Krishan Kumar v. The Income Tax Officer, Patiala

ITA No. 152 of 2018 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 152 of 2018 (O&M)Decided on : 04.10.2018 Krishan Kumar Versus ...... Appellant The Income Tax Officer, Patiala...... Respondent CORAM : HON'BLE MR. JUSTICE AJAY KUMAR MITTALHON'BLE MR. JUSTICE AVNEESH JHINGAN Present :Mr. Arvind Bansal, Advocatefor the appellant. * * * AVNEESH JHINGAN, J. The appellant has filed the present appeal under Section 260A ofIncome Tax Act, 1961 (for brevity, 'the Act') against the order dated01.12.2016 passed by Income Tax Appellate Tribunal, Chandigarh(hereinafter referred to as 'the Tribunal') in ITA No.70/CHD/2014 to theassessment year 2008-09, dismissing the appeal of assessee. 2.As per the appellant, the following substantial question of lawarises for consideration in the present appeal:- “Whether on the facts and in the circumstances of the case the Tribunal was right in law inupholding the addition of ` 26,68,525/- underSection 69A of the Income Tax Act, 1961, asconfirmed by the CIT(A) in utter disregard of thefact that primarily all the business transactions ofthe Assessee were routed through regular BankingChannel vide his Saving Bank account in erstwhileCenturian Bank of Punjab.” 3.The brief facts of the case are that for assessment year 2008-09, the assessee who is a proprietor of M/s United Traders filed Income Tax ITA No. 152 of 2018 (O&M) Return declaring income of ` 1,03,896/-. The department had information byAnnual Information Return (AIR) that the assessee had made cash deposit tothe tune of ` 37,73,695/- in his saving account with Centurian Bank ofPunjab Ltd., (now HDFC) Calibre Mkt., Rajpura The case was selected forscrutiny. Notice under Section 143(2) of the Act was issued on 02.09.2009.The detailed questionaire dated 29.03.2010 was also issued. The assessee inthe income tax return declared that his case is “No Account Case”, andshowed gross receipts of ` 9 lakhs and net profit of ` 1,20,000/-. 4.During the assessment proceedings, the assessee contended thathis sales were of ` 29 lakhs whereas it was inadvertently declared as ` 9lakhs in the return. It was contended that the assessee was not maintainingany books of account. The Assessing Officer (AO) asked for details ofpurchases and sales and the copy of VAT return, but these were not producedon the pretext that VAT returns were not available and the purchase fileswere missing. The AO obtained the copy of VAT return from Sales TaxOffice, Rajpura. From the return, it was evident that the assessee had shownsales of ` 9,65,170/- in the VAT return and the assessee had also filed aTrading and Profit & Loss account in the balance sheet with the VAT return. 4.On being confronted with the documents received from the SalesTax Department, the assessee furnished a cash flow chart as an explanation,but it was not accepted as there were number of discrepancies. The entriesmade in the cash flow charts were not substantiated by any evidence. In orderto explain the cash deposits made, the assessee explained the source aswithdrawal of cash from accounts, advances received from the parties andunsecured loans of ` 1,40,000/-. Since, no evidence was produced in supportof the claim of withdrawal from accounts and advances from the parties, the ITA No. 152 of 2018 (O&M) AO rejected the same. The assessee was able to substantiate unsecured loansof ` 1,40,000/- and the AO gave the credit of the said amount. Vide orderdated 29.11.2010 the assessment was finalised by making followingadditions:- i) Addition of ` 26,68,525/- under Section 69A of the Act; ii) Addition of ` 7,21,958/- on account of difference in closing stock figure; iii) Addition of ` 80,000/- on account of undisclosed income from Labour Job. ITA No. 152 of 2018 (O&M) AO rejected the same. The assessee was able to substantiate unsecured loansof ` 1,40,000/- and the AO gave the credit of the said amount. Vide orderdated 29.11.2010 the assessment was finalised by making followingadditions:- i) Addition of ` 26,68,525/- under Section 69A of the Act; ii) Addition of ` 7,21,958/- on account of difference in closing stock figure; iii) Addition of ` 80,000/- on account of undisclosed income from Labour Job. 5.Aggrieved of the assessment made, the assessee filed an appealbefore the Commissioner of Income Tax (Appeals), Patiala (for brevity,'(CIT(A)'). Appeal was dismissed vide order dated 29.10.2013. Further,appeal was filed before the Tribunal, which was also dismissed vide orderdated 01.12.2016. Hence, the present appeal. 6.Learned counsel for the appellant argued that the Tribunal erredin upholding the addition of ` 26,68,525/- under Section 69A of the Act. Hesubmitted that the assessee was able to explain the source of cash deposits. Itwas contended that AO erred in not appreciating the figures of purchases asper the VAT return as ` 13,12,607/-, being coupled with the value of closingstock at ` 11,51,958/-. 7.The contention raised by learned counsel for the appellant thatthe authorities have not considered the figure of purchase and closing stockas per the VAT return deserves rejection. 8.The assessee filed an income tax return showing the grossreceipts of ` 9 lakhs, on the other hand, there were cash deposits made ofmore than ` 37 lakhs in the savings bank account. The assessee tried to explain the source of cash deposits by taking a stand that the actual saleswere of ` 29 lakhs but were wrongly mentioned as ` 9 lakhs in the incometax return. The details of the purchases and copy of VAT return werewithheld by the assessee on the excuse that same were not available. The AOgot the copy of the VAT return from the Sales Tax Office in which the saleswere mentioned amounting to ` 9,65,170/-. Before the AO the stand takenwas that the appellant was not maintaining books of account, on the otherhand with the VAT return, the appellant had filed Trading and Profit & LossAccount and the balance sheet. The appellant had withheld the materialinformation available with him. 9.All the three authorities below have recorded consistent findingsof facts. The appellant has not been able to dispute the findings of factsmuch less to prove perversity. No interference is called for in the orderpassed by the Tribunal. 10.No substantial question of law is involved. Therefore, the appealis dismissed. (AJAY KUMAR MITTAL) JUDGE (AVNEESH JHINGAN) JUDGE October 04, 2018anju Whether speaking/reasoned: YesWhether reportable :Yes