Usha Compressors Pvt.Ltd., Ahmedabad V. The DCIT, Circle-4(1)(1), Ahmedabad

ITA 994/AHD/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6935 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 06-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Peak credit; Revised return; Set aside
• Section: 68; 139(5); 139(1)

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ B’’ BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT And SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 994/AHD/2019 िनधाᭅरण वषᭅ/Asstt. Year: 2013-14 Usha Compressors Pvt. Ltd., 1708, GIDC Industrial Estate, Phase-III, Vatva, Ahmedabad-382445. PAN: AAACU3349R Vs. D.C.I.T., Circle-4(1)(1), Ahmedabad. (Applicant) (Respondent) Assessee by : Shri P.F. Jain, A.R Revenue by : Shri R.R. Makwana, Sr.D.R सुनवाई कᳱ तारीख/Date of Hearing : 12/11/2021 घोषणा कᳱ तारीख /Date of Pronouncement: 07/12/2021 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-8, Ahmedabad, dated 10/05/2019 arising in the matter of assessment order passed under s. 143 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2013-14. ITA no.994/AHD/2019 A.Y. 2013-14 2 2. The only issue raised by the assessee is that the learned CIT (A) erred in confirming the addition made by the AO for ₹ 12,65,195 representing the deposit of cash in the bank treating the same as unexplained cash credit under section 68 of the Act. 3. The facts in brief are that the assessee in the present case is a private limited company and engaged in the business of manufacturing of water rings, vacuum pumps and compressors. There was the bank account of the assessee bearing No. 080010200014748 maintained with the Axis Bank which was not disclosed in the income tax return. On question by the AO, the assessee submitted that the credit entries reflected in the bank statement represents the business transactions and accordingly offered a sum of ₹92,747 as profit being 6.83% of the total credits in the bank i.e. ₹13,57,942.00 only. 3.1 However, the AO disregarded the contention of the assessee by observing that the assessee has not brought any material on record suggesting that the credits received in the bank account represents the sale proceeds. Accordingly, the AO treated the entire amount of money deposited in the bank account as unexplained cash credit under section 68 of the Act. 4. Aggrieved assessee preferred an appeal to the learned CIT (A) who confirmed the order of the AO by observing as under: 4.1 In the statement of facts, appellant stated that they have paid taxes on the sales of Rs.13,57,942/- @ 6.83% voluntarily. I am not inclined to accept appellant's assertions made in the Statement of Facts(SOF) for the reasons that appellant has not specified the nature of sales in cash made, no details whatsoever regarding the sales. Appellant is manufacturer of Water Rings, Vacuum Pumps & Compressors and which items were sold in cash is not specified. Further there is no mention of the related expense and the manner as well as the basis on which appellant has simply offered the sum of Rs.92,747/-. Further, appellant has not provided any details of peak credits; it is for the appellant to show that there were withdrawals and such withdrawals were again deposited in cash forming part of this sum of Rs.13,57,942/-. Hence, I do not find any infirmity with the action of AO in adding this sum of Rs.13,57,942/- u/s.68 of the Act. However, I find that since appellant has offered a sum of Rs.92,747/- the same need to be reduced from Rs.13,57,942/-. Accordingly, AO is directed to reduce this sum of Rs.92,747/-. With these remarks ail the grounds of appeal are dismissed. ITA no.994/AHD/2019 A.Y. 2013-14 3 5. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. 6. The learned AR before us filed a paper book running from pages 1 to 57 and submitted that the Tribunal in the own case of the assessee for the assessment year 2011-2012 in ITA No. 2159/AHD/2014 vide order dated 24 th of September 2015 has set aside the issue to the file of the AO with the direction to adopt the peak credit as income instead of taking the entire amount of credit entries as unexplained cash credit under section 68 of the Act. Thus, the learned AR prayed before us to issue the same direction in the year under consideration as the facts of the case are identical with the earlier year. 6.1 The learned AR without prejudice to the above also contended that the assessee in the revised return of income has incorporated the impugned bank statement and offered an income of ₹92,747 being 6.83% of the deposits made in the year under consideration. The learned AR in support of his contention drew our attention on page 40 of the paper book where the copy of the revised return of income was placed. No defect was pointed out by the authorities below in the revised return of income. Thus the learned AR submitted that no addition can be made to the income of the assessee qua the deposits made in the bank account. 7. On the contrary the learned DR vehemently supported the order of the authorities below. 8. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the impugned bank account was not disclosed by the assessee in the earlier years as well. In earlier years the AO has taken the entire credit entries as unexplained cash credit and made the addition under section 68 of the Act. The facts of the case on ITA no.994/AHD/2019 A.Y. 2013-14 4 hand appears to be identical with the facts of the case of the earlier year in which the ITAT has observed as under: 5. We have heard the rival submissions, perused the material -available on record and gone through the orders of the authorities below as well as the decisions relied upon by the Ld.counsel for the assessee. The question that needs to be examined is whether the authorities below were justified and correct in treating the entire undisclosed deposits in the bank account as unexplained investment. Undisputedly, the bank Account No.080010200014748 with Axis Bank of assessee was furnished by the assessee during the course of assessment proceedings to the AO. It is not the case where the bank account was not disclosed to the AO by the assessee. There are transactions of deposits by way of cheques on different dates and, similarly cash withdrawals have been made on different dates during the year under appeal. The explanation of the assessee is that the deposits are undisclosed sale transactions. The AO rejected the contention of the assessee that the deposits were sale transactions and proceeded to make addition on deposits. The AO as well as the Ld.CIT(A) has rejected the contentions of the assessee that at the most the peak of the deposits be disallowed from the records, it is transpired that the AO has not made any enquiry from the material placed before him in the form of the bank statement which reflected the deposits by cheques. In case, the assessee was reluctant to furnish the details of the depositors, then it was incumbent upon the AO to make independent enquiry for coming to the conclusion that the deposits are undisclosed Income of the assessee. The assessee has made cash withdrawals on various dates which shows that the assessee was having this much of amount and out of the deposits made into the bank account was available with the assessee. Under the facts, we are of the considered view that the authorities below ought to have accepted the contention of the assessee with regard to the application of the peak credit. Therefore, we hereby set aside the orders of the authorities below and restore the appeal back to the file of AO for verifying the peak credits and treating the same as undisclosed income. In the light of the above, the AO would compute the same accordingly. Thus, ground Nos. l to 3 are allowed for purposes. 8.1 Before parting, it is pertinent to note that we have referred the bank statement filed by the assessee which is placed on pages 50 to 51 of the paper book. On perusal of the same we note that there was the deposits of rupees R.13,57,942/- only in the bank account of the assessee. Admittedly, such deposits were not disclosed in the income tax return filed under section 139(1) of the Act. But the return was revised subsequently under the provisions of section 139(5) of the Act dated 18-1-2014 wherein the deposits in the impugned bank accounts were incorporated. A revised return can be filed under section 139(5) of the Income- tax Act, 1961 (‘the Act’) which reads as under : "If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier:" ITA no.994/AHD/2019 A.Y. 2013-14 5 8.2 The implications of filing the revised return were laid down long back by the Allahabad High Court in its well recognized case namely Dhampur Sugar Mills Ltd. v. CIT [1973] 90 ITR 236 and the same are as follows: (a) The original return stands substituted with the revised return; (b) The original return is treated as withdrawn; and (c) The revised return is to be treated as having been furnished on the date on which the original return was furnished. 8.3 A revised return replaces the originally filed return and acquires the nature and character of the originally filed return. Thus, there cannot be any addition to the total income of the assessee based on the fact that there was less income shown by the assessee in the original return of income. It was incumbent upon the AO to point out the flaw in the revised return of income with respect to the income disclosed by the assessee. To our understanding, no such defect has been pointed out. The addition was made by the authorities below merely on the reasoning that the bank account was not shown in the original return of income which is not the correct approach in our humble understanding. Accordingly, we hold that no addition is warranted in the given facts and circumstances. Hence the ground of appeal of the assessee is allowed. 9. In the result the appeal of the assessee is allowed. Order pronounced in the Court on 07/12/2021 at Ahmedabad. Sd/- Sd/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 07/12/2021 Manish