ITO 22(2)(2), NAVI MUMBAI V. G. SAMSUDDIN, MUMBAI

ITA 917/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2449 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARSHAD VENGURLEKAR
• Keywords: Business income; Business expenditure; Peak credit
• Section: 143(3); 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.917/MUM/2014 ASSESSMENT YEAR: 2009-10 ITO 22 ( 2 )( 2 ) 4 TH FLOOR, TOWER NO.6 R.NO.20, VASHI RLY STN COMPLEX VASHI NAVI MUMBAI-400703 / VS. G. SAMSUDDIN, 201, SHREYAS APARTMENT, 2 ND FLOOR, OPP. SWAMI SAMARTH TEMPLE, D.L. VAIDYA ROAD, DADAR (W) MUMBAI-400028 (REVENUE) (RESPONDENT ) P.A. NO. AYPPS4239N REVENUE BY HARSHAD VENGURLEKAR ( D R ) RESPONDENT BY MANDAR VAIDYA ( A R) / DATE OF HEARING : 28/10/2015 / DATE OF ORDER: 18/11/2015 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-3 3, MUMBAI {(IN SHORT LD. CIT(A)} DATED 01.11.2013 FOR THE ASSESSMENT YEAR 2009-10, DECIDED AGAINST THE ASSESS MENT G. SAMSUDDIN 2 ORDER PASSED BY THE ASSESSING OFFICER (IN SHORT AO ) U/S 143(3) OF THE ACT. THE REVENUE HAS FILED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE A .O TO TAKE 25% OF GROSS RECEIPTS TO BE THE NET PROFIT FRO M ACTIVITIES IN UNDISCLOSED ICICI BANK ACCOUNT AS AGA INST THE ADDITION OF CASH DEPOSITS OF RS. 21,46,330/- MA DE BY THE A.O. U/S 68 OF THE I.T. ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN APPRECIATING THE FACT THAT THE BANK ACCOUNT MAINTAINED WITH ICICI BANK WAS NOT DISCLOSED BY THE ASSESSEE EVEN DURING THE ASSESSMEN T PROCEEDINGS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO 25% OF GROSS RECEIPTS INSPITE OF THE FA CT THAT THE ASSESSEE COULD NOT CORROBORATE WITH EVIDENCES THAT DEPOSITED CASH AMOUNT HAD BEEN UTILIZED FOR PURCHAS ING OF TICKETS AND BUSINESS EXPENSES. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CI T(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSES SING OFFICER BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2 . DURING THE COURSE OF HEARING, SHRI HARSHAD VENGUR LEKAR DEPARTMENTAL REPRESENTATIVE ( LD DR) ON BEHALF OF T HE REVENUE G. SAMSUDDIN 3 AND SHRI MANDAR VAIDYA AUTHORISED REPRESENTATIVE (L D COUNSEL) ON BEHALF OF THE RESPONDENT, ARGUED THE CA SE. 3 . ALL THE GROUNDS ADDRESS THE COMMON ISSUE OF GRIEV ANCE OF THE REVENUE WITH RESPECT TO ACTION OF LD. CIT(A) IN DIRECTING THE AO TO TAKE 25% OF GROSS RECEIPTS TO BE THE NET PRO FIT FROM THE BUSINESS ACTIVITIES OF THE ASSESSEE, AS AGAINST THE ADDITIONS MADE BY THE AO ON ACCOUNT OF CASH DEPOSITED INTO TH E ICICI BANK ACCOUNT OF THE ASSESSEE DURING THE YEAR, AGGRE GATING TO RS.21,46,330/- U/S 68 OF THE ACT 1961. 4. THE BRIEF FACTS, AS CULLED OUT FROM THE ASSESSMENT ORDER, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVED PENS ION INCOME FROM LIC OF INDIA RS.7200. APART FROM THE ABOVE ASS ESSEE, WAS ENGAGED IN THE BUSINESS OF TRAVEL AGENCY IN THE NAM E AND STYLE OF M/S NEW EXPO INDIA. DURING THE YEAR, ASSESSEE DE CLARED TICKET BOOKING COMMISSION AND OTHER SERVICE CHARGES FOR RS.2,87,590/- AND DECLARED NET PROFIT OF RS.1,88,26 3/-. ASSESSEE IS PARTNER IN M/S. EXPO INDIA TRAVEL AGENC Y, A PARTNERSHIP FIRM AND RECEIVED REMUNERATION AND INTE REST ON CAPITAL. APART FROM THE ABOVE, ASSESSEE DECLARED IN COME FROM OTHER SOURCES BEING INTEREST ACCRUED ON FIXED DEPOS ITS, BANK INTEREST ETC. 5 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT W AS NOTED BY THE AO THAT THE ASSESSEE HAS DEPOSITED CASH OF RS.21,46,330/- IN ITS BANK ACCOUNT WITH ICICI BANK. ACCORDINGLY, ASSESSEE WAS ASKED TO EXPLAIN SOURCES OF THE SAME AND ITS JUSTIFICATION. IT WAS FURTHER NOTED BY THE AO THAT G. SAMSUDDIN 4 PROFIT AND LOSS ACCOUNT OF THE ASSESSEE SHOWS COMMI SSION INCOME OF RS.2,87,590/- AND NET PROFIT OF RS.1,88,2 63/-. IN RESPONSE, THE ASSESSEE SUBMITTED PARTICULARS OF THE ENTRIES IN THE ICICI BANK ACCOUNT AND ALSO SUBMITTED RE-CASTED PROFIT AND LOSS ACCOUNT, WHEREIN THE INCOME WAS SHOWN BY H IM ON GROSS BASIS, SHOWING BUSINESS RECEIPT OF RS.34,57,9 21/-, AND AGAINST THIS RECEIPT, HE SHOWED PURCHASES OF TICKET S AGGREGATING TO RS.31,70,331/-, AND DECLARED GROSS P ROFIT OF RS.2,87,590/-, AND AFTER CLAIMING VARIOUS EXPENSES THE ASSESSEE SHOWED NET PROFIT OF RS.1,88,263/-, I.E. A T THE SAME AMOUNT WHICH WAS SHOWN IN THE ORIGINAL PROFIT AND L OSS ACCOUNT. THE AO WAS NOT SATISFIED WITH THE RESPONSE OF THE ASSESSEE, AND THEREFORE, MADE ADDITION OF RS.21,46, 330/- U/S 68 ON ACCOUNT OF CASH DEPOSITED INTO THE BANK ACCOU NT. 6. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFO RE THE LD. CIT(A), WHEREIN IT WAS SUBMITTED IN DETAIL THAT THE ASSESSEE WAS WORKING AS TICKETING AGENT AND THEREFORE, CASH WAS RECEIVED BY HIM ON ACCOUNT OF SALE OF TICKETS WHICH WAS DEPOSITED INTO THE BANK ACCOUNT, AND CASH WAS WITHD RAWN FOR PURCHASING OF TICKETS FROM CONCERNED AGENCIES AND F OR MAKING PAYMENTS BY CHEQUES TO THESE AGENCIES AND FOR VARIO US TYPES OF ROUTINE EXPENSES. THE ASSESSEE ALSO SUBMITTED VA RIOUS DOCUMENTS SHOWING NATURE AND PARTICULARS OF DEPOSIT S AND WITHDRAWALS FROM THE BANK ACCOUNT OF THE ASSESSEE. LD. CIT(A) CONSIDERED SUBMISSION OF THE ASSESSEE BUT WAS NOT F ULLY SATISFIED WITH THE SAME. IT WAS MENTIONED BY THE LD . CIT(A) THAT THE ASSESSEE COULD NOT SUBSTANTIATE WITH EVIDE NCES THAT G. SAMSUDDIN 5 CASH DEPOSITED HAS BEEN FULLY UTILIZED FOR THE PUR CHASE OF TICKETS AND/OR BUSINESS EXPENSES. HOWEVER, TAKING HOLISTIC VIEW AND TO MEET THE ENDS OF JUSTICE, IT WAS HELD B Y THE LD. CIT(A) THAT 25% OF THE GROSS RECEIPTS SHOULD BE TAK EN TO BE NET PROFIT FROM THE ACTIVITIES IN THE ICICI BANK ACCOUN T, NOT DISCLOSED BY THE ASSESSEE. THUS, PART RELIEF WAS AL LOWED BY HIM. 7 . BEING AGGRIEVED, THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. IT HAS BEEN SUBMITTED BY THE LD. DR THAT THE ACTION OF LD. CIT(A) IS WHOLLY AND JUSTIFIED. ACCORDING TO HIM LD. CIT(A) OUGHT TO HAVE UPHELD, FULLY, THE ADDITION O F RS.21,46,330/- MADE BY THE AO ON ACCOUNT OF CASH DE POSITED INTO THE BANK ACCOUNT, AND THAT NO RELIEF COULD HAV E BEEN GIVEN TO THE ASSESSEE IN THE FACTS AND CIRCUMSTANCE S OF THE CASE. IN SUPPORT OF HIS VIEW, HE PLACED RELIANCE UP ON THE JUDGMENTS OF DELHI HIGH COURT IN THE CASE OF CIT VS CHANDRA PRAKASH PABREJA 372 ITR 472 AND CIT VS. SARWANKUMAR SHARMA 2014 ITL 1061 (GUJ-HC). 8. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE HAS VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A). IT WA S SUBMITTED BY HIM THAT LD. CIT(A) HAS RENDERED JUSTI CE TO THIS CASE BY TAKING A HOLISTIC VIEW OF THE MATTER IN AS MUCH AS, AN ADDITION EQUIVALENT TO 25% OF THE GROSS RECEIPTS HA S BEEN SUSTAINED BY HIM, WHEREAS THE CASE OF THE ASSESSEE WAS FULLY EXPLAINED AND NO ADDITION AT WAS SUSTAINABLE. BUT T O REDUCE THE LITIGATION, THE ASSESSEE ACCEPTED THE ORDER OF LD. CIT(A), BUT REVENUE HAS CHALLENGED THE ORDER OF LD. CIT(A) WITHOUT G. SAMSUDDIN 6 ANY JUSTIFICATION AND JUST TO KEEP THE LITIGATION A LIVE. HE HAS TAKEN US THROUGH VARIOUS PAGES OF THE PAPER BOOK TO SHOW THAT COMPLETE DETAILS HAVE BEEN FILED. THIS FACT IS ON RECORD, AS IS SEEN FROM THE BALANCE SHEET OF LAST THREE YEARS FILED BY THE ASSESSEE IN THE PAPER BOOK, THAT THE ASSESSEE IS IN THE BUSINESS OF TICKETING SINCE LAST MANY YEARS. IT IS QUITE NATURAL THAT IN THE BUSINESS OF TICKETING, PURCHASE OR SALE IS DONE IN CASH. CASH RECEIVED ON ACCOUNT OF SALE PROCEEDS OF TICKET WAS DEPOSITED IN THE BANK ACCOUNT, FOR BETTER MANAGEMEN T. THE ASSESSEE WAS MAKING PAYMENTS TOWARDS PURCHASE OF TI CKETS EITHER BY CHEQUES OR BY WITHDRAWING CASH FROM THE B ANK ACCOUNT. IT WAS LASTLY SUBMITTED BY HIM THAT THE FA CTS ARE PLAIN AND SIMPLE, WHICH HAVE BEEN MADE MORE COMPLIC ATED BY THE LD. AO, UNNECESSARILY. HE DREW OUR ATTENTION ON VARIOUS ENTRIES OF THE BANK STATEMENT SHOWING THAT PAYMENTS WERE MADE FROM THE BANK ACCOUNT TOWARDS PURCHASE OF TICK ETS. IN SUPPORT OF HIS PROPOSITION, HE PLACED RELIANCE UPON FOLLOWING JUDGMENTS: (I) MEDIGA ASHOK KUMAR, ITA. NO.1674/HYD/2013 DT. 29 TH DECEMBER 2014 (II) NISAR K. HIRANI ITA NO.6054/MUM/2013 DT. 12 TH FEBRUARY 2014 (III) SURINDER KAUR ITA/522/DEL./2012 DT. 3 RD MAY 2013 9. BEFORE CONCLUDING HIS ARGUMENTS, IT WAS SUBMITTED BY THE LD. COUNSEL, WITHOUT PREJUDICE, THAT, EVEN IF WE TA KE THE PEAK CREDIT OF THE ENTRIES IN THE BANK ACCOUNT ON ACCOUN T OF CASH WITHDRAWALS AND CASH DEPOSITED, THE AMOUNT SO ARRIV ED WOULD G. SAMSUDDIN 7 BE LESSER THEN THE AMOUNT OF ADDITION SUSTAINED BY LD. CIT(A), AND THEREFORE, NO OTHER ADDITION WAS LIABLE TO BE M ADE, AND ORDER OF THE LD. CIT(A) BEING FAIR AND JUDICIOUS DE SERVES TO BE UPHELD, AND THEREFORE, THE APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED. 10 . WE HAVE GONE THROUGH THE SUBMISSIONS MADE BY BOTH THE SIDES, ORDERS OF THE LOWER AUTHORITIES AND MATERIAL PLACED BEFORE US FOR OUR CONSIDERATION. THIS FACT HAS NOT BEEN DENIED THAT THE ASSESSEE HAS BEEN IN THE BUSINESS TICKETIN G SINCE LAST FEW YEARS. IN THIS YEAR ALSO, THE ASSESSEE WAS ENGA GED IN THE BUSINESS OF TRAVEL AGENCY UNDER THE NAME AND STYLE OF M/S. NEW EXPO INDIA AND DECLARED INCOME FROM TICKET BOOK ING COMMISSION. THESE FACTS WERE MENTIONED BY THE AO HI MSELF IN PARA 3 OF THE ASSESSMENT ORDER. ONCE THIS FACT IS O N RECORD, IT WOULD NOT BE UNJUSTIFIED TO BELIEVE THAT CASH WAS R ECEIVED BY THE ASSESSEE ON ACCOUNT OF SALE PROCEEDS OF TICKETS . IF THE ASSESSEE WOULD HAVE BEEN IN A POSITION TO EXPLAIN E ACH AND EVERY ENTRY, THEN, PROBABLY NO ADDITION WOULD HAVE BEEN LIABLE TO BE MADE IN THE HANDS OF THE ASSESSEE. BUT SINCE THE ASSESSEE FAILED TO DO SO, THEREFORE, ASSESSEES CLA IM WAS NOT FULLY ACCEPTABLE, AND THEREFORE, UNDER THESE CIRCUM STANCES A JUDICIOUS ESTIMATE OF THE PROFIT OF THE ASSESSEE WA S THE ONLY COURSE AVAILABLE WITH THE AO AND LD. CIT(A). HOWEVE R, SINCE AO FAILED TO DO SO, LD. CIT(A) DID THIS EXERCISE BY TAKING HOLISTIC VIEW OF THE MATTER AND FOLLOWING JUDICIOUS APPROACH, PROFIT OF 25% WAS ESTIMATED ON THE AMOUNT OF GROSS RECEIPTS. IN OUR CONSIDERED VIEW, IT CANNOT BE ALLEGED THAT E STIMATE G. SAMSUDDIN 8 MADE BY THE LD. CIT(A) WAS ON THE LOWER SIDE. NO SU CH ALLEGATION HAS BEEN MADE BY THE REVENUE IN ITS GROU NDS OR BY LD. DR BEFORE US. IT HAS BEEN ARGUED BY THE LD. DR THAT ENTIRE AMOUNT OF CASH DEPOSITED INTO THE BANK ACCOUNT SHOU LD HAVE BEEN ADDED AS INCOME OF THE ASSESSEE. IN OUR CONSID ERED VIEW, THE ARGUMENT OF THE LD. DR IS NEITHER FAIR NOR JUDI CIOUS, AND THEREFORE, NOT SUSTAINABLE IN THE EYES OF LAW. WE F IND THAT, AT TIMES, THE REVENUE AUTHORITIES ARE CALLED UPON TO M AKE AN EX- PARTE ASSESSMENT, AND ALSO ESTIMATION OF INCOME OF THE ASSESSEE. BUT, IN OUR CONSIDERED OPINION, THE BEST JUDGMENT ASSESSMENT AS PER LAW DOES NOT MEAN BEST PUNISHMEN T ASSESSMENT. WHILE MAKING BEST JUDGMENT ASSESSMENT A ND ESTIMATING THE INCOME, THE REVENUE AUTHORITIES ARE OBLIGED UNDER THE LAW TO FOLLOW SOUND AND JUDICIOUS PRINCIP LES OF COMMERCE AND ACCOUNTANCY. THE INCOME TAX PROCEEDING S ARE NOT MEANT TO SETTLE THE SCORE WITH TAX PAYERS. THES E PROCEEDINGS CAST ONEROUS RESPONSIBILITIES UPON REVE NUE OFFICERS TO DETERMINE THE TAXABLE INCOME AND TAXABL E THEREON BY THE ASSESSEE, WITHIN THE FRAME WORK OF THE LAW. THE TAX REGIME OF OUR COUNTRY WORKS WITHIN THE FUNDAMENTAL PRINCIPLE ADOPTED IN CONSTITUTION OF OUR COUNTRY THAT NO TAX CAN BE COLLECTED WITHOUT AUTHORITY OF THE LAW. 11. ADVERTING BACK TO THE FACT OF THE CASE, ONE MORE A RGUMENT HAS BEEN PUT FORTH BEFORE US I.E. TELESCOPING OF WI THDRAWALS AND DEPOSITS. THERE HAVE BEEN DEPOSITS AS WELL AS W ITHDRAWALS IN THE BANK ACCOUNT. IF THE CASH DEPOSITED IN THE B ANK ACCOUNT IS REQUIRED TO BE ADDED AS INCOME, IN OUR V IEW, THE G. SAMSUDDIN 9 SAME CAN BE DONE AFTER GIVING SET OFF OF THE CASH W ITHDRAWN FROM THE BANK ACCOUNT, MORE PARTICULARLY, IN ABSENC E OF ANY CONTRARY EVIDENCES BROUGHT ON RECORD BY THE AO SHOW ING THAT CASH WITHDRAWN HAS BEEN UTILIZED BY THE ASSESSEE, E LSEWHERE. NO SUCH ALLEGATION HAS BEEN MADE IN THE ASSESSMENT ORDER THAT AMOUNTS OF CASH WITHDRAWN HAVE BEEN UTILIZED SOMEWHERE ELSE. UNDER THESE CIRCUMSTANCES, THE AMOU NT OF ADDITION, WHICH COULD HAVE BEEN MADE ON THIS ACCOUN T, COULD NOT HAVE EXCEEDED THE PEAK AMOUNT OF CASH DEPOSITED BY THE ASSESSEE IN THE BANK ACCOUNT DURING THE YEAR. THE A SSESSEES COUNSEL HAS SUBMITTED A WORKING SHEET, SHOWING THAT PEAK AMOUNT OF CASH DEPOSITED DURING THE YEAR, WAS TO TH E TUNE OF RS.3,70,080/-, WHICH IS APPARENTLY LESSER THEN THE AMOUNT OF ADDITION SUSTAINED BY THE LD. CIT(A) EQUIVALENT TO 25% OF THE GROSS RECEIPT IN THE BANK ACCOUNT. IT IS NOTED FROM THE COPY OF BANK ACCOUNT ENCLOSED IN THE PAPER BOOK THAT AN AGG REGATE AMOUNT OF RS. 31,84,055/- HAS BEEN DEPOSITED INTO THE BANK ACCOUNT IN THE BOOKS OF THE ASSESSEE, AND 25% OF TH E SAME COMES TO RS.7,96,000/-, WHICH IS APPARENTLY GREATER THEN RS. 3,70,080/-, BEING THE AMOUNT OF PEAK CREDIT OF THE CASH DEPOSITED INTO THE BANK ACCOUNT. THUS, WE FIND THAT ORDER OF LD. CIT(A) IS NOT ONLY WELL REASONED BUT ALSO JUSTIF IED ON FACTS AS WELL AS LAW. NO INTERFERENCE IS CALLED FOR THERE IN, AND THE SAME IS UPHELD. WE FURTHER FIND THAT CASES RELIED U PON BY THE LD. DR ARE NOT APPLICABLE ON THE FACTS OF THIS CASE . ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. G. SAMSUDDIN 10 12 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER, 2015. SD/- (SAKTIJIT DEY ) SD/- (ASHWANI TANEJA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 18/11/2015 CTX? P.S/. .. !'#$%&%'# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ( ) / THE CIT, MUMBAI. 4. ! / CIT(A)- , MUMBAI 5. $%& '( , '( * , / DR, ITAT, MUMBAI 6. &+, - / GUARD FILE. / BY ORDER, $ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI