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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal
आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This assessee’s appeal for A.Y. 2012-13, arises from order of National Faceless Appeal Centre (NFAC), Delhi dated 03-12-2021, in proceedings under section 250 of the Income Tax Act, 1961; in short “the Act”.
The assessee has raised the following grounds of appeal:-
Page No 2 Shri Bhavikbhai Amrutlal Vaza vs. DCIT
“1. The Hon'ble Commissioner of income Tax (Appeals), NFAC, Delhi has erred in upholding the validity of order passed u/s 143(3) r.w.s. 147 of the Act is unwarranted, unjustified and bad in law.
2. The Hon'ble Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in upholding the cash deposit in Bank of Rs. 8,00,000/- out of this Rs.6,50,000/- in estimate is confirmed Rs.1,50,000/- deleted hence addition of Rs.6,50,000/- on estimate basis and the same is treated as unaccounted cash deposit is unwarranted, unjustified and bad in law.
The Hon'ble Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in upholding the initiating the penalty proceedings u/s. 271(1)(c) of the IT Act is unwarranted, unjustified and bad in law.
The Hon'ble Commissioner of income Tax (Appeals), NFAC, Delhi has erred in upholding the charging the interest u/s.234 A/B/C/D of the Act is unwarranted, unjustified and bad in law.
5. Your applicant reserves the right in addition or alteration in the grounds of appeal at the time of hearing.”
3. At the outset, the counsel for the assessee submitted that he shall not be pressing for ground no. 1 challenging the validity of order passed u/s. 147 of the Act. Accordingly, ground no. 1 of assessee’s appeal is being disposed off as not pressed.
4. In the result, Ground No. 1 of assessee’s appeal is dismissed.
Ground No. 2
The brief facts of the case in relation to ground no. 2 of assessee’s appeal are that the assessee is an individual and he had not filed his return of Page No 3 Shri Bhavikbhai Amrutlal Vaza vs. DCIT income for assessment year 2012-13. The Assessing Officer reopened the case of the assessee u/s. 147 of the Act after observing that the assessee during the year under consideration had deposited cash amounting to Rs. 8 lakhs in his bank account and he has also observed that the assessee had entered into share transactions with Bombay Stock Exchange amounting to Rs. 76,94,149/-. In response to the said notice, the assessee filed return of income on 15-04-2019 declaring total income of Rs. 1,72,472/-. The Assessing Officer completed assessment u/s. 147 of the Act by making addition of Rs. 8 lakhs on account of unaccounted cash deposit during the impugned year.
The assessee filed appeal before ld. CIT(A) against the aforesaid addition made by the Assessing Officer. In appeal, the assessee submitted before the ld. CIT(A) that during the year under consideration, the assessee had earned job work income. Further, whatever amount the assessee was having cash in hand he deposited the same in bank account. Accordingly, the aforesaid deposit of Rs. 8 lakhs in his bank account held with Union Bank of India were out of his own past savings. In support he submitted balance sheet, profit and loss account, capital account and cash book for assessment years 2009-10, 2010-11 and 2011-12. Further, the assessee submitted that deposits and withdrawals were made regularly by the assessee in his saving bank account and hence the deposits should be treated as job work income of the assessee.
6.1 However, the ld. CIT(A) partly allowed the appeal of the assessee on the ground that the assessee could not adduce any cogent reasons and Page No 4 Shri Bhavikbhai Amrutlal Vaza vs. DCIT supporting documents to show that the above deposits of Rs. 8 lakhs were out of his past savings. The ld. CIT(A) observed that the assessee had not filed any return of income in any of the previous years and this was the first year of the filing of return of income by the assessee and that too was filed in response to notice u/s. 147 of the Act. He further noted that the profit and loss account, capital account and cash deposits for assessment year 2009-10, 2010-11 and 2011-12 in respect of his cash deposits out of income from job work accumulated from earlier years and personal savings could not be accepted because the above documents are not third party evidences and are rather self made documents which were never scrutinized by the Income Tax Authority at any point in time. However, considering the facts that the assessee had declared income of Rs. 1,72,471/- for the impugned assessment year albeit in response to notice u/s. 148 of the Act and further since the Assessing Officer had accepted such return of income without raising any questions, in the interest of justice, the ld. CIT(A) has restricted the addition to Rs. 6.5 lakhs and deleted the addition of Rs. 1.5 lakhs.
The assessee is in appeal before us against the aforesaid additions confirmed by ld. CIT(A) in the appellate order. Before us, the counsel for the assessee submitted that the assessee has not been filing return of income of the earlier years since his income was below taxable limit. He further submitted that the assessee is also engaged in the business of investment in stock market and drew our attention to the balance sheet for the impugned assessment year showing investment in shares amounting to Rs. 87,10,664/- as on 31st March, 2012. Further, he pointed out that even for the year ending 31st March, 2011, the share investments of the assessee amounted to Rs. Page No 5 Shri Bhavikbhai Amrutlal Vaza vs. DCIT 99,40,400/-. Accordingly, the counsel for the assessee submitted that the assessee was having past saving, which were deposited by the assessee in the bank account during the impugned year under consideration. The counsel for the assessee relied on the case of Subhash Chandra Sharma in which held that considering the fact that the assessee had made cash deposits and withdrawals in the bank account regularly during the year, it is reasonable to hold that the deposits was business transaction turnover and therefore only the gross profit addition is justified. He further relied on the case of ITAT Lucknow Bench decision in the case of ITO vs. Shri Vishanlal ITA No. 634/Lkw/2014 stating that since deposits and withdrawals were made regularly in the saving bank account of the assessee during the year, hence it can be treated as his business turnover. In response, the ld. Departmental Representative relied upon observations made by ld. CIT(A) in the appellate order.
We have heard the rival contentions and perused the material on record. We observed that assessee has been regularly making small deposits and withdrawals from his bank account held with Union Bank of India. Further, the assessee filed return of income for the impugned assessment year declaring income of Rs. 1,72,471/- (though it was in response to notice u/s. 148 of the Act). The said return of income was also accepted by the Assessing Officer as correct. The counsel for the assessee also submitted that the assessee was having substantial investments in share on the Bombay Stock Exchange and we observe that the during the year under consideration the assessee was having investments in shares amounting to Rs. 87,10,664/-. In the case of ITO vs. Shri Vishanlal No 6 Shri Bhavikbhai Amrutlal Vaza vs. DCIT 634/Lkw/2014, it was held that since the deposits and withdrawals were made regularly in the saving bank account of the assessee during the year and hence it can be treated as his business turnover. While passing the order, the ITAT observed as under:-
"From the above paras from the order of the Learned CIT(A) it is seen that a clear finding has been given that perusal of the- entries reflected in the said bank account, it was revealed that the cash deposits and withdrawals were made regularly during the year and therefore the Assessing Officer was not justified in making the addition of Rs. 15,68,500/-. Considering the facts discussed above that the cash deposit and withdrawal in the bank account was made regularly by the assessee during the year, it is very reasonable to say that the same was business turnover outside books and therefore only gross profit addition is justified in the facts of the present case. Hence, we not find any reason to interfere in the order of C!T(A) and therefore, \ve decline to interfere with the same."
Considering the facts of the instant case and considering the fact that the assessee had declared income amounting to Rs. 1,72,471/- during the year under consideration and also considering the fact that assessee was having sufficient investments in shares amounting to Rs. 84,10,664/- as on 31st March, 2012 (we also observe that the assessee in the past years was having substantial investments in shares as reflected in the balance sheet produced before us), we are of the considered view that in the instant facts, the assessee has been able to reasonably establish source of deposits of Rs. 8 Page No 7 Shri Bhavikbhai Amrutlal Vaza vs. DCIT lakhs deposits in the bank account during the year under consideration. Accordingly, looking into the totality of the facts of the instant case, we hereby direct that the addition of Rs. 6.5 lakhs confirmed by the ld. CIT(A) may be deleted.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 13-03-2023