SRI SHANKAR PRADHAN,ASANSOL vs. ITO, WARD-2(3), ASANSOL, ASANSOL

The relevant facts of the case giving rise to this appeal are as follows: The assessee is an individual, who is engaged in the business of plying of Dumper and Mini Bus. The return of income for the year under consideration was filed by him on 11.08.2008 declaring total income of ./2014 Assessment year: 2008-2009 Page 2 of 7 Rs.1,79,177/-. In the said return, dumber hire charges received from the solitary party M/s. M.J. Movers were shown by the assessee at Rs.20,09,538/-, while bus plying hire charges were shown at Rs.6,24,000/-. The inquiry made by the Assessing Officer directly from M/s. M.J. Movers revealed that the dumper hire charges paid by the said party to the assessee were Rs.20,09,538/- as correctly shown by the assessee. The said party, however, had shown the sum of Rs.1,95,880/- as payable to the assessee as on 31.03.2008, whereas no such amount was reflected on the assets side of the assessee’s balance-sheet. Since no satisfactory explanation could be offered by the assessee in this regard, the amount of Rs.1,95,818/- was treated by the Assessing Officer as undisclosed investment of the assessee and the same was added by him to the total income of the assessee.

In the balance-sheet filed along with the return of income, a residential Flat No. 3 in ‘Suchitra Building’, Burnpur Road owned by the assessee was shown on the assets side. On enquiry made by the Assessing Officer through Inspector, it was revealed that the said Flat was given by the assessee on rent since 2006 for monthly rent of Rs.3,500/-, but the said rent received in cash was not offered by the assessee to tax in the return of income. When this position was confronted by the Assessing Officer to the assessee, latter accepted the same by submitting that the rental income for the year under consideration was not shown in the return of income inadvertently. Accordingly, the addition of Rs.29,400/- was made by the Assessing Officer to the total income of the assessee under the head “income from house property” after allowing deduction under section 24 of the Act of Rs.12,600/- from the annual rent of Rs.42,000/-.

During the year under consideration, the assessee had shown to have received two gifts of Rs.50,000/- in cash, one from mother of Rs.20,000/- and other of Rs.30,000/- from his brother. On verification, the Assessing Officer found that both the said donors were not having ./2014 Assessment year: 2008-2009 Page 3 of 7 sufficient means to give the gifts to the assesese and the assessee could not explain the said gifts satisfactorily in terms of section 68. Accordingly both these gifts were treated by the Assessing Officer as unexplained cash credits and the amount of Rs.50,000/- was added by him to the total income of the assessee under section 68 of the Act.

The inquiry made by the Assessing Officer during the course of assessment proceedings revealed that there was one Bank account maintained by the assessee with Axis Bank, Asansol in his individual name but the same was not reflected in the books of account of the assessee. The assessee also could not offer any satisfactory explanation as regards the total deposits of Rs.4,17,163/- found to be made in the said Bank account and merely submitted that keeping in view the withdrawals made from the said Bank account from time to time, only peak credit could be considered as income. This submission of the assessee was not found acceptable by the Assessing Officer keeping in view that the withdrawals made from the said account were mainly on account of cheques, whereby the amounts were transferred by the assessee to other accounts. He, therefore, added the entire amount of Rs.4,17,163/- to the total income of the assessee under section 69 by treating the deposits found to be made in the undisclosed Bank account of the assessee as unexplained investment. Accordingly, the total income of the assessee was computed by the Assessing Officer at Rs.8,71,560/- in the assessment completed under section 143(3) vide an order dated 21.09.2010.

Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) and after considering the submissions made by the assessee and perusing the relevant material on record, the ld. CIT(Appeals) did not find any merit in the said appeal. Accordingly, he dismissed the same and confirmed all the four additions made by the Assessing Officer to the total income of the assessee. Aggrieved by the order of the ld. CIT(Appeals), ./2014 Assessment year: 2008-2009 Page 4 of 7 the assessee has preferred this appeal before the Tribunal on the following grounds:-

I have heard the arguments of both the sides and also perused the relevant material available on record. As regards the issue involved in Ground No. 2 relating to the addition made on account of rental income, it is observed that the Flat No. 3 in Suchitra Building, Burnpur Road, was owned by the assessee throughout the year under consideration and inquiry made by the Assessing Officer through Inspector revealed that the same was let out to one Shri Abhijit Banerjee during the year under ./2014 Assessment year: 2008-2009 Page 5 of 7 consideration with monthly rent of Rs.3,500/-, which was paid to the assessee in cash. This position was admitted by the assessee himself before the Assessing Officer and although it is now claimed in the ground raised by the assessee that the flat was let out to the tenant only for five months during the year under consideration, there is nothing brought on record to establish the same. I, therefore, find no merit in Ground No. 2 raised by the asseessee and dismiss the same.

As regards the issue raised in Ground No. 3 relating to the addition of Rs.50,000/- made on account of cash gifts claimed to be received by the assessee from his mother and brother, it is observed that these two gifts representing cash credits were duly examined by the Assessing Officer in terms of section 68 and on such examination, he found that both the donors having a very meagre source of income had no capacity or creditworthiness to give the gifts to the assessee as claimed. At the time of hearing before me, the ld. Counsel for the assessee has not been able to controvert the findings recorded by the Assessing Officer in this regard. He has also not been able to bring any cogent evidence on record to establish the capacity or creditworthiness of the concerned two donors to give the gifts to the assessee as required in terms of section 68. I, therefore, find no merit in Ground No. 3 raised by the assessee and dismiss the same.

As regards the issue raised in Grounds No. 1 and 4, it is observed that the same are inextricably connected with the business income of the assessee, inasmuch as, the amount of Rs.1,95,808/- was receivable by the asseesese from M/s. M.J Movers on account of dumper hire charges, while the undisclosed Bank account of the assessee with Axis Bank, Asansol Branch is required to be treated as reflecting the business transaction of the assessee going by the fact that the assessee admittedly had no other source of income during the year under consideration as well as the nature of transactions reflected therein, which show the payments made for purchase of tyres as well as cash withdrawals made for incurring the ./2014 Assessment year: 2008-2009 Page 6 of 7 expenditure besides transfer of funds to some other Bank account. I, therefore, find merit in the contention raised by the ld. Counsel for the assesee that the same should be considered together and the business income of the assessee may accordingly be estimated. In this regard, the ld. D.R. has invited our attention to the specific material defects pointed out by the assessing officer in the books of account and other record maintained by the assessee and after considering the same, I find merit in the contention of the ld. D.R. that the book results declared by the assesese are liable to be rejected and the income from the business of plying dumber and the Mini Bus is required to be computed on estimate basis. In this regard, it is observed that the dumper hire charges shown by the assessee at Rs.20,09,538/- exactly matched with the books of the concerned party M/s. M.J. Movers. The amount shown to be payable by the said party as on 31.03.2008, however, was not reflected in the assets side of the assessee’s balance-sheet, which as submitted by the ld. Counsel for the assessee was attributable to non-maintenance of proper books of account and keeping in view that the entire amount of dumper hire charges was duly shown by the assessee, I am of the view that separate addition on account of part of such amount, which had remained payable cannot be separately made. The credits appearing in the undisclosed Bank account of the assessee amounting to Rs.4,17,163/-, however, can appropriately be considered as its business receipts and by adding the same to the receipts of Rs.26,33,538/- declared by the assessee, the total receipts of the assessee’s business can reasonably be taken at Rs.30.50 lakhs. On these receipts, a net profit rate of 12% can be applied to determine the income of the assessee keeping in view the nature of his business and the same has been accepted even by the ld. Counsel for the assessee at the time of hearing before me. Accordingly, I modify the impugned order of the ld. CIT(Appeals) and direct the Assessing Officer to re-compute the business income of the assessee by applying net profit rate of 12% on gross receipts of Rs.30.50 lakhs instead of separate additions of Rs.1,95,818/- and Rs.4,17,163/- which ./2014 Assessment year: 2008-2009 Page 7 of 7 are directed to be deleted. Grounds No. 1 and 4 are accordingly treated as partly allowed.

In the result, the appeal of the assessee is partly allowed.