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Income Tax Appellate Tribunal, JAIPUR BENCHES (SMC
Before: SHRI BHAGCHANDvk;dj vihy la-@ITA No. 47/JP/2017
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR Jh Hkkxpan] ys[kk lnL;] ds le{k BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER vk;dj vihy la-@ITA No. 47/JP/2017 fu/kZkj.k o"kZ@Assessment Year : 2009-10 cuke Babu Lal Lakhera (Deceased), Income Tax Officer, Vs. Through Manju Devi (L/H), Ward 7(3), 15, Radhakisan Pura, Mahajano Jaipur. Ka Mohalla, Amer, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACSPL 1187 D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Ms. Garima Khandelwal & Shri Mukesh Khandelwal (CA) jktLo dh vksj ls@ Revenue by : Smt. Poonam Roy (DCIT) lquokbZ dh rkjh[k@ Date of Hearing : 18/04/2017 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 19/04/2017 vkns'k@ ORDER
PER: BHAGCHAND, A.M. This is an appeal filed by the legal heir of the assessee against the order dated 25/10/2016 passed by the ld CIT(A)-III, Jaipur for the A.Y. 2009-10, wherein following grounds of appeal has been raised: “1. That under the facts and circumstances of the case, the ld. CIT(A) has erred seriously on facts in considering a sum of Rs. 20,21,147/- being the amount deposited by the deceased assessee in
ITA 47/JP/2017_ 2 Babu Lal Lakhera (Deceased) Vs ITO
his bank account during the period from 01/4/2008 to 04/9/2008 as income from commission and thereafter considering 50% of the same as net income of the appellant from such commission.
That under the facts and circumstances of the case, the ld. CIT(A) has erred on facts in considering a sum of Rs. 3,632/- as income from commission without allowing any deduction for expenses incurred for earning such commission.”
The brief facts of the case are that the Assessing Officer received
information through AIR that there was a cash deposit in the savings
account No. 0767000100363209 maintained with Punjab national Bank,
Jhotwara, Jaipur totaling to Rs. 30,25,940/-. The Assessing Officer asked
the source of deposits and the entire credits in the accounts were added
as income by invoking the provisions of Section 68 of the Income Tax
Act, 1961 (in short the Act). The ld. CIT(A) reduced the addition to
50% of Rs. 20,21,147/- or say Rs. 10,10,573/-.
The first ground of appeal is against considering a sum of Rs.
20,21,147/- being the amount deposited by the deceased assessee in
his bank account as income from commission. In the first appeal, the ld.
CIT(A) has reduced the addition to Rs. 10,10,573/- by holding as
under:-
ITA 47/JP/2017_ 3 Babu Lal Lakhera (Deceased) Vs ITO
“5.3 I have carefully considered the facts of the case, findings of the AO and submission of the appellant. The appellant challenged addition of Rs 30,92,006/- on account of unexplained cash deposit in bank account. The AO observed that there is cash deposit in bank account of assessee of Rs 30,92,006/- for which no explanation was filed in assessment proceedings. The learned A/R argued that the correct deposit in the bank account is Rs 30,42,997/-. Assessee expired on 4.9.2008 (death certificate filed) and therefore no income could be earned after that. Deposit till date of death is Rs 20,21,147/- and there was a peak negative balance of Rs 20,350/- on 31.08.2008 and therefore as per A.R. no amount can be taxed. Alternatively he argued that this deposit can be taken as turnover and therefore profit of 5% as per section 44AF can be estimated. On perusal of assessment order and bank statement of assessee, it seen that there is continuous cash deposit/withdrawal. Deposits in bank have been made at various places like Bharatpur, Jodhpur, Bangalore and Guwahati but withdrawals were made only at Jaipur. This indicates that he was doing some business out of books against which the amounts are being received. AO made an addition of entire cash deposit which appears to be incorrect. The addition should be for profit earned from these transactions and the peak deposit in the bank account. Further I find that the assessee expired on 4.9.2008 and therefore addition in hands of assessee can be made only in respect of deposit up to 4.9.2008. Total deposit up to 4.9.2008 is Rs 20,21,147/-.
Further on perusal of 26AS, as mentioned by AO that assessee is also receiving insurance commission. Therefore the receipt can be considered to be a commission income from insurance business conducted by assessee. For earning such commission assessee must
ITA 47/JP/2017_ 4 Babu Lal Lakhera (Deceased) Vs ITO
have incurred some expenditure and therefore I find it reasonable to estimate Net Profit rate at 50% on the commission receipt of Rs.20,21,147/- received till death of assessee. On this basis, the income of the assessee works out to Rs.10,10,573/- which is confirmed. Balance addition is deleted. Appellant gets resultant relief.
So far relief as cash deposited after the period of death is concerned, Assessing Officer is directed to tax the same in the hands of the legal heir. This may be treated as direction u/s 150(1) for taking remedial action as per law.”
I have heard both the sides on this issue. The assessee expired
on 04/09/2008, for which the death certificate is placed on the record
and the ld. CIT(A) considered the deposit till the date of death of the
assessee as commission income and the deposits were of Rs.
20,21,147/-. The ld. CIT(A) considered the amount as a commission
income from insurance business and 50% of the same was estimated as
income. However, from the close scrutiny of the bank account, I notice
that the cash was deposited and thereafter the cash has withdrawn with
a regular intervals and the highest peak of deposits in this bank account
of the assessee comes at Rs. 89,332/- on 30/8/2008. The pattern of
deposits and withdrawals shows that the income credited in this account
was out of the cash transactions of trading activity, therefore, the
provisions of Section 44AF of the Act for estimating the income of the
ITA 47/JP/2017_ 5 Babu Lal Lakhera (Deceased) Vs ITO
assessee on the total deposit of Rs. 20,21,147/- has to be considered.
The 5% of deposit of Rs. 20,21,147/- comes to Rs. 1,01,057/-. The peak
of the deposits in this account also comes at Rs. 89,332/-, thus the
income of the assessee for this period out of these transactions
recorded in bank can reasonably and justifiably be estimated at Rs.
1,01,057/-. Thus, this ground of the assessee’s appeal is partly allowed.
In the ground No. 2 of the appeal, the issue involved is receipt of
Rs. 3,632/- as a commission from insurance as reflected in Form 26AS.
Since no explanation was furnished in this regard, the same was treated
as income from other sources.
The ld. CIT(A) has sustained the addition by holding as under:-
“6.2 During the appellate proceeding the appellant has filed written submission as under and also argued the case on the same basis. “The legal heirs of the assessee are not literate to the extent that they could have verified such amount of Rs. 3,632 and hence it is sincerely requested that this issue may kindly be decided on the basis of your honour's verification of the assessment records wherein form 26AS or ITS must be lying. It is also requested that the assessee may also kindly be provided an opportunity to verify the same. I have carefully considered the facts of the case, findings of the AO and 6.3 submission of the appellant. The appellant challenged addition of Rs 3632/- by AO in respect of insurance commission. The Ld A/R did not file any evidence whereas this income is verifiable from 26AS. Accordingly the same is confirmed.”
ITA 47/JP/2017_ 6 Babu Lal Lakhera (Deceased) Vs ITO 7. I have heard both the sides on this issue. No explanation was
furnished by the ld AR of the assessee before the ld. CIT(A) as well as
before this Bench, therefore, I find no infirmity in the order of the ld.
CIT(A) and the same is hereby sustained.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 19/04/2017.
Sd/- ¼Hkkxpan½ (BHAGCHAND) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 19th April, 2017
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