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Income Tax Appellate Tribunal, MUMBAI BENCHES “G”, MUMBAI
Before: Shri Saktijit Dey, & Shri Ashwani Taneja
आदेश / O R D E R Per Ashwani Taneja (Accountant Member):
This appeal has been filed by the Revenue against the order of Ld. Commissioner of Income Tax (Appeals)-33, Mumbai {(in short Ld. CIT(A)} dated 01.11.2013 for the assessment year 2009-10, decided against the assessment
2 G. Samsuddin order passed by the Assessing Officer (in short ‘AO’) u/s 143(3) of the Act. The revenue has filed following grounds of appeal:
“1.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the A.O to take 25% of gross receipts to be the net profit from activities in undisclosed ICICI Bank account as against the addition of cash deposits of Rs. 21,46,330/- made by the A.O. u/s 68 of the I.T. Act.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in appreciating the fact that the bank account maintained with ICICI Bank was not disclosed by the assessee even during the assessment proceedings.
3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition to 25% of gross receipts inspite of the fact that the assessee could not corroborate with evidences that deposited cash amount had been utilized for purchasing of tickets and business expenses.
4. The appellant prays that the order of the Ld. CIT(A) on the above grounds be reversed and that of the Assessing Officer be restored.
5. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary.
During the course of hearing, Shri Harshad Vengurlekar Departmental Representative ( Ld DR) on behalf of the revenue
3 G. Samsuddin and Shri Mandar Vaidya Authorised Representative (Ld Counsel) on behalf of the respondent, argued the case.
All the grounds address the common issue of grievance of the revenue with respect to action of Ld. CIT(A) in directing the AO to take 25% of gross receipts to be the net profit from the business activities of the assessee, as against the additions made by the AO on account of cash deposited into the ICICI Bank account of the assessee during the year, aggregating to Rs.21,46,330/- u/s 68 of the Act 1961.
The brief facts, as culled out from the assessment order, are that the assessee is an individual and derived pension income from LIC of India Rs.7200. Apart from the above assessee, was engaged in the business of travel agency in the name and style of M/s New Expo India. During the year, assessee declared ticket booking commission and other service charges for Rs.2,87,590/- and declared net profit of Rs.1,88,263/-. Assessee is partner in M/s. Expo India Travel Agency, a partnership firm and received remuneration and interest on capital. Apart from the above, assessee declared income from other sources being interest accrued on fixed deposits, bank interest etc.
During the course of assessment proceedings, it was noted by the AO that the assessee has deposited cash of Rs.21,46,330/- in its bank account with ICICI Bank. Accordingly, assessee was asked to explain sources of the same and its justification. It was further noted by the AO that 4 G. Samsuddin profit and loss account of the assessee shows commission income of Rs.2,87,590/- and net profit of Rs.1,88,263/-. In response, the assessee submitted particulars of the entries in the ICICI Bank account and also submitted re-casted profit and loss account, wherein the income was shown by him on gross basis, showing business receipt of Rs.34,57,921/-, and against this receipt, he showed purchases of tickets aggregating to Rs.31,70,331/-, and declared gross profit of Rs.2,87,590/-, and after claiming various expenses the assessee showed net profit of Rs.1,88,263/-, i.e. at the same amount which was shown in the original profit and loss account. The AO was not satisfied with the response of the assessee, and therefore, made addition of Rs.21,46,330/- u/s 68 on account of cash deposited into the bank account.
Being aggrieved, the assessee filed an appeal before the ld. CIT(A), wherein it was submitted in detail that the assessee was working as ticketing agent and therefore, cash was received by him on account of sale of tickets which was deposited into the bank account, and cash was withdrawn for purchasing of tickets from concerned agencies and for making payments by cheques to these agencies and for various types of routine expenses. The assessee also submitted various documents showing nature and particulars of deposits and withdrawals from the bank account of the assessee. Ld. CIT(A) considered submission of the assessee but was not fully satisfied with the same. It was mentioned by the Ld. CIT(A) that the assessee could not substantiate with evidences that 5 G. Samsuddin cash deposited has been fully utilized for the purchase of tickets and/or business expenses. However, taking holistic view and to meet the ends of justice, it was held by the Ld. CIT(A) that 25% of the gross receipts should be taken to be net profit from the activities in the ICICI Bank account, not disclosed by the assessee. Thus, part relief was allowed by him.
Being aggrieved, the Revenue has filed an appeal before the Tribunal. It has been submitted by the Ld. DR that the action of Ld. CIT(A) is wholly and justified. According to him Ld. CIT(A) ought to have upheld, fully, the addition of Rs.21,46,330/- made by the AO on account of cash deposited into the bank account, and that no relief could have been given to the assessee in the facts and circumstances of the case. In support of his view, he placed reliance upon the judgments of Delhi High Court in the case of CIT vs Chandra Prakash Pabreja 372 ITR 472 and CIT vs. Sarwankumar Sharma 2014 ITL 1061 (Guj-HC).
On the other hand, Ld. Counsel of the assessee has vehemently supported the order of Ld. CIT(A). It was submitted by him that Ld. CIT(A) has rendered justice to this case by taking a holistic view of the matter in as much as, an addition equivalent to 25% of the gross receipts has been sustained by him, whereas the case of the assessee was fully explained and no addition at was sustainable. But to reduce the litigation, the assessee accepted the order of Ld. CIT(A), but Revenue has challenged the order of Ld. CIT(A) without
6 G. Samsuddin any justification and just to keep the litigation alive. He has taken us through various pages of the paper book to show that complete details have been filed. This fact is on record, as is seen from the balance sheet of last three years filed by the assessee in the paper book, that the assessee is in the business of ticketing since last many years. It is quite natural that in the business of ticketing, purchase or sale is done in cash. Cash received on account of sale proceeds of ticket was deposited in the bank account, for better management. The assessee was making payments towards purchase of tickets either by cheques or by withdrawing cash from the bank account. It was lastly submitted by him that the facts are plain and simple, which have been made more complicated by the Ld. AO, unnecessarily. He drew our attention on various entries of the bank statement showing that payments were made from the bank account towards purchase of tickets. In support of his proposition, he placed reliance upon following judgments:
(i) Mediga Ashok Kumar, dt. 29th December 2014 (ii) Nisar K. Hirani ITA No.6054/Mum/2013 dt. 12th February 2014 (iii) Surinder Kaur ITA/522/Del./2012 dt. 3rd May 2013
Before concluding his arguments, it was submitted by the Ld. Counsel, without prejudice, that, even if we take the peak credit of the entries in the bank account on account of cash withdrawals and cash deposited, the amount so arrived would
7 G. Samsuddin be lesser then the amount of addition sustained by Ld. CIT(A), and therefore, no other addition was liable to be made, and order of the Ld. CIT(A) being fair and judicious deserves to be upheld, and therefore, the appeal of the Revenue is liable to be dismissed.
We have gone through the submissions made by both the sides, orders of the lower authorities and material placed before us for our consideration. This fact has not been denied that the assessee has been in the business ticketing since last few years. In this year also, the assessee was engaged in the business of travel agency under the name and style of M/s. New Expo India and declared income from ticket booking commission. These facts were mentioned by the AO himself in para 3 of the assessment order. Once this fact is on record, it would not be unjustified to believe that cash was received by the assessee on account of sale proceeds of tickets. If the assessee would have been in a position to explain each and every entry, then, probably no addition would have been liable to be made in the hands of the assessee. But since the assessee failed to do so, therefore, assessee’s claim was not fully acceptable, and therefore, under these circumstances a judicious estimate of the profit of the assessee was the only course available with the AO and Ld. CIT(A). However, since AO failed to do so, Ld. CIT(A) did this exercise by taking holistic view of the matter and following judicious approach, profit of 25% was estimated on the amount of gross receipts. In our considered view, it cannot be alleged that estimate
8 G. Samsuddin made by the Ld. CIT(A) was on the lower side. No such allegation has been made by the Revenue in its grounds or by Ld. DR before us. It has been argued by the Ld. DR that entire amount of cash deposited into the bank account should have been added as income of the assessee. In our considered view, the argument of the Ld. DR is neither fair nor judicious, and therefore, not sustainable in the eyes of law. We find that, at times, the revenue authorities are called upon to make an ex- parte assessment, and also estimation of income of the assessee. But, in our considered opinion, the ‘best judgment’ assessment as per law does not mean ‘best punishment’ assessment. While making best judgment assessment and estimating the income, the Revenue authorities are obliged under the law to follow sound and judicious principles of commerce and accountancy. The income tax proceedings are not meant to settle the score with tax payers. These proceedings cast onerous responsibilities upon revenue officers to determine the taxable income and taxable thereon by the assessee, within the frame work of the law. The tax regime of our country works within the fundamental principle adopted in constitution of our country that no tax can be collected without authority of the law.
Adverting back to the fact of the case, one more argument has been put forth before us i.e. telescoping of withdrawals and deposits. There have been deposits as well as withdrawals in the bank account. If the cash deposited in the bank account is required to be added as income, in our view, the 9 G. Samsuddin same can be done after giving set off of the cash withdrawn from the bank account, more particularly, in absence of any contrary evidences brought on record by the AO showing that cash withdrawn has been utilized by the assessee, elsewhere. No such allegation has been made in the assessment order that amounts of cash withdrawn have been utilized somewhere else. Under these circumstances, the amount of addition, which could have been made on this account, could not have exceeded the peak amount of cash deposited by the assessee in the bank account during the year. The assessee’s counsel has submitted a working sheet, showing that peak amount of cash deposited during the year, was to the tune of Rs.3,70,080/-, which is apparently lesser then the amount of addition sustained by the Ld. CIT(A) equivalent to 25% of the gross receipt in the bank account. It is noted from the copy of bank account enclosed in the paper book that an aggregate amount of Rs. 31,84,055/- has been deposited into the bank account in the books of the assessee, and 25% of the same comes to Rs.7,96,000/-, which is apparently greater then Rs. 3,70,080/-, being the amount of peak credit of the cash deposited into the bank account. Thus, we find that order of Ld. CIT(A) is not only well reasoned but also justified on facts as well as law. No interference is called for therein, and the same is upheld. We further find that cases relied upon by the Ld. DR are not applicable on the facts of this case. Accordingly, the grounds raised by the Revenue are dismissed.
10 G. Samsuddin 12. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 18th November, 2015.