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Income Tax Appellate Tribunal, “ A ” BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH
आदेश / O R D E R
PER SHRI RAJPAL YADAV, JUDICIAL MEMBER : The Assessee is in appeal before us against the order of Ld.Commissioner of Income Tax(Appeals)-5, Vadodara [‘CIT(A)’ in short] dated 12/04/2016 passed for Assessment Year (AY) 2007-08.
The solitary grievance of the assessee is that the Ld. CIT(A) erred in confirming the penalty of Rs.1,73,515/- imposed by the Assessing
ITA No.1861/Ahd/2016 Shri Ajay Desai vs. ITO Asst.Year – 2007-08 - 2 - Officer u/s.271(1)(c)of the Income Tax Act, 1961 (hereinafter referred to as "the Act").
The brief facts of the case are that the assessee is an individual engaged in the business of sale and purchase of second hand cars. He has filed his return of income on 29/09/2007 declaring total income of Rs.1,04,010/-. The case of the assessee was selected for scrutiny assessment and notice u/s.143(2) of the Act was issued and served upon him. On scrutiny of accounts, it revealed to the Assessing Officer that assessee has deposited cash with ABN Amro Bank. The Ld.AO made a detailed analysis of different deposits made in the Bank account and the explanation of the assessee. He accordingly made an addition of Rs.78,21,308/- on account of unexplained cash credit in the bank.
The dispute travelled upto the Tribunal by way of ITA No.716/Ahd/2011 for AY 2007-08 and the Tribunal scaled it down to Rs.7,35,045/-. The finding recorded by the Tribunal in para-10 reads as under:
“10. We find that no material has been brought on record by the Revenue to show that Rs.39,45,580/- was invested by the assessee in the aforesaid business at any given point of time. Thus, the addition of Rs.39,45,580/- made by the Commissioner of Income Tax (Appeals) is without any basis. Further, the Commissioner of Income Tax (Appeals) observed in his order that deposit of Rs.78,21,308/- includes Rs.9,43,000/- which was personal loan received by the assessee from
ITA No.1861/Ahd/2016 Shri Ajay Desai vs. ITO Asst.Year – 2007-08 - 3 - the bank. However, while calculating the profit of business, the Commissioner of Income Tax (Appeals) took the entire deposit of Rs.78,21,308/- as sales proceeds of the business. In our considered view, the Commissioner of Income Tax (Appeals) was not justified in taking Rs.9,43,000/- as sale proceeds of the business of the assessee. Thus, on reducing the above amount of Rs.9,43,000/- from the profit of Rs.12,45,340/- considered by the Commissioner of Income Tax (Appeals), the amount of profit comes to Rs.3,02,340/-. Keeping in view the entire facts and circumstances of the case, we find that in the aforesaid bank account, the peak credit was Rs.6,60,045/- was on 31- 01-2007. Therefore, it will be fair and reasonable to add Rs.6,60,045/- and profit earned by the assessee after that date which has been estimated at Rs.75,000/- to the income of the assessee in respect of aforesaid bank account. We therefore, confirm the addition to the extent of Rs.7,35,045/- out of the addition of Rs.45,33,324/- confirmed by the Commissioner of Income Tax (Appeals) and delete the balance amount of Rs.37,98,279/-. Thus, the ground of appeal of the assessee is partly allowed.
The Ld.AO has initiated the penalty proceedings on the ground that addition of Rs.78,21,308/- was made to the total income of the assessee on account of unexplained bank deposits. He imposed the penalty on account of concealment of income. Appeal to the CIT(A) did not bring any relief to the assessee.
With the assistance of the Ld.Representative of the assessee, we have gone through the record carefully. Ld.counsel for the assessee, at the very outset, submitted that 90% of the additions made by the Assessing Officer stand deleted at the end of the Tribunal. The balance addition was confirmed on an estimate basis.
ITA No.1861/Ahd/2016 Shri Ajay Desai vs. ITO Asst.Year – 2007-08 - 4 -
On the other hand Ld.DR contended that estimation of income at Rs.7,35,045/- is mode of computation. Hence, to this extent, assessee has concealed the income and deserves to be visited with penalty.
On due consideration ob above facts and in the light of ITAT’s order, it revealed that this account was used by the assessee for the purpose of business and that is why a peak credit of Rs.6,60,045/- as on 31/01/2017 was considered for addition. It was not a simpliciter unexplained deposits. The assessee used to deposit the money as well as to withdraw from this account for the purpose of his business. Thus, he has made an explanation about the nature of deposit with this bank account and that explanation was not found to be false. It was not accepted by the Assessing Officer. It is a difference of opinion. Hence, assessee does not deserve to be visited with penalty.
In the result, appeal of the assessee is allowed. Order pronounced in the Court on 15th February-2019 at Ahmedabad.
Sd/- Sd/- ( AMARJIT SINGH ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 15/ 02 /2019 ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS
ITA No.1861/Ahd/2016 Shri Ajay Desai vs. ITO Asst.Year – 2007-08 - 5 -
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-5, Vadodara �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation .. 14.2.19(dictation-pad 7- pages attached at the end of this File) 2. Date on which the typed draft is placed before the Dictating Member ..14.2.19 3. Other Member... 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….15.2.19 7. Date on which the file goes to the Bench Clerk…………………15.2.19 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………