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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Before: Shri A. T. Varkey, JM & Dr. A.L. Saini, AM]
ORDER Per Shri A.T.Varkey, JM: This is an appeal preferred by the assessee against the order of Ld. CIT(A)-6, Kolkata dated 13.09.2018 for AY 2015-16.
Ground No. 1 not pressed, therefore, we confirm the addition of Rs.8,21,865/-. So, ground no. 1 is dismissed as not pressed.
Ground no.2 is as under: “2(a). That the Ld. CIT(A) was not justified in rejecting ground no.2 of the appellant [before Ld. CIT(A)] ignoring written submissions dt. 12.09.2018 filed before him. The said ground included following disputed additions: i) Undisclosed Bank A/c- Axis Bank (Peak Credit) Rs. 12,80,589/- ii) SBI, Kalna Branch Rs.19,53,730/- iii) Fixed Deposit in PNB, Guptipara (on 17.03.2012) Rs. 1,33,051/- iv) PNB, Guptipara Branch Rs. 4,27,988/- b) The Ld. CIT(A) should have corrected peak credit addition made by AO which included closing balance as on 31.03.2014, which cannot be taxed in AY 2015-16.”
From a perusal of the aforesaid ground of appeal, it is noted that the AO has made an addition of Rs.1,33,051/- in respect of fixed deposit in the PNB, Guptipara dated 17.03.2012. At the outset, it has been brought to our notice by the Ld. AR that the fixed deposit of Rs.1,33,051/- pertains to AY 2012-13 and does not pertain to this assessment year. It is a trite law that the income should be taxed in the right hand, right person and in the right year, therefore, if the fixed deposit is pertaining to AY 2012-13 then only the interest accrued on the fixed deposit in this year under consideration can only be taxed and not the entire fixed deposit. Therefore, the order of the Ld. CIT(A) is set aside and Ashoke Kundu, Assessment Year: 2015-16 remanded back to the AO for the limited purpose of verification as to whether Fixed Deposit in question pertains to earlier year (AY 2012-13) and not that of this assessment year, then the Fixed Deposit cannot be brought to tax in this assessment year and only interest accrued if any can be taxed and we order accordingly.
5. Coming to the other three undisclosed sums of money found in the three bank accounts are concerned, we note that there is no dispute that the assessee has not disclosed these bank accounts to the Income Tax Authorities. According to the assessee, he is engaged in the business of trading of rice and the amount found in the undisclosed three bank accounts is from the undisclosed trading of rice. We note that when undisclosed bank accounts are found, there can be two additions made one is in respect of the undisclosed investment made by the assessee [for the undisclosed business] and second, the profits derived from the undisclosed business in the assessment year under consideration. In order to find out the undisclosed investment made by the assessee, the AO had to find out the peak credit from the consolidated bank accounts of the assessee and then make the addition. Needless to say, when the peak credit is computed the closing balance as on 31.03.2014 should not be considered in respect of AY 2015-16. [The closing balance of 31.03.2014 can only be taxed in accordance to law only when assessment is framed for AY 2014-15 and not this relevant assessment year.] Thereafter, the turnover of the undisclosed business transaction carried out in this year has to be computed and thereafter, the profit element embedded in the turnover which the assessee had carried out in his undisclosed business has to be determined by considering the business of the assessee which is undisclosed. This can be determined from the results of comparable business. Therefore, we set aside the order of the Ld. CIT(A) and remand the matter back to the file of the AO for fresh adjudication as per the direction given above and in accordance to law. Needless to say opportunity of hearing be given to the assessee and the assessee is at liberty to produce list of comparable business as well as object to the inclusion of comparables before the AO and the AO after hearing pass a speaking order.
In the result, appeal of assessee is partly allowed for statistical purposes.
Order is pronounced in the open court on 18.03. 2020.