Income Tax Appellate Tribunal - Chandigarh
Sh. Jitender Arora S/O Sh. Ram Nath ... vs Ito, Kurukshetra on 7 August, 2023
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, "A" CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND
SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.683/CHD/2017
नधा रण वष / Assessment Year : 2011-12
Shri Jitetnder Arora, बनाम The ITO,
S/o Shri Ram Nath Arora, Ward-1,
Vaishno Fruit Company, Kurukshetra.
New Sabji Mandi,
Kurukshetra.
थायी ले खा सं./PAN NO: AENPA2744L
अपीलाथ /Appellant यथ /Respondent
नधा रती क! ओर से/Assessee by : Shri B.M.Monga &
Shri Rohit Kaura, Advocates
राज व क! ओर से/ Revenue by : Smt. Amanpreet Kaur,Sr.DR
सन
ु वाई क! तार&ख/Date of Hearing : 19.07.2023
उदघोषणा क! तार&ख/Date of Pronouncement : 07.08.2023
आदे श/ORDER
Per Sanjay Garg, Judicial Member:
The p re se n t a p pe a l ha s be e n pre fe r re d b y the a s se ssee a ga i nst the o r de r da te d 0 2 .0 2 .2 01 7 o f the C om mi ss ion e r o f I n co me Ta x (A pp ea l s), Ka r na l [ i n sh o r t ' the CI T( A ) '] p e r ta i ni ng to 20 1 1- 1 2 a sse ss me nt yea r .
2. The a sse ssee i n thi s a ppea l i s a ggr ie ve d b y t he a cti o n of th e CI T(A ) i n c o nfi r m in g the a dd iti o n m a de b y the A sse ssi ng ITA No.683/CHD/2017 A.Y. 2011-12 Page 2 of 5 O ff ice r (i n s ho r t 'th e AO ') o f Rs .8 3 ,0 0, 0 93 / - o n a cc o un t of ne ga tive ca sh i n ha nd .
3. The b ri e f f a c ts o f the ca se a re tha t the AO n o te d tha t t he re was un e x p la i ned d e p o si t of R s .1 ,7 4 ,2 9 ,9 70 / - in the ba n k a cco u nt o f the a sse ssee . Si nce th e a sse ssee ha d fa ile d to sa ti sfa cto r il y e xp l a i n the so u rce of de p o si ts in the ba n k a cco u nts o f the a sse ssee , the AO t re a te d the sa id a m o un t of d e p o si ts o f R s.1, 7 4, 29 , 97 0 /- a s un e x p la i ne d inco m e o f the a sse sse e a n d a dde d the sa me in to th e in co me o f t he a sse ssee .
4. I n a p pea l b e fo re th e ld . C I T( A) , the a sse sse e sub m itte d th a t the a sse ssee wa s a fr ui t a nd v e ge ta b le Co mm i ssi o n Age nt a nd ha d s ho w n a ne t p r o fi t o f R s. 1, 59 , 12 0 /- u nd e r the he a d 'b usi ne ss & p r o fe s si o n'. I t wa s a ls o s ub mi tte d tha t va r i o us ca sh de p o si ts i nto t he b a nk a cc o unt o f th e a sse ssee wa s o u t o f th e sa le p r o ce e ds/ bu sin e ss tur no ve r o f the a ssess ee a n d tha t th e e n tire ca sh de po s its ca nn ot b e a d de d, ra the r, o n ly the p ro fi t el e me nt on t he t ur no ve r sho u ld b e a d de d a s i nco me of th e a s se ssee . The a sse ssee a l ter na ti ve ly o ffe re d tha t o nl y t he p ea k o f the de po si ts m a y be a dd e d a s the re we re re cu rr i ng d e p o si ts a nd w i thd r a wa l s. Th e l d. C I T( A) ca ll e d f o r re ma nd r e p o rt f ro m the AO in th is r e spec t. Th e AO , ho w e ve r, ca me to th e c o ncl usi o n th a t the co mb i ne d p ee k o f ne ga ti ve ca s h i n ha nd of the a sse sse e wa s a m o un ting to R s. 8 3, 00 , 09 3 /- , he, ITA No.683/CHD/2017 A.Y. 2011-12 Page 3 of 5 th e re fo re , p r o pos e d tha t a s pe r th e p ea k cre d it th e o r y, t he a m o unt s ho ul d be ta ke n a s R s. 83 ,0 0 ,0 9 3/ - . H o w e ve r , t he a sse sse e co u nte re d the sa i d re po r t by ma k i ng the fo l lo w i ng su bm i ssi o ns :
" Kindly refer to the remand report dated 08.09.2016 of Ld. Assessing Officer, Ward-01, Kurukshetra wherein peak credit investment is calculated at Rs. 90,25,893/-. In this connection, I wish to submit as under :-
It is pertinent to note the withdrawals made in cash or through Cheque/transfer from both the saving accounts are used to make the payments to suppliers from whom the purchases are made by the assessee on behalf of his principal. This fact can be verified from the Bank statement of both accounts where name of such fruit growers appears as recipient of payment. So, in no way the cash credit peak calculated by the Ld. AO is acceptable in the present case. Where the cash is deposited by the assessee from the sales proceeds and the withdrawals/transfer are used to make the payment of purchases, the peak credit theory is not applicable in such a case. The only possibility to calculate the untaxed income is to calculate Gross Profit on such sales by treating the whole deposit as unaccounted sales."
5. The l d. CI T( A) , tho ugh, a c ce p ti ng the a b o ve co nte n tio n, co m p ute d the ne t p r o fi t @ 8% on the t o ta l tur n o ve r of R s. 1 ,7 4, 2 9, 97 0 / - a nd m a de the a dd i tio n o f R s. 1 3, 9 4 , 40 0 /- , ye t, he f ur the r ma de th e a d d iti o n o f R s. 8 3, 00 , 09 3 /- o n a cco u nt o f p ea k o f the ne ga ti ve ca sh i n ha n d.
6. B e f o re us , l d . Co uns e l fo r the a s se ssee ha s sub m itt e d tha t th e ca sh fl o w s ta te me nt wa s f ur ni sh e d be f o re the ld . C I T( A) . Tha t the re wa s no ne ga ti ve pea k a s a lle ge d b y th e AO /CI T( A) . Tha t th e e rr o ne ous pe a k o f R s .8 3, 0 0, 09 3 / - ha s bee n ca lcu la te d b y th e AO b y ta k ing o nl y c a sh de po s its a n d ca sh w it hd ra wa l s i n ITA No.683/CHD/2017 A.Y. 2011-12 Page 4 of 5 th e ba nk a cc o unt, to ta l l y i gno r i ng t he ca sh sa le s a n d pa yme n ts m a de th r o ugh ch eq ue /t ra n sfe r to m a ke th e pa ym e n ts to the su pp l ie r s fr o m w ho m the pu rc ha se s we re ma de by the a sse sse e. Tha t if t he ca sh s a le s a nd p ur ch a se s we re ta ke n i nto co n si de ra ti o n, the re w ill be no ne ga tive pea k a s a ll e ge d by the AO . The l d. c o u nse l ha s fur th e r su bm i tte d a d d iti o n ha s a lre a d y be e n ma d e by ta ki n g the d e p o si ts o ut o f tu rn o ve r o f t he a sse sse e a n d the r e u po n th e pr o fits @ 8 % h a s b ee n a s se s se d , m a ki ng the a d di ti o n o f R s .1 3, 9 4, 400 / - . Tha t th e ld . C I T(A ) w a s no t j ust if ie d in co nf ir m i ng the a dd iti o n o n b o th cou nts i .e . on a cco u nt o f ne ga tiv e pea k a s we l l a s o n a c co un t o f ne t pr o f it.
7. Af te r c o nsi de r in g th e r i va l sub m issio ns, w e a re o f th e v ie w th a t o n ce the dep o si ts o f the a s se ssee ha ve bee n ta ke n o ut o f th e sa le s/ tu rn o ve r o f the a sse s see a nd th e p r o fi t r a te @ 8 % ha s b ee n a sse sse d on the sa i d tur no ve r , the re wa s no q ue sti o n of m a ki ng f ur the r a d d iti o n o n a c co un t o f p ea k c re di t th e o r y a s it w o ul d a m o un t t o d o ub l e a dd i tio n . Mo r e o ve r , the a sse sse e ha s e x p la i ne d t ha t the AO ha s fa ile d to ta ke no te o f th e ca s h sa le s a s we ll a s p ur cha se s ma de thr o ugh ba n ki ng cha nn e l.
8. C o ns id e r i ng the a bo ve sub m issi o ns, the a d diti o n is r e str i cte d o nl y to the a m o un t o f R s.1 3 ,9 4 ,4 00 / - o n a cco u nt o f p ro fi ts o n tu rn o ve r @ 8 %. Th e r e ma in in g a d d itio n of p e a k of ne ga tive ca sh i s o r d e re d to be de le te d.
ITA No.683/CHD/2017
A.Y. 2011-12 Page 5 of 5
9. I n the re sul t, a ppe a l o f t he a sse ssee i s pa r tl y a l low e d .
O rd e r pr o no u nced o n 0 7 t h A ug. ,2 023 .
S d/ - S d/ -
( VIKRAM SINGH YADAV) ( SANJAY GARG)
लेखा सद य/ Accountant Member या यक सद य/ Judicial Member
"Poonam."
आदे शक! त,ल-पअ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकरआयु/त/ CIT
4. -वभागीय त न2ध, आयकर अपील&य आ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH
5. गाड फाईल/ Guard File आदे शानुसार/ By order, सहायकपंजीकार/ Assistant Registrar