SMT. DARSHIKA RASHMIN MORE, NAVI MUMBAI V. PR. CIT-28, NAVI MUMBAI

ITA 927/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2993 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 24-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.M MADHAVI
• Keywords: Business income; Revision of order; TDS; Set aside
• Section: 148; 263; 44AD; 143(3); 143(2); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI G.S PANNU, PRESIDENT & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 927/Mum/2021 (A.Y: 2010-11) Smt.Darshika Rashmin More,C/o 248, Sector 28, Vashi, Navi Mumbai – 400 703 Vs. Pr.CIT- 28 Room No. 301, 3 rd Floor, Tower No. 6, Vashi Railway Station Complex, Vashi Navi Mumbai – 400 703 PAN/GIR No. : AICPM2208C Appellant .. Respondent Appellant by : None Respondent by : Smt. R.M Madhavi .DR Date of Hearing 19.04.2022 Date of Pronouncement 04.05.2022 आदेश / O R D E R PER PAVAN KUMAR GADALE JM: This appeal is filed by the assessee against the order of the Principal Commissioner of Income Tax (Appeals)-28, Mumbai passed u/s 263 of the Act. The assessee has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case, the appeal filed against order u/s 263 dt: 19/2/2020 received by me through the Income Tax Officer vide his letter dt:26/03/2021 and the appeal filed if it is delayed I humbly pray for condonation as no order u/s.263 was ITA No. 927/Mum/2019 Smt Darshika Rashmin More, Navi Mumbai. - 2 - served earlier. The appellant prays that, the delay if any be condone 2. On the facts and in the circumstances of the case, the order passed u/s.263 is bad in law and contrary to the facts and evidence on record and it be cancel. 3(a) On the facts and in the circumstances of the case, the Learned Principal CIT erred in observing that, the order passed u/s.143(3) r.w.s.147 was erroneous and prejudicial to the interest of the revenue. (b) On the facts and in the circumstances of the case, the learned Principal CIT failed to appreciate that, the A.O. had considered the total credit entry in the bank passbook/bank accounts totaling to Rs.3,03,95,334/- and explained the nature and source of credit and the learned A.Q. took a view the credits in the bank account as total turnover and estimated income thereof. Therefore the order passed u/s.263 is not correct. (c) The Learned Principal CIT erred in observing that, the deposits in the bank account constitute income from other sources ignoring the facts that, the learned A.O. had issued various notices and verified the deposits and took a possible view that, the deposits made in the bank account is the total turnover of the business. 2. On perusal of the facts, the appeal was filed by the assessee on 25-05-2021 and the case was posted for hearing on3.11.2021,13.12.2021,2.02.2022,7.03.2022, and today i.e 19.04.2022, none appeared on dates of hearing nor any application was filed for adjournment. On considering the facts and the action of the assessee in non appearance on date of hearing. The ITA No. 927/Mum/2019 Smt Darshika Rashmin More, Navi Mumbai. - 3 - presumption is that after filling the appeal, the assessee is not inclined/interested to prosecute the appeal. Accordingly, we heard the Ld. DR submissions and decided the appeal based on the material information available on record. 3. The brief facts of the case that the assessee is an individual and has not filed the return of income for the A.Y 2010-11. Whereas the Assessing officer (A.O) found that as per the ITS details, the assessee has made cash deposits in her bank account aggregating to Rs.74,09,000/- and the payments pertaining to credit card expenses of Rs. 2,50,100/- in the financial year(F.Y. 2009-10) and the assessee has earned contract receipts of Rs. 9,34,348/-. The A.O. has reason to believe that the income has escaped assessment and recorded reasons for reopening and issued the notice u/s 148 of the Act. In compliance to notice, the assessee has filed the return of income for A.Y 2010-11 on 31.03.2017 and accepted the contract receipts as her income and claimed TDS on the contract receipts and there are no explanations or information or disclosure in respect of cash transactions in bank account as per ITS. ITA No. 927/Mum/2019 Smt Darshika Rashmin More, Navi Mumbai. - 4 - Subsequently, the A.O. issued notice u/s 143(2) and 142(1) of the Act along with questionnaire and provided reasons for reopening. In compliance, the assessee and her authorized representative appeared from time to time and submitted the details. On perusal of the information, the assessee has filed the return of income disclosing a total income of Rs.2,90,890/- where the assessee has offered income under the deemed profit u/s 44AD of the Act in respect of gross receipts of Rs.36,22,650/-. 4. Further the assessee has explained by letter dated 27.06.2017 that she is a small trader and not maintained books of accounts and doing business in the name and style of M/s Pure Water System by taking contracts for purification, cleaning of tanks and sanitizing. The assessee also did trading in grains in the name and style of M/s Nobel Trading Co. and offered the income @ 8% of gross receipts. The assessee has filed a letter dated 19.09.2017 with the bank account statements and comparative charts with details of business activities The A.O has dealt on the facts with respect to the cash deposits and withdrawals at page 3 of the order. Further the A.O found that ITA No. 927/Mum/2019 Smt Darshika Rashmin More, Navi Mumbai. - 5 - there are several credits entries through RTGS, NEFT and cheques and withdrawals of cash from time to time. The A.O has verified the bank accounts and the total receipts, cheque transfers, cash with drawls and observed that the total credits in the bank account and the inter account transfers are aggregating to Rs. 3,03,95,334/- and estimated the income by applying the provisions of Sec. 44AD of the Act @ 8% which worked out to Rs. 24,31,626/-. Since the assessee has offered the income of Rs. 2,90,890/- and the remaining income of Rs.21,41,814/- was added and assessed the total income of Rs.24,32,704/- and passed the order u/s 143(3) r.w.s 147 of the Act dated 29.12.2017. 5. Subsequently, the Pr.CIT on perusal of the records and information and the findings of the scrutiny assessment has issued revision notice U/sec263 of the Act and observed at page 1 Para 2 of the order as under: 2. On perusal of records, the following issues were noticed in the aforesaid order u/s 143(3) r.w.s 147 of the Act dated 29.12.2017. On perusal of the bank statements for the year under consideration, goes to show that the assessee has a total credit entry of Rs. 3,03,95,334/- which have been ITA No. 927/Mum/2019 Smt Darshika Rashmin More, Navi Mumbai. - 6 - discussed at length in the assessment order. During the assessment proceedings, she was asked to explain the various credit entries in her bank account through RTGS/cheques, vide show cause dated 08.12.2017. However, she had only submitted that these credits are loans/ advances received and repaid. No documentary evidences were either produced by her to establish the identify of the persons from whom the credits were received in her bank account. The nature and sources of the credits of Rs. 3,03,95,334/- has also not been established. However while assessing her income, the entire credit of Rs. 3,03,95,334/- were held as her turnover without any material available on record and the income was assessed at Rs. 24,31,626/- being 8% considering it as turnover without any evidence of being business receipts. No details/documents are available regarding sale or purchase of any goods or services. There is no material available on record establishing the total credits of Rs. 3,03,95,334/- as turnover. For want of any explanation regarding the nature and sources of the credits of Rs. 3,03,95,334/- and the net cash deposits of Rs. 20,04,600/- totaling to Rs. 3,23,99,934/- constitutes income from other sources in assessee’s hands. 6. The Pr.CIT is of the opinion that the A.O. has not justified or correct in estimating income @ 8% of the total credits which is against the provisions of law. Further, the order passed u/s 143(3) r.w.s 147 of the Act is erroneous and prejudicial to the interest of the revenue. The assessee has filed a letter dated ITA No. 927/Mum/2019 Smt Darshika Rashmin More, Navi Mumbai. - 7 - 11.02.2020 which was referred at para 4 of the Pr.CIT order but there is no clarity on the facts mentioned by the assessee as the letter was not completed presented in the order. Whereas the Pr.CIT was not satisfied with the information as the assessee has not produced confirmation of loans and advances received and repaid as claimed during the assessment proceedings nor submitted any documentary evidences supporting the business transactions. Therefore the Pr.CIT relied on the judicial decisions and invoked the explanation 2 to Sec. 263 (1) of the Act and observed that the Assessing officer has failed to verify the credit entries and cash deposits in the bank accounts of the assessee and the assessment order passed is erroneous and prejudicial to the interest of the revenue and set aside the order u/sec143(3) r.w.s 147 of the Act and directed the A.O. to pass a fresh assessment order considering the disputed issues and passed the revision order u/s 263 of the Act dated 19.02.2020. 7. Aggrieved by the order, the assessee has filed an appeal before the Hon’ble Tribunal. At the time of hearing none appeared on behalf of the assessee and further as discussed in the above paragraphs there is ITA No. 927/Mum/2019 Smt Darshika Rashmin More, Navi Mumbai. - 8 - no representation or letter/details filed. Whereas, The Ld.DR supported the order of the Pr.CIT. 8. We heard the Ld. DR submissions and perused the material on record. The sole crux of the disputed as envisaged by the assessee in the grounds of appeal that the Pr.CIT order is bad in law. The order u/s 143(3) r.w.s 147 of the Act does not satisfy the twin conditions being erroneous and prejudicial to the interest of the revenue. The contentions of the assessee in the grounds of appeal are that the credit entries in the bank accounts have been considered in the assesseement proceedings and the A.O. has estimated the income. We found that the A.O. has considered the total credits in all the bank accounts including bank transfers and estimated the income u/s 44AD of the Act as the assessee is in the business of contract works. Whereas, the Pr.CIT observed that the assessee has neither produced the confirmation of loans and advances and repaid as claimed in the Assesseement proceedings nor furnished any documentary evidence to substantiate the business expediency. Further the A.O. has observed that the total credits in the bank accounts as turnover and there is nothing on record to ITA No. 927/Mum/2019 Smt Darshika Rashmin More, Navi Mumbai. - 9 - show that Rs. 3,03,95,334/- credited in the bank accounts is a part of the turnover of the assessee and the assessee has filed the return of income for the A.Y 2010-11 applying the provisions of Sec. 44AD of the Act. We found that the AO has called for the explanations of the assessee in respect of the credits in the bank accounts and the observations at page 5 of order are as under: Keeping in view the above observations, the assessee vide notice dated 08.12.2017 was asked to file the under mentioned details in view the above, please file the under mentioned : You are requested to explain the reasons alongwith proper evidences for not taking these credits as reflected in your bank statements for your business turnover. In view of-the turnover as reflected in your bank statements, please explain your eligibility for application section u/s. 44AD in your case. Cashbook/ bank book with detailed narration for A.Y. 2010-11. ...................... However, the assessee has not filed any details with respect to day wise detailed narration in respect of entries appearing in her bank statement and evidences regarding not taking credit entries in the bank statements for business turnover or to establish that the other credits in cheques /RTGS are merely loans and advances taken by ITA No. 927/Mum/2019 Smt Darshika Rashmin More, Navi Mumbai. - 10 - her. On the other hand vide letter dated 19.12.2017, the assessee has merely submitted that the bank turnover loans advances received and repaid are not her real income. However, the assessee has failed to justify the turnover taken for the computation of income as per section 44AD vis-à-vis the trend of deposits / withdrawals in her bank statement. 7. Further, on perusal of details it is seen that out of the business turnover in cash receipts as claimed by the assessee which is amounting to Rs.20,04,600/-, a significant amount of Rs.17,12,300/- has been deposited between 21.07.2009 to 29.08.2009 i.e. within a very short period having less than 45 days. Therefore, the income receipt in Cash as claimed by the assessee is not evenly distributed throughout the year under consideration. However, no explanation or details have been furnished by the assessee regarding the parties from whom she has received her gross receipts in Cash. On the other hand on perusal of the corresponding bank statements for the relevant period, it is seen that the amounts have been transferred out through RTGS / Cheques from the said bank accounts. Therefore, the nature of transaction vis-ã- vis business activities have not been fully justified. The assessee has not explained the nature of various credit entries in RTGS/Cheques vis-a-vis subsequent withdrawals of Rs.57,48,800/- and as cash deposits made out of alleged turnover of business in her bank account. Further, most of the transactions have been carried out from the ODD Account No.108 held with TJSB, Vashi Branch and constant debit and credit entries and cash deposits and withdrawals are being made in the bank accounts as seen from the statement. The closing balances in the bank Accounts are mentioned as under: Bank account Closing Balance as on ITA No. 927/Mum/2019 Smt Darshika Rashmin More, Navi Mumbai. - 11 - 31.03.2010 Dena Bank A/c No. 1790 0.00 Dena Bank Ac No. 3784 5,040 TJSB Ac No. SB/730 22 TJSB; AC No. OD/108 (-) 3,83,729/- The above balances available in the bank accounts have also strengthen the facts that the various credits and cash deposits in the accounts have been carried out and which are not explained and justified with the closing balances. In view of the above observation, the undersigned is constraint to reject the assessee's claim regarding mere gross receipts shown at Rs.36,22,650/-. There are voluminous credits and debits transactions in the account of thee assessee. There are frequent cash deposit and cash withdrawals in the accounts and the assessee has made efforts to consider merely gross receipts of Rs. 36,22,650/- in the shelter of showing income u/s 44AD and pretended that in the absence of regular books of accounts she will escape the explanation for not considering the components of income in respect of other credits transaction in her bank. In the absence of supporting evidences of claim of the assesssee, the credits/debits transactions cannot be ignored for the purpose of taxation. Even in the case of borrowings and lendings also the component of income cannot be denied. 8. In view of the above facts and circumstances, the assessee was show caused vide order sheet noting dated 20.12.2017 as to why her income should not be computed @ 8% of total credits in her bank account for the assessment year under consideration. However, till the finalization of this order no explanation has been furnished by the asses see in this regard. ITA No. 927/Mum/2019 Smt Darshika Rashmin More, Navi Mumbai. - 12 - 9. We find that the assessee has not complied with the directions of the A.O in the assessment proceedings and could not substantiate the loans and advances with the evidence, and the A.O. has assumed the credits as business turnover and estimated the income. The Pr.CIT has rightly pointed out that the assessee has not filed the details to substantiate the bank credits. We Considering the overall facts, circumstances and the action of the assessee in not submitting the information / confirmation of loans and advances obtained and repaid find that the Pr.CIT has invoked the explanation (2) to Sec. 263(1) of the Act as the A.O. has to work in time bound manner to pass the assessment order and in present case, the A.O. could not make enquiries or verification on the bank credits for various reasons and the assessee also not submitted the details. Therefore we find that the Pr.CIT has relied on facts, judicial decisions and is justified in considering the order passed u/s 143(3) r.w.s 147 of the Act is erroneous and prejudicial to the interest of the revenue and the assessment order is set aside and directed the A.O. to pass a fresh assessment ITA No. 927/Mum/2019 Smt Darshika Rashmin More, Navi Mumbai. - 13 - order considering the issues raised in the order u/s 263 of the Act. Accordingly, we do not find infirmity in the order of the Pr.CIT and uphold the same and dismiss the grounds of the appeal of the assessee. 10. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 04.05.2022 Sd/- Sd/- (G.S. PANNU) (PAVAN KUMAR GADALE) PRESIDENT JUDICIAL MEMBER Mumbai, Dated 04.05.2022 KRK, PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. Concerned CIT 5. DR, ITAT, Mumbai 6. Guard file. आदेशान ु सार/ BY ORDER, //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai