HARISH VELAMAL BUDHANI,NA

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ITA 206/SRT/2018Status: DisposedITAT Surat23 November 2022AY 2008-094 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal acknowledged that the assessee is a small seasonal trader dealing primarily in cash. Considering the nature of the business, the Tribunal restricted the addition to the peak credit amount of Rs. 3,51,108, as initially determined by the AO.

What were the facts?

The Assessing Officer (AO) found cash deposits totaling Rs. 11,49,200 in the assessee's bank account. The assessee failed to provide an explanation for these deposits. The AO made an addition of Rs. 3,51,108 as unexplained cash credit.

What were the issues?

Whether the reopening of assessment was justified and whether the enhancement of income by the CIT(A) was warranted given the nature of the assessee's business and cash transactions.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM

For Appellant: Shri Hiren R. Vepari - CA
For Respondent: Ms. Anupama Singla – Sr. DR
Hearing: 09/07/2021Pronounced: 23/08/2021

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकरअपीलसं./ITA No.206/SRT/2018 (�नधा�रणवष� / Assessment Year: (2008-09) (Virtual Court Hearing) Harish Velmal Budhani, Vs. The Income Tax Officer, 303, Neelam Apartment, Sindhi Camp, Ward-2, Navsari. Navsari – 396445. �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAMPB 8797 R (Assessee) (Respondent)

Assessee by : Shri Hiren R. Vepari - CA Respondent by : Ms. Anupama Singla – Sr. DR

सुनवाईक�तार�ख/ Date of Hearing : 09/07/2021 घोषणाक�तार�ख/Date of Pronouncement : 23/08/2021 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee, pertaining to the Assessment Year (A.Y.) 20008-09, is directed against the order passed by the ld.Commissioner of Income Tax(Appeals), Valsad dated 02.02.2018, which in turn arises out of an assessment order passed by the Assessing Officer, under section 143(3) r.w.s 147 of the Income Tax Act, 1961, ( hereinafter referred to as “the Act”), dated 22.02.2016.

2.

Grounds of appeal raised by the assessee are as follows: (I) Reopening of Assessment: On the facts and circumstances of the case and as per law, the learned CIT(A) erred in confirming reopening of the assessment when no income had escaped assessment.

(II) Enhancement of income to Rs.11,49,200: (1) The learned CIT(A) erred in enhancing the addition of Rs.3,51,108 (Refer Ground No. III) particularly when the assessee in no unclear terms explained that the enhancement was not justified. (2) On the facts and circumstances of the case, the enhancement is unwarranted. (III) Cash deposit in bank Rs.3,51,108: (1) Without prejudice to the above, the learned CIT(A) ought to have deleted the addition made by the A.O. of Rs.3,51,108. (2) The assessee submits that entire deposit has been made out of Cash Book i.e. known source. (IV) Miscellaneous: The assessee craves leave to add, alter or vary any of the grounds of appeal.

3.

Brief facts qua the issue are that during the course of assessment proceedings, on verification of bank account of Bank of Baroda (BOB) produced by the assessee, the assessing officer found that assessee has deposited cash in his Bank account of Bank of Baroda account No. 06190100006105, Branch Navsari, an amount of Rs. 11,49,200/- on various dates. The assessee was requested to explain the source of receipt and confirmation of the parties from whom the amount is received. However, assessee has not filed any explanation in this regard before the assessing officer. The assessing officer noted that to justify the case, the assessee has produced certificate from CST and sales tax department which cannot be ignored therefore, assessing officer was of the view that assessee has done the retail business, but the cash deposit has not been explained by assessee, therefore a peak amount of Rs. 3,51,108/- in the Bank Balance was taken as unexplained cash credit and added to the total income of the assessee.

4.

Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld.CIT(A) who has enhanced the addition from Rs. 3,51,108/- to Rs. 11,49,200/-. Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us.

5.

We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Learned Counsel submits before us that assessee is a very small retail trader and almost his entire gross receipts are being held to be of “unexplained” nature by ld CIT(A), which is unfair. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Ld CIT(A), and pleads that ld CIT(A) has rightly enhanced the assessment. We note that in the assessment order, the AO has stated that Rs. 11,49,200/- was deposited in the saving bank account by way of cash on various dates. As the assessee did not explain the sources of receipts of cash and the cash books was not maintained, the AO calculated peak credits from the transactions in the bank account at Rs. 3,51,108/- and this amount was added as unexplained cash credit.

Learned Counsel argues before us that cash book and bank books were produced during assessment proceedings and cash deposits were duly explained from the entries in the cash books. We note that assessee is a small trader based in Navsari who sells firecrackers, rakhis, holi colours etc, on a seasonal basis. Almost his entire business occurred in cash during the year, as most the suppliers and customers that he dealt with were understandably of unorganized and small in nature. Therefore, considering that nature of the assessee`s business we restrict the addition to the extent of peak credit ( addition made by the assessing officer) to tune of Rs. 3,51,108/-. It is made clear that instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year.

6.

In the result, appeal filed by the assessee is partly allowed in above terms.

Order is pronounced in the open court on 23/08/2021 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963.

Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat /�दनांक/ Date: 23/08/2021 /sgr Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // / / TRUE COPY / / Senior Private Secretary ITAT, Surat

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