IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `G', NEW DELHI
Before Sh. N. K. Saini, AM And Sh. A. T Varkey, JM
ITA No. 3493/Del/2013 : Asstt. Year : 2009-10
Income Tax Officer, Vs Sh. Shobhit Tyagi
Ward 43(2), GH-53, Windsor Park Plot No.-15,
New Delhi Vebhav Khand, Inderapuram,
Ghaziabad-201010
(APPELLANT) (RESPONDENT)
PAN No. ACCPT8187D
Assessee by : Sh. B. R. R. Kumar, Sr. DR
Revenue by : Sh. Devinder Pal Singh, Adv.
Date of Hearing : 04.12.2014 Date of Pronouncement : 11.12.2014
ORDER
Per N. K. Saini, AM:
This is an appeal by the department against the order dated
28.03.2013 of CIT(A)-XXX, New Delhi.
2. The only effective ground raised in this appeal reads as under:
"On the facts and in the circumstances of the case, the Ld.
CIT(A) has erred in allowing of Rs. 12,12,500/- out of total
addition of Rs. 13,40,500/- made u/s 68 of the I. T Act by the
AO on account of unexplained cash credits by holding that
the said cash credits were assessee's turnover of business to
be taxes u/s 44AF of the I.T. Act by taking a net profit @ 8%
at Rs. 1,28,000/- by ignoring the material fact that no such
income from business was declared by the assessee in his
return of income."
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3. The facts of the case in brief are that the assessee filed his return of
income declaring an income of Rs. 6,00,540/- on 31.07.2009 which was
processed u/s 143(1) of the I.T Act, 1961 (hereinafter referred to as the
Act) on 30.04.2010. Later on the case was selected for scrutiny. The AO
noticed that the assessee deposited Rs. 13,40,500/- upto 31.03.2009 in the
Punjab National Bank. He asked the assessee to produce the bank pass
book with narration. The assessee furnished the bank pass book and stated
that he started some short of handloom and wooden items business which
was operated from house and looked after by his wife. It was further stated
that the business was not profitable hence it was closed and the cash
withdrawals & deposits were related to that business. The AO was not
satisfied from the submissions of the assessee and observed that the
assessee was bank employee and that no such income was shown in the
return of income. He, therefore, added a sum of Rs. 13,40,500/-.
4. Being aggrieved the assessee carried the matter to the ld. CIT(A) and
submitted as under:
"That while framing assessment during the year under
consideration the Ld. AO has framed took the view of his
wrong conceptions, notions and without applying his legitimate
mind and added Rs. 13,40,500/- to the income of the assessee
which was deposited in to bank account no.
04496000100029698 maintained with the Punjab National
Bank, Vikas Puri Branch, New Delhi copy of the same has
already been placed on record with your goodself. It is also
worth stating here that the Appellant/Assessee made full
disclosures during the course of the proceedings of the
assessment and had submitted that the he had started a small
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Shobhit Tyagi
business of handloom and small wooden items operated from
the house and the same was looked after by his wife. The
business was not profitable hence the same was discontinued
by the Appellant/assessee. All the purchases were made from
the Panipat which is near to Saharanpur, the wife of the
Appellant/assessee had been looking after the said business
and all the cash payments has been withdrawn from
Saharanpur. It's further pertinent to mention here that the Ld.
AO did not apply his legitimate mind and added all such cash
deposits in the income of the Appellant/assessee and taxed the
same. Now at this stage the assessee submits and offers, to end
up the issue and buy peace of mind, the said cash credits may
be taken at Rs. 16,00,000/- (Rs. Sixteen Lac) to be treated as its
turnover of business and be taxed under section 44AF of the
Income Tax Act taking a net profit @ 8% which comes to Rs.
1,28,000/-."
5. After considering the submissions of the assessee, the ld. CIT(A)
observed that the assessee started a small business of handloom and small
wooden items operated from the house which was looked after by his wife
and the assessee to buy peace of mind surrendered Rs. 1,28,000/- @ 8% of
Rs. 16,00,000/-. The ld. CIT(A) confirmed the addition of Rs. 1,28,000/-
and deleted the remaining addition of Rs. 12,12,500/-. Now the department
is in appeal.
6. We have considered the submissions of the ld. DR alongwith the
written submission furnished by the assessee. In the present case it is an
admitted fact that the various deposits totaling to Rs. 13,40,500/- were
made in the bank account of the assessee, detail of the same is given by the
AO at page nos. 1 to 7 of the assessment order dated 29.11.2011. The
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Shobhit Tyagi
Explanation of the assessee regarding those deposits was that he was doing
small business in handicraft and wooden items which was looked after by
his wife from his house. All the cash payments had been withdrawn from
Saharanpur and utilized for making the purchases from Panipat which is
near to Saharanpur, therefore, the Explanation of the assessee appears to be
plausible. The assessee was doing the small business in handicraft and
wooden items which were purchased from Panipat (near to Saharanpur).
As the assessee was doing small business and the turnover was less than
Rs. 40,00,000/-, the assessee offered the income of the said business u/s
44AF of the Act on the estimated turnover of Rs. 16,00,000/- which was
more than Rs. 13,40,500/- deposited on various dates throughout the year
in the bank account. In our opinion the ld. CIT(A) rightly sustained the
addition of Rs. 1,28,000/- considering the same as profit @ 8% on the
turnover of Rs. 16,00,000/-. We do not see any infirmity in the order of the
CIT(A) and accordingly do not see any merit in this appeal of the
department.
7. In the result, the appeal of the department is dismissed.
(Order pronounced in the open Court on 11/12/2014).
Sd/- Sd/-
(A. T. Varkey) (N. K. Saini)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 11/12/2014
*Subodh*
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Shobhit Tyagi
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5.DR: ITAT
ASSISTANT REGISTRAR
Date Initial
1. Draft dictated on 05.12.2014 PS
2. Draft placed before author 05.12.2014 PS
3. Draft proposed & placed before the JM/AM
second member
4. Draft discussed/approved by Second JM/AM
Member.
5. Approved Draft comes to the Sr.PS/PS PS/PS
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk PS
8. Date on which file goes to the AR
9. Date on which file goes to the Head Clerk.
10. Date of dispatch of Order.
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