TMI Blog2019 (8) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 2.0 Brief facts of the case, as mentioned in the assessment order, are that the assessee, during the year under consideration, derived income from remuneration and interest from three partnership firms and also derived income from glass bangle business. The return of income was filed declaring income of ₹ 2,13,850/- . The case was subsequently selected for scrutiny under CASS . During the course of assessment proceedings the Assessing Officer (AO) noted that the assessee had deposited cash of ₹ 8,45,000/ in Account No 0344104000025267 with ICICI Bank and ₹ 25,000/- in Account No 344104000005388 with IDBI Bank, aggregating to ₹ 8,70,000/-. The Assessing officer was of the opinion that the assessee had failed to prove that the above cash deposit represented his business turnover. An addition of ₹ 7,99,950/- was made under section 69 of the Income Tax Act, 1961 (hereinafter called the Act ) after allowing credit of the business income of ₹ 70,050/- as shown by the assessee under section 44AD of the Act. 2.1 Aggrieved, the assessee filed appeal before the learned CIT (A). However, being unconvinced, the learned CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld CIT(A) was not bonafide when he transgressed his jurisdiction in giving findings in para 7.3.3 observing that the assessee is guilty for the charges provided under section 271(1)(c) and thereby directing the AO for imposition of penalty under secton 271(1)(c). Thus, the CIT (A) exceeded his jurisdiction in adjudicating the issue of penalty under section 271(1)(c) causing prejudice and taking away the right of the assessee to raise the issue in first appeal as and when penalty is levied. 3. Because, while making the assessment the AO and while sustaining addition Ld. CIT(A) made various observations/conclusions which are contrary to facts available on records. 4. Because the appellant denies liability of interest under section 234B of the Act. 5. Because, the order appealed against is contrary to the facts, law and principles of natural justice and in any view of the matter deserves to be quashed. 3.0 Shri Anurag Sinha, the learned Authorised Representative (AR) for the assessee submitted that ground No.1 is not being pressed and the same be treated as withdrawn. 3.1 With regard to grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the purchase bills submitted were not backed by any banking transactions and provide little strength to the assessee s submissions; (e) the sale bills produced by the assessee, when considered along with the entries of cash deposits in the assessee's two bank accounts, conclusively establish that the explanation of the assessee is false. 4.1 The Ld. Sr. DR also submitted that the case for A.Y 2011-12, as decided by the learned CIT(A), is distinguishable as in that year the assessee had claimed that the turnover in A.Y 2011-12 was represented by sale of bangles out of which he used to earn commission income @ 0.3% to 0.4% . Though, as noted in the present order the then learned CIT (A) in A.Y 2011-12 also found the explanation of the assessee to be untrue and held that the cash deposited in the bank accounts aggregating to ₹ 97,15,747/- was the turnover of the assessee. The Learned Sr. D.R also placed reliance upon the judgment of Hon ble Gujarat High Court in the case of Sarwan Kumar Sharma (supra) as was relied upon by the learned CIT (A) in the impugned order. 5.0 We have heard the rival submissions, carefully perused the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customers to whom sales were made, located in different parts of the country, were allowed to deposit cash and the said amounts were withdrawn from banks for the purpose of making payments to dealers of glass bangles business of firms namely M/s Raja Enterprises, M/s Biharji Decorators and M/s Raja Bangles Stores where assessee is one of the partners, their ITR s and Balance Sheets were also brought on records along with Computation of Income filed before the AO showing income from trading of glass bangles. This further fortifies the claim of the assessee that the deposits in the bank accounts had accrued to the assessee from business activity of glass bangles trading. In the light of peculiar facts of the case and in view of the evidences brought on records by the assessee, particularly the Affidavits by four of its customer, the action of the Ld CIT(A) in holding bank Deposits to be from the business activities of glass bangle trading business cannot be said to be unjustified. Moreover, no other source of income is demonstration by the Assessing Officer either from the attending facts of the present case or as a result of scrutiny of bank accounts. 7. The stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO. The AO has nowhere raised any objection as to the non-production of photocopies of said diaries or the veracity of their contents. It is also not evident from record that the AO ever demanded original customer diaries to verily the contents of it photocopies. Hence, this objection of the AO also does not hold good. 9. The decision of the Hon'ble Allahabad High Court in the case of Bhaiya Lal Shyam Behari (supra) relied by the Id. D.R , in our opinion, does not render any aid to the Revenue, being based on different set of facts. In that case various cash credits appearing in the name of various persons were added under section 68 of the Act by the AO. Before the ITAT assessee took an alternative plea that in the event deposits/ cash credits are treated to be unexplained then only peak credit be added. The Tribunal rejected this alternative plea of the assessee, which was approved by the jurisdictional High Court on the ground that for seeking benefit of peak credit, foundation has to be laid down by the assessee and assessee has to accept that all credits shown as cash credits belongs to the assessee and question of peak credit can be raised thereafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see by treating the income from undisclosed source. 11. The learned CIT(A) partly allowed the appeal filed by the assessee in that case by restricting the addition of ₹ 35,33,414/- to ₹ 1.80 lacs under Section 44AF of the I.T. Act and the appeal filed by the Revenue before the Tribunal against the order of Id. CIT(A) stood dismissed. The Revenue, therefore, filed appeal before Hon'ble Gujrat High Court raising following question of law: Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in considering in law, the deposits in the saving bank account of the assessee as Trading Receipts without any evidence of the existence of business on record? Whether on the facts and circumstances of the case, the ITAT was right in restricting the addition from ₹ 35,33,414/- to ₹ 1.80 lacs by way of business income from retail trade u/s. 44AF of the Act where the assessee failed to furnish name and addresses of the suppliers? 12. While deciding the aforesaid questions, Hon'ble Gujrat High Court Confirmed the view taken by the Id. CIT(A) and the Tribunal hol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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