEARNED AR ARGUED ON BEHALF OF THE ASSESSEE. 3. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS THAT WHETHER THE LEARNED CITA IS JUSTIFIED IN APPLYING LOWER ESTIMATED RATE OF NET P ROFIT FROM BUSINESS @ 4% AS AGAINST 8% ADOPTED BY THE LEARNED AO AFTER REJECTING THE BO OKS OF ACCOUNTS. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE IS A CIVIL CONTRACTOR AND CARRYING ON A PROPRIETORY CONCERN UNDER THE NAME AND STYLE O F M/S CONSTRUCTIVE CONSTRUCTION FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. FOR TH E ASST YEAR 2008-09, THE ASSESSEE DISCLOSED RS. 2,64,20,951/- AS ITS GROSS RECEIPTS. THE GROSS CONTRACT RECEIPTS AS PER NSDL TDS RECORDS WAS RS. 2,67,77,057/-. THIS WAS O NE OF THE DEFECT NOTICED BY THE LEARNED AO IN THE DETAILS SUBMITTED BY THE ASSESSEE VIS A VIS THE BOOKS OF ACCOUNTS ITA NO.884/KOL/2012 SRI BADAL KRISHNA SAHA A.YR.2008-09 2 MAINTAINED BY THE ASSESSEE. THE LEARNED AO ALSO FO UND THAT THE ASSESSEE HAD MAINTAINED A SAVINGS BANK ACCOUNT WITH ALLAHABAD BA NK, GARIAHAT BRANCH, KOLKATA WHICH WAS ALSO NOT DISCLOSED IN THE BOOKS OF ACCOUN TS MAINTAINED BY THE ASSESSEE AND ACCORDINGLY FOUND IT AS A DEFECT IN THE BOOKS OF AC COUNTS AND PROCEEDED TO REJECT THE BOOKS OF ACCOUNTS AND DETERMINE THE PROFIT ON AN ES TIMATED BASIS U/S 145(3) OF THE ACT. THE NET PROFIT WAS ESTIMATED AT 8% OF GROSS RECEIPT S BY THE LEARNED AO AND DETERMINED AT RS. 21,42,165/- (8% OF RS. 2,67,77,05 7/-). ON FIRST APPEAL, THE SAME WAS BROUGHT DOWN TO 4% BY THE LEARNED CITA BASED ON THE AVERAGE PROFIT RATIO OF THE ASSESSEE IN THE EARLIER YEARS. AGGRIEVED, THE REVE NUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 1. THAT THE LD. CIT(A) HAS ERRED IN APPLYING LOWER ESTIMATED RATE OF PROFIT FROM BUSINESS OF THE ASSESSEE BEING A CIVIL CONTRACTOR, AFTER ACCEPTING THE REJECTION OF ACCOUNTS MADE BY THE ASSESSING OFFICER. 3.2. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED AO BY JUSTIFYING THE REJECTION OF BOOKS OF ACCOUNTS BY TH E LEARNED AO AND THE ESTIMATION OF PROFITS @ 8% OF GROSS RECEIPTS. IN RESPONSE TO T HIS, THE LEARNED AR ARGUED THAT THE LEARNED CITA HAD BROUGHT DOWN THE ESTIMATION OF NET PROFITS TO 4% BASED ON AVERAGE PROFIT RATIO OF THE ,EARLIER YEARS AND ACCORDINGLY PRAYED FOR NON INTERFERENCE TO THE LEARNED CITA ORDER IN THIS REGARD. 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD NOT DISCLOSE D ONE SAVINGS BANK ACCOUNT WITH ALLAHABAD BANK GARIAHAT BRANCH IN HIS BOOKS AND HEN CE THE LEARNED AO WAS JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS AND DETERMINING THE PROFITS ON AN ESTIMATED BASIS U/S 145(3) OF THE ACT. NOW THE SHORT POINT THAT AR ISES FOR CONSIDERATION IS WHETHER THE PROFIT DETERMINED AT 4% BY THE LEARNED CITA IS JUST IFIED IN THE FACTS OF THE CASE. WE FIND THAT THE LEARNED CITA HAD CONSIDERED THE AVERA GE NET PROFITS DECLARED BY THE ASSESSEE IN THE EARLIER YEARS AND ACCORDINGLY HAD D ETERMINED THE NET PROFIT AT 4% OF GROSS RECEIPTS WHICH IN OUR OPINION IS REASONABLE I N THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE LEARNED CITA IN THIS REGARD. ACCORDINGLY, THE GROUND NO.1 RAISED B Y THE REVENUE IS DISMISSED. ITA NO.884/KOL/2012 SRI BADAL KRISHNA SAHA A.YR.2008-09 3 4. THE SECOND ISSUE TO BE DECIDED IN THIS APPEAL I S AS TO WHETHER THE LEARNED CITA IS JUSTIFIED IN INCREASING THE TURNOVER BY RS. 22,25,0 00/- CREDITED IN THE UNDISCLOSED BANK ACCOUNT AND DIRECTING THE LEARNED AO TO COMPUTE NET PROFIT @ 6% OF RS. 22,25,000/- AS BUSINESS INCOME OF THE ASSESSEE AS AGAINST THE P EAK CREDIT ADDED BY THE LEARNED AO FROM THE UNDISCLOSED BANK ACCOUNT IN THE SUM OF RS. 91,96,120/-. 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE HAD MAINTAINED A SAVINGS BANK ACCOUNT WITH ALLAHABAD BANK, GARIAHAT BRANCH, KOLKA TA WHICH WAS NOT DISCLOSED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. THE LEARNED AO CONSIDERED THE PEAK CREDIT BALANCE FROM THE SAID BANK ACCOUNT AND BROUGHT TO TAX A SUM OF RS. 91,96,120/-. ON FIRST APPEAL, THE LEARNED CIT(A) H ELD THAT THE ONLU SOURCE OF INCOME FOR THE ASSESSEE IS HIS BUSINESS OF CONTRACTOR / SU BCONTRACTOR. THE LEARNED CITA ALSO FOUND THAT OUT OF THE TOTAL CREDITS IN THE UNDISCLO SED BANK ACCOUNT, A SUM OF RS. 22,25,000/- WAS ALSO FOUND CREDITED. THIS WAS INIT IALLY INFORMED BY THE ASSESSEE AS UNSECURED LOANS. HOWEVER, NO DETAILS FOR THE SAME WERE PRODUCED BEFORE THE LEARNED AO. LATER THE LEARNED CITA TREATED THE SUM OF RS. 22,25,000/- AS TURNOVER FROM UNDISCLOSED BUSINESS OF THE ASSESSEE OF BEING A CON TRACTOR / SUBCONTRACTOR AND DETERMINED THE NET PROFIT THEREON AT 6% OF TURNOVER OF RS. 22,25,000/- . THE LEARNED CITA ALSO HELD THAT THE ONLY SOURCE OF INCOME FOR T HE ASSESSEE IS FROM HIS CONTRACT BUSINESS AND THE LEARNED AO HAVING REJECTED THE BOO KS OF ACCOUNTS AND RESORTING TO DETERMINE THE NET PROFIT FROM BUSINESS ON AN ESTIMA TED BASIS, CANNOT MAKE ANY SEPARATE ADDITION TOWARDS PEAK CREDIT FROM THE UNDI SCLOSED BANK ACCOUNT AND AGREED TO THE PROPOSITION OF THE ASSESSEE THAT THE CREDITS IN THE SAID BANK ACCOUNT ARE ONLY TOWARDS BUSINESS RECEIPTS. ACCORDINGLY, THE LEARN ED CITA DIRECTED THE LEARNED AO TO DELETE THE ADDITION TOWARDS PEAK CREDIT IN THE S UM OF RS. 91,96,120/- AND DIRECTED TO ADD 6% OF SUM OF RS. 22,25,000/- AS BUSINESS PROFIT S OF THE ASSESSEE IN ADDITION TO THE REGULAR BUSINESS PROFITS ADDED AS PER GROUND NO.1 H EREINABOVE. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GRO UND:- 2. THAT THE LD. CIT(A) HAS ERRED IN DIRECTING TO I NCREASE THE TURNOVER OF THE ASSESSEE BY THE AMOUNT OF RS.22.25 LAKH DEPOSITED IN THE UND ISCLOSED BANK ACCOUNT OF THE ASSESSEE WHICH HE HIMSELF HAS PROVED TO BE UNSUBSTA NTIATED. ITA NO.884/KOL/2012 SRI BADAL KRISHNA SAHA A.YR.2008-09 4 4.2. THE LEARNED DR ARGUED THAT THE ACTION OF THE LEARNED CITA IS NOT IN ORDER AS ORIGINALLY THE ASSESSEE HAD STATED THAT THE CREDITS IN THE BANK ACCOUNT FOR RS. 22,25,000/- WERE UNSECURED LOANS AND FOR WHICH NO D ETAILS WERE FILED BY THE ASSESSEE. THIS FACT IS ALSO STATED BY THE LEARNED CITA IN PAR A 4.4 OF HIS ORDER. HE ARGUED THAT HAVING SAID SO, THE LEARNED CITA ERRED IN COMING TO A CONCLUSION THAT THE SAID CREDITS FOR RS. 22,25,000/- SHOULD ONLY REPRESENT BUSINESS RECEIPTS OF THE ASSESSEE AND ACCORDINGLY PLEADED FOR RESTORATION OF THE ORDER OF THE LEARNED AO IN THIS REGARD. IN RESPONSE TO THIS, THE LEARNED AR VEHEMENTLY SUPPORT ED THE ORDER OF THE LEARNED CITA AND ALSO ARGUED THAT IN ANY CASE, THE ORDER OF THE LEARNED AO FOR THIS ADDITION CANNOT BE RESTORED AS THE REVENUE IS NOT IN APPEAL BEFORE THIS TRIBUNAL FOR DELETION OF PEAK CREDIT ADDITION OF RS. 91,96,120/- FROM THE UNDISC LOSED BANK ACCOUNT. 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD NOT DISCLOSE D ONE SAVINGS BANK ACCOUNT WITH ALLAHABAD BANK GARIAHAT BRANCH IN HIS BOOKS. WE FI ND THAT THE LEARNED AO HAD CLEARLY ACCEPTED THE CREDITS AND DEBITS IN THE UNDI SCLOSED BANK ACCOUNT AS BUSINESS TRANSACTIONS OF THE ASSESSEE AND THAT IS THE REASON HE HIMSELF HAD ADOPTED PEAK CREDIT THEORY AND ADDED THE PEAK CREDIT BALANCE OF RS. 91, 96,120/- IN THE ASSESSMENT. WE FIND THAT THE LEARNED AO HAVING REJECTED THE BOOKS OF ACCOUNTS AND PROCEEDING TO DETERMINE THE NET PROFIT ON AN ESTIMATED BASIS U/S 145(3) OF THE ACT COULD NOT MAKE ANY SEPARATE ADDITION TOWARDS PEAK CREDIT BALANCE W HICH ADMITTEDLY IS ALSO ARISING OUT OF THE BUSINESS OF THE ASSESSEE. HOWEVER THE LEAR NED CIT(A) FOUND THAT THE ASSESSEE WAS NOT ABLE TO PROVE THE CREDITS IN THE SAID BANK ACCOUNT TO THE EXTENT OF RS. 22,25,000/- AND HELD THAT THE SAME HAS TO BE CONSTR UED AS TURNOVER OF THE ASSESSEE AND NET PROFIT TO BE DETERMINED AT THE RATE OF 6% THERE ON AS HE FOUND THAT PROFITS FROM UNDISCLOSED BUSINESS WOULD NORMALLY BE HIGHER THAN THE REGULAR BUSINESS PROFITS AS THE ASSESSEE NEED NOT INCUR CERTAIN EXPENDITURE THEREON . WE ALSO FIND THAT THE FINDING GIVEN BY THE LEARNED CITA THAT THE ONLY SOURCE OF I NCOME OF THE ASSESSEE IS HIS INCOME FROM CONTRACT / SUB CONTRACT BUSINESS HAS NO T BEEN REFUTED BY THE REVENUE. HENCE WE ARE IN AGREEMENT WITH THE FINDINGS GIVEN B Y THE LEARNED CITA IN THIS REGARD. ACCORDINGLY, THE GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. ITA NO.884/KOL/2012 SRI BADAL KRISHNA SAHA A.YR.2008-09 5 5. THE THIRD ISSUE TO BE DECIDED IN THIS APPEAL I S AS TO WHETHER THE LEARNED CITA IS JUSTIFIED IN DELETING THE ADDITION MADE IN THE SUM OF RS. 9,01,870/- TOWARDS UNDISCLOSED SUNDRY DEBTOR. 5.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE MADE A SECURITY DEPOSIT OF RS. 9,01,870/- WITH M/S WESTINGHOUSE SAXBY FARMER LTD F OR WHOM THE ASSESSEE WORKED AS A SUB-CONTRACTOR. AS THE PAYMENT OF SAID SECUR ITY DEPOSIT WAS NOT REFLECTED IN THE BALANCE SHEET FILED BY THE ASSESSEE, THE LEARNED AO PROCEEDED TO ADD THE SAME AS UNEXLIANED INVESTMENT U/S 69 OF THE ACT. ON FIRST APPEAL, THE LEARNED CITA FOUND THAT M/S WESTINGHOUSE SAXBY FARMER LTD IS CONTROLL ED BY GOVERNMENT OF WEST BENGAL AND THE SAID SECURITY DEPOSIT WAS MADE IN TH E EARLIER YEARS BY THE ASSESSEE AND NOT DURING THE ASSESSMENT YEAR UNDER APPEAL. MOREOV ER, HE ALSO FOUND THAT THE SECURITY DEPOSIT WAS CREATED BY DEDUCTION OUT OF SALE PROCEE DS RECEIVABLE FROM THE SAID SUB- CONTRACTOR AND ACCORDINGLY IT IS ONLY NON-MAINTENAN CE OF PROPER ENTRIES IN THE BOOKS OF ACCOUNTS WHICH IN ANY WAY HAS BEEN REJECTED BY THE LEARNED AO AND HAS BEEN ACCEPTED BY THE ASSESSEE AND THE CREATION OF SECURI TY DEPOSIT IS CLEARLY EXPLAINED BY THE ASSESSEE. THE LEARNED CITA ALSO FOUND THAT AS AND WHEN THE FINAL BILL IS CLEARED BY THE SAID PARTY I.E M/S WESTINGHOUSE SAXBY FARMER LTD, THE AMOUNT RETAINED AS DEPOSIT IS RECEIVED BY THE ASSESEE AND SHOWN AS PAR T OF TURNOVER. ACCORDINGLY, HE DIRECTED FOR DELETION OF THIS ADDITION AS UNEXPLAIN ED INVESTMENT BUT DIRECTED THE LEARNED AO TO TREAT THE SAME AS TURNOVER OF THE ASS ESSEE FOR ESTIMATION OF NET PROFIT THEREON. AGGRIEVED, THE REVENUE IS IN APPEAL BEFOR E US ON THE FOLLOWING GROUND:- 3. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN INCLUD ING THE UNDISCLOSED SUNDRY DEBTOR OF RS.9,01,870/- INTO THE TURNOVER OF THE ASSESSEE WIT HOUT VALID REASON. 5.2. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED AO. IN RESPONSE TO THIS, THE LEARNED AR ARGUED THAT THE AD DITION HAS BEEN MADE BY THE LEARNED AO ONLY ON THE PREMISE THAT THE SECURITY DE POSIT WAS NOT REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HE FURTHER ARGU ED THAT NO ADDITION NEED TO BE MADE ON THIS COUNT WHEN BOOKS ITSELF HAVE BEEN REJECTED BY THE LEARNED AO. HE ARGUED THAT THIS DEPOSIT WAS MAINTAINED WITH AN ENTITY CON TROLLED BY GOVERNMENT OF WEST ITA NO.884/KOL/2012 SRI BADAL KRISHNA SAHA A.YR.2008-09 6 BENGAL AND WAS CREATED IN THE EARLIER YEARS AND HEN CE NO ADDITION COULD BE MADE U/S 69 OF THE ACT TREATING THE SAME AS UNDISCLOSED INCO ME OF THE YEAR UNDER APPEAL. 5.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, IT IS FOUND THAT THE SECURI TY DEPOSIT MAINTAINED BY THE ASSESSEE WITH M/S WESTINHOUSE SAXY FARMET LTD, AN ENTITY UND ER THE CONTROL OF GOVERNMENT OF WEST BENGAL, TO WHOM THE ASSESSEE WAS WORKING AS A SUB-CONTRACTOR, HAD NOT BEEN REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. WE FIND THAT THE LEARNED AO HAD ALREADY REJECTED THE BOOKS OF ACCOUNTS OF THE ASSES SEE AND HAD PROCEEDED TO DETERMINE THE NET PROFIT FROM BUSINESS ON AN ESTIMATED BASIS. HAVING DONE SO, THERE IS NO NEED TO GET INTO THE SAME BOOKS FOR MAKING AN INDEPENDEN T ADDITION TOWARDS SECURITY DEPOSIT. IN ANY CASE, WE FIND THAT THE LEARNED CIT A HAD GIVEN A CATEGORICAL FINDING OF THE MANNER IN WHICH THE SECURITY DEPOSIT WAS CREATE D IN THE EARLIER YEARS AND THESE FINDINGS HAVE NOT BEEN REFUTED BY THE REVENUE . MOR EOVER, WE HOLD THAT SINCE THE SECURITY DEPOSITS WERE MADE IN THE EARLIER YEARS, T HE SAME CANNOT BE THE SUBJECT MATTER OF ADDITION AS UNDISCLOSED INCOME U/S 69 OF THE ACT IN THE ASSESSMENT YEAR UNDER APPEAL. HENCE WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CITA IN THIS REGARD. ACCORDINGLY, THE GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. 6. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL I S AS TO WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 74,826/- TOWARDS INTEREST ON FIXED DEPOSITS BY RECKONING THE SAME AS BUSINESS INCOME AS AGAINST TH E CLAIM OF THE LEARNED AO AS INCOME FROM OTHER SOURCES. 6.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE HAD DERIVED INTEREST INCOME ON FIXED DEPOSITS OF RS. 74,826/- AND CREDITED THE SAM E IN HIS PROFIT AND LOSS ACCOUNT AND CLAIMED THE SAME AS BUSINESS INCOME AS THE ASSESSEE HAD INVESTED IN FIXED DEPOSITS AND UTILIZED THE SAME AS A SECURITY FOR AVAILING OV ERDRAFT FACILITY FOR THE PURPOSE OF HIS BUSINESS. THE BOOKS OF ACCOUNTS OF THE ASSESSEE H AS BEEN REJECTED BY THE LEARNED AO WHICH IS ALSO ACCEPTED BY THE ASSESSEE. SEPARATE A DDITION WAS MADE BY THE LEARNED ITA NO.884/KOL/2012 SRI BADAL KRISHNA SAHA A.YR.2008-09 7 AO TOWARDS INTEREST ON FIXED DEPOSITS TO THE TUNE O F RS. 74,826/- AS INCOME FROM OTHER SOURCES AS THE SAME WAS CREDITED IN THE BOOKS OF TH E ASSESSEE. ON FIRST APPEAL, THE LEARNED CITA ACCEPTED TO THE CONTENTIONS OF THE ASS ESSEE BY TREATING THE INTEREST INCOME ON FIXED DEPOSITS AS BUSINESS INCOME AND SIN CE BUSINESS INCOME IS ESTIMATED BY THE LEARNED AO , NO SEPARATE ADDITION NEED TO BE MADE ON ANY OTHER COUNT. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON TH E FOLLOWING GROUND:- 4. THAT THE LD. CIT(A) HAS ERRED IN TREATING INTER EST INCOME OF RS.74,826/- AS BUSINESS INCOME OF THE ASSESSEE RELYING ON THE TREATMENT OF THIS INCOME IN EARLIER YEARS. 6.2. THE LEARNED DR ARGUED THAT THE ASSESSEE HAD I NVESTED IN FIXED DEPOSITS ONLY OUT OF IDLE FUNDS AND JUST BECAUSE THE SAME HAS BEEN UT ILIZED BY HIM BY OFFERING THE SAME AS SECURITY FOR AVAILING OVERDRAFT FACILITY IN HIS BUSINESS, THE CHARACTER OF THE RECEIPT DOES NOT UNDERGO ANY CHANGE AND HENCE THE LEARNED A O HAD RIGHTLY TREATED THE SAME AS INCOME FROM OTHER SOURCES AND ACCORDINGLY PLEADE D FOR CONFIRMATION OF THE ADDITION. IN RESPONSE TO THIS, THE LEARNED AR ARG UED THAT THE FIXED DEPOSITS HAS CLOSE NEXUS WITH THE BUSINESS OF THE ASSESSEE AND HENCE T HE INTEREST INCOME DERIVED THEREON HAS TO BE TREATED AS BUSINESS INCOME ONLY. HE FURTH ER ARGUED THAT SINCE THE BUSINESS INCOME OF THE ASSESSEE HAS BEEN DETERMINED BY THE L EARNED AO ON AN ESTIMATED BASIS, THE LEARNED CITA HAD RIGHTLY DELETED THE ADDITION O F RS. 74,826/- BEING INTEREST INCOME ON FIXED DEPOSITS, BY STATING THAT NO SEPARA TE ADDITION NEED TO BE MADE ON ACCOUNT OF ANY OTHER BUSINESS INCOME. 6.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE ARE NOT IN AGREEMENT WITH THE ARGUMENTS OF THE LEARNED AR THAT THE FIXED DEPOSITS WERE USED AS A SECURITY FOR AVAILING OVERD RAFT FACILITY BY THE ASSESSEE FOR THE PURPOSE OF HIS BUSINESS AND HENCE THE INTEREST INCO ME DERIVED THEREON HAS GOT DIRECT BUSINESS NEXUS AND HAS TO BE CONSTRUED ONLY AS BUSI NESS INCOME. IT IS SEEN THAT THE ENTIRE BOOKS OF ACCOUNTS OF THE ASSESSEE HAS BEEN R EJECTED BY THE LEARNED AO WHICH IS ALSO ACCEPTED BY THE ASSESSEE DUE TO CERTAIN DEFECT S. WE FIND THAT THE LEARNED CITA HAD ONLY ACCEPTED TO THE CONTENTIONS STATED BY THE ASSESSEE DURING FIRST APPELLATE PROCEEDINGS AND PROCEEDED TO ACCEPT THE CLAIM OF TH E ASSESSEE. NO EVIDENCES WERE PRODUCED TO SUPPORT THE CONTENTIONS OF THE ASSESSEE IN THIS REGARD EITHER BEFORE THE ITA NO.884/KOL/2012 SRI BADAL KRISHNA SAHA A.YR.2008-09 8 LEARNED CIT(A) OR BEFORE US. IN THE ABSENCE OF CL EAR EVIDENCES TO PROVE THE BUSINESS NEXUS OF INVESTING THE FIXED DEPOSITS, THE RESULTAN T INTEREST INCOME HAD TO BE TAXED ONLY AS INCOME FROM OTHER SOURCES. WE ALSO DRAW S UPPORT FROM THE DECISION OF THE HONBLE SUPREME COURT TO SUPPORT OUR VIEW IN THE CA SE OF PANDIAN CHEMICALS LTD VS CIT REPORTED IN 262 ITR 278 (SC). THIS DECISION WAS RENDERED IN THE CONTEXT OF GRANTING DEDUCTION OF INTEREST INCOME ON ELECTRICIT Y DEPOSITS FOR THE PURPOSE OF SECTION 80HH OF THE ACT. IN THIS CASE, THE HONBLE APEX C OURT HELD THAT THOUGH ELECTRICITY IS REQUIRED FOR THE PURPOSE OF RUNNING THE INDUSTRIAL UNDERTAKING IT CANNOT BE CONSTRUED THAT INTEREST DERIVED FROM SUCH ELECTRICITY DEPOSIT S COULD BE TREATED AS PROFITS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR THE PURPOSE OF SECTION 80HH OF THE ACT. APPLYING THE SAME ANALOGY TO THE FACTS OF THE INSTA NT CASE, WE HOLD THAT THE INTEREST INCOME ON FIXED DEPOSITS EARNED BY THE ASSESSEE IS TO BE TAXED ONLY AS INCOME FROM OTHER SOURCES AND ACCORDINGLY THE GROUND NO. 4 RAIS ED BY THE REVENUE IS ALLOWED. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 08.10.2015. SD/- SD/- [S.S.VISWANETHRA RAVI] [M.BALAGAN ESH] JUDICIAL MEMBER ACCOUNTANT MEMBE R DATE :.08.10.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . SRI BADAL KRISHNA SAHA, 2/222, SREE COLONY REGENT E STATE, KOLKATA- 700092. 2 THE I.T.O., WARD-53(4), KOLKATA. 3 . THE CIT-XVIII, KOLKATA, 4. THE CIT(A)-XXXIII, KOLKATA. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA NO.884/KOL/2012 SRI BADAL KRISHNA SAHA A.YR.2008-09 9