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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. N. S. SAINI & SH. N. K. CHOUDHRY
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N. S. SAINI, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I. T. A. Nos. 516 & 517/(Asr)/2015 Assessment Yeard: 2005-06 & 2006-07
Shri Rajiv Kumar, Vs. Income Tax Officer, 64-E, Rani Ka Bagh, Ward-5(3), Amritsar Amritsar PAN No. AAZPK1231R (Appellant) (Respondent)
Appellant by : Sh. K.R. Jain, Advocate Respondent by: Sh. Bhawani Shankar, DR
Date of Hearing : 11.2.2019 Date of Pronouncement : 14.2.2019
ORDER Per N.S. SAINI, AM: These are the appeals filed by the assessee against the Order of Commissioner of Income Tax (Appeals), Amritsar, dated 31.7.2015.
In both the years in appeal, the assessee has taken additional grounds of appeal, which reads as under:-
That the AO has erred in law and on facts while initiating proceeding u/s 147 of the Income Tax Act. 2. That despite specific requests the reason/s of initiating the proceeding u/s 147 has not been supplied. 3. That this is a legal ground and no fresh information is required for deciding this ground.
2 ITA Nos. 516 & 517/Asr/2015 – Shri Rajiv Kumar, Amritsar 4. The appeal is fixed for hearing before the Hon'ble Bench on 14th January 2016.
At the time of the hearing, the AR of the assessee submitted that he does not
press the additional grounds raised in the appeals, hence, they are dismissed for want
of prosecution.
The common ground of appeal taken in both the years under appeal is that the
CIT(A) erred in confirming the ad of Rs. 1,79,500/- for the Assessment Year 2005-06
and Rs. 85,000/- for the Assessment Year 2006-07 for cash deposits made by the
assessee in the bank account No. 0115100015685 in HDFC bank Ltd, The Mall,
Amritsar.
The brief facts of the case are that the AO observed that the assessee has made
cash deposits in the bank account No. 00151000154685 maintained with HDFC Bank,
The Mall, Amritsar of Rs. 8,60,783/- in the Assessment Year 2005-06 and Rs.
8,89,670/- in the Assessment Year 2006-07. The assessee did not comply with the
notices issued and, therefore, the source of the deposits could not be verified by him,
hence, he added the same to the income of the assessee.
On appeal before the Ld. CIT(A), the assessee submitted that the perusal of the
bank accounts it will show that most entries of deposits in the bank account are of
small amounts of cash deposits which are explainable. It was submitted that the
assessee was acting as an agent to exporters M/s M.K. International and M.K. Agri
International, D-19, Greater Kailash –II, New Delhi. The company purchased rice
3 ITA Nos. 516 & 517/Asr/2015 – Shri Rajiv Kumar, Amritsar
from Food Corporation of India in Punjab and the role of the assessee was to take
delivery of rice from Food Corporation of India and to dispatch to destination. The
company transferred funds to the assessee to pay freight, local charges and other
incidental expenses. The assessee was only paid service charges and the amount were
transferred in his account and withdrawn within one for few days of reimbursement of
labour and other incidental expenses on behalf of the principle. Hence, it was
submitted that the AO was factually wrong in stating that cash amounting to Rs.
8,60,783/- was deposited in the bank account in Assessment Year 2005-06 and Rs.
8,89,670/- was deposited in the bank account in Assessment Year 2006-07 when
credit of funds transferred through banks amounting to Rs. 6,16,364/- in the
Assessment Year 2005-06 and Rs. 7,09,001/- in the Assessment Year .
It was further argued that maximum peak amount during the year 2005-06 was
Rs. 2,02,856/- and in the Assessment Year 2006-07 and was Rs. 4,08,152/-, while the
peak balance during the period 7.1.2006 to 31.3.2006 amounted to Rs. 1,01,787/- and
during the period 7.1.2007 to 31.3.2007 amounted to Rs. 2,02,856/- and, therefore,
the maximum addition in the Assessment Year 2005-06 could be made of Rs.
1,01,069/- and in the Assessment Year 2006-07 of Rs. 2,05,296/-.
The CIT(A) dismissed the submissions of the assessee on the ground that the
assessee had not given any working of the peak cash amount of Rs. 2,02,856/- in the
Assessment Year 2005-06 and Rs. 2,05,296 in the Assessment Year 2006-07.
4 ITA Nos. 516 & 517/Asr/2015 – Shri Rajiv Kumar, Amritsar
The CIT(A) observed that in the Assessment Year 2005-06 and 2006-07, the
following credit entries in the bank account with the narrations given below were
transferred entries / deposits by cheques:-
Assessment Year: 2005-06
Date Amount(Rs.) 03-04-2004 17,000/- Funds transfer – 1152560004209 29-04-2004 165,000 Funds transfer 0272320001433 12-5-2004 50,000/- funds transfer –Chandigarh 0272320001433 02-06-2004 100,000 funds transfer – GK II, Delhi01272320001433 14-06-2004 20,000/- funds transfer – GK-II Delhi 01272320001433 Funs transfer – GK II 03-07-2004 20,000/- 01272320001433 06-07-2004 200,000/- funds transfer Lajpat Nagar Delhi 02942320000097 28-09-2004 6000/- Funds transfer-Amritsar 11525600004209 06-02-2004 12,515/- Chq dep-MICR CLG-Amritsar 03-12-2004 11,415/- Chq Dep – MICR BR-DEL 10-12-2004 5000/- Funds tran – Amritsar 11525600004209 20-12-2004 3434/- Rayya – Pheriphery LOC for Amritsar BR 07-01-2004 6000/- Chq dep – MICR CLG- Service BR CHA Total 616,364
Assessment Year: 2006-07
Date Amount (Rs) 23-05-2005 3494/- Chq dep-MICR CLG-Amritsar 27-06-2005 13,000/- Funds transfer-Amritsar 1152560004209 28-06-2005 3350/- Chq dep-MICR CLG - Amritsar
ITA Nos. 516 & 517/Asr/2015 – Shri Rajiv Kumar, Amritsar
10-08-2005 10,000/- Funds transfer-New Delhi 2711140000237 11-08-2005 20,000/- Funds transfer-Lajpat Nagar 2942320000097 01-10-2005 225,860/- Chq dep-MICR CLG – Clearing BR- Del 22-10-2005 408,152/- Chq dep-MICR CLG – Clearing BR- Del 26-10-2005 1000/- Funds transfer-New Delhi 0271050124511 13-01-2006 22,579/- Chq dep-MICR CLG – Amritsar 27-03-2006 1566/- Funds tran-Amritsar Total 709,001/-
Therefore, he held that since the aforesaid deposits totaling of Rs. 6,16,364/- in the
Assessment Year 2005-06 and Rs. 7,09,001/- in the Assessment Year 2006-07 in
Account No. 011000154685, HDFC Bank, The Mall Amritsar were by way of transfer
entries / cheque deposits, therefore, the AO was unjustified in treating the same as
cash deposits and making the additions. Accordingly, he deleted the additons of Rs.
6,16,364/- in the Assessment Year 2005-06 and Rs. 7,09,001 in the Assessment Year
2006-07. Thereafter, the CIT(A) observed that the appellant made following cash
deposits / withdrawals in the said bank account in the HDFC bank wherefrom the peak
cash balance of Assessment Year 2005-06 and 2006-07 worked out as under:-
Assessment Year 2005-06
Date Withdrawal (Rs.) Deposits (Rs.) Credit Balance 01-04-2004 Opening Balance 8196/- 23-04-04 14,000/- 22,196/- 26-04-04 6000/- 28,196/-
6 ITA Nos. 516 & 517/Asr/2015 – Shri Rajiv Kumar, Amritsar
01-06-04 16,000/- 44,196/- 01-06-04 16,000/- 60,196/- 01-06-04 16,000/- 76,196/- 09-06-04 15,000/- 91,196/- 02-09-04 23,000/- 114,196/- 16-09-04 20,000/- 134,196/- 06-10-04 5000/- 129,196/- 30-10-04 15,000/- 144,196/- 10-11-04 5500/- 149,696/- 08-01-04 10,000/- 159,696/- 07-02-04 8000/- 167,696/- 21-02-04 20,000/- 187,696/-
Assessment Year 2006-07
Date Withdrawal(Rs) Deposits (Rs) Credit 01-04-2005 Opening Balance 5300/- 05-04-05 19,000/- 24,300/- 07-05-05 14,000/- 38,300/- 22-06-05 11,000/- 49,300/- 02-07-05 4000/- 53300/- 06-07-05 16,000/- 69,300/- 23-07-05 8000/- 77,300/- 10-08-05 10,000/- 87,300/- 05-11-05 3000/- 90,300/-
He observed that the maximum peak cash credit balance in the Financial Year
2004-05 was Rs. 1,87,696/- on 21.2.2014 and the maximum peak cash credit balance
during the Financial Year 2005-06 was Rs. 90,300/- as on 5.11.2005. He observed that
the Appellant claim that the peak credit balance is covered within the returned income
filed by the assessee but as the Appellant has not been able to substantiate the source
of the above cash deposits in the said bank account, therefore, no credit in the return
of income is being allowed to the appellant, hence, he confirmed the addition of Rs.
7 ITA Nos. 516 & 517/Asr/2015 – Shri Rajiv Kumar, Amritsar 1,79,500/- in Assessment Year 2005-06 and Rs. 85,000/- in the Assessment Year 2006-07.
Before us, the AR of the assessee submitted that the assessee is filing return of income regularly since Assessment Year 2003-04. He filed a table for giving the assessment order wise details of gross total income and net income placed at page 30 of the paper book which is as under:- Sr. No. Assessment Year Gross Income Net Income 1 2003-04 1,68,860/- 1,68,860/- 2 2004-05 1,83,920/- 1,83,920/- 3 2005-06 1,65,750/- 1,65,750/- 4 2006-07 2,52,350/- 2,45,291/- 5 2007-08 3,99,430/- 2,99,430/- 6 2008-09 1,45,760/- 1,45,760/- 7 2009-10 3,42,830/- 2,42,830/- 8 2010-11 3,83,490/- 3,52,310/- 9 2011-12 4,12,650/- 3,44,340/- 10 2012-13 4,72,830/- 3,91,690/-
He submitted that the assessee was having income in earlier years as evidenced in the return of income and, therefore, the assessee deposited the cash in the bank account in Assessment Years 2005-06 and 2006-07 out of incomes of earlier Assessment Years i.e for 2004-05 at Rs. 1,83,920/- and for Assessment Year 2003-04 at Rs. 1,68,860/-, therefore, the addition made should be deleted.
The DR, on the other hand, supported the orders of the lower authorities.
In the above facts and circumstances of the case and after hearing the rival submissions, we are of the considered opinion, that the arguments of the Revenue that the assessee could not have any savings out of income earned in the immediately
8 ITA Nos. 516 & 517/Asr/2015 – Shri Rajiv Kumar, Amritsar preceding Assessment Years 2004-05 and 2003-04 are against real life facts. The assessee will definitely have some savings out of the past years income. It is seen that the assessee had shown net income of Rs. 1,68,860/- in the Assessment Year 2003-04 and Rs. 1,83,920/- in the Assessment Year 2004-05. Thus, we estimate the savings of the assessee in the Assessment Year 2003-04 at Rs. 85,000/- and also in the Assessment Year 2004-05 at Rs. 87,000/-. According, we allow deduction on account of deposit in the bank of Rs. 85,000/- in the Assessment Year 2005-06 and confirm the addition of Rs. 92,500/- for the Assessment Year 2005-06. Similarly, we allow credit for deposit in the bank account out of past year savings of Rs. 85,000/- in the Assessment Year 2006-07 and delete the addition of Rs. 85,000/-. Thus, the grounds of appeal of Assessment Year 2005-06 is partly allowed and for the Assessment Year 2006-07 is allowed.
In the result, the appeal for Assessment Year 2005-06 stands partly allowed, whereas, the appeal for Assessment Year 2006-07 stands allowed.
Order pronounced in the open court on 14.2.2019.
Sd/- Sd/- (N. K. Choudhry) (N.S. Saini) Judicial Member Accountant Member Date: 14.02.2019 ‘rkk’ Copy of the order forwarded to: (1) The Appellant (2) The Respondent (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T.