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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Shri S.S.Godara & Shri, M. Balaganesh
O R D E R
PER S.S.Godara, Judicial Member:
- This assessee’s appeal for assessment year 2008-09 arises against the Commissioner of Income Tax (Appeals)-13 Kolkata’s order dated 21.03.2016 in case No.517/CIT(A)-13/Kol/W-44(4)/2014-15 involving proceedings u/s 144 of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.
We notice at the outset that this assessee’s appeal suffers from 55 days delay in filing. He has filed his condonation petition dated 17.04.2018 attributing reasons thereof to his Auditor’s failure in following all due procedures. The Revenue’s fair enough in not disputing correctness of assessee’s solemn averments therein. We therefore condone the impugned delay of 55 days in filing being neither intentional nor deliberate. The case is taken up adjudication on merits.
Sh. Sujay Kr.Shah Vs. ITO Wd-44(4),Kol. Page 2 3. The assessee’s first substantive grievance challenges both the lower authorities’ action adding his fresh capital of ₹6.50 lac in his proprietory concern M/s Saibaba Trading his commission agent business. The CIT(A)’s detailed discussion on this first issue reads as under:- “Ground number 2 relates to the addition of Rs.650000/- made by the AO on account of introduction of capital by the appellant which source could not be proved, therefore, AO added the same under section 68 of the IT. Act and the order was passed under section144 of the IT. Act. The detail submitted by the appellant at appellate stage was sent for remand report, to the AO. The AO vide his remand report dated 23-12-2015 had sated as under:- An addition of Rs.6,50,000/- was made in regard to the capital introduction by the assessee in his proprietary concern named MI5 Saibaba Trading. According to the assessee, this sum was received by the assessee as a gift from his father Lt. Kanti lal Shah through a notarized declaration. The assessee was asked to prove the credit worthiness of his father Lt Kanti lal Shah. The Assessee could file the details for the A.Y. 2006-07 & A.Y.2007-08 only but could not produce the accounts for the relevant assessment year i.e. 2008-09. Therefore in the absence of ITR, Balance Sheet and Profit & Loss Account of the relevant assessment year i.e. 2008-09, the actual credit worthiness of the donor could not be ascertained. The appellant was confronted with the findings of the AO. The appellant has submitted that the appellant had taken gift through notarised declaration from his old father Sri Kantilal Sah in the assessment year 2006-07 and 2007-08 only. The appellant further submitted that Sri Kantilal Sah had his own interest free capital as of Rs.1490703/- as on 31-03-2007 out of which he gifted the appellant. Though the appellant has stated that the same were gift received from his father and also claimed' that the balance sheet of Sri Kantflal Sah was submitted before the AO, but it is pertinent to mention here that the appellant could filed the detail of assessment year 2006-07 and 2007-08 only and could not produce account for the relevant assessment year i.e.2008-09. Therefore, in absence of ITR, copy of account, balance sheet of relevant assessment year 2008-09, the creditworthiness of the donor could not be proved. Perusal of assessment order and submission of the appellant shows that nowhere the appellant has stated to receive gift in cheque. Even the declaration deed does not show that the aforesaid capital of Rs.650000/- were received through cheque. The declaration produced by the appellant is not self speaking and the appellant has submitted balance sheet as on 31-03-2007 only where as the balance sheet of 31-03-2008 was relevant because the so called declaration made is of 26-03-2008. Therefore In absence of balance sheet, copy of bank account of the same the gift: cannot be accepted as genuine showing of Interest free capital, In the balance sheet of F.Y 2006-07, has also corresponding liability, does not deposits the cash flow status of the appellant. The declaration made by the appellant is not supported with documentary evidences. It is also not self speaking. Therefore keeping in view that the appellant did not discharge its onus of proving the gift at remand stage and at appellate stage too, the addition made by the AO is here by upheld and the ground of the appeal is dismissed.”
We have heard rival contentions reiterating both parties respective stand against and in favour of impugned addition. The assessee’s only plea Sh. Sujay Kr.Shah Vs. ITO Wd-44(4),Kol. Page 3 explanation tendered throughout is that he had received the amount in question of ₹6.50 lac from his father late. Shri Kantilal Sah. He has placed on record his father / donor’s duly notorised gift deed, income-tax returns, balance-sheet etc., of assessment years 2006-07 & 2007-08. Both the lower authorities are of the view that assessee had failed to produce the donor’s necessary details for the impugned assessment year i.e.,2008-09. We see no merit in Revenue’s stand under challenge. The fact remains that the assessee’s father, late. Shri Kantilal Sah never filed any return for the impugned assessment year. A perusal of earlier year’s balance-sheet makes it clear that he had sufficient cash in his hand exceeding much more than assessee’s cash gift sum. We therefore take into account totality all these facts and circumstances to conclude that assessee has successfully proved his gift claim in issue. We therefore delete the impugned addition of ₹6.50 lac forming the subject-matter of this assessee’s first substantive ground.
The assessee’s second substantive grievance challenges correctness of both the lower authorities’ action making cash deposits addition of ₹17,32,450/- in assessment as affirmed in lowr appellate proceedings as under:- “Next ground number 04 relates to the addition of Rs.1732450/- on account of cash deposit made on several dates to his Saving Bank account with ICICI bank which was not disclosed. In this regard his explanation alongwith cash flow statement was submitted before the AO and the AO has observed as under:- "Addition of Rs.17,32450/- was made being cash deposits on several dates in S.B. A/c with ICCI Bank. The assessee filed submission clarifying that the deposits in the bank accounts during the F.Y. 2007-08 relevant to A.Y.2008- 09 includes the amount withdrawn from the bank of Rs.10,75,000/- and also out of the amount received from Smt. Sangita Shah, wife of the assessee of Rs.2,25,000/-. The assessee also filed the details of withdrawals from bank and details of cash deposits date wise. From the details, it was noted that, last day of cash deposits was on 17.03.2008 and up to that date total withdrawals was Rs.3,25,000/- and the remaining Rs.7,50,000/- [10,75,000- 3,25,000] was withdrawn after 17.03.2008. Other than a mere statement, the assesses could not produce any evidence that the withdrawal amount of Rs.3,25,000/- was deposited in the bank. Further, from the gift deed, it was noted that the assessee had received gift of Rs.2,25,000/· from wife on 26.03.2015 which is after the date of last cash deposit. Therefore, Rs.14,07,450/-[17,32,450-3,25,000] is still remain unexplained". On the contrary the appellant has submitted against the remand report on this issue and stated that from the remand report it is dear that from said ICICI bank of the assessee, cash withdrawal of Rs.1025000/- were there on, various dates during the Sh. Sujay Kr.Shah Vs. ITO Wd-44(4),Kol. Page 4 financial year 2007-08. The appellant further submitted that the appellant deal in potato and onion. The assessee purchases goods in cash and sales are made also in cash and the resulted in deposit in bank. In this regard it is pertinent to mention here that the appellant could not establish that deposits were made from its withdrawal. It has been observed in the said report that aforesaid withdrawal of Rs.1025000/- & Rs.75000/- were withdrawn after 17-03-2008 i.e. after last date of cash deposit, while Rs.325000/- only was withdrawn before 17-03-2008. As the AO has very categorically find out that withdrawals were made to the extent of Rs.1075000/- after the date of cash deposit made in the bank. The last date of deposit in the bank was 17-03-2008 where as the date of withdrawals was after 17- 03-2008. The AO further found that total withdrawals of Rs.325000/- was made prior to 17-03-2008. The AO has observed that the appellant could not prove nexus between deposits and withdrawals. At appellate stage also the purpose of withdrawals and redeposit of the same has not been established. The appellant has further submitted that it was dealing in potato and onion which lead him to deposit cash has not been proved with the sale & purchase bills of the onion and potato along with confirmation of the parties from whom sales & purchase were made and its transportation detail. Once the sale is net proved, deposit in cash claimed to be made from sale cannot be accepted. The appellant has failed to prove its sale before the AO and during the appellate proceeding. Even purchases were also not established hence deposit made in the account cannot said to be made from business. It was further observed that out of total deposit of Rs.1732450/- the AO has advised to give benefit of Rs.325000/- without any basis, merely on the basis of withdrawal. The AO himself has stated in his remand report that no connection between deposit and withdrawal are established. It is not understood how he has treated it as explained. Therefore his observation is contradictory of his own findings therefore entire Rs.1732450/- is treated as unexplained. As regard non-giving credit against gift received of Rs.225000/- from his wife is concerned, the AO has not given any benefit from reducing of cash deposit of Rs.1732400/- because Rs.225000/- was deposited after the date of last cash deposit, Keeping in view of the above, the addition made by the AO is confirmed the case law relied by the appellant namely Ramesh Kumar Agarwal(HUF) Vs ITO W- 54(4)/KOL in lTAT No-1493/Kol/2012 dated 05-11-2015 is not applicable because in that case appellant was able to substantiate his purchase of potato which were kept in cold storage which was again reconfirmed from third party therefore in that case trading in onion was established but in this case neither the appellant has tried to prove its purchase nor he has tried to established his sale. Therefore, his deposits are from business activity could not be proved. The appellant has taken ground for sake of argument without any substance. In view of above the addition made by AO is upheld and the addition is confirmed. The ground of this appeal is dismissed.”
Heard rival contentions. There is no dispute that this assessee is in trading and commission agent business in agricultural crops. His profit on purchase and sale in potato and onion trading amounting to ₹20,02,229/- stands accepted in assessment. It thus transpires that he is engaged as commission agent / proprietor in agricultural produce. He has placed on record all detail of withdrawal from bank, partnership firm, cash book