M/S JAI MATADI ENTERPRISE,HOOGHLY vs. THE ITO, WD-23(2), HOOGHLY, HOOGHLY

- This assessee’s appeal for assessment year 2011-12 arises against the Commissioner of Income Tax (Appeals)-6, Kolkata’s order dated 01.02.2016 passed in case No.246/CIT(A)-6/Kol/14-15, involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Case called twice. None appears at the assessee’s behest. The registry has already sent an RPAD notice dated 10.12.2019 which stand received back “un-served”. It is accordingly proceeded ex parte. The case is now taken up for adjudication on merits.

We have heard learned departmental representative. Case file perused. The assessee’s sole substantive grievance raised in the instant appeal seeks to reverse both the lower authorities’ action making u/s 69 unexplained A.Y. 2011-12 M/s Jai Matadi Enterprise Vs. ITO Wd-23(2), Hgy. Page 2 investment addition of ₹53,09,235/- followed by alleged enhanced of ₹5,07,056/- made in lower appellate proceedings under challenge reading as follows:- “4. The first ground of appeal is against addition of Rs.53,09,235/- in assessment order. The Assessing Officer (Assessing Officer) while matching the addition in order has stated as under:- "On 16.09.2013 Individual Transaction statement containing AIR information was taken from ITD (AST) application. Accordingly it was detected transaction amounting to Rs.70,59,667/- had taken place in the cash mode in ICICI Bank Limited under the name and address of the assessee. Accordingly the Bank statement was collected from the ICICI Bank Limited, Rishra Branch as per the power conferred u/ s. 133(6) of the Income Tax Act on 09.01.2014. The account number is identified as 100301501271 and the aggregate of cash deposit made in it amounts to Rs.67,49,745/- during the F.Y. 2010-11 relevant to A.Y. 2011-12. The explanation was thereafter sought from the assessee under show cause letter no.W 1(2)/Hg/ AHPPJ7807C/2013-14/717 dt.11.02.2014 as to why the sum of Rs. 67,49,745/- should not be treated undisclosed investment u/ s. 69 of the Income Tax Act and added to the total income. In this connection the assessee was asked to file a written submission on or before 19.02.2014 failing which assessment would be completed as per the materials available in record. " The AO then stated in the assessment order that no reply was furnished by the appellant in response to the show cause notice. The AO also observed that the appellant had not disclosed the bank account and the details of the transaction in the bank account to the department. The discussion was concluded as under: "The circumstantial evidence leads to reflect that certainly the assessee had a voluminous business the activities of which were carried out in cash mode the income of which he purportedly obscured. Assessee's Bank account opening form as on 30.04.2009 has also been requisitioned which too records the source as sales from Self employment. The likely monthly deposit in the account has been mentioned as "less than 25K" chosen only after the option “10 lacs plus." Logically the likely monthly income implies the earning of the assessee between Rs. 10 lac to 25 lac. The option is duly signed by the Bank authorities. This indicates the capability of earning of the assessee. The cash deposit figure amounting to Rs. 67,49,745/- found in the undisclosed Bank bearing nO.100301501271 is not in conformity with the gross sales of Rs. 14,40,510/- recorded in the Profit & Loss account hence the difference amount of Rs. 53,09,235/ - is treated unexplained investment u/ s. 69 of the income tax Act without any ambiguity in absence of assessee's explanation and therefore added to the total income of the assessee."

I have considered the facts of the case and the appellant's submissions. The AO has mentioned various details in the assessment order, which he had called for from the appellant like nature of business, complete address of business premises, signed copies of work orders, complete set of books of account and the profit and loss account and balance sheet for the relevant previous year but only the profit and loss account and balance sheet were furnished. I have also examined the assessment record and find as per the note sheet that the AO had specifically and repeatedly asked the appellant to furnish details of purchases. However, the appellant did not furnish any such details. Now, the appellant has requested that the peak balance in the bank ITA No.775/Kol/2016 A.Y. 2011-12 M/s Jai Matadi Enterprise Vs. ITO Wd-23(2), Hgy. Page 4 account may only be considered the undisclosed income but the reply given is very vague. The AO has been fair and reasonable in concluding that a sum of Rs. 14,40,510/-deposited it bank account is represented by sales proceeds declared by the appellant in his profit and loss account. However, regarding the balance cash deposits, appellant has not given any explanation whatsoever. In the case of Jhamatmal Takhatmal Kirana Merchant Vs. CIT 152 CTR (MP) 311 and also CIT Umadevi Bhuwalka (1990) 181 ITR 547 (Mad), the Hori'ble High Courts have held that where existence of business could not be established, the entire cash deposits in undisclosed bank accounts are to be treated as "Unexplained investments ujs.69 of the Act. In the case of Jhamatmal Takhatmal Kirana Merchant Vs. CIT, the Hori'ble Madhya Pradesh High Court observed that the statement of crediting and debiting itself shows that there is no question of peak credit involved in the matter. It is only a matter of jugglery devised by the assessee to somehow evade income tax. We fail to understand the theory of peak credit being used in this set of affairs when it is more than apparent that the assessee juggled the cash transaction to conceal his income." During the appellant proceedings also, the appellant has not furnished any evidence or details to dispel the specific observations of the Assessing Officer reproduced in para-4 above. Thus, there is no evidence on record in support of the appellant's explanation to support his offer for taxing the peak credit in his bank account. The Hori'ble Rajashan High Court in its order dated 29.09.2010 in in the case of Pawan Kumar Pareek Vs. ITO, Ward-2(2), Jodhpur upheld the Tribunal's order that all unexplained cash deposits in the bank account were rightly added and they were "unable to see any logic in reference to the peak credit theory in the present case". The Hon'ble High Court's decision was with reference to the ITAT, Jodhpur Bench's factual finding that the assessee laid no cogent material or reliable documentary evidence to substantiate the claim that the deposits made in his bank account allegedly from the sale realization of his goods stood withdrawn and utilized either for making purchases for future sales coming to the same account or re- deposited in cash after making withdrawals therefrom. The Hon'ble Tribunal, in that case, also relied upon the judgements in the case of Jhamatmal Takhatmal Kirana Merchant Vs. CIT (1999) 152 CTR, (MP) 311 and Swaroop Chand Kojuram 235 ITR 732 (RAJ). The appellant has not furnished any reliable evidence in support of his implicit claim regarding the unexplained cash deposits representing sales which were withdrawn and utilized for making subsequent purchases or deposits which were withdrawn and re- deposited in the same bank account. The facts of the case relied upon by the appellant are distinguishable and in that case the AO had agreed in his remand report that the peak credit only may be brought to tax.

Thus, the submissions of the appellant and his first ground of appeal