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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-2, Jalandhar dated 25.10.2019 in respect of Assessment Year 2011-12.
The assessee has raised the following grounds of appeal:
Swaran Singh v. ITO “1. That the order of the Ld. CIT(A) is against law and facts of the case on the file.
2. That the Ld. CIT(A) gravely erred in sustaining the assessment wrongly reopened u/s 147 of the Income Tax Act, 1961.
That the ld. CIT(A) gravely erred in sustaining addition of Rs.18,80,000/- in respect of credits in the bank accounts of the assessee.
3.1 That while sustaining the addition the ld. CIT(A) did not appreciate the source of amounts of credit in the assessee’s bank account duly explained.
3.2 That the ld. CIT(A) erred in not accepting the source of deposits in the bank account of assessee accepted by the department in the earlier years.
That the appellant begs to add or amend any ground of appeal before the appeal is heard and disposed off.”
3. Ground nos. 1 & 3 not pressed by the assessee, hence dismissed as not pressed.
4. The Assessing Officer passed an assessment order ex-parte qua the assessee by making an addition of Rs.18,80,000/- by observing that the assessee did not offer any explanation about the nature and source of acquisition of the cash deposit in its bank account despite being given opportunity of being heard.
5. In appeal, the CIT(A) has confirmed the addition by observing as under:
Swaran Singh v. ITO “During the appeal proceedings, the assessee has stated that total receipts of Rs.18,80,000/- were on account of sale of milk etc and profit @ 8% u/s 44AD of the Income Tax Act, 1961 shall work out at Rs. 1,50,400/-. However, the assessee has shown income of Rs. 1,10,000/- from sale of milk etc. It is stated that in the earlier year on the basis of inspector report and remand report the Ld. CIT(A) has treated total cash deposits of Rs.20,96,973/- as receipts from sale of milk and the assessing officer was directed to apply a profit of 6% on these receipts.
It is observed that in the year under appeal, the assessee has not filed any reply or explanation before the assessing officer regarding cash deposit of Rs.18,80,000/-. In the earlier year the assessee has filed additional evidence during appeal proceedings. In his report, the inspector has stated that the assessee has earned income from sale of milk. As far as the year under appeal is concerned, the assessee has not brought on record any evidence to substantiate the source of cash deposits in the bank account. As per the reply filed by the Ld. Counsel, the assessee is a Granthi and Mukhya Sewadar of Gurdwara. The assessee has not brought on record any evidence to explain the source of cash deposits during the year. In view of these facts, the grounds of appeal taken by the assessee are dismissed.”
6. The counsel for the assessee submitted that the ld. CIT(A) did not appreciate the facts on record as regards the source of amount of credit in the assessee’s bank account which are self-explanatory. He, further submitted that in the earlier assessment year, the ld. CIT(A) has accepted the source of identical cash deposit in the bank account of the assessee which has been accepted by the department. In support, he has filed a paper book pgs. 1 to 77 besides synopsis. The Relevant part is reproduced as under:
On merits, it is submitted that in response to notice u/s 148, the assessee had filed the return of income declaring income from sale of Milk and interest on FDR etc. as per computation of Income had been disclosed at pages 1 to 2 of the Paper Book and, in fact, in the reasons, the Assessing Officer has wrongly mentioned that the income of Rs. 63,36,931/- has escaped assessment, because while assessing the Income, he has only considered the deposit of Rs. 18,80,000/- as per page 3 of the assessment order and finally made an addition of Rs. 18,80,000/- in para -9 of the order because there has been withdrawals and deposits out of the same cash.
9. It is submitted that when a fact has been verified during the course of assessment proceedings for Asstt. Year 2010-11, that the assessee is engaged in the sale of Milk and there were similar kind of bank deposits and the total addition of the bank deposits was made in the Asstt. Year 2010-11 and after making the due enquiries on the basis of report of the Inspector, the said addition of the bank deposits was deleted and the rate of 6% was applied by the Ld. CIT(A) in Asstt. Year 2010-2011 on the total bank deposits and since the facts are similar during the year under consideration, the same treatment should have been adopted in this year.
10. The Ld. CIT(A) has discussed such facts at page 3 & 4 of his order and has also confirmed that the Inspector has stated that the assessee has earned the income from sale of Milk as per his report in Asstt. Year 2010-11 and the only thing, which has been mentioned by the Ld. CIT(A) is that the assessee has not brought any evidence to substantiate the source of cash deposits.
11. It is submitted that this observation of the Ld. CIT(A) is vehemently contested in the sense, that when, one fact has been established during the course of assessment proceedings for Asstt. Year 2010-11 and for this year, we had filed the return in response to notice u/s 148 declaring the profit on sale of milk, the contention of the Ld.CIT(A) is not in order.
Another fact doubted by the Assessing Officer that the assessee is a Granthi/Mukhiya/Sewadar of Gurudwara, it is submitted that there is no harm being an Granthi/Mukhiya/Sewadar of Gurudwara, but for the purposes of earning the livelihood , he has been carrying on the business of sale of Milk as per earlier years and it is a settled law that when a fact has already been accepted by the department, like in the present case, that the assessee is carrying on the business of sale of milk, then on the same facts and circumstances, the department cannot take another view as the consistency is required to be maintained. The Reliance is being placed on the following judgments:- a. CIT Vs/ Dalmia Dadri Cement Ltd. (1970) 77 ITR 410 (P&H)
“Held also, that though as a general rule the principle of res judicata is not applicable to decisions of income tax authorities and an assessment for a particular year is final and conclusive between the parties only in relation to the assessment for that year and the decisions given in an assessment for an earlier year are not binding either on the assessee or the department in a subsequent year, this rule is subject to limitations, for there should be finality and certainty in all litigations including litigation arising out of the Income Tax Act and an earlier decision on the same question cannot be reopened.” b. Berger Paints India Ltd. Vs CIT (2004) 266 ITR 99 (SC)
“If the Revenue has not challenged the correctness of the law laid down by the High Court and has accepted it in the case of one assessee, then it is not open to the Revenue to challenge its correctness in the case of other assesses, without just cause”.
Here in the present case in assessee’s own case, the view has been taken by CIT(A) and ITAT since the Department accepted the plea of the assessee. c. DCIT V/s United Vanaspati Ltd. (2005) 275 ITR 124 (AT) (TM)
“It is also true that the principles of res judicata do not apply to income tax proceedings but equally important, is the rule of consistency, which has been held to be applicable in tax proceedings. If the facts and circumstances of the earlier year are similar, the same view should ordinarily be followed in the subsequent years.” d. Radhasoami Satsang Vs CIT (1992) 193 ITR 321 (SC)
“Strictly speaking, res judicata does not apply to income tax proceedings. Though, each assessment year being a unit, what was decided in one year might not apply in the following year; where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year”. e. CIT V/s Arthur Andersen & Co. (2009) 318 ITR 229 (Bom)
“Held, dismissing the appeal, that admittedly for the Assessment Year 1997-1998 the Assessing Officer had allowed deduction under the very head, except to the extent of 20 per cent, which was set aside in appeal. Having not challenged the order for the Assessment Year 1997-1998 and not shown any valid cause for reconsideration, the Revenue was precluded from raising the issue in the present appeal.” f. Commissioner of Income Tax V/s Leader Valves Ltd. (2007) 295 ITR 273 (P&H) “Held, that keeping in view the principle of consistency, the Revenue could not be permitted to raise an issue in isolation only for one year in the case of one assessee, while accepting the findings on the same issue in the case of other assesses and for other years in the case of assessee.” g. PRINCIPAL CIT V/S GRASIM INDUSTRIES LTD. 424 ITR 236 (BOM) "Rule of consistency- Taxability of profits of overseas branches of assessee- Department having accepted order of Tribunal for earlier years- Precluded from raising point for later year before court- Income-tax Act, 1961, s. 260A” h. CIT (EXEMPTIONS) V/S INDIA HABITAT CENTRE 425 ITR 325 (DEL) “Charitable purpose- Exemption- “Any other object of general public utility”- Denial of benefits as charitable organization- Assessing Officer accepting that assessee promoted public interest as provided in proviso to section 2(15)- Merely because assessee charged for Swaran Singh v. ITO certain goods and services, activities not commercial activities- Onus on Department to prove assessee had profit motive in such activities- Principle of consistency- Finding that there was no change in nature of activities of assessee from earlier years- Assessee charitable organization and entitled to benefit.” i. DCIT Vs Marigold Premises Pvt. Ltd. as reported 83 ITR (Trib.) 32 (Pune) "Development, maintenance and operation of industrial park- Special deduction- Claim for first year disallowed and appeal at assesse’s instance pending before High Court- Claim for five subsequent years allowed by Assessing Officer- Claim in respect of immediately preceding assessment year rejected by Assessing Officer but allowed by Commissioner (Appeals)- Rule of consistency- Facts identical- Deduction to be allowed- Income-tax Act, 1961, s. 80-IA(4)(iii)"
It is, therefore, very humbly requested that the addition as sustained by the Ld.CIT(A) may, please, be deleted and oblige.”
The Ld. DR although supported the impugned order, however, he has not filed any material evidence in rebuttal to the contention of the appellant.
We have the heard rival contentions, perused the relevant material on record, impugned order, written submissions and case law cited before us.
Admittedly, the assesse was carrying on the business of sale of milk. He had not been filing his returns of income since his income was below the taxable limit; and that this fact stands verified by the department during the course of his proceedings for Assessment Year 2010-11. In that year, its Swaran Singh v. ITO case was also reopened u/s 148 of the Act for verification of cash deposits Rs. 20,96,973/- in its bank from his business of supplying of Milk where the addition made for Asstt. Year 2010-2011, by the AO, has been deleted by the Worthy CIT(A), on the basis of report of the Inspector that the assessee had been carrying on the business of sale of Milk by restricting to only 6% profit on the total bank deposits of Rs. 20,96,973/- being treated as Milk Business Turn Over under the provisions of Section 44AD of the Act (APB, Pgs. 7-17).
In the case of “Commissioner of Income Tax vs. Leader Valves Ltd.”, (Supra) the Hon’ble Jurisdictional High Court observed that in view the principle of consistency, the Revenue could not be permitted to raise an issue in isolation only for one year in the case of one assessee, while accepting the findings on the same issue in the case of other assesses and for other years in the case of assesse.
In view of the above, the department cannot be permitted to raise an issue in isolation only for immediately succeeding on identical facts in the case of the same assesse. Thus, the source of amount of credit in the assessee’s bank account stands explained as milk sale Turn Over for the Assessment Year under consideration. However, as per provisions of Swaran Singh v. ITO section 44AD of the Act, the AO is directed to apply 8% Net profit on the total milk sale of worth Rs.18,80,000/-.
In the backdrop of aforesaid discussion, the appeal of the assesse is allowed in the terms indicated as above.
Order pronounced in the open court on 23.02.2023