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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM
आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM आयकर अपीऱ सं./ITA No.314 & 315/CTK/2018 (नििाारण वषा / Assessment Year :2013-2014 & 2014-2015) Chandramani Sahu, Vs. ITO, Ward-1, Berhampur At: Ekasingi, PO:Mendarajpur, Via: Golanthara, Dist:Ganjam PIN-761008 स्थायी लेखा सं./PANNo. : CETPS 0517 P (अऩीलाथी /Appellant) (प्रत्यथी / Respondent) .. ननधाारिती की ओर से /Assessee by : Shri Girish Kumar Mahapatra, Adv. िाजस्व की ओर से /Revenue by : Shri S.M.Keshkamat, CITDR
सुनवाई की तािीख / Date of Hearing : 07/11/2019 घोषणा की तािीख/Date of Pronouncement : 19/11/2019 आदेश / O R D E R Per L.P.Sahu, AM: These two appeals filed by the assessee against the order passed by the CIT(A)-1, Bhubaneswar, both dated 04.05.2018 for the assessment years 2013-2014 & 2014-2015. 2. Since the issues raised in both the appeals are same and identical, therefore, for the sake of convenience, both the appeals have been taken together and disposed off by this consolidated order. First we shall take up the appeal of the assessee for the A.Y.2014-2015 in ITA No.315/CTK/2018 and the grounds raised therein are as under :- 1. For that on the facts of the case the appellate order passed by the learned C.I.T.(A)-1, Bhubaneswar on dated 04.05.2018 is fully arbitrary, unjustified, against the facts of the case.
2 ITA No.314&315/CTK/2018
For that on the facts of the case, the Appellant Sri Chandramani Sahu was an employee at R. Suvani I.M.F.L. Off Shop, Vendor Sri P. Dinabandhu during the year 2013-2014 relating to the Asst. Year 2014-2015, to substantiate the employer employee relationship the Appellant had filled all relevant documentary evidence before the learned A.O during the hearing of the scrutiny assessment proceeding.
For that on the facts of the case, the Appellant was authorised to purchase the stock from the O.S.B.C. (The Orissa State Beverages Corporation Ltd.) on behalf of his employer i.e. the licenced Vendor Sri P. Dinabandhu, R. Suvani I.M.F.L. Off Shop and for these purchases the payments were required to be made to the O.S.B.C. by Demand Drafts only. The cash purchase of Demand Drafts without transfer from any Bank Account is not permissible and since the licenced Vendor Sri P. Dinabandhu, R. Suvani I.M.F.L. Off Shop was not always available for operating the Bank account for purchase of Demand Drafts, the Appellant Sri Chandramani Sahu being the authorised person had to deposit the cash to his own Bank account for purchase of the Demand Drafts in favour of the O.S.B.C. against supply of stock. In view of the above facts, the Appellant most respectfully submits that all the cash deposits to his Bank accounts during the year are fully represented by corresponding purchase of Demand Drafts in favour of the O.S.B.C. on behalf of his employer the licenced Vendor Sri P. Dinabandhu, R. Suvani I.M.F.L. Off Shop. The appellant had filed copies of some of the money receipts issued by The Orissa State Beverages Corporation Ltd. before the learned A.O. during the hearing of the scrutiny assessment proceeding. Hence the amount of Rs. 1,23,01,780/- being the entire cash deposits for the year in to the Bank accounts of the Appellant treating it as transaction generated from running F.L. Off Shop business by the learned A.O. purely based on assumption, is fully arbitrary, unjustified and is liable to be fully deleted.
For that, the assessee has filled all the relevant documents in support of the above facts before the learned A.O during scrutiny assessment hearing which were not disputed by the learned A.O. In spite of this, the learned A.O without giving any reason treated the Cash deposits as turnover of the assessee and estimated the net profit.
That in view of the above facts, the Appellant most respectfully submits that all the cash deposits to his Bank accounts during the year are fully represented by corresponding purchase of Demand Drafts in favour of the O.S.B.C. on behalf of his employer the licensed Vendor Sri P. Dinabandhu, R. Suvani I.M.F.L. Off Shop.
The fact that the Appellant was working as an employee at R. Suvani I.M.F.L. Off Shop, Vendor Sri P. Dinabandhu is not disputed by the learned A.O.
3 ITA No.314&315/CTK/2018
The payment made by the Appellant out of his Bank account by Demand Drafts to M/s Orissa State Beverages Corporation Ltd., the Supplier is also not disputed by the learned A.O.
That the appellant's name as an authorised Salesman for this year for the Shop R. Suvani I.M.F.L. Off Shop has been duly acknowledged by the E.P Holder, Mr. P. Dinabandhu & Sub inspector of Excise, Golanthara. A copy of the same has been filed before the Ld. A.O. during the scrutiny assessment proceeding. 9. Further the Appellant was issued with an Identity Card along with the counter signature of the Vendor Sri P. Dinabandhu, R. Suvani I.M.F.L. Off Shop & by the Dy. Superintendent of Excise, Berhampur. In this Identity Card "Name of the person authorised to purchase stock from the O.S.B.C." for R. Suvani I.M.F.L. Off Shop, the name of the Appellant Chandramani Sahu is clearly mentioned. A copy of this Identity Card has been filed before the Ld. A.O. during the scrutiny assessment proceeding. 10. The licence for operating this I.M.F.L. Off Shop actually belong to the Vendor Sri P. Dinabandhu. A copy of the Licence Renewal No.27/2013-14 issued in the name of E.P. Holder Sri P. Dinabandhu, (Employer) in which the name of the authorised Agent Sri Chandramani Sahu (Employee) has been clearly mentioned and duly certified by the Collector, Ganjam has been filed before the Ld. A.O. during the scrutiny assessment proceeding. (Annexure-1)
Under the circumstances, treatment of Rs. 1,23,01,780/- being the entire cash deposits for the year in to the Bank accounts of the Appellant as business Turnover of the F.L Off shop belonging to the Appellant, by the learned A.O. and estimation of the net Income at Rs.9,84,142/- i.e. @ 8% u/s 44 AD of the IT. Act, 1961 is purely based on assumption, fully arbitrary, unjustified and is liable to be fully deleted. 12. For that among other grounds to be urged at the time of hearing, the appellant prays for full relief in view of facts and circumstances of the case in the interest of natural justice and equity.
Brief facts of the case are that the assessee is engaged in fast food
business and salary from foreign liquior off-shop and filed return of
income on 21.04.2015 by disclosing total income of Rs.3,45,170/-,
which was processed u/s.143(1) of the Act. Subsequently, the case was
selected for scrutiny and statutory notices were issued to the assessee.
4 ITA No.314&315/CTK/2018
During the course of assessment proceedings the documents were
called for by the AO from the assessee and the AO noticed that the
assessee is having a bank account with Andhra Bank maintained at
Girisola Branch, Ganjam and made cash deposit of Rs.1,23,01,780/-
during the year under consideration. In this regard, a show cause
notice was issued to the assessee and in reply to the same, the assessee
filed written explanation dated 14.12.2016 as under :-
"In course of last hearing, you had desired certain information. As instructed by my client, I am submitting the same hereunder: 1. Total Income: The assessee has filled ITR -4S by showing the following income under different heads: (i) Income from salary, (ii) Income from business, (Hi) Income from other sources. 2. Income from salary: During the Financial Year 2013-14, the assessee has received monthly Salary of Rs.3000/- from Mr. P. Dinabandhu, the proprietor of R. Subani FL off shop and the PAN of the employer is ALFPP5677A. The Assessee has worked on that shop as an Authorised Salesman. 3. Income from business: The assessee has carried out the business of Fast Food Centre. During the year under assessment the gross receipts from Fast food business along with amount received for advertising some foreign liquor and beverage at Fast Food Centre, amounting Rs. 25,92,710/- has been disclosed in the return of income and the profit was assessed @ 8% as per section 44AD of Income Tax Act. 4. Income from other sources: During the Financial Year 2013-14, the assessee has received interest on Fixed Deposit as well as interest on saving Bank account. The total interest of Rs.1,55,922/- has been disclosed as income from other sources. 5. Regarding cash transaction of Rs. 1,23,01,780/- at Andhra bank Girisola: As the Assessee is working at the Shop as a Salesmen and is involved to carry out the banking transaction hence for ease of operation cash of Rs.1,23,01,780/-has been deposited by his employer on various dates
5 ITA No.314&315/CTK/2018
and DD has been Drawn in favour of M/s. Orissa Beverages Corporation, on the date of deposit.
The Transactions in the account of the assessee is arose due to mear employer employee relationship, the cash has been deposited on behalf of the employer (The vendor Mr. P. Dinabandhu) and the DDs has been issued in favour of the Supplier i.e. M/s Orissa State Beverages Corporation Ltd. The OSBC acknowledged the receipt by issuing authenticated Money Receipts in the name of P. Dinabandhu. To establish the employer and employee relationship, the following documents are attached herewith for your record:
Copy of Licence Renewal No. 27/2013-14, in which the name of the Assessee has been submitted as the Authorized agent along with his age, Father's name Et address under the signature of the licence holder (the Employer) Mr. P. Dinabadhu which is further endorsed by Superintendent of Excise & by the Collector, Ganjam, Exhibit-1
List of Authorised Agent/Salesmen: In the list of Authorised Agent/salesmen, the name of the Assessee along with his age, Father's name, address, passport size photograph and signature with due attestation by the owner of the shop, Mr. P. Dinabandhu, has been included as the authorized employee of the shop and the same is identified by the Sub Inspector of Excise Golanthara, Ganjam on dated 30.03.2013. Exhibit-2
Identity Card: In the Identity Card issued to authorize to purchase stock from OSBC, the Assessee name with details address, photograph and signature has been attested by the employer, Mr. P. Dinabandhu Exhibit-3
Some instance of cash deposit, the concerned DD No. and Amount is given hereunder for your perusal.
No Date of Amount of Date of DD DD No Amount of DD MR No. & Date of cash Cash with OSBC Ltd. deposit Deposit
1 10.04.13 255500 10.04.13 600300 255000 002807/10.04.13 2 25.04.13 350000 25.04.13 600317 350000 003260/25.04.13 3 09.05.13 142000 09.05.13 600344 142000 009920/09.05.13 4 13.05.13 280500 13.05.13 600354 280000 009861/13.05.13 5 21.05.13 241000 21.05.13 600371 240000 006551/21.05.13 6 30.05.13 282500 30.05.13 600389 282000 021358/30.05.13 7 01.06.13 271000 01.06.13 600394 270000 021428/01.06.13 8 03.06.13 693000 03.06.13 600397 600000 021573/06.06.13 03.06.13 600398 91200 022155/11.06.13 9 10.06.13 240500 10.06.13 600414 190000 022097/10.06.13 10.06.13 600413 50000 022155/11.06.13 10 12.06.13 541000 12.06.13 600416 540500 022198/12.06.13 11 21.06.13 183000 21.06.13 600445 183000 025686/21.06.13
6 ITA No.314&315/CTK/2018
12 22.06.13 601500 22.06.13 600446 600000 025717/22.06.13 13 02.07.13 254200 02.07.13 600455 254000 025975/02.07.13 14 03.07.13 601500 03.07.13 600462 600000 034559/03.07.13 15 08.07.13 [205000_ 08.07.13 600475 204500 034637/08.07.13 16 15.07.13 602000 15.07.13 600487 600000 034799/15.07.13 17 16.07.13 205000 16.07.13 600490 130000 034822/16.07.13 16.07.13 600491 75000 18 17.07.13 159000 17.07.13 600494 158600 034923/20.07.13 19 23.07.13 145500 23.07.13 600498 145000 034981/23.07.13 20 26.07.13 301000 26.07.13 600509 300000 023064/26.07.13 21 03.08.13 156000 03.08.13 600534 156000 023245/03.08.13 22 05.08.13 702000 05.08.13 600537 700000 023278/05.08.13 23 06.08.13 155000 06.08.13 600550 154500 023327/06.08.13 24 17.08.13 669300 1.7.08.13 600588 667300 041600/17.08.13 25 26.08.13 182000 26.08.13 600609 182000 038880/26.08.13 26 27.08.13 180000 27.08.13 600618 180000 039007/27.08.13
Some of the Money Receipts are enclosed here for your reference as Exhibit-4
Furthermore, as the Govt. Agency has acknowledge the receipt then it must have collected the Tax at Source from P. Dinabandhu, the vendor of FL off Shop. As per the 26AS of the assessee there no TCS in assessee's account. The 26AS is enclosed herewith as Exhhibit-5.
As a law binding person, the assessee has accounted for every transaction and has disclosed all known sources of income.
The AO noticed that the assessee has not maintained any books of
accounts, therefore, the AO estimated the total income of the assessee
@8% u/s.44AD of the Act treating the same as total turnover of the
assessee and accordingly made addition of Rs.9,84,142/-.
Feeling aggrieved from the order of AO, the assessee filed appeal
before the CIT(A) and the CIT(A) dismissed the appeal of the assessee
after observing as under :-
I have considered the matter with reference to the facts and materials on record. The assessee has not filed any evidence in support of his contention either before the AO at the assessment proceeding or before the undersigned in the course of appeal hearing. In the absence of the books of account of the so-called IMFL business of Sri P. Dinabandhu, it
7 ITA No.314&315/CTK/2018 cannot be accepted that all the cash deposits in assessee's bank accounts have come from the business of Sri Dinabandhu. In the circumstances, therefore, the action of the AO to treat the bank deposits as assessee's business turnover appears to be very liberal and judicious. The AO has estimated the profit on such business turnover at 8% which is also quite reasonable. Hence, the addition made by the AO of Rs.9,84,142/- is upheld.
Against the above findings of the CIT(A), the assessee is in further
appeal before the Income Tax Appellate Tribunal.
Before us, ld. AR reiterated the submissions made before the
lower authorities and he submitted that the assessee was an employee
on behalf of Sri P. Dinabandhu against which he is getting salary of
Rs.3000/- which has been shown by him as income from salary. The
total DDs were made in favour of M/s Odisha State Beverages
Corporation Ltd. on behalf of Shri P. Dinabandhu from cash deposited
in the bank account. The assessee’s bank account has only been used
for a conduit of business facilitation. Therefore, the entire proceeds
deposited in the bank account should not be taxed in the hands of the
assessee. In support of his arguments, he stated that entire facts were
submitted before the CIT(A) via e-mail which has been considered by
the Tribunal in ITA No.418/CTK/2017, dated 22.03.2018.
On the other hand, ld. DR submitted that the orders of authorities
below should not be disturbed as both the lower authorities have after
considering to the cash deposited as total turnover of the assessee,
rightly applied 8% profit in the case of the assessee’s business. He
8 ITA No.314&315/CTK/2018 submitted that the AO has considered this issue very liberal and
judicious manner. The assessee was also unable to substantiate that the
receipts had been incorporated in the employee’s account or taxed in
the hands of the employer as a turnover.
After hearing both the sides and perusing the entire material on
record along with the orders of authorities below, we noticed that the
ld.AO has decided this issue in very liberal and judicious approach
because the assessee was unable to prove that the entire cash deposits
have been incorporated in the accounts of Shri P.Dinabandhu and the
assessee has also not maintained any books of account. During the
course of hearing we asked the ld. AR of the assessee that if he would
prove that the receipts have been considered while computing the
income of Shri P.Dinabandhu, however, ld. AR of the assessee could not
prove the same before us. Considering the totality of facts and
circumstances of the case, we are of the opinion that the AO has rightly
considered and estimated the total income @8% of the assessee
u/s.44AD of the Act on the total bank deposits for the year under
consideration because the assessee could not produce books of account
before the AO. Accordingly, we dismiss the grounds raised by the
assessee and also dismiss the appeal of the assessee.
Thus, ITA No.315/CTK/2018 is dismissed.
9 ITA No.314&315/CTK/2018
Now, we shall take up the appeal of the assessee in ITA
No.314/CTK/2018 for the assessment year 2013-2014.
In this case, the assessee was also performing similar work as
was in the assessment year 2014-2015, only different of fact is that the
total deposits in the bank account of Rs.1,80,42,420/- has been
considered as income of the assessee for want of non-explanation by
the assessee. The said amount of Rs.1,80,42,420/- was deposited in two
bank accounts which is as under :-
No Name of the Bank Source Financial Mode of Transactions Total Amount of Year Transactions 01 Andhra Bank, Girisola, AIR 2012-13 Amount of Cash Deposits Rs. 1,50,50,420/- Ganjam, Odisha,-761009 (More than Rs. 10,00,000/-) 02 Andhra Bank, Tulu, Ganjam, AIR 2012-13 Amount of Cash Deposits Rs. 29,92,000/- Odisha,-761008 (More than Rs. 10,00,000/-) TOTAL AMOUNT Rs.1,80.42,420/-
Since we have decided the issue raised by the assessee for the
assessment year 2014-2015 and the issue being similar, our
observations made in the above appeal shall be applicable to the
assessment year 2013-2014. In the assessment year 2014-2015, the AO
himself has accepted the total cash deposited as turnover of the
business of the assessee as per Section 44AD of the Act. The CIT(A) has
decided this issue on the same date but for the assessment year 2014-
2015 he has accepted the version of the AO regarding applicability of
8% net profit u/s.44AD of the Act but in this year, he has considered
the total bank deposits as income of the assessee.
10 ITA No.314&315/CTK/2018 12. After considering the submissions of both the sides and the
activities of the assessee are same for both the years under
consideration, therefore, in the interest of justice, we restrict the
addition made by the AO on account of unexplained source of income
to 8% of the total bank deposits treating it as turnover of the assessee
as held by the revenue authorities in the assessment year 2014-2015.
We order accordingly.
In the result, appeals of the assessee i.e. ITA No.314/CTK/2018 is partly allowed and ITA No.315/CTK/2018 is dismissed. Order pronounced in the open court on 19/11/ 2019. Sd/- Sd/- (C.M.GARG) (L.P.SAHU) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनांक Dated 19/11/2019 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीलाथी / The Appellant- 1. Chandramani Sahu, At: Ekasingi, PO:Mendarajpur, Via: Golanthara, Dist:Ganjam,PIN-761008 प्रत्यथी / The Respondent- 2. ITO, Ward-1, Berhampur आयकि आयुक्त(अऩील) / The CIT(A), 3. आयकि आयुक्त / CIT 4. ववभागीय प्रनतननधध, आयकि अऩीलीय अधधकिण, कटक / DR, ITAT, Cuttack 5. गार्ा पाईल / Guard file. 6. सत्यावऩत प्रनत //True Copy// आदेशािुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक /ITAT, Cuttack