Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: SHRI C.M. GARG & SHRI MITTHA LAL MEENA
IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI MITTHA LAL MEENA, ACCOUNTANT MEMBER ITA No. 327/Agra/2017 Asst. year : 2011-12
Shri Subhash Chand Sharma, Income Tax Officer-2(2), Mansapura, Nagla patam, Agra Iradat Nagar, Agra PAN:CRNPS4643F (Appellant) (Respondent)
Appellant by Shri Deepak Maheshwari, A.R. Respondent by Shri Waseem Arshad, Sr. D.R.
Date of hearing 10/04/2019 Date of pronouncement 31/05/2019
ORDER Per M. L. Meena, A.M.: This appeal by the Appellant assessee is directed against the order of ld. CIT(A)-I, Agra dated 24.03.2017 for the assessment year 2011-12 on the following grounds:
That the ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in sustaining the learned Assessing Officer’s Order under section 144 of the Income Tax Act, 1961. 2. That the authorities below have erred in law and on facts in making the addition of Rs.33,57,510/- being the peak amount of deposit in the bank account as unexplained investment. 3. That the order passed by the authorities below is bad in law and against the facts of the case.
2 ITA No. 327/Agra/2017 Asst. year : 2011-12
That any other relief or reliefs deemed fit in the facts and circumstances of the case may be granted. 5. The appellant craves leave to add, alter or vary the grounds of appeal before or at the time of hearing. 2. Apropos, ground no. 2, the assessee challenged that the addition of Rs.33,57,510/- on account of the peak cash deposit in his bank account as unexplained investment.
Brief facts of the case are that the assessee derived income from business of dairy products and interest on bank depositsand he furnished the return of income on 20.05.2011 declaring total income of Rs.1,85,254/-. The case of the appellant assessee was selected under scrutiny on the basis of AIR information that assessee had deposited cash of Rs.56,70,990 in his Saving Account of Punjab National Bank and that the AO issuedstatutory notice was issued to the assessee to produce details and source with respect to the aforesaid deposit in his PNB account during the course of assessment proceedings but which was no compliance and subsequently the AO obtained copy of bank account no.2023000100157472 of the assessee with Punjab National Bank,Rohtaunder section 133(6) of theact. From the Bank statement, the AO found that total deposit of Rs.71,69,424/- were made in assessee PNB saving Bank account which include the cash deposit of Rs.56,70,900/- as reflected in AIR information as noted in the assessment order.According, the AO computed the income of assessee at Rs.33,57,509/- treating the peak credit balance in assessee saving bank accountant as unexplained money of the assessee. The assessee challenged the matter before the 1st appellate 4. authority, the Ld CIT (A) where he submitted that he is carrying on the
3 ITA No. 327/Agra/2017 Asst. year : 2011-12 business of dairy products and filed return of income Rs.1,85,254. The assessee also explained that he is a President of Sumangalam Co- operative Avas Samiti Ltd., Agra and the cash deposited during the year under consideration in his saving bank account belongs to the society. The society is engaged in the business of sale & purchase of plots. The society has made the sale of plots of the society but the sale proceeds of the plots have been deposited by him in his personal bank account in Punjab National Bank, Rohta, Agra. In support of his contention, the assessee submitted copy of sale deeds,certificate, and a chart showing the details of the amount collected for depositing into his saving bank account to show that the cash deposit belongs to the society and not to him. It was pleaded that the addition made by the AO is not justified and needs to be deleted. The ld. CIT(A) considering the explanation of the assessee and going through the documents/ evidences filed by assessee, rejected the contention of the assessee stating that the documentary evidences filed by the assessee cannot be accepted as they were not produced before AO.Thefindings of the ld. CIT(A) in para 7 of the appellate order are reproduced as under: - “I have carefully considered the appellant’s submission and facts of the case. The facts of the case show that the appellant had filed his return of income comprising of business income from dairy products of Rs.1,83,378/- and interest income of Rs.1,876/-. The appellant was not able to explain to the A.O. the source of cash deposits in his saving bank account in PNB, which apparently was discovered by the A.O. through the receipt of AIR information. The A.O. treated the said cash deposit as unexplained and assessed the peak value of deposits in the saving bank account as unexplained investment of the appellant. No business income or income from other sources was included by the A.O. as part of the assessed income on the
4 ITA No. 327/Agra/2017 Asst. year : 2011-12 reasoning that it got covered by the peak balance in the appellant’s saving bank account in PNB. The appellant has given the explanation that the cash deposits in the appellant’s bank account in PNB are related to the dealings of a society namely Sumanglam Co-operative Avas Samiti Ltd., Agra and the cash deposited in the said bank account belongs to the society and not to him. Copies of certain sale deeds of plots of land and a copy of registration certificates dated 16.06.2009 in the name of the said society, are enclosed. After perusing these, I find them to be not sufficient and reliable enough to prove that the cash deposited in the appellant’s bank account belonged to the society and not to the appellant. “ 5. Being aggrieved, the assessee has filed this appeal before us. 6. Ld. Authorized Representative for the assessee reiterated the submissions made before the ld. CIT(A). The Ld. AR contended that the ex-parte order has been passed in haste based on wrong facts. The AO in his assessment order himself accepted by stating that the assessee is carrying onthe business of dairy products besides interest income on bank deposits. He contended that the deposits made in the saving bank account represents his turnover on which he must have earned profit, still the AO proceeded to make the addition of Rs.33,57,509 treating the peak credit balance as unexplained money of the assessees business turn over. The relevant portion as per page-2, para-1 of the Assessment order is reproduced as under- “After considering the facts and circumstances of the case and as the assessee is carrying over business activity, it is held that the deposits made in this saving bank account during F.Y. 2010-11 amounting to Rs.7169424/- represents the turnover of the Assessee from the business, on which the assessee must have earned a profit of 8% this amounting to 5,73,553/- for the year under consideration. Further the assessee must have provided some working capital for the
5 ITA No. 327/Agra/2017 Asst. year : 2011-12 running of the business. On perusal of Bank A/c it is gathered that the maximum credit balance in the A/c stands on 02.11.2010 at Rs.33,57,509/-. Which is held to be the peak investment of the assessee in the business. Since assessee has offered no satisfactory explanation with regard to source of this amount of Rs.33,57,509/- during the course of assessment proceedings. This amount is treated as the unexplained money of the assessee and is added to his total income.” 7. The Ld. counsel submitted that the bank deposits were arise out of the sale proceeds of the plot by society which were deposited in assessee’s personal saving bank account due to lack of awareness of accounting for the purpose of Income Tax. In support of his contention he submitted copy of sale deeds, cash flow statement, registration certificates and ledger containing details of amount deposited and amounts returned to the society and its members during the year under consideration which are placed on record.
The Ld. counsel has taken alternative argument that since the deposits and withdrawals were made regularly by the assessee in his saving bank account, hence, the deposits can be treated as business turnover of the assessee if the lower authorities were not satisfied with the explanation of the assessee. For this purpose, he referred to the preceding year’s assessment proceedings in the assessee’s own case, where the AOhas accepted the profit of Rs. 1,59, 750/- declared by the assessee in his original income tax return treating the total cash deposits of Rs. 58,64,456/- in the saving bank account of PNB, as his businessturnover. The assessment order of immediately preceding Assessment Year 2010-11 is placed on record.
6 ITA No. 327/Agra/2017 Asst. year : 2011-12 9. The Ld. Counsel for the assessee relied upon the decision of ITAT Lucknow Bench in case of ITO Vs Shri Vishan Lal, ITA No.634/LKW/2014 stating that since the deposits and withdrawal were made regularly in saving bank account of assessee during the year hence it can only be treated as his business turnover. Thereafter, he prayed that the impugned addition of peak credit balance made by AO and sustained by ld. CIT(A) may kindly be deleted and the total deposits should be treated as business turnover and only profit on the same should be treated asassessee’s business income.
On the other hand, the ld. DR relied upon the orders passed by lower authorities.The ld. DR further contended that the ledgers produced by the assessee cannot be considered sufficient for the purpose of determining that the amount was returned by the assessee to the society or for the benefit of society. Hence, the addition made by the CIT(A) should be sustained.
Heard the rival contentions, and perused the facts of the case and material on record. We have also gone through the case laws relied upon by the Ld. AR of the assessee.
The contention of the AR although deserves to be accepted but in the absence of documentary evidence in support of amount returned to society, the ledger itself filed by assessee cannot be held as sufficient documentary evidence to reach any conclusion. But we find force in the argument raised by the ld. AR of assessee that, the assessee is carrying on a small business of dairy products through cash transactions and in absence of any other source of income, the total deposits made in the assessee’s saving bank account can be considered as his business turnover which gets support from the observation of the assessing officer for the year under
7 ITA No. 327/Agra/2017 Asst. year : 2011-12 consideration and the AO’s observation in assessment of the preceding year where on identical facts, the trading turnover of “dairy business” of the assessee, cash deposits from cash transactions has been accepted as his business turnover and the profit disclosed in the return was accepted. The ITAT Lucknow Bench in case of “ITO vs Shri Vishan Lal” (Supra) 13. after considering the deposits and withdrawal made in assessee’s bank account upheld the order of CIT(A) holding as under- “From the above paras from the order of learned CIT(A), it is seen that a clear finding has been given that perusal of the entries reflected in the said bank account, it was revealed that the cash deposits and withdrawals were made regularly during the year and therefore the Assessing Officer was not justified in making the addition of Rs.15,68,500/-. Considering the facts discussed above that the cash deposit and withdrawal in the bank account was made regularly by the assessee during the year, it is very reasonable to say that the same was business turnover outside books and therefore only gross profit addition is justified in the facts of the present case. Hence, we do not find any reason to interfere in the order of CIT(A) and therefore, we decline to interfere with the same.” 14. Considering the facts as discussed above that the cash deposit and withdrawal in the bank account was made regularly by the assessee during the year, it is very reasonable to say that the same was business turnover and therefore only gross profit addition is justified in the facts of the present case. Hence, we are not inclined to agree with the finding of the Ld.CIT(A) in observing that of peak cash deposits in bank account, endorsing the observation of the AO which was against the principle of ‘rule of consistency’ on comparison to the preceding Assessment Year and nature of retail milk business of the assessee.In our considered opinion, such deposits in the bank account would certainly constitute business turnover of
8 ITA No. 327/Agra/2017 Asst. year : 2011-12
the assessee and the income disclosed in the return is justified as reasonable business profit for the year under consideration.
In the above view and following the decision of ITAT Lucknow bench, we accept the grievance of the assessee as justified. Accordingly, the addition of Rs.33,57,510/- is deleted. Thus, the issue in grounds of appeal is allowed.
In the result, the appeal is allowed.
Order pronounced on 31/05/2019 under rule 34(4) of ITAT Rules, 1963. Sd/- Sd/- (C.M. Garg) (Dr. M. L. Meena) JUDICIAL MEMBER ACCOUNTANT MEMBER *AKV*/DOC