Pawan Kumar Goyal, Hyderabad V. ITO, Ward-1, Warangal

ITA 900/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69823 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R LAXMAN
• Assessee Lawyers: RAVI SHESHAGIRI RAO
• Keywords: Unexplained cash credit; Peak credit
• Section: 234B; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 900/HYD/2013 ASSESSMENT YEAR 2009-10 SRI PAWAN KUMAR GOYAL WARANGAL PAN: AFZPG2987C VS. THE INCOME TAX OFFICER WARD-1 WARANGAL APPELLANT RESPONDENT APPELLANT BY: SRI RAVI SHESHAGIRI RAO RESPONDENT BY: SRI R. LAXMAN DATE OF HEARING: 17.09.2013 DATE OF PRONOUNCEMENT: 17.09.2013 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-VI, HYDERABAD DATED 29.3.2013 FOR ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APP EAL: 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS TO THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT. 2. THE LEARNED CIT(A) ERRED HOLDING THAT THE DEPOSI TS MADE INTO THE BANK ACCOUNT AGGREGATING TO RS. 1,52,81,943/- REPRESENT THE BUSINESS TURNOVER OF TH E APPELLANT AND FURTHER ERRED IN ESTIMATING THE INCOM E AT 20% OF THE SAID AMOUNT OF RS. 1,52,81,945/-. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING LEVY OF I NTEREST U/S. 234A, 234B AND 234C OF THE IT ACT. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE, AN INDIVIDUAL SHOWN TO HAVE ENGAGED IN THE BUSINESS OF TRADING IN SEEDS AND DURING THE COURSE OF THE SCRUTINY PROCEEDINGS, THE AO FOUN D AND OBSERVED THAT THE ASSESSEE MAINTAINED BANK ACCOUNT WITH PUNJ AB NATIONAL BANK AND ORIENTAL BANK OF COMMERCE AT WARANGAL, AND WERE NOT DISCLOSED ITA NO. 900/HYD/2013 SRI PAWAN KUMAR GOYAL ================== 2 IN THE BOOKS OF ACCOUNT. THE TOTAL CASH CREDITS INT O THE SAID BANK ACCOUNTS WERE QUANTIFIED AT RS. 1,18,87,481/- , WITH AN AMOUNT OF RS. 45,53,670/- DEPOSITED IN TO PUNJAB NATIONAL BANK AC COUNT AND RS. 73,33,811/- INTO ORIENTAL BANK OF COMMERCE ACCOUNT. THE SAID AMOUNTS WERE TREATED AS UNEXPLAINED CREDITS, WHILE COMPLETING THE ASSESSMENT EX-PARTE, AS THE ASSESSEE FAILED TO ATTE ND AND EXPLAIN THE SOURCES FOR SUCH DEPOSITS, IN REFERENCE TO THE STAT UTORY NOTICES ISSUED, AND THE TOTAL INCOME WAS DETERMINED AT RS. 1,20,30, 960/-. THE APPEAL IS MAINLY AGAINST SUCH ADDITION. 4. BEFORE THE CIT(A), THOUGH THE ASSESSEE RAISED AS MANY AS 6 GROUNDS OF APPEAL, THE SAME ARE MAINLY AGAINST COMP LETION OF ASSESSMENT U/S. 144 AND FOR MAKING ADDITION OF RS. 1,18,87,481/-, ON ACCOUNT OF TREATING THE ENTIRE DEPOSITS AS THE INCO ME OF THE ASSESSEE. THE ASSESSEE'S CONTENTION AGAINST PASSING THE ORDER U/S. 144 WAS THAT THE AO ERRED IN PASSING SUCH ORDER. HOWEVER, WHILE CONTINUING THE SUBMISSIONS, THE ASSESSEE DID NOT ELABORATE ON THE ISSUE. 5. THE CIT(A) OBSERVED THAT THE ASSESSEE WAS GIVEN ADEQUATE OPPORTUNITIES INCLUDING THE SHOW-CAUSE NOTICE FOR E XPLAINING THE SOURCES FOR THE DEPOSITS INTO BANK ACCOUNT, APART F ROM THE OTHER RELEVANT INFORMATION ASSOCIATED WITH THE SCRUTINY P ROCEEDINGS. THE CIT(A) FURTHER OBSERVED THAT THE GIST OF OPPORTUNIT IES WERE ENUMERATED IN ASSESSMENT ORDER, AND AS SUCH THE ORDER OF AO IN COMPLETING THE ASSESSMENT PROCEEDINGS U/S. 144 OF IT ACT, IN ABSEN CE OF RESPONSE/COMPLIANCE TO THE NOTICES, IS JUSTIFIED. ACCORDINGLY, THE CIT(A) DISMISSED THE GROUND U/S. 144 OF THE ACT. 6. THE CIT(A) ALSO OBSERVED THAT WHILE FINALISING T HE SCRUTINY PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE MAIN TAINED TWO ACCOUNTS WITH ORIENTAL BANK OF COMMERCE (A/C. NO. 9 912151003334) AND PUNJAB NATIONAL BANK (A/C. NO. 0468000100504893 ) WHICH WERE NOT DISCLOSED IN THE BOOKS. IT WAS FURTHER OBSERVE D THAT AN AMOUNT OF RS. 45,53,670/- AND RS. 73,33,881/- WERE DEPOSITED AS CASH INTO THE ITA NO. 900/HYD/2013 SRI PAWAN KUMAR GOYAL ================== 3 ORIENTAL BANK OF COMMERCE AND PUNJAB NATIONAL BANK, RESPECTIVELY. SINCE THE BANK ACCOUNTS ARE NOT DISCLOSED AND IN SP ITE OF REPEATED NOTICES THE ASSESSEE DID NOT COMPLY AND EXPLAIN THE SOURCES FOR SUCH DEPOSITS, THE AO TREATED THE AMOUNTS OF DEPOSITS AS UNEXPLAINED INCOME OF THE ASSESSEE FOR THE YEAR UNDER REFERENCE , TO THE EXTENT OF RS. 1,18,87,481/-. 7. THE ASSESSEE OBJECTED TO TREATING THE DEPOSITS O F RS. 1,18,87,841/-, AS UNEXPLAINED INCOME. WHILE CONFIRM ING THE AMOUNTS AS DEPOSITS INTO THE TWO BANK ACCOUNTS AT ORIENTAL BANK OF COMMERCE (RS. 45.53 LAKHS) AND PUNJAB NATIONAL BANK (RS. 73. 33 LAKHS), THE ASSESSEE SUBMITTED THAT THE SAID DEPOSITS ARE NOT R ECORDED IN BOOKS OF ACCOUNT AS THEY RELATE TO OTHER PETTY TRADERS IN TH E SIMILAR BUSINESS, WHO DEPOSITED THE AMOUNTS INTO THE BANK ACCOUNT OPE NED BY THE ASSESSEE AND FURTHER SUBMITTED THAT THERE WERE WITH DRAWALS FROM THE DEPOSITS MADE, AS SUCH THE GROSS RECEIPTS SHOULD NO T HAVE BEEN ADDED BY THE AO AND ONLY PEAK CREDITS COULD HAVE BEEN ADD ED, WHICH WORKED OUT TO RS. 4,41,867/- (ON 12.02.2009) IN CASE OF OR IENTAL BANK OF COMMERCE ACCOUNT AND RS. 2,40,252/-, FOR PUNJAB NAT IONAL BANK ACCOUNT (ON 11.04.2008). 8. IN LIGHT OF THE SUBMISSIONS OF THE ASSESSEE ON T HE ABOVE LINES, WHICH CONSTITUTED ADDITIONAL INFORMATION, THE SAME WAS REFERRED TO THE AO BY THE CIT(A), FOR FURTHER VERIFICATION OF THE C LAIMS AND SUBMISSION OF REPORT. THE AO SUBMITTED THE REPORT VIDE LETTER DATED 21.03.2013 TO THE CIT(A), WHERE IT HAS BEEN OBSERVED THAT ONLY SU BMISSIONS ARE THE ADDITIONAL INFORMATION AND THE STATEMENTS OF BOTH T HE BANK ACCOUNTS WERE EXAMINED AT THE TIME OF SCRUTINY ASSESSMENTS. HOWEVER, WHILE REFUSING TO LOOK INTO THE ISSUE OF LOOKING THE RECE IPTS AS TRADING RECEIPTS OF OTHER PARTIES IN SAME TRADE, ON WHICH HE RECEIVE D COMMISSION, THE AO HAD CONFIRMED THE PEAK CREDITS AT RS. 4,41,867/- AS ON 12.02.2009 IN CASE OF ORIENTAL BANK OF COMMERCE ACCOUNT AND RS . 2,40,252/-, AS ON 11.04. 2008 IN CASE OF PUNJAB NATIONAL BANK ACCO UNT. ITA NO. 900/HYD/2013 SRI PAWAN KUMAR GOYAL ================== 4 9. THE CIT(A) GONE THROUGH THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AND IN REMAND REPORT, ALONG WITH T HE SUBMISSIONS OF THE ASSESSEE. AS COULD BE SEEN FROM THE FACTS OF THE CASE THAT ACCOUNTS WITH ORIENTAL BANK OF COMMERCE AND PUNJAB NATIONAL BANK AT WARANGAL WERE OPENED AND MANAGED BY THE ASSESSEE AND HAVE COME TO THE NOTICE OF THE AO, WHICH WERE NOT DISCLO SED IN BOOKS. THE TOTAL AGGREGATE DEPOSITS IN CASH AND CHEQUES WERE Q UANTIFIED AT RS. 1,18,87,481, WITH AN AMOUNT OF RS. 45,53,670/-, SHO WN IN ORIENTAL BANK OF COMMERCE ACCOUNT AND RS. 73,33,811/- IN PUN JAB NATIONAL BANK ACCOUNT. WHILE NARRATING IN ASSESSMENT ORDER, IT WAS MENTIONED AS DEPOSITS BY CASH, WHEREAS IT WAS MENTIONED AS DE POSITS BY CASH AND CHEQUES, IN THE TABULAR FORMAT INDICATED IN ASS ESSMENT ORDER. FURTHER, THE AGGREGATE AMOUNTS OF DEPOSITS INTO SUC H ACCOUNT HAS REVEALED THE DEPOSITS AT RS. 49,77,699/- FOR PNB AN D RS. 1,03,64,246/- IN OBC ACCOUNT, AS PER THE BANK ACCOUNT STATEMENTS FURNISHED DURING THE APPELLATE PROCEEDINGS. THESE VARIATIONS ARE NEI THER POINTED OUT BY THE AO IN REMAND REPORT NOR EXPLAINED BY THE ASSESS EE, IN HIS SUBMISSIONS, EXCEPT INDICATING TILE VARIATIONS IN T HE AMOUNTS. THUS, THE AMOUNTS OF DEPOSITS ARE ON INCREASE IN OBC (RS. 1,0 3,64,246/- AS AGAINST RS. 45,53,670/-), IT WAS DECREASED IN PNB A CCOUNT (RS. 49,77,699/- AS AGAINST RS. 73,33,811/-); AS PER THE STATEMENTS FURNISHED AS AGAINST THE AMOUNTS AS ADOPTED BY THE AO IN ASSESSMENT ORDER. ACCORDINGLY, THE CORRECT AMOUNTS OF DEPOSIT S INTO THE BANK ACCOUNT ARE TAKEN AT RS. 1,52,81,945/- (RS. 49,77,6 29/- FOR PNB ACCOUNT AND RS. 1,03,01,246/- TOR ORIENTAL BANK OF COMMERCE ACCOUNT WHICH REPRESENT THE UNACCOUNTED TURNOVER/RECEIPTS R EFLECTED IN THE SAID BANK ACCOUNTS. 10. THE CIT(A) OBSERVED THAT THOUGH THE ASSESSEE AR GUED THAT THE OTHER PARTIES IN SAME TRADE DEPOSITED THEIR TRADE R ECEIPTS IN BANK ACCOUNTS, OPENED BY ASSESSEE, IT WAS NOT SUBSTANTIA TED IN ANY FORMAT. IT IS A FACT THAT THERE ARE CERTAIN DEPOSITS AND WI THDRAWALS BY CLEARING BY INSTRUMENT OF CHEQUES, AND WILL NOT HELP THE ASS ESSEE, WITH NO SUPPORT TO SUCH THEORY. FURTHER, THE THEORY OF PEAK CREDIT MAY NOT ITA NO. 900/HYD/2013 SRI PAWAN KUMAR GOYAL ================== 5 REFLECT THE CORRECT PICTURE OF THE PROFIT EARNED OU TSIDE THE BOOKS, WHERE CERTAIN TRANSACTIONS WERE ALSO CARRIED OUT BY CHEQU ES, APART FROM CASH. HENCE, IT WAS ACCEPTED BY THE ASSESSEE THAT THE DEP OSITS INTO THE TWO BANK ACCOUNTS REPRESENT THE TRADE RECEIPTS OF THE A SSESSEE, ON WHICH PROFITS MAY BE ESTIMATED, AS AN ALTERNATE METHOD OF WORKING OUT THE PROFIT ON THE BASIS OF PEAK CREDITS. HOWEVER, NO BA SIS OR RATE OF PROFIT WAS INDICATED BY APPELLANT TO WORK OUT THE PROFITS RELATED TO THE UNACCOUNTED TRADE RECEIPTS OR TURNOVER, ACHIEVED BY ASSESSEE WHICH HAS BEEN WORKED OUT AT RS. 1,52,81,945/, ON THE BAS IS OF STATEMENT OF BANK ACCOUNTS FURNISHED, AS INDICATED. 11. THE CIT(A) OBSERVED THAT WHERE THE BOOKS ARE NO T RELIABLE, ESTIMATION HAS TO BE RESORTED, BUT ON REASONABLE BA SIS, AND BY TAKING ALL FACTS INTO CONSIDERATION. IN THIS CASE, NEITHER THE ASSESSEE HAS FURNISHED THE DETAILS TO INDICATE THE PROFITS AVAIL ABLE TO HIM, IN THE BOOKS OF ACCOUNT, SINCE COMMISSION ALONE WAS OFFERE D IN P&L ACCOUNT, AS INCOME. ACCORDINGLY, THE PROFIT OF THE ASSESSEE ESTIMATED AT 20% ON TILE GROSS RECEIPTS OF RS. 1,52,81,945/- AS DEPOSIT ED INTO THE TWO BANK ACCOUNTS WHICH WERE NOT REFLECTED THROUGH BOOKS AND THIS PERCENTAGE APPEARS REASONABLE, SINCE ALL THE OVERHEADS AND EXP ENSES WERE ALREADY METED OUT THROUGH BOCKS. ACCORDINGLY, THE A O IS DIRECTED TO ESTIMATE THE PROFITS FOR THE ASSESSEE AT 20% ON THE AMOUNTS CF RS. 1,52,81,945/-, IN ADDITION TO THE REGULAR INCOME AD MITTED. TO COMPUTE THE TOTAL TAXABLE INCOME OF THE ASSESSEE, AS AGAINS T THE ADDITION OF RS. 1,18,87,481 MADE BY AO IN ASSESSMENT ORDER. ACCORD INGLY, THE CIT(A) ALLOWED THE ASSESSEE'S APPEAL PARTLY. AGGRIEVED, T HE ASSESSEE IS IN APPEAL BEFORE US. 12. ACCORDING TO THE AR THE INCOME OF THE ASSESSEE IS T O BE ESTIMATED AT 4% AS THE ASSESSEE IS IN THE BUSINESS OF TRADING IN SEEDS. 13. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT TH E ORDER OF THE CIT(A) IS TO BE CONFIRMED. ITA NO. 900/HYD/2013 SRI PAWAN KUMAR GOYAL ================== 6 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, THE ASSESSEE HAS NOT ACTIV ELY PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. THE CIT(A) ESTIMATED THE I NCOME OF THE ASSESSEE AT 20% OF THE GROSS RECEIPTS DEPOSITED IN TWO BANK ACCOUNTS. IN OUR OPINION, IT IS APPROPRIATE TO REMIT THE ISSU E BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO SUBSTANTIATE HIS CLAIM AND PROVE THAT THE ASSESSEE ACCOUNTED THE TUR NOVER IN HIS BOOKS OF ACCOUNT. ACCORDINGLY, THE ENTIRE ISSUE IS REMIT TED TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ASSESSMENT. NEEDLESS TO SAY THAT THE ASSESSEE SHALL BE GIVEN ADEQUATE OPPORTUNITY OF HEA RING. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2013. SD/- (SAKTIJIT DEY) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 17 TH SEPTEMBER, 2013 COPY FORWARDED TO: 1. SRI PAWAN KUMAR GOYAL, C/O. SRI S. RAMA RAO, AD VOCATE, FLAT NO. 102, SHRIYA'S ELEGANCE, H. NO. 3-6-643, ST. NO. 9, HIMAYATHNAGAR, HYDERABAD-500 029. 2. THE INCOME TAX OFFICER, WARD-1, WARANGAL 3. THE CIT(A)-VI, HYDERABAD. 4. THE CIT-VI, HYDERABAD. 5. THE DR 'A' BENCH, ITAT, HYDERABAD. TPRAO