I.T.O WD - 46(2),KOLKATA, KOLKATA vs. MOJAMMAL HOSSAIN MOLLAH, HOWRAH

ORDER Per Dr. A.L.Saini, A.M.: The captioned appeal filed by the Revenue and the Cross Objection filed by the assessee pertaining to assessment year 2006-07, are directed against the order passed by the Ld. Commissioner of Income-Tax (Appeals)-XXX, Kolkata in appeal No.376/CIT(A)-XXX/Wd-46(2)/2011-12 dated 30.01.2013, which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short, `the Act`) dated 30th December, 2011. & C.O.No.105/Kol/2013 Assessment Year 2009-10 Mojammal Hossain Mollah 2. Since the appeal filed by the Revenue and the Cross Objection filed by the assessee relate to the same assessee and same assessment year and involve common issues, therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.

but at the time of hearing, the grievance of the Revenue has been confined to ground No.2. Ground No.2 is solitary grievance of the Revenue. Other grounds of appeals reiterate the grievance which we have noted in ground No.2 therefore, other grounds of appeal have not been pressed. Ground No.2 taken by the Revenue reads as under: “2. For that on the facts and in the circumstances of the case and in law the Ld. CIT(A)-XXX/KOL erred in deleting the addition of the cash deposit of Rs.1,83,30,472/- out of cash deposits Rs.1,96,38,780/- in the undisclosed savings bank accounts of the assessee when that positive material in record.” & C.O.No.105/Kol/2013 Assessment Year 2009-10 Mojammal Hossain Mollah

5. The assessee has also filed Cross Objection which relates to ground No.2 taken by the Revenue, therefore, we adjudicate both together. Cross objections taken by the assessee reads as under: ‘1. For that without prejudice to what is submitted herein before in respect of disallowed amounting to Rs.1,96,38,780/- made by the ld. Assessing officer in the impugned assessment order for the assessment year 2009-10, there is no positive material in the record that the amount of cash deposited of Rs. 1,96,38,780/- as conceal income and therefore added to the total income as unexplained investment.

2. For that the ld. CIT(A)-xxx/kol has considered appeal and granted relief of Rs.1,83,30,472/-where the addition made by the AO was Rs. 1,96,38,780/- in the saving bank A/c of the assessee.

3. I strongly relied on the order of the Ld. CIT (A)-xxx/Kol.”.

On 06.09.2011, a notice was issued by AO under section 133(6) of the I.T. Act, 1961 to Standard Chartered bank stating full facts with the request to send the copies of all bank statements of the assessee either in his personal name or in the name of the business or jointly. On 20/09/2011, the Standard Chartered bank delivered two copies of bank statement namely, (1) Mojammal Molla Hussain , A/c. no. 22505656112 and (2) Mr. Mojammal Hossain Mollah, A/c. no.32205357788. But on examination of these two accounts, it is noticed that these statements are all related to current accounts maintained by the assessee. Thus, there happens to be absolute disorder and confusion in respect of the AIR information which relates to savings bank account only and the bank statements forwarded by Standard chartered bank relates to Current accounts. In the face of such a situation another letter dated 22.12.2011 was issued to the said bank seeking clarification in this regard and to send the copy of bank statements (especially savings bank account), if any, maintained by the assessee. Surprisingly, on 28.12.2011, the Standard Chartered Bank dispatched the statement of another bank account (savings account) bearing no.32410322761 of Mojammal Hossain Molla with a forwarding letter stating the account no.32410322761 previously as we do not have the relevant information with us. On receiving clarification from you vide letter dated 22.12.2011, we confirm the account number. Meanwhile, the assessee by an Affidavit sworn by Oath dated 21.12.2011, filed in this office on 23.12.2011 affirmed that I have maintained banking accounts namely A/C. No.322-0-533778-8 and 225-0-565611-2 with Standard chartered bank at their Park Street branch in my sole name or in the name of my proprietary concern. The ld. AO made the addition of Rs.1,96,38,780/- by observing the following: 4 & C.O.No.105/Kol/2013 Assessment Year 2009-10 Mojammal Hossain Mollah “Here the assessee, or his A/R offers an explanation in relation to cash deposit in Standard chartered bank which is found to be absolutely false. On being requested repeatedly, the assessee did not divulge the existence of a savings account in Standard Chartered Bank, wherein the said cash deposits were made, but tried to mislead the Department emphasizing by producing only the statement of current accounts. This attempt on the part of the assessee to keep the savings bank account secret is a deliberate one. There is positive material in the record that the amount of cash deposit of Rs.1,96,38,780/- represents his concealed income and therefore added to the total income of the assessee as unexplained cash credit.”

Therefore in this bank account i.e. Standard Chartered S.B A/c. No.32410322761, the opening balance as on 01.04.2008 in this account 5 & C.O.No.105/Kol/2013 Assessment Year 2009-10 Mojammal Hossain Mollah was Rs.22,366/- and the closing balance Rs.l,175/-. The peak deposit was of Rs.3,36,800/- (29.09.2008), therefore the addition made by the A.O. in respect of cash deposits in the relevant bank account is restricted to the peak amount of Rs.3,14,434/- (3,36,800 - 22,366).

4.2 It is further seen that the commission earned on this business in respect of the transaction of this bank account had also not been offered to tax by the Appellant since this account was not disclosed in the Income Tax Return. It is seen that the Appeliant had shown commission of Rs.7,48,128/- in the Profit & Loss Account shown service charges received at Rs.7,48,128/- against the Turnover in the two disclosed current accounts of Rs.27,77,508 + Rs.1,23,78,118/- i.e. Rs.1,51,55,688/- i.e. 5%. Accordingly, applying the rate of 5%, on the Turnover i.e. deposits in this undisclosed Savings Bank Account of Rs. 1,98,77,470/-, the Net profit on the same comes to Rs.9,93,874/- which is considered as profit earned by the Appellant on the deposits in this undisclosed bank account. Therefore in view of the above discussion, the addition is confirmed to the above extent i.e. of Rs.3,14,434/- + Rs.9,93,874/- only. (Relief Rs.1,83,30,472/-).”

The Revenue did not agree with the order of ld CIT (A) and contested that the relief given to the assessee is not correct. Therefore, not being satisfied from the order of the ld. CIT(A), the Revenue is in appeal before us.

7.1. The ld. DR for the Revenue submitted that the addition deleted by the ld. CIT(A) is without any base and cogent documents. The ld. DR further submitted that the assessee did not disclose the said account at all, but later on he confronted when the AO summoned the bank authority under section 133(6). Then bank has disclosed a new savings bank account which was never accounted by the assessee and never disclosed by the assessee. Ld. DR further explained that the assessee submitted before the ld. CIT(A) that he has received the commission on account of courier services and therefore, he has disclosed the account. The commission received by the assessee against the courier services had been duly getting reflected & C.O.No.105/Kol/2013 Assessment Year 2009-10 Mojammal Hossain Mollah in the Profit & Loss a/c. and the said commission relates to only the savings bank account under dispute, is kind of an after-thought process and should not be acceptable. The ld. DR has strongly defended the order made by the ld. AO and stated that the said bank account which was never disclosed by the assessee, must be treated as an undisclosed income. The ld. DR further stated that the entire deposits in the said undisclosed account should not be assessed by applying the peak credit deposited because all the moneys credited therein belonged to the assessee.

7.2 The ld. AR for the assessee has stated that the assessee is in Cross Objection on the same issue. Ld AR has submitted that the assessee’s turnover in respect of undisclosed bank account has been included in respect of commission earned and disclosed in his Profit & Loss a/c. He also submitted that even if such deposits are to be considered as unexplained in the said account, then it is the peak credit which should be taken as assessee`s income, as the withdrawals were also being made against the deposits and benefits of which should be allowed to the assessee. The Ld. CIT(A), has worked out the peak credit of the cash deposits which is restricted to the peak amount of Rs.3,14,434/-, as income, in addition to the 5% profits computed by the Ld. CIT(A) on deposits, therefore, the ld AR strongly relied on the order of the ld.CIT(A).

The ld. A.R. before us, also submitted a copy of the judgment of Hon’ble ITAT, Kolkata “A” bench in the case of ITO-vs- Madhu Kedia in dated 26.04.2012, wherein the same issue has been discussed,vide para 4 of the order as follows: “4. The CIT(A) after taking the details of deposits and withdrawals restricted the peak addition at Rs.1,95,597/-. Revenue before us could not adduce anything that the peak credit assessed by the CIT(A) is wrong. We find that the assessee has filed peak credit computation on the basis of transaction recorded in the bank account before CIT(A) but 7 ITA No.1695 & C.O.No.105/Kol/2013 Assessment Year 2009-10 Mojammal Hossain Mollah Revenue could not point out any defect in transaction recorded in the bank account before CIT(A) but Revenue could not point out any defect in the same. In view of the above facts and circumstances, we are of the view that the CIT(A) has simply accepted the peak credit after AO’s remand report. We find no infirmity in the order of CIT(A) in sustaining the part addition on the basis of the theory of ITA No.1767/K/2011 Smt. Madhu Kedia A.Y. 07-08.” 7.3. We have heard both the parties, gone through the facts and circumstances of the case and perused the materials available on record. We noticed that there is merit in the submissions of the assessee, as the propositions canvassed by the Ld. AR for the assessee are supported by the facts narrated above and the case laws cited above. The ld. CIT(A), after taking into consideration the deposits and withdrawals restricted the peak addition at Rs.3,14,434/-. The ld. DR before us could not adduce anything whether with respect to the peak credit assessed by the ld. CIT(A) is wrong. We find that the assessee has offered peak credit composition on the basis of transaction recorded in the bank account and that the CIT(A) and the Revenue could not point out any defect in the same. In view of the above facts and circumstances of the case, we are of the view that the CIT(A) has accepted the peak credit after AO’s remand report and with careful calculation. We find no infirmity in the order of the CIT(A) in stating with the part addition on the basis of the peak credit and part addition based on the net profit of the assessee. Accordingly, we confirm the order of the ld. CIT(A). 7.4. In the result, the Cross Objection filed by the assessee is allowed and that of the appeal filed by the Revenue is dismissed. Order Pronounced in the Open Court on 19-08-2016 Sd/- Sd/- (N.V.Vasudevan) (Dr. A.L.Saini) JudicialMember Accountant Member Dated: 19/8/2016 Talukdar 8 ITA No.1695 & C.O.No.105/Kol/2013 Assessment Year 2009-10 Mojammal Hossain Mollah Copy of the order forwarded to: 1. Revenue 2 Assessee 3. The CIT-I, 4. The CIT(A)-I, 5. DR, Kolkata Benches, Kolkata