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TMI Blog2024 (9) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances, therefore, as a matter of convenience, these appeals and cross objections were heard together and are being disposed off by way of this consolidated order. ITA no.22/Nag./2020 Assessee's Appeal : A.Y. 2009-10 3. In its appeal, the assessee has raised following grounds:- "1. The Honorable CIT(A) has arrived at the difference between bank deposit less inter branch transfer with the total sales and treated the difference of Rs. 5158766.00 as unexplained deposit u/s 69A which is unjustified proposition and assumption and inference. It cannot be considered as unexplained without considering the fact that in any business concern the bank deposits have multiple reasons. Thereby it is not necessary that in all situations the bank deposits must tally with the sales only. It depends on the business transactions held in any concern on case to case basis. All the banking transactions are recorded in our books of account maintained and produced by us and have been verified by the AO during the remand report proceeding on dt. 23.4.2015. The honourable CIT(A) has not accepted the source of Rs. 2024495.00 stating that no supporting confirmation has been submitted and regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by AO. This is not justified in view of the fact that penalty order pertains to the year concerned and appeal was admitted by the office of CIT(A) on this point also. In view of this fact, we pray your honor that penalty u/s 271(1)(b) be orders to be waived." 4. Brief facts:- The assessee is an individual. For the year under consideration, the assessee had not filed his return of income. During the relevant assessment year, as per AIR information, the assessee was found to have deposited cash of Rs. 5,28,35,502 in his bank account with Bank of Baroda, Gondia. Since the assessee had substantial cash deposits in his bank account and on the other hand had not filed the return of income for the year under consideration, the Assessing Officer issued notice under section 148 of the Income Tax Act, 1961 ("the Act") on 04/03/2013, which was served upon the assessee on 15/07/2013 and in response to which the assessee had stated to have filed all the books and other details. However, the Assessing Officer made addition of Rs. 5,28,35,502, to the total income of the assessee for the relevant assessment year 2009-10, by passing order dated 13/03/2014, under section 144 r/w section 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he third ground is a general in nature. 6.0 Ground No.1: The first Ground of Appeal pertains to addition of Rs. 5,28,35,502/-.The assessee was dealing in tobacco products and other miscellaneous items which are normally sold in small shops. He had the dealership of ITC, and the products purchased from ITC were strictly accounted for. During this year, the Assessing Officer has passed an ex-parte order under section 144 r.w.s. 147. The appellant had not filed return of income for A.Y. 2009-10. The Assessing Officer was in possession of information that the assessee had deposited total cash of Rs 5,28,35,502/- during the year under consideration. As the assessee has failed to file return of income, the Assessing Officer issued notice under section 148 and asked the assessee to file return of income within 30 days. The appellant neither submitted return in response to 148 notice nor submitted requisite details sought under section 142(1). Finally, an ex-parte assessment order was passed by the Assessing Officer as the assessee failed to file return of income and submit requisite details. The Assessing Officer added the entire deposits appearing in the bank account as unexplained cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port are not fully correct and he again highlighted his findings. The Assessing Officer again highlighted that the appellant has failed to file original return of income as well as return of income in pursuance to notice under section 148. The Assessing Officer also made out a case, that the appellant is a habitual defaulter and he had not filed return of income for A.Y. 2009-10, 2010-11 & 2011-12. The Assessing Officer also pointed out that irrespective of the fact that the turnover runs into crores, the appellant has not got books of accounts audited or paid advance taxes. The Assessing Officer also highlighted the fact that the accounts submitted by the appellant during the appellate proceedings as well as remand proceedings lacks sanctity. The Assessing Officer highlighted the discrepancy by way of an example, wherein he has tabulated the closing stock reported in the preceding year which is not carried forward in the subsequent years. The Assessing Officer pleaded for rejection of the books of accounts and requested that the additional evidences submitted by the appellant may not be admitted in view of Rule 46 A of the Income Tax Rules. 6.3 As both the remand reports were si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITC, by this office seeking ledger account of the appellant in the books of ITC from 01/04/2008 to 31/03/2011 and break-up of commodity wise sale made by the ITC to the appellant. ITC vide its letter dated 27/12/2018 provided the details of transaction with the appellant for F.Y. 2008-09, 2009-10 & 2010-11. Although the details received from ITC was not in the format as sought by this office, however, as per the details submitted by ITC, the total sales made by the ITC during the year to the appellant is Rs. 4,20,75,366.97/-. The ITC has not provided product wise break up. As per the details submitted by the appellant, approx. 90% of purchases pertains to cigarettes and approx. 10% sales pertain to other miscellaneous items. As per the rate list provided by the appellant, the average Gross Profit ratio for cigarettes is 1.60% and for food items its 3.5%. The appellant has not provided any details of the trading of goods of the other companies. 6.6 During the appellate proceedings, the appellant submitted the financial statements, computation of income and summary statements of bank accounts, but did not submit the bank statements. The appellant has articulately submitted that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credits in the bank account displays a complete disregard to the provisions of the Income Tax Act. 6.9 I also find that the appellant has failed to abide by the provisions of the Income Tax Act. The appellant has neither filed original return of income for A.Y. 2008-09, 2009-10 & 2010-11 nor has filed return of income in pursuance to notice/s. 148. The appellant did not get his books of accounts audited as per the provisions of the law. In my considered opinion the appellant has himself not filed details for almost 15 months (i.e.) from the date of issue of notice to the date of issue of show cause. Therefore, his income for the year is now determined strictly on the basis of documents submitted as mentioned in Para 6.7 above. Even though this office had allowed the assessee to file additional evidences, in the absence of confirmations from debtors and loan creditors, no cognizance as such can be taken of any figures that are not supported by primary evidences. 6.10 Having stated the above, the Assessing Officer is found to have gone too far in bringing to tax the entire deposits in the bank account. As per the statute, the tax is levied only on the income portion and not on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Account. However, in the absence of any supporting confirmations submitted, the appellant's explanation is not accepted. Similarly, in the case of the other deposits totaling to Rs 8,47,865- appearing in the Current account of Mahila Urban Bank, the appellant has not adduced any supporting primary evidences. Therefore, both the amounts reflecting as other deposit in the working spreadsheet submitted by the appellant (annexed to this order), are treated as unexplained. As far as balance amount (i.e.) Rs. 31,38,638/- [51,63,133 (11,49,630-8,47,8650)] is concerned, no verifiable explanation is given by the appellant and hence same is treated as unexplained. Based on the above discussion and calculations, the income of the appellant for AY 2009-10 is arrived at as under. Particulars Amount (Rs. ) (a) Total Sales 4,30,71,236.00 (b) Cigarettes Sales (90% of (a)] 3,87,64,112.40 (c) Other items sales (10% of (a) 43,07,123.60 Profit Margin (d) Cigarettes sales @ 1.60% 6,20,225.80 (e) Other items sales @ 3.5% 1,50,749.33 (f) Total business profit [(d) + (e)] 7,70,975.12 (g) Unexplained money u/s 69A 51,58,766.00 (h) Interest received cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be faulted with because the assessee has not been frank enough its true state-of-affairs. Once the assessee has himself conceded before the learned CIT(A) about the computation of income, he simply cannot turn around and argue against the same before us. Therefore, in view of our aforesaid findings, we uphold the order passed by the learned CIT(A), as the learned CIT(A) has taken up a plausible view and the estimate of income is not found arbitrary. Hence, all the grounds raised by the assessee are dismissed. 9. In the result, appeal filed by the assessee for the ay 2009-10 stands dismissed. 10. On the other hand, The Revenue appeals were on a solitary ground that the learned CIT(A) should have confirmed the entire deposit of cash in bank account as done by the Assessing Officer. However, they have not denied the business modal of the assessee. The learned CIT(A) has correctly estimated the net profit which can only be brought into tax. Accordingly, all the grounds raised by the Revenue in its appeal for A.Y. 2009-10 and 2011-12 are dismissed. 11. The cross objection filed by the assessee are in support of the appeal filed by the Revenue. Since we have dismissed the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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