Income Tax Appellate Tribunal - Delhi
Ito, New Delhi vs Sh. Ram Niwas Aggarwal, New Delhi on 19 November, 2019
1 ITA Nos.5392 & 5393/Del/2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'F' NEW DELHI
BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEMBER
AND
SHRI O. P. MEENA, ACCOUNTANT MEMBER
I.T.A. Nos. 5392 & 5393/DEL/2016
(Assessment Years : 2008-09 & 2011-12)
ITO, Vs Shri Ram Niwas Aggarwal,
Ward - 38(2), Prop. R. N. Aggarwal & Co.
New Delhi. D-16/381, Sector- 7, Rohini,
New Delhi - 110 085.
(ABKPA 6231 C)
(APPELLANT) (RESPONDENT)
Appellant by Smt. Nidhi Srivastava, CIT- D.R.
Respondent by Shri Kapil Goel, Adv.
Date of Hearing 19.11.2019
Date of Pronouncement 19.11.2019
ORDER
PER SUCHITRA KAMBLE, JM
These two appeals are filed by the Revenue against the order dated 29.07.2016 passed by the Commissioner of Income Tax [Appeals]-13, New Delhi for Assessment Years 2008-09 & 2011-12 respectively.
2. The Grounds of appeal are as under:-
ITA No. 5392/Del/2016"Grounds of Appeal before Hon'ble ITAT New Delhi in the case of Sh. Ram Niwas Aggarwal, D-16/381, Sector-07, Rohini, Delhi-110085, vide PAN No.- ABKPA6231C, A.Y. 2008-09.2 ITA Nos.5392 & 5393/Del/2016
(i). Whether on the facts and in the circumstances of the case and in the law, the Ld. CIT(Appeal) erred in not appreciating the facts of the case properly?
(ii). Whether on the facts and in the circumstances of the case and in the law, the Ld. CIT (Appeal) has erred in deleting the addition of Rs.13,30,16,654/- on account of unexplained total deposits with the bank.
(iii) The CIT(A) erred in admitting additional evidences without giving sufficient opportunity to the Assessing Officer under Rule 46-A of the I.T. Act, 1961."ITA No. 5393/Del/2016
"Grounds of Appeal before Hon'ble ITAT New Delhi in the case of Sh. Ram Niwas Aggarwal, D-16/381, Sector-07, Rohini, Delhi-110085, vide PAN No.- ABKPA6231C, A.Y. 2011-12.
(i). Whether on the facts and in the circumstances of the case and in the law, the Ld. CIT(Appeal) erred in not appreciating the facts of the case properly?
(ii). Whether on the facts and in the circumstances of the case and in the law, the Ld. CIT (Appeal) has erred in deleting the addition of Rs.38,80,43,254/- on account of unexplained total deposits with the bank.
(iii) The CIT(A) erred in admitting additional evidences without giving sufficient opportunity to the Assessing Officer under Rule 46-A of the I.T. Act, 1961."
3. These two appeals are identical, therefore, we are taking brief facts for A.Y. 2008-09.
4. The assessee filed his return of income for A.Y. 2008-09 on 02.02.2009 disclosing income of Rs.1,80,560/- from brokerage of stock and shares and from commission. The assessment was reopened under section 147 on 28.03.2013 on the basis of information with the Assessing Officer that the assessee was the real owner of two bank accounts in the names of M/s Pride Trade Agency and M/s. Sidh Trading Company though these business were in 3 ITA Nos.5392 & 5393/Del/2016 the name of his employee Shri Dharmender Kumar. The Assessing Officer recorded the statement of Shri R. N. Aggarwal who admitted control and supervision of these two concerns which were engaged in purchase and sale of goods on commission basis. The assessee claimed that out of commission of 25 paise per thousand, the assessee paid 10 paise to Shri Dharmender Kumar. The Assessing Officer treated the entire deposits in these bank accounts totaling Rs.3,34,35,821/- as unexplained credits. The Assessing Officer also treated the entire credits in the assessee's bank account with Syndicate Bank as unexplained and after considering the amounts transferred to this account from M/s Sidh Trading Company and M/s. Pride Trade Agency and added the sum of Rs.13,30,16,654/- to the income of the assessee. The Assessing Officer also added the commission income of Rs.5,016/- on account of the transaction of M/s. Sidh Trading Company and M/s. Pride Trade Agency and Rs.24,896/- on account of transactions in the Syndicate Bank Account.
5. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A) the CIT(A) partly allowed the appeal of the assessee.
6. The Ld. DR submitted that the assessee found the different units under the business one in the names of M/s. Sidh Trading Agency and other in the name of M/s. Pride Trading Agency. The whole business concerns was placed in capacity of proprietorship concern of Shri Dharmender Kumar, his employee and as far as the question of fund necessary for running the business is concerned the same was arranged by the assessee. The other significant aspect of the case is that Shri Dharmender was his employee he was paid for as a salary but since his employee was assisting the assessee in carrying out his business the assessee was giving him 10 paise out of 25 paise as commission. The assessee admitted to have his full control and supervision over the business. Thus, the Ld. DR further submitted that the Assessing Officer has rightly made addition as no confirmation was filed by the assessee during the assessment proceedings to establish the identity, creditworthiness and genuineness of the creditors from whom the cash amount was taken.
4 ITA Nos.5392 & 5393/Del/2016Therefore, the credit of Rs.1,76,53,000/- in cash and also the deposits other than the cash of Rs.1,57,82,821/- in the bank accounts of M/s. Sidh Trading Agency and M/s. Pride Trade Agency which were unexplained was added to the income of the assessee. Applying the same, commission rate as applied in the earlier year, the Assessing Officer has rightly made addition of Rs.24,896/- to the income of the assessee on commission.
7. The Ld. AR relied upon the order of the CIT(A) and submitted that for A.Y. 2009-10 and 2010-11 the same Assessing Officer has accepted the assessee's plea in respect of commission income. The Ld. AR further submitted that the Hon'ble Delhi High Court in case of PCIT vs. Vijay Conductors India Pvt. Ltd. (ITA No.683/2015 dated 29.09.2015) has deleted the similar addition on cash credits. The Ld. AR also relied upon the decision of the Tribunal in case of M/s Alpha Chemie Trade Agencies Pvt. Ltd. vs. DCIT (ITA No. 6558 to 6564/Mum/2012 order dated 09.09.2016) wherein on the similar facts the income by way of commission was assessed at 0.15% instead of 2% applied by the Assessing Officer.
7. We have heard both the parties and perused all the relevant materials available on record. The CIT(A) held as under:
"The above submissions have been carefully considered. So far as the admission of additional evidence is concerned, the AO has objected to their admission without any rebuttal per se looking to the issue at hand, the same are admitted being necessary for deciding the appeal. The appellant has pointed out that substantive addition of the entire deposits in his bank account, and in the bank accounts of M/s Sidh Trading Co. and M/s Pride Trade Agency, were made in his case in the A.Y. 2008-09, and after reopening, in the A.Y. 2011-12, vide order dated 31.03.2014; however, in the subsequent assessment orders u/s 143(3) r.w.s. 147 dated 30.03.2015, for the A.Ys. 2009-10 and 2010-11, no such addition of the credits was made. The AO has assessed the commission income earned on the total credits in these bank accounts, by applying a rate of 0.43% in the A.Y. 2009-10 and 0.37% in the A.Y. 2010-11, being the net profit rate from the disclosed business transactions. The appellant has further pointed out that, on the same set of facts, the CIT(A) 32 has deleted the protective addition in the hands of Sh. Dharmender Kumar for the A.Y. 2010-11, of the credits in the bank accounts of M/s Pride Trade Agency and M/s Sidh 5 ITA Nos.5392 & 5393/Del/2016 Trading Co., restricting the protective addition to the commission earned at 0.37% of the net credits (i.e. total transactions of these two concerns less transfer to M/s R.N. Aggarwal & Co.).
8.1 There is evidently no doubt that the Department and the appellant are now in agreement that the appellant is the beneficial owner of M/s Pride Trade Agency and M/s Sidh Trading Co., and that he was earning commission of 0.37-0.43% on the deposits in those bank accounts. Considering the Department's own stand in subsequent scrutiny assessments, and the findings of the CIT(A)-32 in the case of Shri Dharmender Kumar in the A.Y. 2010-11, there is no credible basis for treating the entire turnover as the income of the appellant. The credits in the Syndicate Bank account of the appellant are shown to be out of the business of share broking. The appellant has filed the bank statement, the debit notes and difference bills, and certificate of SEBI of registration as a sub-broker, in support of this contention. It is seen that in the subsequent scrutiny assessment orders, no adverse view has been taken of the transactions in the Syndicate Bank account. After carefully looking at the above facts and circumstances, the addition made of the credits in the bank accounts, amounting to Rs.13,30,16,654/- is deleted.
8.2 So far as the addition of commission income is concerned, the AO has computed the commission income on the credits in the bank accounts of M/s Pride Trade Agency and M/s Sidh Trading Co. at 25 paise per thousand rupees, by relying on the statement of the appellant, Shri R.N. Aggarwal, recorded on 20.03.2014. Out of the said 25 paise per thousand rupees, which works out to just 0.025%, the appellant stated that he paid 10 paise to Shri Dharmender Kumar, i.e. 40% of the commission earned. However in the subsequent A.Ys. 2009-10 and 2010-11, the AO has worked out the commission on the credits in the bank accounts at the net profit shown by the appellant in the disclosed business transactions. This computation has not been contested by the appellant. In any event, it is not believable that any business would be operated for an earning of 0.025%. Hence, after careful consideration, the AO is directed to compute the commission income at 0.37% on the total transactions in the bank accounts of M/s Pride Trade Agency and M/s Sidh Trading Co.. The appellant had submitted that the cash withdrawn of Rs. 10,33,000/- from the bank account of M/s Sidh Trading Co. and of Rs.5,70,400/- from the bank account of M/s Pride Trade Agency should be reduced from the total transactions, as allowed in the order of the CIT(A)32 in the case of Shri Dhar mender Kumar in the AY 2010-11. However, the appellant has been unable to show the nexus between the cash withdrawn and cash deposited on later dates. Hence, this claim is not accepted. The commission income works out to Rs.1,23,712/- accordingly.
9. In the result, the appeal is partly allowed."
6 ITA Nos.5392 & 5393/Del/2016From the perusal of the order of the CIT(A), it can be seen that the protective addition in the hands of Dharmender Kumar was restricted to the commission at 0.37% on the net credits for A.Y. 2010-11. Therefore, there is no credible basis for treating the entire turnover as the income of the assessee for which the assessee has filed additional evidence before the CIT(A) which were taken cognizance by the CIT(A). The CIT(A) has rightly held that in the subsequent scrutiny assessment orders no adverse view has been taken on the transaction in the bank account and therefore, CIT(A) rightly deleted the addition of Rs.13,30,16,654/-. As regards direction given to the Assessing Officer to compute the commission income at 0.37% on the total transactions in bank account of M/s. Pride Trade Agency and M/s Sidh Trading Company the CIT(A) has rightly held that the assessee has not shown any nexus between the cash withdrawal and cash deposited on later dates and has not accepted the claim of the assessee and worked out commission to the extent of Rs.1,23,712/-. Thus ITA No.5392/Del/2016 filed by the Revenue is dismissed.
8. As regards ITA No.5393/Del/2016, the facts are similar to the A.Y. 2008- 09 and therefore the same finding will be applicable in this appeal as well. Hence appeal of the Revenue for A.Y. 2011-12 is dismissed.
9. In result, both the appeals filed by the Revenue are dismissed.
Order pronounced in the Open Court on 19th day of November, 2019.
Sd/- Sd/-
(O. P. MEENA) (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 19/11/2019
Priti Yadav, Sr. PS *
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
7 ITA Nos.5392 & 5393/Del/2016
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation 19.11.2019
Date on which the typed draft is placed before the 19.11.2019
dictating Member
Date on which the typed draft is placed before the 19.11.2019 Other Member Date on which the approved draft comes to the Sr. 19.11.2019 PS/PS Date on which the fair order is placed before the 19.11.2019 Dictating Member for pronouncement Date on which the fair order comes back to the Sr. 19.11.2019 PS/PS Date on which the final order is uploaded on the 19.11.2019 website of ITAT Date on which the file goes to the Bench Clerk 19.11.2019 Date on which the file goes to the Head Clerk