Income Tax Appellate Tribunal - Ahmedabad
Chandrika Dilipkumar Thakkar, Surat vs Assessee on 19 November, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH AHMADABAD
Before Shri D.K.Tyagi, Judicial Member and
Shri T.R. Meena, Accountant Member
ITA No. 334/Ahd/2013
Assessm ent Year : 2009-10
Dilipkum ar Vasantlal Thakkar V/s. ITO
9/887, Am baji Road, Near W ard 5(1), Surat.
Choryasi Dairy, Surat - 395003
PAN No. AAOPT9504E
(Appellant) .. (Respondent)
ITA No. 335/Ahd/2013
Assessm ent Year : 2009-10
Chandrika Dilipkum ar Thakkar V/s. ITO
9/887, Ambaji Road, Near W ard 5(1), Surat.
Choryasi Dairy, Surat - 395003
PAN No. ACEPT0102 A
(Appellant) .. (Respondent)
ITA No. 336/Ahd/2013
Assessm ent Year : 2009-10
Binita Karan Thakkar V/s. ITO
9/887, Ambaji Road, Near W ard 5(1), Surat.
Choryasi Dairy, Surat - 395003
PAN No. AHBPT5134E
(Appellant) .. (Respondent)
राजःव कȧ ओर से Shri P. L. Kureel, Sr. D.R.
By Revenue
आवेदक कȧ ओर से/By Assessee Shri Anil K. Shah, A.R.
सुनवाई कȧ तारȣख/Date of Hearing
22.07.2013
घोषणा कȧ तारȣख/Date of Pronouncement 06.09.2013
ORDER
PER : Shri T.R.Meena, Accountant Member
These three appeals at the behest of three assessee which have emanated from the order of CIT(A)-I, Surat, dated 19.11.2012 for assessment I T A No s . 3 34 , 3 35 & 3 36 / Ah d /2 013 , A . Y. 0 9- 10 Page 2 year 2009-10. These appeals were heard together and are being disposed of by way of this common order for the sake of convenience. The effective grounds of all appeals are as under:
Grounds of ITA No. 334/Ahd/2013 "(1). That on the facts and circumstances of the case, the learned CIT (A) has grossly erred in rejecting the returned income as declared by the appellant under presumptive basis under Section-44AF of the I.T. Act on various baseless allegations and thereby passing assessment order U/s-144 of the Act.
(2). That on the facts and circumstances of the case, the learned CIT (A) has grossly erred in making additions of undisclosed income of Rs.12,08,976/- determined on the basis of highest peak balance on particular date of the two banks maintained by the appellant.
ADDITIONAL GROUND OF APPEAL The learned A.O. has made the addition of Rs.12,08,976/- without rejecting books of accounts U/s-145."
Grounds of ITA No. 335/Ahd/2013 "(1). That on the facts and circumstances of the case, the learned CIT (A) has grossly erred in rejecting the returned income as declared by the appellant under presumptive basis under Section-44AF of the I.T. Act on various baseless allegations and thereby passing assessment order U/s-144 of the Act. (2). That on the facts and circumstances of the case, the learned CIT (A) has grossly erred in making additions of undisclosed income of Rs.7,09,227/- determined on the basis of highest I T A No s . 3 34 , 3 35 & 3 36 / Ah d /2 013 , A . Y. 0 9- 10 Page 3 peak balance on particular date of the two banks maintained by the appellant.
ADDITIONAL GROUND OF APPEAL The learned A.O. has made the addition of Rs.7,09,227/- without rejecting books of accounts U/s-145."
Grounds of ITA No. 336/Ahd/2013 "(1). That on the facts and circumstances of the case, the learned CIT (A) has grossly erred in rejecting the returned income as declared by the appellant under presumptive basis under Section-44AF of the I.T. Act on various baseless allegations and thereby passing assessment order U/s-144 of the Act. (2). That on the facts and circumstances of the case, the learned CIT (A) has grossly erred in making additions of undisclosed income of Rs.7,01,025/- determined on the basis of highest peak balance on particular date of the two banks maintained by the appellant.
ADDITIONAL GROUND OF APPEAL The learned A.O. has made the addition of Rs.7,01,025/- without rejecting books of accounts U/s-145."
2. The assessee filed return of income on 25.03.2010 in case of Dilipkumar Thakkar, on 16.03.2010 in case of Chandrika D. Kumar Thakkar and on 16.03.2010 in case of Binita K. Thakkar, declaring total income of Rs. 2,39,970/-, Rs. 2,42,910/- & Rs. 2,41,670/- respectively. The cases were selected for scrutiny u/s. 143(3) on the basis of AIR information. The assessee had deposited cash of Rs. More than Rs. 10 lacs in their bank accounts of Bank of Baroda and purchased immovable property valued at Rs. I T A No s . 3 34 , 3 35 & 3 36 / Ah d /2 013 , A . Y. 0 9- 10 Page 4 40,01,000/- alongwith other co-owner, namely, Smt. Chandrika D. Kumar Thakkar and Smt. Binita K. Thakkar. The detailed questionnaires were issued in all the cases during the course of assessment proceeding and reasonable opportunity was given to all the assessee. The appellants submitted replies vide various dates. The appellants' replies were considered by the ld. A.O. Before the A.O., the appellants claimed that the cash deposited in the bank account which pertained to year 08-09 and same were deposited in the bank, which were generated from the trade business. They gave the name and address of the various parties. The ld. A.O. issued summon to all six parties from whom they had claimed that purchases were made but only one out of six suppliers attended office against the summon issued u/s. 131 of the IT Act. The A.O. held as in case of Dilipkumar V. Thakkar as under:
"i. The assessee failed to submit confirmation from his HUF and not proved creditworthiness of his HUF, who was given loan of Rs.5,00,000/- to him also given loan installment of Rs.5,04,000/-. ii. The contents regarding deposit made in BOB of Rs.1418650/- is found correct, because at the time issuing letter the amount of F.Y. 2009-10 was also included in the total amount of Rs.3298860/-. iii. During the year the assessee was purchase immovable property, and made payment from bank accounts. It is pertinent to note that the before issuing the cheque to the land owner the assessee as well other co-owner of the land first deposited cash in their bank accounts and then issued cheque to land owner. It is proved that the assessee was rotating his undisclosed fund/money through unverifiable sale and purchase translations. iv. One thing also noted interesting in this case, that all seller parties return of income were filed by the A.R. of the assessee. I T A No s . 3 34 , 3 35 & 3 36 / Ah d /2 013 , A . Y. 0 9- 10 Page 5 Therefore, it may be possible the A.R. of the assessee was give facility to the assessee to rotating his undisclosed fund through above six persons.
v. The assessee also mentioned that he runs his business activity from his residence. The residence of the assessee is not in market area, and the same come under pure residence zone, therefore, the claim of the assessee sale of saree and dress materials is not reliable."
The A.O. made addition of Rs.12,08,996/- under the head 'undisclosed income' determined on the basis of peak balance and gross profit after peak balance at Rs. 2,08,729/-.
The finding in case of Smt. Chandrika D. Kumar Thakkar is as under:
"i. The assessee has received loan of Rs.365000/- from Dilipbhai Thakkar. But it was found, after verification of the account details of the Shri Dilipbhai Thakkar, that he had deposited cash of Rs.365000/- in his bank accounts before issuing the cheque of Rs.365000/- to the assessee. Therefore, it is clear that the cash deposited by the lonee was brought from his undisclosed sources. ii. During the year the assessee was purchase immovable property, and made payment from bank accounts. It is pertinent to note that the before issuing the cheque to the land owner the assessee as well other co-owner of the land first deposited cash in their bank accounts and then issued cheque to land owner. It is proved that the assessee was rotating his undisclosed fund/money through unverifiable sale and purchase translations. iii. One thing also noted interesting in this case, that all seller parties return of income were filed by the A.R. of the assessee. Therefore, it may be possible the A.R. of the assessee was give facility to the assessee to rotating his undisclosed fund through above six persons.
I T A No s . 3 34 , 3 35 & 3 36 / Ah d /2 013 , A . Y. 0 9- 10 Page 6 iv. The assessee also mentioned that he runs his business activity from his residence. The residence of the assessee is not in market area, and the same come under pure residence zone, therefore, the claim of the assessee sale of saree and dress materials is not reliable."
The A.O. made addition of Rs.7,09,227/- under the head 'undisclosed income' determined on the basis of peak balance and gross profit after peak balance at Rs. 15,956/-.
The finding in case of Smt. Binita K. Thakkar is as under:
"i. The assessee has received loan from three persons Mr. Dilipbhai Thakkar- Rs.100000/-, Mr. Bharat Thakkar- Rs. 50,000/- and Mr. Bharat Vasantlal Thakkar(HUF)- Rs.125000/-. But it was found, after verification of the account details of all three persons (lender), that they had deposited cash of Rs.365000/- in their bank accounts before issuing the cheque to the assessee. Therefore, it is clear that the cash deposited by the said lenders was brought from their undisclosed sources.
ii. During the year the assessee was purchase immovable property, and made payment from bank accounts. It is pertinent to note that the before issuing the cheque to the land owner the assessee as well other co-owner of the land first deposited cash in their bank accounts and then issued cheque to land owner. It is proved that the assessee was rotating his undisclosed fund/money through unverifiable sale and purchase translations. iii. One thing also noted interesting in this case, that all seller parties return of income were filed by the A.R. of the assessee. Therefore, it may be possible the A.R. of the assessee was give facility to the assessee to rotating his undisclosed fund through above six persons.
I T A No s . 3 34 , 3 35 & 3 36 / Ah d /2 013 , A . Y. 0 9- 10 Page 7 iv. The assessee also mentioned that he runs his business activity from his residence. The residence of the assessee is not in market area, and the same come under pure residence zone, therefore, the claim of the assessee sale of saree and dress materials is not reliable."
The A.O. made addition of Rs.7,01,025/- under the head 'undisclosed income' determined on the basis of peak balance and gross profit after peak balance at Rs. 12,550/-.
3. Being aggrieved by the order of the A.O., the assessees carried the matter before the CIT(A) who had upheld the A.O's. action by observing as under in case of Shri Dilipkumar V. Thakkar:
"a. Only payment of Rs.4,21,700/- are claimed to have been received from debtors by way of cheque. All the remaining cheque transaction/s are pertaining to loans or personal transactions of the appellant.
b. The pattern of cash deposits is very erratic and does not appear to be the deposits, out of sale proceeds of sarees, which should have regular pattern.
c. The opening cash balance of Rs.15,03,853/- is unrealistically high for the claimed turn over of Rs.32.98 lakhs and returned income of Rs. 2.4 lakhs.
d. The appellant claimed in the return of income filed, that he is not maintaining books of account. Therefore, the arguments made subsequently at the assessment stage and appellate stage that he maintained the various register/s goes against the appellant's statement in the return of income. Needless to say, the appellant has not shown the gross profit and turnover in the return and the relevant column which is mandatory for filing of return u/s 44AF of the Income Tax Act.
I T A No s . 3 34 , 3 35 & 3 36 / Ah d /2 013 , A . Y. 0 9- 10 Page 8 e. It is not a clerical mistake of omission as claimed by the appellant as there details are vital information necessary for a valid return.
f. The appellant has not been able to establish that he sold sarees/goods during the relevant previous year.
7.7 In view of the above discussion, it is held that the appellant has failed to establish that the cash deposits in the Bank account represent sale transactions of his business. Considering the same, the Assessing Officer's action of rejection of appellant's claim u/s 44AF is upheld. Since there is no way to ascertain the nature of deposits, the assessing officer 's action of making the addition of the peak of cash and cheque amounts together is also upheld."
The similar finding was also given in case of Smt. Chandrika D. Kumar Thakkar and Smt. Binita K. Thakkar.
4. Now the assessees are before us. Ld. Counsel for the appellants filed paper book and claimed that the assessees are individual and are in retail trading business of sarees and dress materials since many years. Shri Dilipkumar V. Thakkar filed return @ 6.81% on the total income of Rs.2,39,970/- on the total turn over of Rs. 32,98,660/- under the presumptive tax scheme u/s. 44AF of the Act, in case of Smt. Chandrika D. Kumar Thakkar, total income of Rs. 2,42,910/- @ 10.40% on the total turnover of Rs.23,34,660/- and in case of Smt. Binita K. Thakkar, total income of Rs.2,41,670/- @ 12.08% on the total turnover of Rs. 19,99,630/-. The appellants had purchased immovable property alongwith other co-owners. He further argued that the ld. A.O. issued summon u/s. 131 to six parties. Shri Nagraj Jain had confirmed the transactions with them. The assessee had I T A No s . 3 34 , 3 35 & 3 36 / Ah d /2 013 , A . Y. 0 9- 10 Page 9 submitted cash book, ledger, purchase register & sale register to A.O. Other family members were also in the saree retail business. The peak credit theory normally applied to non- genuine entries and not to genuine ones. Where there are many credits, all treated as non genuine. Withdrawals from one account should be treated as available for credit in another. He filed affidavits in all cases and claimed that they were doing business from A.Y. 06-07, 07- 08, 08-09 till the year under consideration. He has also drawn our attention on CBDT Circular No. 5 of 2010 dated 3rd June, 2010 for special provision for computing profits and gains of business on presumptive basis u/s. 44AD and also scrutiny assessment in the Income Tax Act with special reference to AIR. He further relied in case of Bhaiyalal Shyam Behari CIT (2005) 276 ITR 38 (All.). Thus, he requested to delete the addition in all cases. At the outset, Ld. Sr. D.R. vehemently relied upon the order of the CIT(A) and prayed to confirm the addition in all the cases.
5. We have heard the rival contentions and perused the material on record. The assessees claimed that they were in retail business of saree, was not found genuine by the lower authorities, as ld. A.O. issued the summons to all parties, only one party responded back. The assessees were not substantiated their claims before the lower authorities with reference to cash deposited in the bank account. The ld. CIT(A) had confirmed the addition on the basis of peak cash. No nexus had been established by the assessee with the sale transaction of their business and cash deposited. Thus, Section 44AF cannot be applied in this case. The appellants were not produced any books of accounts before the A.O. but submitted copy of the I T A No s . 3 34 , 3 35 & 3 36 / Ah d /2 013 , A . Y. 0 9- 10 Page 10 purchase and sale register. Ld. CIT(A) had given specific finding on all the points raised by the appellant and appears to be logical. Thus, we confirm the order of the CIT(A) in all three cases.
6. In the combined result, all three assessees' appeals are dismissed.
These Orders pronounced in open Court on 06.09.2013 Sd/- Sd/-
(D.K.Tyagi) (T.R. Meena)
Judicial Member Accountant Member
True Copy
S.K.Sinha
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।