1 ITA NO.4402.Del.13
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `C' NEW DELHI
BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER
AND
SMT SUCHITRA KAMBLE, JUDICIAL MEMBER
I.T.A .No.-4402/Del/2013
(ASSESSMENT YEAR-2006-07)
ITO vs Gautam Murgai
Ward-44(3), Room No. 210, B-53, South Extension,
D- Block, Dr. S. P. Mukherjee Civic Part-2
Centre, J. N. Marg New Delhi
New Delhi AAGPM4791A
(APPELLANT)
(RESPONDENT)
Appellant by Sh.T. Vasanthan, SR. DR
Respondent by Sh.V. K. Sabharwal, Adv.
Date of Hearing 26.08.2015
Date of Pronouncement
31.08.2015
ORDER
PER SUCHITRA KAMBLE, JM
This appeal is filed by Revenue against order dated 25/06/2013 passed
by CIT(A) XXX, New Delhi. The grounds of appeal raised herein, are as
follows:-
"1. Deleting the addition of Rs.14,19,676/- made by the AO on account
of unexplained cash credits and payments of credit cards from
undisclosed sources.
2. Treating the unexplained cash credits as business receipt and
determining income from business by applying net profit @ 5% of
the business receipts by ignoring the material facts that the
assessee had failed to prove the sources of cash credits.
2. The assessee is an employees of Indian Airlines, accordingly he filed his
return declaring an income of Rs. 1,82,610/-. The same was accepted as
2 ITA NO.4402.Del.13
correct under Section 143(1) of the Income Tax Act, 1961. Consequently, the
notice u/s. 148 of the Act was issued. As per the information received it was
found that the assessee is having bank account with CITI Bank and with HSBC
besides having a separate salary account with Central Bank of India. The
Bank accounts with CITI Bank, Central Bank of India and HSBC Ltd. shows
that total deposits amounting to Rs.2,61,800/-, Rs.3,61,575/- and
Rs.5,34,658/- respectively during the financial year 2005-06 totaling to
Rs.11,58,033/-. The Assessing Officer found the same to be escaped
assessment as per provisions of law contained u/s. 147 of the Act, therefore,
on the basis of which the notice was issued u/s. 148 of the Act. The assessee
asked the reasons recorded, contained u/s. 147 of the Act, by virtue of which
the notice was issued u/s. 148 of the Act, to the assessee. The same was
supplied to the assessee. The assessee vide his letter dated 02.12.2011
challenged the initiation of proceedings u/s. 147 of the Act on the following
grounds:
1. That the proceedings initiated u/s. 147 of the Income Tax Act, 1961,
are perverse to the law and to the facts of the case and not tenable
because the deposits of Rs. 3,61,575/- with the Central Bank of India
during the year pertains only to the credit of salary received by the
assessee from his employer Indian Airlines, which has already been
disclosed in his ITR and a sum of Rs. 86,148/- credited in his said bank
a/c on 06.04.2005 was the maturity amount received from UTI, which
were deposited in the preceding year by the assessee, therefore the same
could not be the income.
2. That with regard to the deposits of Rs.5,34,658/- with HSBC Bank
Ltd., which has also been taken and treated as deposits from undisclosed
sources while initiating the proceedings u/s. 147 of the Act, is not
correct because the said SB A/c pertains only to the wife of the assessee
Mrs. Ashita Murgai, who is a separate assessee, declared here salary
3 ITA NO.4402.Del.13
during the year of Rs.6,38,345/- and filed here ITR accordingly. In the
said A/c the entire deposits pertains to the credit of her salary received
during the year from her employer, therefore, by taking the said deposits
of Rs.5,34,658/- in her bank a/c during the year, presumed to be treated
as unaccounted deposits of the assessee vitiates the proceedings initiated
u/s. 147 of the Act by the Assessing Officer, therefore, it was challenged
before the Assessing Officer primarily prior to the commencement of the
proceedings, that the said proceedings so initiated after recording the
reasons for which the copy has also been supplied are against the law
and to the facts of the case and further it was stated that the notice has
not been issued u/s. 148 of the Act within the time limit prescribed u/s.
149 (1)(b) of the Act, in accordance with the provisions of law contained
u/s. 151 of the Act.
That the Assessing Officer without going through the explanation given,
material produced, filed and available with him, proceeded to reject the
objections raised arbitrarily, capriciously and in a frivolous manner,
without adhering to the provisions of law contained under which he
could not presume to be the concealed income of the assessee during the
year, as for the one bank account maintained in the Central Bank of
India only the salary of the assessee has been credited and the deposits
appearing in the other bank A/c maintained with HSBC Bank, the same
does not belongs to the assessee as the same was being operated by his
wife Mrs. Ashita Murgai, the Assessing Officer out-rightly rejected the
objections filed by the assessee against the initiation of proceedings u/s.
147 of the Act, as such the initiation of proceedings declared to be valid
by the Assessing Officer is illegal and not tenable in the eyes of law and
liable to be quashed.
3. That with regard to the deposits of Rs.2,61,800/- in the CITI Bank
A/c No. 5150374229, the counsel of the assessee attended the hearing
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on 29/12/2011 and explained that the deposits of Rs. 2,61,800/- on
various dates pertains to the sale proceeds of electronic items which the
assesses did during the year, but since the assessee has not maintained
and was not required to maintain any books of accounts for the said
transactions under the provisions of law contained u/s 44AF of the Act,
therefore, 5% profit deduced/derived there from could maximum be
added to the income of the assessee from undisclosed sources which
comes to Rs.13,090/- and no further additions could have been
warranted and to have been made in the income of the assessee, as has
been done by the Assessing Officer. The additions made by the
Assessing Officer in the income of the assessee of Rs.2,61,800/- is
perverse to the provisions of and to the facts of the case.
That in support of assessee's contention, the copies of purchase bills
complete in all respects, confirming the procurement of material against
which the said payments were made through his two credit cards of CITI
Bank were enclosed for perusal and records along with the Petition filed
under Rule 46A of the Income Tax Rules, which the assessee was
prevented by reasonable and sufficient cause to produce and file the
same during the course of assessment proceedings, therefore, the income
of the assessee shall be computed in the following manner:-
Income from salary declared as per return Rs.182610/-
Income from other sources
a. Interest on Deposits Rs. 1992/-
b. Income as 5% Profit on the total credit of Rs.261800/-
with the CITI Bank Rs.13090/-
Total Rs.197692/-
Rounded Off 197700/-
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4. The CIT(A) relied upon the letter dated 02.12.2011 submitted by the
Assessee before the Assessing Officer challenging the initiation of proceedings
u/s. 147 of the Act. The CIT(A) further held that the assessee's wife is filing her
income tax return in ITO, Ward 32(4) since many years before A.Y. 2003-04.
She is deriving her income from salary separately. Hence, her income and the
gifts she has received from her uncle in USA in US$ for the help of her father,
was excluded from the income tax assessment of the assessee, Shri Gautam
Murgai. Thus, directed the Assessing Officer to compute the assessee's income
from his salary income and his income from small business u/s. 44AF at 5% of
turnover and total income was recomputed for A.Y. 2006-2007 was of Rs.
1,97,692/-.
5. The DR submitted that for other assessment year the tax effect was
below four lakhs hence for A.Y. 2003-04, 2004-05, 2005-06, 2007-08 and
2008-09 appeal was not filed by the Department. The DR relied upon the
Assessment Order and further pointed out page 4 of the Assessment Order
which is reproduced herein below :-
"The above stated contention cannot be accepted since no documentary
evidence has been furnished along with the letter suggesting that such
credits in the bank accounts are on account of sales made to the customers
and deposited in the bank to pay off the credit card dues. Further the
assessee's contention of doing business on which profit u/s 44AF (comes
@ 5%) has been earned is also not acceptable since no declaration has
been made in the return originally filed and neither had you revised your
return before the expiry of time limit for filing the revised return. An
assessee is required to substantiate his claims with supporting
documents. It is all afterthought of the assesssee. The assessee has
cooked up a story just-to cover up the deposits made in bank out of
undisclosed income for making payments of credit-cards as well as in
banks. The assessee has failed to discharge his onus with supporting
evidences."
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The DR further submitted that the assessee being an employed person
cannot run any business and thus the entire amount should be taken into
account.
6. The AR totally relied upon the CIT(A)'s order and urged that the appeal
be dismissed.
7. We have perused all the relevant records and proceedings and heard
both the parties, the CIT(A) has correctly mentioned that the income of the
assessee's wife has to be excluded from the income tax assessment of the
assessee, as the wife of the assessee is filing her returns with the respective
ITO. The CIT(A) has correctly directed the Assessing Officer to compute the
assessee's income from salary and income from small business under Section
44AF at 5% of turnover and recomputed the same. The Assessing Officer has
failed to establish that the Income of the wife is not separate from the
assessee's income along with his salary income.
8. In result, the appeal of the Department is dismissed.
The order is pronounced in the open court on 31st of August 2015.
Sd/- Sd/-
( N. K. SAINI) (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 31/08/2015
*R. Naheed*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT ASSISTANT REGISTRAR
7 ITA NO.4402.Del.13
ITAT NEW DELHI
Date
1. Draft dictated on 26.08.2015 PS
2. Draft placed before author 27.08.2015 PS
3. Draft proposed & placed before JM/AM
the second member 27.08.2015
4. Draft discussed/approved by JM/AM
Second Member.
5. Approved Draft comes to the PS/PS
Sr.PS/PS 31.08.2015
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk .08.2015 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.
8 ITA NO.4402.Del.13
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