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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
This appeal preferred by the assessee is against the order of the Ld. CIT(A)-13, Kolkata dated 20.11.2015 for AY 2011-12. The following revised grounds have been assailed by the assessee in this appeal:
“1. For that the Ld. CIT(A) was not justified in confirming the addition of Rs.35,99,000/- made by the AO on account of alleged unexplained cash deposits in Bank Account No. 01630110010983 and 01630100575160.
2. For that the Ld. CIT(A) was not justified in confirming the addition of Rs.7,25,000/- made by the AO on account of alleged unexplained cash deposits in Bank Account No.01630100023996.
For that the Ld. CIT(A) was not justified in confirming the addition of Rs.1,70,451/- made bythe AO on account of alleged unexplained cash deposits in daily deposit scheme.
4. For that the Ld. CIT(A) was not justified in confirming the addition of Rs.1,39,386/- made by the AO on account of alleged undisclosed interest income.”
At the outset itself the Ld. AR did not press revised grounds of appeal nos. 3 and 4 so the same stand dismissed.
2 Smt. Sipra Ghosh, AY 2011-12 3. Coming to ground nos. 1 and 2. Both these grounds relate to confirming the additions on account of unexplained cash deposits in bank account nos. 01630110010983, 01630100575160 and 01630100023996.
Briefly stated facts as observed by the AO are that the assessee maintained three Bank A/cs. during the relevant financial year. (1) 01630110010983, (2) 01630100575160 and (3) 01630100023996 - all with UCO Bank, Dum Dum Branch. All three are joint accounts. The first account holders of A/c. No.01630110010983 is of Smt. Sipra Ghosh (the assessee) and her son Shri Raja Ghosh. The joint account holders of the other two A/cs. Viz. 01630100575160 and 01630100023996 are Smt. Sipra Ghosh (the assessee) and her husband Shri Nityananda Ghosh. Notices u/s. 133(6) of Income-tax Act, 1961 (hereinafter referred to as the “Act”) were issued to the Bank authority and replies were received. The AO, therefore, observed from the Bank A/c. no 16030100575160 that cash deposits amounting to Rs.18,99,000/- were made during the period from 16/04/2010 to 28/03/2011 and in A/c. No.01630110010983, cash deposits amounting to Rs.17,00,000/- (totaling to Rs.35,99,000/-) were made during the period from 16/04/2010 to 28/03/2011. It was also observed that in A/c. no. 01630100023996, cash amounting to Rs. 25,000/- and Rs.7,00,000/- were deposited on 07/08/2010 and 25/10/2010 respectively. During the course of assessment proceeding, the assessee was asked to clarify the source of deposits amounting to Rs.35,99,000/- in her bank account nos. 01630110010983 and 01630100575160 with documentary evidence. The Ld. AR in his submission dated 05.08.2013 stated in para 5 of his reply that those deposits were absolutely personal receipts being sale consideration of cows, buffaloes and natural accreted calves in the personal cattle shed of the assessee. Thereafter, the assessee filed 7 affidavits including that of her (the assessee), her husband, son and others. From the copy of the affidavit sworn in on 10.09.2013 by the assessee the AO observed that in para-l0 of the affidavit the assessee has affirmed that she had sold 9 cows for Rs.4,49,500/- and 5 Buffaloes for Rs.31,49,000/- aggregating to Rs.35,99,000/-. The AO noted that no details regarding such sale including the date of such sale was furnished. From a perusal of the affidavit the AO observed that each cows were sold at Rs.49,944/- and each buffalos were sold at Rs.6,29,800/-. The AO 3 Smt. Sipra Ghosh, AY 2011-12 asked the following queries to the assessee, 1) reason for sale of cows and buffalos, (2) why the cows and buffalos sold at a remote market (as affirmed in the affidavit) and not in the market nearer to her locality and (3) whether such sale of cows and buffalos were effected in any previous years and succeeding year. In reply to the first query, the Ld. AR submitted that the cows and buffaloes as stated in the Affidavit, were sold since those (cows and buffaloes) were not yielding milk. As to the second query as to the place of sale at remote places, it was submitted by the Ld. AR the middlemen took the cows and buffalos to far flung areas at their own cost at the market/stations where such sales are held and the residual considerations were handed over to the assessee, In reply to the question as to sales of such cows and buffalos in earlier occasion or succeeding year it was submitted by the Ld. AR that such question is out of purview of the relevant assessment. According to AO, the Ld. AR never mentioned the quantity of milk each cows and buffalos yielded daily (for two times milking) and wondered as to what was the quantity of milk the cows and buffalos yielded daily for which the milkers reported to be inadequate. According to AO, the sale prices of each cows and buffalos seemed to be very high. So the AO in order to ascertain the selling price of cows and buffalos searched the web-site "OLX.in". After the search, the AO observed that many advertisers have given advertisement for sale of the prices and they have offered ranges from Rs.6,000/- to Rs.30,000/- depending upon the class of cows. Another site (india.com) which was also searched by the AO and he observed that the prices of cows and buffalos at Erode market, Tamil Nadu, where at least 750 numbers of cows and buffalos were sold on 12th February, 2010, the AO noted that cows were sold at Rs.12,500/- to 27,000/- (per cow) and buffalos were sold at Rs.14,000/- to 28,000/- (per buffalo). The assessee was confronted with these search information vide letter dated 14/02/2014 and the Ld. A/R in his reply dated 14/02/2014 stated that the data are baseless and not reliable and which has no validity. According to AO, the Ld. AR, in course of proceeding did not file the names and addresses of the middlemen who took the cows and buffalos from the assessee and also did not produce any evidence to substantiate the sale value of each cows and buffalos. According to AO, it is very difficult to believe that cows and buffaloes which were "started to become permanently useless since the same were giving very inadequate milk", were sold at Rs.49,944/- and Rs.6,29,900/- respectively. So, 4 Smt. Sipra Ghosh, AY 2011-12 the AO concluded that the sale price of cows and buffalos to explain the source of deposit of cash of Rs.35,99,000/- was not acceptable. Hence, the AO considered the said sum of 35,99,000/- as deposit in the bank accounts from undisclosed source and added it to the returned income of the assessee.
In respect of unexplained cash deposit of Rs.7,25,000 - into Bank the AO issued notice u/s. 142(1) dated 12/08/2013 the assessee wherein the assessee was asked to furnish details narration of deposits (mentioning source) in her Bank A/c. No. 01630100023996 maintained with UCO Bank, Dum Dum Branch. Assessee was also asked vide notice referred to above to furnish month-wise sale of sweets during financial year 2010-11. The AR in his reply stated that cash deposits in A/c. No. 01630100023996 represented deposits arising out of business cash surplus. As to the monthly sale of the business the Ld. A/R furnished the following figures which are reproduced below:- April, 2010 Rs.2,22,900/- May, 2010 Rs.2,12,600/- June, 2010 Rs.2,18,600/- July, 2010 Rs.2,13,200/- August, 2010 Rs.2,18,800/- September, 2010 Rs.2,19,300/- October, 2010 Rs.3,24,600/- November, 2010 Rs.2,21,800/- December, 2010 Rs.2,10,300/- January, 2011 Rs.2,16,200/- February, 2011 Rs.2,01,100/- March, 2011 Rs.1.85,600/- Total: Rs.26,75,000/- And also since the assess in her affidavit affirmed that she lives in a joint family, she was asked by the AO to state her monthly drawing including her contribution to joint family and cost of fodder for cows and buffalos. But, according to AO, she never stated her amount of drawings from business for the relevant financial year. The AO noted that assessee in para-25 of her affidavit dated 10/09/2013 affirmed "That the required family expenditures were/ are drawn from the excess balance of cash in hand arising out of daily business transactions." The AO noted that in para- 26 of the same affidavit she affirmed 5 Smt. Sipra Ghosh, AY 2011-12 "That keeping in hand a reasonable amount of cash for maintaining daily business outflow as well as drawings thereof, the excess balance intermittently deposited in the Savings Bank Accounts held in my name jointly with my husband Sri Nityananda Ghosh and my son Sri Raja Ghosh." The assessee was asked by AO vide letter dated 17/10/2013 to state the period of accumulation of cash before it is deposited intermittently Bank. In reply to this the Ld. A/R, vide his letter dated 31/10/2013, submitted that the cash deposits in A/c. No. 01630100023996 being cash surplus arose out of business during the festive seasons (Durga Puja & other Pujas) in the month of October Rs. 7,00,000/- (25/10/2010) and normal cash surplus Rs.25,000/- (07/08/2010). According to AO in financial year 2010-11, -Mahalaya- fell on 07/10/2010 and Durga Puja & Laxmi Puja fell on 14/10/2010 and 22/10/2010 respectively. According to AO, from the month-wise sale as furnished by the A/R that sale for the months of August, 2010, September, 2010 and October, 2010 were for Rs.2,18,800/-, Rs.2.19,300/- and Rs.3,24,600/- and total sales of these 3 months comes to Rs.7,62,700/- and cash deposits into Bank is only Rs.25,000/- on 07/08/2010 and Rs.7,00,000/- on 25/10/2010. The total comes to Rs.7,25,000/- whereas total sales during the year is Rs.26,75,000/-. No other cash deposit except Rs.7,25,000/- in her Savings Bank A/c. No. 01630100023996 is seen from the relevant bank statement. So, according to AO, the submission of the assessee in her affidavit that keeping in hand a reasonable amount of cash and that the excess balance was intermittently deposited to Bank cannot be accepted because, according to AO, had the cash been intermittently deposited into Bank, there should have been few more credit entries in the Bank Statement. So, the explanation of the assessee as to source of cash deposits of Rs.7,25,000/- was not accepted by the AO and the same was, therefore, considered as from unexplained source and was added to the returned income of the assessee.
Aggrieved against the aforesaid addition made by the AO, the assessee preferred an appeal before the Ld. CIT(A) who confirmed the action of AO. Aggrieved, assessee is in appeal before us.
6 Smt. Sipra Ghosh, AY 2011-12 7. We have heard rival submissions and gone through the facts and circumstances of the case. The facts stated above are not repeated for the sake of brevity. The AO noted that the assessee had maintained three bank accounts with UCO Bank, Dum Dum Branch in the joint names of her husband as well as that of her son. In the bank accounts the amounts deposited/withdrawn is not disputed. The assessee when confronted with these deposits in the account said that her income was from a small sweet shop and has been offered to tax. And in respect to the deposits in the bank account she claimed the amount to be from the sales of cows and buffaloes, which explanation has not been believed by the AO/Ld. CIT(A) and have made the impugned addition against the assessee which actions of the authorities below have been challenged before us. The Ld. AR drew our attention to the specific finding made by the AO at page 3 of assessment order wherein at para 6 the AO records – Inspector was deputed for an inquiry and it was reported by him on 13.08.2013 that there were 70-80 cows and buffaloes maintained by assessee in the cow shed. The relevant assessment year before us is AY 2011-12 i.e. the period between 01.04.2010 and 31.03.2011 and the Inspector has inspected assessee’s cow shed and has given his report that he had seen about 70-80 cows & buffaloes on 13.08.2013, which is after one & a half years. In the light of affidavits filed by the assessee and her relatives that they had 41 cows & buffaloes, the assessee’s claim in respect of money deposited in her bank account was from the sale of cows and buffaloes cannot be brushed aside as such. However, we note that the assessee was not able to bring evidence to substantiate that assessee had sold her cows and buffaloes in the market, so source of deposit of money in bank cannot be substantiated. However we note that the Inspector of the Department on 13.08.2013 after site inspection of the cow-shed maintained by the assessee has given a finding of fact that the assessee was having 70-80 cows and buffaloes goes on to show that the assessee had good number of cows and buffaloes maintained by her. We note that AO after perusal of the affidavits of the assessee and that of her relatives has taken note that there were 41 cows and buffaloes maintained by the assessee in the relevant assessment year. From the assessment order it is discerned that assessee is having source of her income from (i) cows, (ii) buffaloes, (iii) milk and milk products and (iv) sweet shop. The sweet shop income assessee has already offered in her regular return of income. So the source of 7 Smt. Sipra Ghosh, AY 2011-12 deposit in the bank accounts must be inferred to have been from the aforesaid sources of income other than from sweet shop. Taking into consideration the overall facts and circumstances of the case, we are of the opinion that in order to find out the undisclosed income of the assessee the AO has to take into consideration the total deposits in the bank account and thereafter, reduce the turnover disclosed by the assessee from sweet shop, which will give the undisclosed turnover of the assessee. It is trite law that the entire undisclosed turnover cannot be the income of the assessee. Necessarily the undisclosed income that shall form part of the total income would be so taken after defraying all expenses that are incurred for earning such income by the assessee, therefore, taking into consideration the overall facts and circumstances of this peculiar case, Gross profit rate of 10% of the undisclosed turnover should be taken as the undisclosed income of the assessee and that amount has only to be taxed. The impugned order of Ld. CIT(A) is set aside on tis issue and the AO is directed to compute the gross profit as directed above.
In the result, appeal of assessee is partly allowed.
Order is pronounced in the open court on 12/12/2018 Sd/- Sd/- (M. Balaganesh) (A. T. Varkey) Accountant Member Judicial Member Dated: 12th December, 2018 Jd.(Sr.P.S.) Copy of the order forwarded to: 1 Appellant – Smt. Sipra Ghosh, 1162, East Sinthee Road, Dum Dum, Kolkata-700 030. 2 Respondent – ITO, Wd-42(3), Kolkata. 3 CIT(A)-13, Kolkata. (sent through e-mail) CIT , Kolkata 4 DR, Kolkata Benches, Kolkata (sent through e-mail) 5 /True Copy, By order,
Sr. Pvt. Secretary