ITO, Ward VI(3), Ludhiana V. Sh. Varinder Kumar Aggarwal, Ludhiana

ITA 967/CHANDI/2010

• Counselvise Citation: 96721514 RSA 2010
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 28-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJEET SINGH
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Unexplained cash credit; Business income
• Section: 2; 44AD; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.967/CHD/2010 (ASSESSMENT YEAR: 2006-07) THE INCOME TAX OFFICER, VS. SH. VARINDER KUMAR AG GARWAL WARD V(3), PROP.M/S AGLOW BUILDERS, LUDHIANA. 553-I, BRS NAGAR, LUDHIANA. PAN: ABKPA7471J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJEET SINGH, DR RESPONDENT BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 09.05.2012 DATE OF PRONOUNCEMENT : 24.05.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH DA TED 23.04.2010 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORD ER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT (A)-II, LUDHIANA HAS ERRED DELETING AN ADDITION OF RS.8,56,0007- MADE BY THEASSESSING OFFICER ON ACCOUNT OF UNEXPLAI NED CASH DEPOSITS. 1A WHILE ALLOWING RELIEF AT' 1' ABOVE, CIT(A) FAI LED TO APPRECIATE THE LAW LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. DEVI PRASAD VISHWANA TH PRASAD REPORTED IN 72 ITR 194 (SC), WHEREIN IT IS HELD THA T, THERE IS NOTHING IN LAW WHICH PREVENTS THE ASSESSING OFFICER IN AN APPROPRIATE CASE IN TAXING BOTH THE CASH CREDIT, TH E SOURCE AND THE NATURE OF WHICH IS NOT SATISFACTORILY EXPLAINED AND THE BUSINESS INCOME ESTIMATED BY HIM AFTER REJECTING THE BOOKS O F ACCOUNT OF THE ASSESSEE AS UNRELIABLE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD FURNISHED ITS INCOME FROM CIVIL CONTRACTOR AT RS.2,08,992/- UNDER THE PROVISIONS OF 2 SECTION 44AD OF THE ACT. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THERE WERE CASH DE POSITS IN THE BANK ACCOUNT OF THE ASSESSEE WITH ORIENTAL BANK OF COMME RCE, LUDHIANA TOTALING RS.8,56,000/- COMPRISING OF DIFFERENT ENTR IES ON DIFFERENT DATES. THE ASSESSEE WAS ASKED TO FURNISH THE SOURCE OF THE SAID CASH DEPOSITS IN THE BANK ACCOUNT. THE ASSESSING OFFICER FINDING TH E EXPLANATION OF THE ASSESSEE NOT SATISFACTORY AND IN THE ABSENCE OF ANY BOOKS OF ACCOUNT BEING MAINTAINED BY THE ASSESSEE, MADE AN ADDITION OF RS.8,56,000/-. 4. BEFORE THE CIT (APPEALS) THE EXPLANATION OF THE ASSESSEE WAS THAT IT HAD MADE CASH WITHDRAWALS FROM THE BANK ACCOUNT OF M/S AGLOW BUILDERS WHICH WAS THE SOLE PROPRIETARY CONCERN OF THE ASSESSEE AND THE SAME WAS THEN DEPOSITED IN THE SAVING ACCOUNT OF TH E ASSESSEE. TOTAL CASH WITHDRAWN FROM THE SAID BANK ACCOUNT WAS RS.16 ,54,000/- ON VARIOUS DATES. THE ASSESSEE CLAIMED THAT IT HAD DI SCLOSED GROSS RECEIPTS OF RS.26,12,397/- FROM CIVIL CONSTRUCTION BUSINESS ON WHICH INCOME WAS DECLARED UNDER THE PROVISIONS OF SECTION 44AD OF TH E ACT. THE EXPLANATION FOR KEEPING THE CASH IN HAND AVAILABLE WAS THAT THE SAME WAS NEEDED TO OFFER BID MONEY IN CASH FOR OBTAINING CON TRACT JOB. THE ASSESSEE HAD FURTHER POINTED OUT THAT THE FUND FLOW STATEMENT WAS ALSO FILED BEFORE THE ASSESSING OFFICER WHICH WAS REJECT ED WITHOUT SUGGESTING ANY ALTERNATIVE WRITTEN STATEMENT TO BE PREPARED. THE WRITTEN SUBMISSION OF THE ASSESSEE FILED BEFORE THE CIT (AP PEALS) ARE REPRODUCED UNDER PARA 2.2 AT PAGES 2 TO 4 OF THE APPELLATE ORD ER ALONGWITH TABULATION OF FUND FLOW AT PAGE 3 OF THE APPELLATE ORDER. THE CIT (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE IN VIEW OF THE AV AILABILITY OF CASH IN HAND OUT OF CASH WITHDRAWALS OF RS.16,54,000/- MADE DURING THE RELEVANT PERIOD. FURTHER RELIANCE WAS PLACED ON THE RATIO L AID DOWN BY THE PUNJAB & HARYANA HIGH COURT IN CIT VS. AGGARWAL ENGG. CO. [302 ITR 246 3 (P&H)] UNDER WHICH IT WAS HELD THAT WHERE THE INCOM E WAS COMPUTED APPLYING A FLAT PROFIT RATE IN THE ABSENCE OF BOOKS OF ACCOUNT, NO FURTHER ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDITS COU LD NOT BE MADE. THE ADDITION OF RS.8,65,000/- WAS DELETED BY THE CIT (A PPEALS). 5. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT (APPEALS). THE CONTENTION OF THE REVENUE BY WAY OF GROUND NO.2 IS THAT THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN COMMISSIONER OF INCOME TAX VS. DEVI PRASAD VISHWANATH PRASAD REPORTED IN 72 IT R 194 (SC) IS APPLICABLE. FURTHER RELIANCE WAS PLACED ON THE RAT IO LAID DOWN IN GROVER FABRICS (INDIA) P. LTD. VS. CIT [332 ITR 312(P&H)]. 6. THE LEARNED A.R. FOR THE ASSESSEE PLACING RELIAN CE ON THE ORDER OF THE CIT (APPEALS) POINTED OUT THAT THE ISSUE IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDER OF CHANDIGARH BENCH O F THE TRIBUNAL IN THE CASE OF SHRI DINESH KUMAR VS. ACIT IN ITA NO.37 9/CHD/2010 RELATING TO ASSESSMENT YEAR 2004-05. THE LEARNED A .R. FOR THE ASSESSEE FURTHER POINTED OUT THAT IN ANY CASE THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT IS FULLY EXPLAINED OUT OF THE WITHDRAW ALS MADE BY THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AS A C IVIL CONTRACTOR HAD DECLARED INCOME OF RS.2,08,992/- @ 8% ON GROSS REC EIPTS OF RS.26,12,397/-. THE SAID INCOME WAS DECLARED UNDER THE PROVISIONS OF SECTION 44AD OF THE ACT. THE ASSESSEE DURING THE Y EAR UNDER CONSIDERATION HAD MADE CASH DEPOSITS OF RS.8,56,000 /- ON DIFFERENT DATES IN VARYING AMOUNTS AS TABULATED BY THE ASSESSING OF FICER AT PAGE 2 OF THE ASSESSMENT ORDER. THE SOURCE OF THE SAID CASH IN H AND AS EXPLAINED BY THE ASSESSEE WAS THAT IT HAD WITHDRAWN CASH TO THE TUNE OF RS.16,54,000/- 4 FROM 1.3.2005 TO 11.7.2005. THE PURPOSE FOR KEEPIN G THE CASH IN HAND WAS EXPLAINED BY THE ASSESSEE FOR MAKING OFFER/S BY WAY OF BID MONEY IN CASH FOR OBTAINING CONTRACT JOB. THE AVAILABILITY OF THE CASH IS FULLY EXPLAINED BY FUND FLOW STATEMENT SUBMITTED BY THE A SSESSEE WHICH IS TABULATED AT PAGE 3 OF THE APPELLATE ORDER. IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHERE THE ASSESSEE HA S AVAILABLE CASH IN HAND OUT OF ITS DECLARED SOURCE OF INCOME, WHICH IN TURN WAS AVAILABLE BECAUSE OF WITHDRAWALS MADE FROM THE BANK ACCOUNT, ITS REDEPOSIT ON DIFFERENT DATES BUT DURING SHORT SPAN OF TIME, DOES NOT WARRANT ANY ADDITION ON ACCOUNT OF SOURCE OF THE SAID CASH IN H AND. THE ASSESSEE HAVING EXPLAINED THE SOURCE OF THE CASH IN HAND BEI NG OUT OF HIS DECLARED SOURCE OF INCOME, THE ORDER OF THE ASSESSING OFFICE R IN MAKING THE AFORESAID ADDITION IS UNWARRANTED. UPHOLDING THE O RDER OF THE CIT (APPEALS) WE DISMISS GROUND NOS.1 AND 1A RAISED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH DAY OF MAY, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : MAY, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH