P.Srinivasan, Salem V. ITO, Salem

ITA 986/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90353 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 15-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N MADHVAVAN IRS
• Assessee Lawyers: T S LAKSHMIVENKATARAMAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! ' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.986/MDS/2014 ( / ASSESSMENT YEAR : 2009-2010) SHRI. P. SRINIVASAN, PROP: M/S. SRI DHANSHREE TEXTILES, SHOP NO.101, 102, KAMALAM COMPLEX, DADUBAI NAGAR, SALEM 636 001. [PAN:BXCPS 8105G] ( &' /ASSESSEE) VS THE INCOME TAX OFFICER, WARD I (1) SALEM. ( '(&' /RESPONDENT) / ASSESSEE BY : SHRI. T.S. LAKSHMI VENKATARAMAN, C.A. / RESPONDENT BY : SHRI. N. MADHVAVAN, IRS, JCIT. /DATE OF HEARING : 15.04.2015 /DATE OF PRONOUNCEMENT : 15.05.2015 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) SALEM, DATED 28.03.2014 FOR THE ASSESSMENT YEAR 2009-2010. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- I.T.A.NO.986/2014. :- 2 -: 1.THE ORDER OF LEARNED CIT(A) SALEM DATED 28.03.2014 IS OPPOSED TO THE FACTS OF THE CASE AND IS NOT LEGALLY MAINTAINABLE. 2. THE LEARNED CIT(A)IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF G31,36,178/- TOWARDS NEGATIVE CASH BALANCE. 3. THE AO HAS FRAMED THE ASSESSMENT ON THE PRESUMPTION THAT CASH WITHDRAWALS AT SURAT HAS BEEN UTILIZED FOR PURCHASES WITHOUT ANY EVIDENCES IN HIS POSSESSION. AN ASSESSMENT HAS TO BASED ON FACTS AND DOCUMENTARY EVIDENCES AND NOT ON PRESUMPTION AND SURMISES. 4. EVEN ASSUMING FOR A MOMENT BUT NOT CONCEDING THAT THE ENTIRE WITHDRAWALS AT SURAT IS FOR PURCHASES, THE ASSESSING OFFICER IN FRAMING HIS ASSESSMENT HAS NOT TAKEN INTO ACCOUNT THE SALE PROCEEDS ARISING OUT OF SUCH PURCHASES WHICH IS AVAILABLE WITH THE ASSESSEE TO EXPLAIN THE ALLEGED NEGATIVE CASH BALANCE OF G31,36,168/- BROUGHT TO ASSESSMENT. 5. IN VIEW OF THE ABOVE GROUNDS THE ADDITION OF G31,36,178/- MADE BY THE AO AND SUSTAINED BY CIT(A) MAY BE DELETED AND JUSTICE RENDERED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE ASSESS MENT YEAR 2009-10 ON 10.09 . 2009 ADMITTING TAXABLE INCOME OF RS.1,93,697/- AND THE SAME WAS PROCESSED U/S.143(1) ON 30.12 . 2009. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTI NY AND NOTICE U/S . 143(2) WAS ISSUED ON 18.08 . 2010 AND SERVED ON 21 . 08.2010. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER AND PRODUCED COPY OF BANK STATEMENTS, LIST OF TRADE CRE DITORS I.T.A.NO.986/2014. :- 3 -: ALONG WITH ADDRESS AND BOOKS OF ACCOUNTS, ETC. AND T HE SAME WERE TEST CHECKED. THE ASSESSEE IS A WHOLESAL E AND RETAIL SAREES TRADER, PURCHASES SAREES AT SURATH AND SELLS THE SAME IN SALEM. ALL THE PURCHASES ARE MADE AT SURATH ONLY . DURING EXAMINATION THE BOOKS OF ACCOUNTS OF ACCOUNTS PRODUCED AND BANK STATEMENT, IT IS FOUND THAT, IN THE CASH BOOK PAGE NO . 337 TO 338 ON APRIL-29' 2008 ATM CASH FROM ICICI BANK ACCOUNT NO.611905043482 G30,000/- WAS ENTERED SIX TIMES AMOUNTING TO G1,80,OOO/-. BUT THERE IS NO CORRESPONDING WITHDRAWAL FROM BANK, WHEN THE SAME W AS POINTED OUT THE AUTHORISED REPRESENTATIVE STATED THA T THE ASSESSEE WILL OFFER THAT AMOUNT AS HIS ADDITIONAL INC OME. THE AUTHORISED REPRESENTATIVE'S ATTENTION HAS BEEN DRA WN TO THE FACT THAT CHEQUES (LISTED IN ANNEXURE-A) ISSU ED TO THIRD PARTIES AND ENCASHED / HONORED AT SURAT BUT IN THE CASH BOOK IT HAS BEEN SHOWN AS CONTRA ENTRY I.E. THE CASH IS CREDITED TO THE CASH BOOK MAINTAINED AT SALEM ON THE S AME DATE. THE CASH WITHDRAWN MIGHT BE EXPENDED IN SURATH ITSELF AND THE SAME IS QUESTIONED, THE AUTHORISED REPRESENTATIVE STATED THAT THE CASH WITHDRAWAL AT SU RATH HAS BEEN ENTERED IN THE REGULAR DAY BOOK . I T WAS I.T.A.NO.986/2014. :- 4 -: REPEATEDLY AND SPECIFICALLY QUESTIONED THE PURPOSE OF WITHDRAWALS AT SURAT AND HOW IT WAS BROUGHT TO THE ASSESSEE ON THE SAME DATE TO INCLUDE IN THE SALEM CASH BOOK . THESE QUESTIONS WERE NEVER ANSWERED BY THE AUTHORISED REPRESENTATIVE, EMPHASIS THAT THE ONLY CAS H WITHDRAWALS ADDED IN THE CASH BOOK . WHEN THE AUTHORISED REPRESENTATIVE QUESTIONED THE PURPOSE OF WITHDRAWLS AND HOW THE SURAT CASH WAS PHYSICALLY BROUGHT TO SALEM ON T HE SAME DATE, HE DID NOT GIVE ANY REPLY. AS THE ASSESS EE'S ENTIRE PURCHASES ARE FROM SURATH ONLY, THE CHEQUE WITHDRAWAL FROM SURAT SHOULD HAVE BEEN EXPANDED FOR SO ME OTHER PURPOSE. IT IS IMPRACTICAL TO SAY THAT CHEQUE ENCASHED AT SURATH AND CASH HAS BEEN BROUGHT BACK TO SALEM EVER Y TIME. IF THESE CHEQUE WITHDRAWALS ARE REMOVED FROM CASH BOOK, THE CASH BALANCE WILL SHOW NEGATIVE BALANCE. FOR THE ASSESSEE'S DAY TO DAY ACTIVITY, CASH FROM OTHER SOU RCE WAS PHYSICALLY BROUGHT IN TO COVER THE NEGATIVE CASH BALANCE . WHEN IT WAS QUESTIONED ABOUT NEGATIVE CASH BALANCE DURING THE HEARING, NO EXPLANATION WAS OFFERED. HENCE THE PEAK OF NEGATIVE CASH BALANCE ON 21.03.2009 AS RS . 31,36,168/-, IS INCOME EARNED FROM THE UNEXPLAINED I.T.A.NO.986/2014. :- 5 -: S OURCE, ADDED WITH INCOME RETURNED. THE ASSESSEE HAD FAILED TO GIVE EXPLANATION FOR THE WITHDRAWAL AT SURA T FROM HIS BANK ACCOUNTS. IN THE ABSENCE OF EXPLANATION, TH E WITHDRAWALS MADE BY THE ASSESSEE HAS TO BE TREATED A S UNACCOUNTED PURCHASE MADE AT SURAT . PROFIT EARNED FROM THIS UNACCOUNTED PURCHASE IS ESTIMATED AT 10 % PROFIT RAT E, IE . , PROFIT = THE ASSESSEE HAS NOT GIVEN ANY EVIDENCE FOR RETURNING OF THIS DEEMED PURCHASE - SALE AMOUNT FROM SURAT TO SALEM, THIS CANNOT BE SET OFF AGAINST THE NEGATIV E CASH AT SALEM. AGAINST THIS, THE ASSESSEE PREFERRED AN APP EAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL S), THE ASSESSEE HAD FILED THE WRITTEN SUBMISSION AS UNDER: - 1. ' THE FIND I NG OF A SSESSING O FFICER THAT ENTIRE PURCHASES ARE AT SURAT IS NOT CORRECT, THE BREAK UP FOR PURCHASES IS AS UNDER: MUMBAI :- 18,676/- BANGALORE :- 2,25,516/- BARGUR :- 3,73,615/- SURAT :- 69,45,125/- 2. IN THE ASSESSMENT ORDER THERE IS A MENTION ABOUT ATM CASH WITHDRAWAL ON 29.04.2008 FROM ICICI BANK ACCOUNT NO.611905043482. COPIES OF BANK STATEMENT FOR THE MONTH OF APRIL 2008 AND JUNE 2008 ARE ENCLOSED. AS COULD BE SEEN FROM THE STATEMENT FOR T HE MONTH OF APRIL 2008 THERE IS NO TRANSACTION AFTER 11.04.08. THE CLOSING BALANCE AS ON 11 . 04.08 IS RS.327 . 24 WHICH IS CARRIED FORWARD TO 01 . 06.08. THERE IS NO TRANSACTION IN THE ABOVE BANK ACCOUNT IN THE MONTH OF MAY 2008. I.T.A.NO.986/2014. :- 6 -: 3. AS COULD BE SEEN FROM THE ANNEXURE TO THE ASST . ORDER, AO HAS TAKEN ENTIRE CASH WITHDRAWAL AT SURAT IS UTILIZED FOR PURCHASES WHICH TOTAL INCOME TO RS . 33,05,100/- BUT IN THE ASST . ORDER SUCH WITHDRAWALS HAS BEEN TAKEN AT A FIGURE OF RS/31,25,100 AND FURT HER A GROSS PROFIT OF RS.3,12,510 AT 10 % HAS BEEN ADDED WITH INCOME RETURNED . THE FINAL FIGURE ADDED IN INCOME COMPUTATION IS RS . 3,35,323/- AND NOT RS.3,12,510/-. EVEN ASSUMING FOR A MOMENT BUT NOT CONCEDING THAT THE ENTIRE WITHDRAWALS AT SURAT IS FOR PURCHASES, T HE AO IN FRAMING HIS ASSESSMENT HAS NOT TAKEN INTO THE SA LE PROCEEDS ARISING OUT OF SUCH PURCHASES WHICH IS AVAILABLE WITH THE ASSESSEE TO EXPLAIN THE ALLEGED NEGATIVE CASH BALANCE OF RS.31,36,168/- BROUGHT TO ASSESSMENT . THE ASSESSMENT HAS BEEN MADE ON PRESUMPTION AND SURMISES THAT CASH WITHDRAWALS AT SURA T HAS BEEN UTILIZED FOR PURCHASE, WITHOUT ANY EVIDENCE IN POSSESSION OF AO. AN ASSESSMENT HAS TO BE BASED ON FACTS AND DOCUMENTARY EVIDENCES. BE THAT A S IT MAY NOT GIVING CREDIT FOR SALE PROCEEDS OF RS.34,60 , 423/- (31,25,100 + 3,35,323) AS TAKEN BY AO, WHILE ARRIVING AT THE NEGATIVE CASH BALANCE IS AGAI NST THE FACTS OF THE CASE.' 5. CONSEQUENT TO THIS, THE COMMISSIONER OF INCOME TAX (APPEALS) CALLED FOR REMAND REPORT FROM THE ASSESSI NG OFFICER WHEREIN HE SUBMITTED THAT T HE SUBMISSION OF THE ASSESSEEE WAS SENT TO THE ASSESSING OFFICER FOR HIS COMMENTS W ITH SPECIFIC DIRECTION TO EXPLAIN HOW ADDITION CAN BE MADE ON BOTH COUNTS, IE., GROSS PR O FIT ON ACCOUNT OF UNACCOUNT E D SA L ES A ND AL S O ON ACCOUNT OF NEGATIVE CASH BALANCE. THE ASSESSING OFFICER HAS SUBMITTED PARA WISE REPLY FOR THE SUBMISSIONS FILED BY THE ASSESSEE IS AS UNDER:- 1. DURING THE COUR S E OF A SSESSMENT PRO CEE DIN GS, I.T.A.NO.986/2014. :- 7 -: TH E AUTHORISED REPRESENTATI V E ' S HAS FILED A WRITTEN SUBMISSION IN W HICH H E H AS S TATED THAT 'THE ASSESSEE IS DEALING ONLY SURAT S A REES.' (COP Y E N C L OSE D) . THIS WAS MENTIONED IN THE ASSES S MENT ORDE R AS ENTIRE PURCHAS E S AR E A T S U R AT . SINCE 92 % OF PURCHASES ARE FROM SURAT , BALANCE 8 % HAS NO EFFECT . 2. THE ISSUE IN CASH BOOK ENTRI ES AT PA GE NO 337 TO 338 THAT ATM CASH 30,000/ - WITHDRAWN FROM ICICI BANK A/ C N O. 611905043482 ON 29.04.2008 SI X TIMES AMOUNTING TO 1,80,000/- WITHOUT COR R E SPONDING ENTRIES CONFIRM THIS ONLY . THE AR HAS ACCEPTED THIS ADDITION DU RI N G A S S ESSMENT . 3. THERE IS A TYPOGRAPHICAL ERROR IN TH E ORDE R . THE ACTUAL WORKING SHOULD HAVE BEEN G . P . EARNED FROM UNACCOUNTED PURCH AS E W ILL B E 33,05,100 X 10.72% (AS PER AUTHORISED REPRESENTATIVES LETTER - COPY ENCLOSED) = .3,54,306/- TH E ASSESSEE ' CONTENTION 'TH E ASS ESSMENT HAS BEEN MADE ON PRESUMPTION AND SURMISES THAT CA S H W ITHD RAW ALS AT SURA T HAS BEEN UTILIZED FOR PURCHASE , WITHOUT AN Y EVIDENC E IN P OSSESS I O N OF AO. AN ASSESSMENT HAS TO BAS E D ON F A CTS AND DOCUMENTARY E V ID E NC ES' IS UNTENABLE . IT IS VERY C LEAR FROM THE FACT S THAT THE CASH BOOK CONTRA E NT RY CHEQUES ARE PAID TO THE CLOTH TRADERS OF SURAT [I . E. DHIVA FASHIONS, OPEL SUL Z PVT . LTD, CHAMUNDESHWARI TEX, VASANTH TRADERS , CHAMPAK TEX, SRI RAJESWARI TEX , AN G OORI DESIGNER, APPLE CREATION, MAHAVEER TEX, ETC] , WHICH WAS CONFIRMED B Y THE BANKER . WHEN THIS WAS QUESTIONED, THE A . R . OFFERED NO EXPLANAT I ON. THEREFORE THE ASSES S MENT WAS FRAMED BASED ON THE FACTS AND DOCUMENTAR Y EV IDENCES PRODUCED BY THE BANKER . THE ASSESSEE IS INSTRUMENTAL TO GE N E R A TE THE BLACK MONEY TO THE TUNE OF RS.69,64,5001- [PURCHASE RS33 , 05,OO + S A L ES R S. 36,59 , 400] FAILED TO PRODUCE ANY EVI D ENCE FOR THE INFLOW OF THE UNAC C OUNT E D SA LE S FUND INTO THE ACCOUNT . BUT IN THE AUDITED ACCOUNTS, WHEREIN THE CH A RT E R E D ACCOUNTANT CERTIFIED THAT TRUE AND CORR E CT, THE OUTFLOW FOR UNACCOUNTED PURCH AS E S AR E ESTABLISHED WITH EVIDENCE . THE ASSESSEE HA S STATED THAT A . O . HA S NOT TAK E N INTO ACCOUNT S ALE I.T.A.NO.986/2014. :- 8 -: PROCEEDS ARISING OUT OF SUCH PURCHASES WHICH ARE AVAILABLE WITH ASSESSEE TO EXPLAIN THE ALLEGED NEGATIVE CASH BALANCE. EVEN AFTER GIVING SUFFICIENT OPPORTUNITIES, THE ASSESSEE HAS NOT PROVED WITH ANY EVIDENCE THAT SUCH CASH BALANCE WAS UTILIZED IN THE BUSINESS AND NOT ELSEWHERE. SINCE THE ASSESSEE FAILED TO DI S CHARGE HIS ONUS, THE ASSESSMENT ORDER WAS RIGHTLY FRAMED AS STATED IN PAGE 3 OF THE ORDER 'SINCE THE ASSESSEE HAS NOT GIVEN ANY EVIDENCE FOR RETURNING OF THIS DEEMED PURCHASE - SALE AMOUNT FROM SURAT TO SALEM, THIS CANNOT BE SET OFF AGAINST THE NEGATIVE CASH AT SALEM.' 6. LATTER THE ASSESSEE SUBMITTED A REPLY TO THIS REMAN D REPORT OF THE ASSESSING OFFICER AS UNDER:- 1.IN THE LETTER OF ASSESSING OFFICER DATED 24.03. 2014, IN PARA NO.2,THERE IS A REFERENCE TO CONFIRMATION OBTAINED FROM THE BANKERS. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ABOVE CONFIRMATIONS WERE NEVER PUT TO THE ASSESSEE FOR HI S COMMENTS. 2.AGAIN IT IS SUBMITTED THAT THE AO HAS NOT BROUGHT IN ANY DOCUMENTARY EVIDENCES LIKE PURCHASE INVOICES AT SUR AT NOT RECORDED IN BOOKS OF ACCOUNTS TO SUPPORT HIS STAND THAT WITHDRAWALS AT SURAT ARE FOR UNACCOUNTED PURCHASES. 3. NOTHING HAS BEEN BROUGHT OUT IN THE ASSESSMENT ORDE R THAT CASH BOOK CONTRA ENTRY CHEQUES ARE PAID TO CLOTH TR ADERS OF SURAT . FOR PURCHASES WHERE PAYMENTS ARE MORE THAN RS.20000/-, THE SAME HAS TO BE PAID ONLY BY CHEQUES AND AO HAS NOT BROUGHT ON RECORD TO SHOW THAT CHEQUE ISSUE D TO PARTIES WHICH HAS GONE THROUGH THEIR BANK ACCOUNT H AS BEEN TREATED AS CASH WITHDRAWALS BY THE ASSESSEE. 4. THE ASSESSMENT HAS BEEN MADE ON PRESUMPTION AND SUR MISES IN THE CONTEXT OF UN A CCOUNTED PURCHASES AT SURAT . AN ASSESSMENT UNDER THE INCOME TAX ACT HAS TO BE MADE ONLY ON THE BASIS OF DOCUMENTAR Y EVIDENCES AVAILABLE ON RECORD AND ON THIS GROUND ALONE THE ADDITION MADE BY AO TOWARDS GROSS PROFIT AND NEGATIVE CASH BALANCE TOTALING TO RS.3471491/- HAS TO BE DELETED. I.T.A.NO.986/2014. :- 9 -: 7. THE COMMISSIONER OF INCOME TAX (APPEALS) GAVE THE FINDINGS THAT AS CAN BE SEEN DURING THE EXAMINATION OF THE BANK ACCOUNT OF THE ASSESSEE, IT WAS SEEN THAT THERE WAS REGULAR WITHDRAWALS FROM THE ACCOUNT BY CASH FROM ATMS IN S URAT. THE SAME WAS ENTERED IN THE CASH BOOK OF THE ASSESSEE A T SALEM. THE ASSESSING OFFICER HAS ALSO FOUND THAT NO CORRES PONDING WITHDRAWALS WERE FOUND FOR AN AMOUNT OF G1,84,000/- , THE ENTRIES OF WHICH WAS FOUND IN THE CASH BOOK. THE ASSESSING OFFICER HAS STATED THAT THE CASH WITHDRAWN MIGHT HAVE B EEN EXPENDED AT SU R AT ITSELF, AND THIS BEING THE CASE, THE CASH BALANCE WOULD NOT BE AVAILABLE IN ACTUAL, LEADING TO A NEGATIVE CASH BALANCE. THE ASSESSING OFFICER HAS CAL CULATED THE NEGATIVE CASH BALANCE AT RS . 31,36,168/- AS PEAK NEGATIVE CASH BALANCE AND STATES THAT CASH FROM SOME OTHER SOURCE MUST HAVE BEEN BROUGHT IN TO MEET THE NEEDS OF THE ASSESSEE IN SALEM . T HE OFFICER HELD THAT IT WOULD BE INCOME FROM UNEXPLAINED SOURCES. THE OFFICER FURTHER TREA TED THE WITHDRAWALS MADE AT SURAT, TO HAVE BEEN UTILIZED FOR UNACCOUNTED PURCHASES, AND HAS GONE ON TO MAKE A FURTH ER ADDITION OF GROSS PROFIT ON THE UNACCOUNTED SALE . THE ASSESSEE HAS, INTER-ALIA, HAS STATED THAT WITHOUT CO NCEDING I.T.A.NO.986/2014. :- 10 -: THAT IN CASE THE ASSESSEE HAD UNACCOUNTED PURCHASES TH EN CREDIT SHOULD BE AVAILABLE FOR THE MONEY FROM THE S ALE OF SUCH PURCHASES. THE ASSESSING OFFICER IS NOT CORRECT IN JUST TAKING THE INVESTMENT PURCHASES AND NOT GIVING CREDI T TO THE SALES REALIZED, IS AGAINST THE BASIC PRINCIPLES OF ACCOUNTING. THE ASSESSEE ALSO STATES THAT ADDITION ON BOTH THE COUNTS I . E., GROSS PROFIT ADDITION AND ALSO NEGATIVE CASH BA LANCE IS NOT CORRECT . I T IS TRUE THAT THE ASSESSING OFFICER HAS THROUGH HIS INVESTIGATION HAS FOUND OUT THE DETAILS ABOUT WITHDRAWALS AT SURAT AND THE ACCOUNTING OF THE CASH THEREOF. THE ASSESSEE CANNOT DISPUTE THE WITHDRAWAL S AT SURAT AND DOES NOT HAVE ANY PLAUSIBLE EXPLANATION F OR THE WITHDRAWALS THERE AND IS NOT WILLING TO ADMIT THAT THE SAME IS ON UNACCOUNTED PURCHASES . HE IS ASKING FOR CREDIT FOR THE UNACCOUNTED SALES MADE, ONLY BECAUSE THE ASSESSING OFFICER TREATED THE WITHDRAWALS AS UNACCOUNTED SALES. THE ASSESSEE IN EFFECT, STATES THAT IT CAN'T BE NEGATIV E BALANCE IF IT IS UNACCOUNTED SALES AND VICE VERSA. THE ASSESSING OFFICER HAS MADE ADDITION ON BOTH THE GROUNDS, IE., ON ACCOUNT OF GROSS PROFIT AND ON ACCOUNT OF NEGATIVE CAS H BALANCE . IT HAS TO BE CONCEDED THAT BOTH ADDITIONS CANNOT I.T.A.NO.986/2014. :- 11 -: BE MADE. NOW IT HAS TO BE DECIDED THAT ONLY ONE ADDI TION HAS TO BE MADE, IT IS TO BE SEEN THE PROBABILITY OF EVENT . THE ASSESSEE HAS NOT BEEN ABLE TO PROVIDE A SHRED O F EVIDENCE TOWARDS ANY UNACCOUNTED PURCHASES OR SALES, AND IN FACT HE IS NOT CONCEDING TO ANY UNACCOUNTED SALE. AT THE SAME TIME THE ASSESSEE ALSO DOES NOT HAVE ANY EXPLA NATION WHATSOEVER, AS TO WHY THE WITHDRAWALS WERE MADE. TH IS GIVES CREDENCE TO THE CONCLUSION THAT THE MONEY WAS SPE NT FOR OTHER PURPOSES AT SURAT, BUT THE ENTRIES WERE M ADE IN THE BOOKS AT SALEM, WITHOUT ANY CASH BEING AVAILABL E. THIS CAN ONLY POINT OUT THAT THERE WAS ACTUALLY A NEGATIV E CASH BALANCE AT SALEM AS CONCLUDED BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE, HE WAS OF THE OPINION THAT THE A DDITION ON ACCOUNT OF NEGATIVE CASH BALANCE IN THE BOOKS OF ACCOUNTS AT SALEM IS ACTUALLY THE CASE. IN CASE THE MONEY IS NOT SPENT IN SURAT, THEN IT IS SIMPLY NOT IN THE NORMAL COURSE OF BUSINESS OR ANY PRACTICE TO DRAW THE MONEY A T SURAT AND BRING IT TO SALEM. IN FACT NOTHING CAN BE STRANGE THAN SUCH AN EVENT HAPPENING. TH I S BEING SO , THE ADDITION ON ACCOUNT O F NEGATIVE CASH BALANCE IS SUSTAINED AND THE COMMISSIONER OF INCOME TAX (APPEALS) GIVEN R ELIEF I.T.A.NO.986/2014. :- 12 -: ON ACCOUNT OF THE ADDITION ON ACCOUNT OF GROSS PROF IT. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LD. COUNSEL SUBMITTED WRITTEN SUBMI SSIONS. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS). 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, IN THIS CASE THERE IS NEGATIVE CASH BALANCE IN THE BOOKS OF ACCOUNTS OF THE ASSESS EE. THE ASSESSING OFFICER BROUGHT THE SAME TO TAX AT G31,36 ,168/-. IN ADDITION TO THIS, THE ASSESSING OFFICER MADE ADDITI ON TO GROSS PROFIT EARNED FROM UNACCOUNTED PURCHASES MADE IN SU RAT AT G3,35,323/-. HENCE, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION ON ACCOUNT OF GROSS PROFIT OF G3,35,323/-. 10. IN THIS CASE, WHEN WE REMOVE THE ENTRY IN ACCOUN TS RELATING TO THE CASH WITHDRAWAL FROM SURAT, THERE WAS ADMITTEDLY NEGATIVE BALANCE WORKED OUT AT G31,36,17 8/-. THE CONTENTION OF THE ASSESSEE BEFORE US IS THAT THERE IS ALSO I.T.A.NO.986/2014. :- 13 -: UNACCOUNTED SALES FROM SURAT AND IF IT IS CONSIDERE D AS SOURCE AVAILABLE TO ASSESSEE, THEN THERE CANNOT BE ANY NEG ATIVE BALANCE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HE SUBMITTED THAT THE ASSESSING OFFICER HAS TO CONSIDE R THE CASH SALES AT SURAT TOWARDS CASH DEFICIENCY IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN OUR OPINION, THE ARGUMENT OF THE ASSESSING OFFICER IS TOTALLY MISCONCEIVED. A MERE ARGUMENT O F THE ASSESSEES COUNSEL THAT THERE WAS UNACCOUNTED SALES AT SURAT DOES NOT SUPPORT THE CASE OF THE ASSESSEE FOR THE SOURCE FROM UNACCOUNTED SALES. NEITHER LAW NOR HUMAN EXPERIENCE GUARANTEE THAT AN ASSESSEE WHO HAS BEEN DISHONEST O N ONE OCCASION BOUND TO BE HONEST SUBSEQUENTLY. IT IS A MATTER OF FACT THAT THE ASSESSEE IS BOUND TO EXPLAIN WITH MAT ERIALS EVIDENCES SUGGESTING AVAILABILITY OF CASH AND THERE IS NO UNACCOUNTED OR CONCEALED INCOME. IN THE PRESENT CA SE, THE ASSESSEE HAS NOT ABLE TO EXPLAIN WITH REFERENCE TO THE NEGATIVE CASH BALANCE IN THE BOOKS OF ACCOUNTS BY PLACING ON RECORD DETAILS OF UNACCOUNTED SALES EFFECTED AT SURAT. T HE ASSESSEE HAS NOT ABLE TO EXPLAIN TRUE NATURE OF CASH RECEIPT WHICH IS UNACCOUNTED AND THUS IT IS TO BE CONSIDERED THAT TH E ASSESSEE HAS NOT EXPLAINED THE NEGATIVE BALANCE IN THE CASH BOOK AND I.T.A.NO.986/2014. :- 14 -: ASSESSEE CANNOT RUN THE BUSINESS WITH NEGATIVE CASH BALANCE. IN SUCH CIRCUMSTANCES, THE ONLY CONCLUSION THAT THE NEGATIVE CASH BALANCE TO BE CONSIDERED AS INCOME OF THE ASSE SSEE FROM UNKNOWN SOURCE AND THE SAME WAS TO BE TREATED AS I NCOME OF THE ASSESSEE BY THE LOWER AUTHORITIES WHICH IS TO BE CONFIRMED IN THE ABSENCE OF ANY MATERIAL EVIDENCE IN SUPPORT OF THE CLAIM OF THE ASSESSEE. 11. IN RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.986/MDS/2014 IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 15 TH DAY OF MAY, 2015, AT CHENNAI. SD/- SD/- ( ! ' ) (CHALLA NAGENDRA PRASAD) # / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER !' /CHENNAI. #$ /DATED:15.05.2015. KV $% &' (' /COPY TO: 1. ) ASSESSEE 2. / RESPONDENT 3. * ( )/CIT(A) 4. * /CIT 5. '+, - /DR 6. ,. / /GF. I.T.A.NO.986/2014. :- 15 -: