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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA
PER PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Revenue against order of the CIT(A)-6, Ahmedabad dated 21.10.2014 arising in the assessment order dated 6.3.2013 passed by the Assessing Officer under section 144 r.w.s. 147 of the Income Tax Act concerning assessment year 2008-09.
Revenue in its appeal has impugned action of the CIT(A) in granting part relief to the assessee against addition of Rs.54,59,176/- made by the AO towards unexplained cash deposits.
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Briefly stated, assessee is engaged in the business of tours and travels, booking tickets, VISA, passports etc. in the name and style of United International Tours and Travels. In the course of scrutiny assessment, the AO found that the assessee has multiple bank accounts with different banks whose details are not incorporated in the return of income. The AO found that cash deposits have been made in these bank accounts aggregating to Rs.54,59,176/- as tabulated in the assessment order. The AO accordingly held the aforesaid amount to be income of the assessee from undisclosed source and thus added to the total income returned by the assessee.
In the first appeal, the CIT(A) revisited facts placed by the assessee before him. After taking cognizance of the remand report obtained from the AO in this regard found that an amount of Rs.2,37,826/- pertaining to A.Y.2009-10 requires to be confirmed and thus granted relief for the balance amount.
Aggrieved by substantial relief granted by the CIT(A), Revenue has preferred appeal before the Tribunal.
When the matter was called for hearing, none appeared for the assessee. It is seen from the record that several opportunities were granted to the assessee in the past where either assessee was not present or assessee has sought adjournment. Thus, in these circumstances, we do not consider it necessary to grant further opportunity to the assessee, and accordingly proceed exparte qua assessee-respondent for hearing the appeal.
The ld.DR for the Revenue relied upon the order of the AO and submitted in furtherance that the assessee has failed to appear before the AO,
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and therefore, there was no warrant for the CIT(A) to admit additional evidence placed by the assessee before him, and grant huge relief.
We have carefully considered the submissions made on behalf of the Revenue and also perused assessment order and first appellate order appealed against. The short question that arises for reconsideration is whether cash deposits to the extent of relief granted by the CIT(A) can be treated as explained in the facts and circumstances. In this regard, we notice at the outset that the CIT(A) has confronted the relevant material placed before him by the assessee to the AO, and a remand report was called for, seeking comments of the AO in this regard. After taking cognizance of the comments obtained from the AO, the CIT(A) compared inward receipt in the bank account as well as payment made out of the bank accounts and found that addition to the extent of Rs.2,37,826/- is only sustainable and the remaining amount stands explained. Similar exercise was done for other preceding assessment years as tabulated in the order of the CIT(A). Relevant operative part of the order of the CIT(A) is reproduced hereinunder:
“3.3.1 1 have considered the submissions of the Ld. Authorized Representative and the order of the Assessing Officer. The Assessing Officer has passed an order u/s. 144 of the Income-tax Act for the years under considerations During the appellant proceedings, the Authorized Representative of the appellant has submitted explanations/details for all the credit/debit entries in undisclosed bank accounts which were not accounted for in the books of accounts. The submissions of the appellant have been remanded to the Assessing Officer for its verification and comments. It is correct that the appellant has not disclosed all the bank accounts in his books which means that the credit and debit entries were not fully explained. However, as relied by the Authorized Representative, Hon'ble ITAT, Ahmedabad in case of ITO Vs. Shri Dinesh Ajitbhai Jain (ITA No. 2740/Ahd/2012) has held that when the assessee has not disclosed the bank account in the
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books,, all the credit entries cannot be considered as unexplained. Similar view has been taken by the ITAT, Ahmedabad in case of Bhavesh Satabhai Patel Pandav Society Vs ITO Ward-2, (ITA No. 381/Ahd/2013).
3.3.2. In the present case the appellant has not disclosed the bank .accounts in his books, however, during the appellate proceedings the appellant has submitted complete details/explanations for all the credit as well as debit entries in respect of all bank accounts maintained by him. He has also submitted nature of each transaction with the names of students along with the summary of income generated for the each such transaction after recording the expenses made out of receipts. All these details are furnished assessment year wise and the same were also examined by the Assessing Officer during the course of remand proceeding. Considering the details submitted by the appellant for each credit and debit entries for all the years and the fact that the Assessing Officer has not been able to controvert the same in his remand report, I am of the considered opinion that the total credit in the undisclosed bank account cannot be treated as income of the appellant. As mentioned in para above, the assessee is engaged in the business of tours and travels, booking tickets, Visa, Passports etc. in the name and style of United International Tours and Travels. Moneys are received from the customers for specific services and the same are deposited in his bank accounts. From the same bank accounts, payments are made to airlines for tickets which is normal and logical because the appellant himself does hot own any airline. He is a mere, travel agent and has to contend with the marginal commission prevalent in this line of business. Similarly, he received payments for visa services for which he had to incur substantial expenditures. Accordingly, I agree with the arguments made by the Authorized Representative that the total credit of the undisclosed bank account cannot be treated as unexplained income as such because all the credits in the undisclosed bank accounts were out of business of Air/Railway ticket bookings and the payments made by the appellant from the undisclosed bank accounts for purchase of Air/Railway Tickets should be allowed as deduction. Accordingly, I hereby restrict the addition made by the Assessing Officer considering the incomes already disclosed by the assessee in the following manner and balance additions made in different assessment years are directed to be deleted :-
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Asst. Total Credit in Payments Net Income Income Additions Year undisclosed Made from (Rs.) already confirmed by Bank a/c(Rs.) undisclosed offered in me accounts ROI u/s 148 (Rs.) (Rs.) (Rs.)
2005-06 7,22,162/- 4,67,600/- 2,54,562/- 2,54,386/- 176/-
2006-07 29,62,828/- 27,71,614/- 1,17,982/- 0 1,17,982/-
2007-08 40,64,951/- 36,97,695/- 2,96,685/- 0 2,96,685/-
2008-09 47,29,879/- 43,14,157/- 3,06,761/- 1,06,838/- 1,99,923/
2009-10 50,52,187/- 46,82,792/- 3,65,195/- 1,27,369/- 2,37,826/-
Total 1,75,32,00/- 1,59,33,858/- 13,41,185/- 4,88,593/- 8,52,592/-
A perusal of the findings of the CIT(A) would make it manifest that the CIT(A) has proceeded to reduce the expenses out of receipts reported in the bank accounts and the difference therein was considered as net income of the assessee. The CIT(A) thereafter excluded the income already declared by the assessee from the aforesaid amount and treated the differential amount (Rs.2,37,826/- relevant to the Asstt.Year 2009-10) as undisclosed income in the various assessment years. We do not see any infirmity in the aforesaid action of the CIT(A). The action of the CIT(A) appears rationale and reasonable in the facts and circumstances of the case, and having regard to the nature of business of the assessee. The CIT(A) has obtained remand report on the evidence placed before it, and thus no serious prejudice exists against the revenue. The CIT(A) has admitted the additional evidences which he is empowered to do for proper adjudication of matter. In the circumstances, we
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do not see any error which requires our interference. We thus decline to interfere.
In the result, appeal of Revenue is dismissed.
Order pronounced in the Court on 03 May, 2018 at Ahmedabad.
Sd/- Sd/- (Ms.MADHUMITA ROY) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER