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TMI Blog2022 (10) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeal and dismissed the Revenue s appeal. Computation of income at 0.25 per lakh deposited in the bank account of the assessee - It is appropriate to follow the ruling of the Jurisdictional High Court in the case of Shree Sidhnath Enterprise [ 2016 (6) TMI 289 - GUJARAT HIGH COURT ] it is the business to receive cash and issue cheques in lieu thereof for which the assessee charges commission amount. In the absence of any material to show that the cash in respect of which the cheque had been issued travelled back to the assessee, one fails to understand as to how such amount may be said to be the undisclosed income of the assessee and the Assessing Officer could not have charged the same as escaped assessment under the provisions of Income Tax Act. The grounds raised by the assessee are hereby allowed and the grounds raised by the Revenue are devoid of merits. Thus we have no hesitation in deleting the additions made by the Ld. CIT(A) and confirming that the assessee is liable to be taxed his commission income at 0.25 per lakh deposited in the bank account. - ITA Nos: 454/Rjt/2018 & 02/Rjt/2019 - - - Dated:- 19-10-2022 - Shri Waseem Ahmed, Accountant Member And Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer noticed that assessee was having one bank account no. 015305005167 with ICICI Bank Ltd., wherein there was cash deposit of Rs. 31,31,81,622/-. The assessee, vide show cause notice dated 29.02.2016 was asked to explain the source of this cash deposits. As there was no proper reply, the entire cash deposit of Rs. 31,31,81,622/- is treated as unaccounted cash of the assessee and added as the income of the assessee and demanded tax thereon and also initiated penalty proceedings u/s. 271(1)(c) of the Act. 5. Aggrieved against the same, the assessee filed an appeal before the Ld. Commissioner of Income Tax(Appeals)-11, Ahmedabad. The Ld. CIT(A) held that the only effective Ground of Appeal is against the addition of Rs. 31.31 Crores. The assessee along with other persons at Rajkot were involved in allowing to use his bank account to deposit unaccounted sale amount from throughout the country. On receipt of the amount in assessee s bank account, it is withdrawn in cash and after deducting his commission, and handed over the remaining cash to the various persons from the ceramic manufacturers. All these persons were searched/surveyed by the department and additions of cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has made high pitched addition without giving any opportunity of being heard. The Id. AR also reiterated the contentions raised by the assessee before the Id. CIT-(A). 21. On the other hand the learned DR before us submitted that the assessee has not furnished the details of the parties to whom the cash was belonging. 22. The Id. DR also contended that the assessee was engaged in the illegal activity by providing the accommodating entries. 23. Both the learned AR and the DR before us vehemently supported the order of the authorities below to the extent as favorable to them. 24. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, there were huge cash deposit in the bank account of the assessee. But at the same time there were huge withdrawals from the bank in cash. Thus, we are of the view that if the cash deposits are treated as income of the assessee then at the same time cash withdrawal from the bank should be treated as expenses. As such the AO cannot take a view which is benefiting the Revenue without considering the fact for the withdrawal of cash. In this regard we have perused the bank stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h above companies on commission on sale, what is your daily and monthly turnover. Ans. My daily turnover is about rupees seven lacs and monthly is about 1.75 crores. Q-6 What is your monthly income? Ans. My monthly income is about Rs. 17007- to Rs. 1800/-. 28. However, the authorities below has not carried out any verification from such parties despite having sufficient powers with them granted under the statute. As such, the assessee discharged his onus by furnishing the details of the parties as discussed above and the onus was shifted upon the revenue to disprove the contention of the assessee that he was not working on behalf of such ceramic manufacturers. 29. We also find that the case of the assessee was taken under the income escaping assessment under section 147 of the Act for the assessment year 2006-07 on the basis of the letter issued by DDIT (Inv), Ahmedabad dated 4-3-2013 after recording the reason that the assessee is engaged in the activity of Shroff. Thus, in our considered view such reason recorded by the revenue under section 148 of the Act also supports the contention of the assessee that he is engaged in the activity of money transfer. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e without considering the withdrawal from the bank. Such relevant finding of the learned CIT (A) is reproduced as under: There is continuous cash deposit and withdrawal on daily basis from these accounts. The A.O. has made addition of total cash deposits in these bank accounts by considering only the credit side of the bank account and the debit side i.e. withdrawal has been ignored altogether. This cannot be considered justified because, it is legally settled principle that the evidence should be relied upon in total and not in piece-meal manner. It is also legally settled principle that if there are withdrawal from the same account in cash prior to the deposit in cash, it is considered that the cash withdrawn has been utilized to deposit in the same account, if that has not been found invested in other asset or incurred as expenditure by the assessee. Keeping in view the facts of the case that the cash deposited in the bank account and amount was withdrawn in cash from the same bank account; the additions of total cash deposits made by the A.O. are not found justified. If these cash deposits would have remained in the bank account or found by the A.O. as invested by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 193/Rjt/2016 on identical facts and dismissed the revenue s appeal as follows: 6. We have gone through the relevant records and impugned order. The question before us is whether cash depositing in aggregate amount of Rs.5,88,43,806/- made in his A/c. No.015305002632 belongs to the Ceramic Industries/Tiles Manufacturing Companies of Morbi who are the clients of Shaileshbhai Marvania or not. In this case, assessee is working as a shroff and as per CIT(A) it is not a disputed fact. The shroff acts as a channel between two parties. It is apparent from the bank account in question that the cash were deposited and withdrawn from time to time. During the proceedings, the assessee recorded his statement and categorically explained the nature of transaction that he is getting a commission at Rs.0.25 paise on transaction of Rs. one lakh. In our considered opinion, in such a case, all deposits in the bank account cannot be treated as income of the assessee. During the assessment proceedings, the learned AO came to know that assessee is working as shroff which means commission agent. After going through the bank statement, it was revealed that cash deposited and withdrawals were made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh in respect of which the cheque had been issued travelled back to the petitioner, one fails to understand as to how such amount may be said to be the undisclosed income of the petitioner. Under the circumstances, on the facts as recorded in the reasons as well as in the affidavit- in-reply, in the opinion of this court, the Assessing Officer could not have formed the belief that income chargeable to tax has escaped assessment. 6.4. The Ld. Counsel further drawn our attention to the decision of the Co-ordinate Bench of this Tribunal in the case of Sidhnath Enterprise in ITA No. 374/Rjt/2017 dated 29.06.2022 wherein held as follows: 7. We have gone through the order of the ld. CIT(A) and find no infirmity in the same. The ld. CIT(A) has deleted the addition on account of cash deposits of Rs. 224.53,23,993/-. In the back account of the assessee. Noting that identical issue had come up before the Hon ble Gujarat High Court in the case of the assessee itself in a writ petition filed by the assessee against reopening of the case for A.Y. 2008-09 and the Hon ble High Court had noted the fact that the assessee being in the business of Shroff, the cash deposits related to its busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming the Punjab Haryana High Court Judgment ruling that when the assessee had failed to give list of persons who advanced huge cash to him and deposit in his bank accounts, the Assessing Officer was justified in adding said amount to assessee s taxable income. 7.2. The Ld. CIT DR further relied upon Delhi High Court Judgment in the case of Ravinder Kumar vs. ITO [2020] 118 taxmann.com 166 (Delhi) wherein it was held when the assessee had failed to produce any material to authenticate his contention that cash deposits in his account were on account of sales being made by him from Kirana business, tax authorities were justified in making addition of unexplained cash entries in bank account in the hands of the assessee. 7.3. The Ld. CIT DR further relied upon other High Court Judgments and contended that the assessee has not been able to discharge his onus of providing confirmation from parties from whom he claims to have received Cash which was deposited in the Bank accounts owned and operated by him. As per the self-submission of the assessee and findings of the Ld. CIT(A), the assessee is engaged in a patently illegal transactions of aiding and abetting businesses in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission amount. In the absence of any material to show that the cash in respect of which the cheque had been issued travelled back to the assessee, one fails to understand as to how such amount may be said to be the undisclosed income of the assessee and the Assessing Officer could not have charged the same as escaped assessment under the provisions of Income Tax Act. 8.3. We are further guided by Hon ble Supreme Court Judgment not only the income but also the losses for the purpose of taxation in the case of CIT vs. SC. Kothari [1971] 82 ITR 794 wherein the Apex Court held that for the purpose of section 10(1) of the Act, a loss incurred in carrying on an illegal business must be deducted before the true figure of profits brought to tax can be computed. Grover, J., speaking for the Court, observed: If a business is illegal, neither the profits earned nor the losses incurred would be enforceable in law: but that does not take the profits out of the taxing statute. Similarly, the taint of illegality of the business cannot detract from the losses being taken into account for computation of the amounts which can subjected to tax under section 10(1). The tax collector cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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