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Income Tax Appellate Tribunal, KOLKATA BENCH “A” KOLKATA
Before: Shri A.T.Varkey & Shri Waseem Ahmed
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-Durgapur dated 19.03.2013. Assessment was framed by ITO Ward-2(4), Burdwan u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 27.12.2011 for assessment year 2009-10.
At the outset, it is noticed that none appeared for and on behalf of Revenue / respondent when its appeal was called out for hearing, nor any adjournment application stands received. Therefore, we have heard ex parte Katick Ch. Roy Vs. ITO Wd-2(4) BWN Page 2 qua Revenue in presence of Shri V.N. Purohit, Ld. Authorized Representative appeared on behalf of assessee.
The facts in brief are that assessee in the present case is an individual and engaged in paddy and potato business. The assessee, for the year under consideration has filed his return of income u/s. 44AF of the Act declaring total income of ₹3,00,660/- on the turnover of ₹21,44,625/-. Subsequently case was selected for scrutiny under CASS module and notices u/s 143(2)/142(1) were issued upon the assessee. The assessment was framed u/s. 143(3) of the Act at a total income of ₹29,73,096/- after making certain additions / disallowances.
Only issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of Assessing Officer by sustaining the addition of ₹ 26.50 lacs on account of undisclosed income of assessee.
The assessee for the year under consideration has shown the turnover of ₹21,44,625/- but the cash was deposited in his savings bank account for ₹ 60 lacs. Therefore, AO called upon assessee to explain the source of said cash deposits. In compliance thereto, assessee submitted that the aforesaid deposits of cash represented the sale proceed of raw paddy to various rice mills. However, assessee failed to substantiate his claim on the basis of bills, vouchers and sale register. Accordingly, AO disregarded the plea of assessee. The AO further observed that on many occasion cash have been deposited and subsequently withdrawn. Therefore, the peak credit theory should be applied for determining the income from the aforesaid transactions. Therefore, AO determined the peak balance exclusive of opening balance of ₹ 26.50 lacs and treated the same as undisclosed income.
Aggrieved, assessee preferred an appeal before Ld CIT(A) whereas assessee submitted that no books of account are being maintained, therefore, same was not produced before AO while framing assessment. Assessee further submitted that cash deposited represents the sale proceed of raw Katick Ch. Roy Vs. ITO Wd-2(4) BWN Page 3 paddy. However, Ld. CIT(A) disregarded the claim of assessee by observing as under:- “… … There is, however, contradiction in the appellant’s stand. If Rs.60,00,000/- is taken, as per the appellant’s explanation, to be the sale proceeds then statutorily the appellant cannot claim his case to be a no books case. Moreover, I find that the appellant’s explanation before me that “Being regular in these activities for last many years he as generated sufficient cash as capital which was used in these activities and hence your honour will find that peak amount of the year exceeded the total sale on which his income was returned u/s. 44AF as it include his capital used in these activities.” to be at variance with what was stated before the AO. It appears from the tenor of the appellant’s explanation submitted before me that the appellant is trying to explain the deposits as a mixture of sales and infusion of fresh capital. However, no evidence for such accumulation of capital has been provided. In view of that, I do not think any interference with the AO's action is required. The addition made is confirmed. This ground of appeal is dismissed.”
Aggrieved by this, assessee has come up in appeal on the following ground .
6. Before us Ld. AR for the assessee filed paper book which is running from pages 1 to 12 and reiterated same submissions as made before Ld. CIT(A).
7. Heard Ld. AR and perused and carefully considered the materials on record. In the instant case, issue relates to cash deposit and withdrawn by assessee which was not corroboratively explained before Authorities Below. Therefore, AO has treated the peak balance as undisclosed income of assessee which was subsequently confirmed by Ld. CIT(A). Admittedly, cash was deposited in assessee’s bank account for ₹ 60 lacs during the year under consideration. It is the duty of assessee to explain the source of such cash. Both Authorities below have given sufficient opportunity to assessee to explain the source but he failed to substantiate the same. In case, the cash deposited is the business receipt then assessee has to justify that it was the business receipt or infusion of capital out of the earlier years savings. But the assessee failed to submit the evidence in support of his claim. There is no evidence about the source of cash deposit whether the business receipt or earlier year’s