DHANI RAM,NEW DELHI vs. ITO, WARD-38(2), NEW DELHI

ORDER This appeal filed by the Assessee is directed against the Order dated 24.01.2019 of the Ld. CIT(A)-13, New Delhi, relating to the A.Y. 2009-2010.

2 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi.

2.1. During the course of assessment proceedings specific details regarding nature of business activities and source of cash deposit in the bank accounts were sought. The requisite information was not provided by the assessee. As the requisite details were not filed by the assessee even

3 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi. after giving enough opportunities and the case was getting barred by limitation on 31.12.2011, there was no other option with the AO but to pass assessment order ex-parte on the material already available on record or provided by the assessee. The A.O. accordingly passed assessment order on 26.12.2011 at a total income of Rs. 42,43,176/- as against the returned income of Rs. 1,90,314/-. The AO added an amount of Rs.40,41,371/- on account of un- explained cash credit and has also added Rs.11,491/- on account of undisclosed interest income.

2.2. Aggrieved with such assessment order, the assessee preferred an appeal before the Ld. CIT(A). Since the assessee did not appear before the Ld. CIT(A), he passed the ex-parte order.

2.3. Aggrieved with such order of the Ld. CIT(A), the assessee preferred an appeal before the Tribunal and the Tribunal restored the issue to the file of Ld. CIT(A) for passing a speaking order, after giving due opportunity of being heard to the assessee.

4 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi.

2.4. During the remand proceedings, the assessee filed certain additional evidences before the Ld. CIT(A), who called for remand report from the A.O. After considering the remand report of the A.O. and the rejoinder of the assessee to such remand report, the Ld. CIT(A) sustained the addition of Rs.40,41,371/- made by the A.O. by observing as under :

“4.2. As narrated in the facts above, it is clear that despite repeated opportunities given during the stage of original assessment as well as original appellate proceedings, the appellant did not avail of the same, resulting in an ex- parte order by the A.O. as well as dismissal of appeal, in limine by CIT(A). In second appeal before Hon'ble ITAT despite non attendance, by the assessee, by way of natural justice, the matter was remitted to the file of CIT(A).

4.3. Since the addition was made on account of unexplained cash deposit the matter was remanded to the assessing officer calling for 5 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi. specific comments on the source of cash deposits. The A.O. vide his remand report submitted that once again the assessee had not fully availed the opportunity given to him. Nevertheless, the A.O. on the basis of documents and submission provided to CIT(A) as additional evidence, examined the same and held that the difference of total credit entries and the declared business receipts(running of taxi business in the name of Kameshwar Tour & travels) that is Rs.62,62,048 – Rs.22,20,677/- = Rs.40,41,371/- were the unexplained cash credits of the assessee.

4.4. The appellant was confronted with the remand report of the A.O. The appellant stated that as per the cash summary furnished, the cash deposits of Rs.51,17,000/- were out of cash withdrawals of Rs.34,97,500/-.

4.5. During the course of assessment proceedings it was pointed out that the cash book shows an entry "Temple Land Collection A/c". The Appellant

6 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi. said that he was going to purchase some land. Out of this also cash was utilized. It was also [pointed out that he has withdrawn in his own name Rs 5 lacs cash. The source was stated to be donations collected from various people. He was asked why he did not produce Books of account before the AO during assessment proceedings. He replied that he had suffered lot of business loss and he was in difficulty. Further that he has closed down the business of taxi hire.

4.6. It is noted that as per affidavit the appellant has stated that during the relevant financial year 2008-09 he maintained 9 bank accounts, 1 of which was closed. But while preparing the cash summary chart and preparing a summary 01 peak balance only four accounts have been referred to. The balance sheet also does not reflect all the bank accounts. While the Appellant has claimed total cash withdrawals of Rs.34,97,500/- As against cash deposit of Rs.51,17,000/-, he has not 7 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi. been able to show the cash flow in terms of intra bank debit and credit nor the movement of cash between the various bank accounts held.

4.7. In light of the above facts it is clear that despite several opportunities at various stages, he has been unable to discharge the onus cast upon him to prove or satisfactorily explain the sources of cash credits in his account. Hence, the addition of Rs.40,41,371/- is hereby confirmed. “

2.5. So far as the interest income of Rs.11,491/- is concerned, the Ld. CIT(A) also sustained the same to the extent of Rs.6,840/- and deleted an amount of Rs.4,651/- which was offered for taxation by the assessee.

1. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the order passed by Ld AO u/s 143(3) without

8 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi. appreciating that asseesse was carrying a business of running of taxi on hire.

1.1. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the order passed by Ld AO u/s 143(3), without appreciating that Ld AO passed the order without application of mind and treating all credit entries in the various bank accounts maintained by the assessee, after considering the turnover declared by the assessee, and treated the difference as unexplained cash credits/cash deposits from undisclosed sources of income.

1.2. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the order passed by Ld AO u/s 143(3) without appreciating that there are frequent cash withdrawal from the banks for day to day requirement of taxi hire business and depositing back the excess cash in the same/other bank account maintained by the assessee.

9 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi.

1.3. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the order passed by Ld AO u/s 143(3) without appreciating that notice u/s 143(2) dated 19/08/2010 statutorily required to be served before 30/09/2010, which was not served to the assessee within time, hence order passed u/s 143(3) without jurisdiction and application of mind.

1.4. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the order passed by Ld AO u/s 143(3) as none of the assessee submission is appreciated while adjudicating the appeal;

2. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the order passed by Ld AO u/s without appreciating that all the additions made are without bringing legally admissible document on records;

10 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi.

3. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in not restoring the returned income declared by assessee in its return of income .

That the appellant craves leave to add add/alter any/all grounds of appeal before or at the time of hearing of the appeal.”

4. Learned Counsel for the Assessee strongly challenged the order of the Ld. CIT(A) in confirming the addition of Rs.40,41,371/-. He submitted that the assessee is an individual and is engaged in the business of taxi plying. Even the A.O. in the remand report also has accepted that assessee is engaged in the business of operation of taxies which has been reproduced by the Ld.

11 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi.

CIT(A) at Pages 5 and 6 of his order. Further in the earlier as well as in succeeding years also the Revenue has accepted that assessee is engaged in the business of taxi operation. Further in A.Y. 2010-11 in the order passed under section 143(3) it has been mentioned that the assessee is engaged in the business of taxi operation. Therefore, once the assessee is engaged in the business of taxi operations which is the only source of income of the assessee, therefore, the stated cash deposit in the instant case cannot be given another colour other than the business receipt. Further, the assessee is not maintaining any books of account as far as the stated bank deposits are concerned. Therefore, the same cannot be treated as unexplained cash credit. Relying on various decisions placed in the written synopsis filed, he submitted that since it is established that the only source of income of the assessee is from taxi operation and assessee is not maintaining any books of account and there is no evidence of any other activity by the assessee to generate such bank deposits, therefore, the difference in the receipts as per the bank account and the 12 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi. receipt already declared in the P & L A/c cannot be brought to tax under section 68 of the I.T. Act, 1961 and only some percentage of profit should be adopted. For the above proposition, the Learned Counsel for the Assessee relied on the decision of ITAT, Delhi Bench in the case of Shri Sourabh Kumar, New Delhi vs., ITO, Ward-46(4), New Delhi vide ITA.No.113/Del./2020 order dated 24.06.2021 and various other decisions.

4.1. Referring to the decision of Hon’ble Supreme Court in the case of Lakhmichand Baijnath vs. CIT [1959] 35 ITR 416 (SC), he submitted that the Hon’ble Supreme Court in the said decision has held that when the amount is credited in the business books, it is not an unreasonable inference to draw that it is a receipt from business. Relying on the decision of Hon’ble Gujarat High Court in the case of J.K. Chokshi vs., ACIT vide Tax Appeal No.149/ 2003 order dated 22.12.2014, he submitted that the Hon’ble Gujarat High Court in the said decision has held that once it is established that the assessee had no other source of income

13 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi. at the relevant time or in the past, it could be safely concluded that the assessee had no other income other than the income from business. Relying on the following decisions, the Learned Counsel for the Assessee submitted that in the case of unaccounted business transaction, only the profit element can be added as income.

 CIT v. President Industries, reported in (2002) 258 ITR 654.  CIT v. Gurubachhun Singh J. Juneja, reported in (2008) 302 ITR 63 (Guj.).  CIT v. Samir Synthetics Mill, reported in (2010) 326 ITR 410.  Hon’ble Gujarat High Court in case of CIT v. Sathyanarayn P. Rathi reported in (2013) 38 taxamann.com 402.  Hon’ble High Court in case of CIT vs. Bahul K Daga reported in 79 taxmann.com 337.  Man Mohan Sadani v. CIT reported in (2008) 304 ITR 52.

14 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi.

 Hon’ble Calcutta High Court in the case of PCIT vs., Subarna Rice Mill reported in (2018) 96 taxmann.com 286.  Reliance is further placed on the decision of the Hon'ble Madhya Pradesh High Court in CIT v. Balchand Ajit Kumar 263 ITR 610 (MP), wherein it was held that the total sale could not be regarded as profit of the assessee.”

4.2. He accordingly submitted that only some profit should be estimated of such unaccounted receipts and the entire amount cannot be added to the total income of the assessee as unexplained cash credit under section 68 of the I.T. Act, 1961. He also relied on the decision of Hon’ble Delhi High Court in the case of CIT vs., Mayawati [2011] 338 ITR 563 (Del.).

stated that the cash deposits were out of cash withdrawal from the bank earlier. Now the assessee is saying that the amount deposited in the bank is business receipt. He submitted that the assessee has miserably failed to substantiate with evidence to the satisfaction of any of the authorities regarding the source of deposit and why he has not disclosed the said receipt in the return of income. He submitted that the Ld. CIT(A) has given valid reasons while upholding the addition made by the A.O. He accordingly submitted that the order of the Ld. CIT(A) be upheld and the grounds raised by the assessee be dismissed.

Ld. CIT(A) upheld the action of the A.O, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the Learned Counsel for the Assessee that the only business of the assessee is that of taxi operation and the entire deposits in various bank accounts are out of taxi plying. Further the assessee is not maintaining any books of account, therefore, the addition, if any, can be made by estimating the difference in the bank deposits and the entire deposits cannot be added under section 68 of the I.T. Act, 1961. It is also his submission that part of the deposit was made out of the previous withdrawals from the bank account and, therefore, the entire addition cannot be made under section 68 of the I.T. Act, 1961.

6.1. I find some force in the above arguments of the Learned Counsel for the Assessee. It is an admitted fact that the A.O. in the preceding as well as succeeding assessment years and also in the remand report for the impugned assessment year has mentioned that assessee is in the business of taxi operation. There is no other evidence before

17 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi. the A.O. that the assessee is engaged in any other activity other than taxi plying. Further the assessee is also not maintaining any books of account.

6.2. I find in the A.Y. 2010-11 the case of the assessee was reopened and in the order passed under section 143(3)/147 dated 04.09.2014 the A.O. has accepted the returned income of Rs.2,23,820/- by observing as under :

“In this case, the return of income declaring income of Rs.2,23,820/- after claiming deduction of Rs.72,453/- under chapter VIA was filed on 31.07.2010 through E-mode. Notice u/s 148 of I.T. Act, 1961 was issued on 29.04.2013 after recording reasons. In response the assessee filed a letter stating that his return of income dated 31.07.2010 may be treated as his return of income in response to notice u/s 148. In response to various statutory notices issued u/s .143(2)/142(I) of the Income Tax Act, 1961 on different dates, Shri Sanjeev Verma, Advocate & AR of the assessee attended the assessment proceedings

18 ITA.No.2817/Del./2019 Shri Dhani Ram, Delhi. from time to time and furnished relevant requisite details, information and documents which have hem examined and placed on file. The case was discussed with him.

2. During the year under consideration, the assessee was engaged in the business of hiring of four wheelers for transporting and tours of passengers to various place within Delhi and outside Delhi. A discussion the returned income of the assessee is hereby accepted. Issue necessary forms.