Rajneesh Dhupar, New Delhi vs Department Of Income Tax

These are two appeals filed by the Revenue, against the Order dated 23.7.2012 passed by the Ld. Commissioner of Income Tax (Appeals-XXX), New Delhi, pertaining to the assessment year 2007-08. One appeal is against the deletions of addition made by the AO and other is against the cancellation of penalty levied by the AO against the assessee for the same Assessment Year.

2. The grounds of Appeal raised in ITA No. 5281/Del/2012 reads as under:-

"On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in :-

"1. Deleting the addition of Rs.6,12,269/- out of total addition of Rs.6,21,080/- made on account of estimated profit @10% of total unexplained cash deposit of Rs. 62,12,286/- treated as total turnover of the assessee's own business without considering the facts brought out by the AO.

2. Deleting an addition of Rs.4,77,300/- made on account of unexplained investment without considering the facts that no explanation could be given during the course of assessment proceedings.

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3. Deleting an addition of Rs.4,22,006/- made on account of unexplained deposits in the bank account by considering the additional evidence produced before him."

3. The facts in brief are that in this case return of income was filed on 31.7.2007

declaring total income of Rs.92,960/-. The return was processed on 20.1.2009

u/s. 143(1) of the Income Tax Act, 1961 (herein after 'the Act'). The case was

selected for scrutiny under CASS on the basis of scrutiny cases programme and

accordingly statutory notices u/s. 143(2) and 142(1) were issued and the

assessee was asked to file copies of all bank accounts with narration of each

entry above Rs. 10,000/- Dr./Cr.; and also to explain the source of deposit of Rs.

57,69,988/- in savings bank account as per AIR information and a copy of the

same were issued to the Assessee. In response thereto, Ld. Counsel of the

assessee appeared on behalf of the assessee before the AO and submitted

that the assessee was an employee in the Company M/s Kajari Ceremics Ltd.;

and the marketing executive of the said company. According to the assessee

the cash deposited by him in his bank account was the cash collected from the

customers of the company. He explained that sometimes when the company

made sale to the customer, the customer pay cash, but the company has the

policy of not accepting cash payment, in that case the assessee accepted the

cash and deposited in his bank account on behalf of the company, and made

DD for the said sum and remit the DD in lieu of cash received to the company.

Thus according to the assessee, all the cash were collected by him was utilizied

in issuing DD in favor of the company. However, the AO disbelieved the

explanation of the assessee. Thereafter, AO completed the assessment u/s.

143(3) of the Act vide his order dated 24.12.2009 on an income of Rs. 16,13,944/.

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ITA NOs.5281 & 5282/Del/2012

4. Being aggrieved with the assessment order dated 24.12.2009, assessee

appealed before the Ld. CIT(A), who vide impugned order dated 23.7.2012 was

pleased to allow the appeal of the assessee.

5. Now the Revenue is aggrieved against the impugned order dated

23.7.2012 and filed the present appeal before us.

6. At the time of hearing Ld. DR relied upon the order of the AO and

reiterated the contentions raised by the Revenue in the grounds of appeal.

7. On the contrary, Ld. Counsel of the assessee relied upon the order of the

Ld. CIT(A) and submitted that the same may be upheld.

8. We have heard both the parties and perused the relevant records

available with us. We find that in this case the assessee has two bank accounts

and is a salaried employee with M/s Kajaria Ceramics and working as a

Marketing Manager and has collected cash from the customers and deposited

the said cash in his account and converted the same into Demand Draft/

cheque through his bank accounts and thereafter promptly remits the

DD/cheque back to the employer company. The AO treated the whole of such

payment of Rs.62,12,868/- as turnover of the assessee's own business and

estimated the net profit at 10% on such sales and made addition of Rs.6,21,286/-

.In such a scenario, the question is when the money has come to the bank of

the assessee and has gone to the employer of M/s Kajaria Ceramics Ltd., in the

same financial year in the form of cheques/drafts, how can it be turn-over of

the assessee? And why the AO did not give an opportunity of cross examination

to the appellant or his AR in his office? If the AO had disbelieved assessee's

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explanation in respect to the money transaction is his accounts then the AO is

duty bound to produce evidence to contradict the explanation given by the

assessee. The ld CIT(A) has rightly observed after a perusal of the bank accounts

that difference between cash deposit and demand draft or pay order made

during the financial year shows total difference of Rs.8811/- only. So he has

rightly held that maximum of this amount of Rs. 8811/- can be treated as

income of the assessee, though, it may be commission paid for making DD/pay

orders. The assessee has shown cash account where the opening balance of

cash is Rs. 11,000/- which is normal balance for a salaried employee and there

is always positive balance of cash throughout the year and closing balance is

Rs.8311/- which is within the permissible limit. We find considerable cogency in

the finding of the Ld. CIT(A) that the assessee's submissions are found to be

genuine and bonafide and the AO should not disbelieve such facts produced

by the assessee and reject his submission in toto without bringing evidences on

board to prove that explanation was false. Therefore, the Ld. CIT(A) has rightly

directed the AO to make addition of Rs. 8811/- only . In view of the above

factual matrix, we are of the considered view that the no interference is called

for in the well reasoned order passed by the Ld. CIT(A), hence, we uphold the

impugned order of the Ld. CIT(A) on the issue in dispute and reject this ground

of appeal raised by the Revenue.

9. With regard to addition of Rs.4,77,300/- is concerned, we find that cash

deposits of two amounts Rs.3,77,300/- + Rs. l lakhs have been duly explained by

the assessee's counsel in his first submissions dated 24-05-2012 and also in the

cash account for the financial year 2006-07 The AO treated peak cash deposit

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in South Indian Bank of assessee on 9-09-2006 as unexplained investment. The

assessee's counsel submitted that this cash deposit is part of total cash deposit

of Rs.62,12,868/- which has been treated by the AO as unaccounted sales.

Further, the Ld. Counsel of the assessee has explained that the cash deposits of

Rs.3,77,3001- does not belong to assessee but to M/s Kajaria Ceramics Ltd. and

DD has been issued from his account to M/s Kajaria for Rs.3,77,264/- on 9-09-06

out of cash deposit of Rs.3,77,300/-. Therefore, we find that Ld. CIT(A) has rightly

held that this addition stands explained and deleted. We also find that as

regards the cash deposits of Rs. 1 lakh on 3-03-2007 is also available cash from

the cash accounts and being reasonable and source stands explained.

Therefore, the Ld. CIT(A) has deleted the addition. In view of the above, we are

of the view that the no interference is called for in the order passed by the Ld.

CIT(A), hence, we uphold the impugned order of the Ld. CIT(A) on the issue in

dispute and reject this ground of appeal raised by the Revenue.

10. With regard to last addition which is related with deposits of

cash/cheque of Rs.4,22,006/- is concerned, we are of the considered view that

Ld. CIT(A) has rightly observed that out of the last 3 deposits in page No.11 of

the assessment order it reflects cash deposits of Rs.15,000/- on 3-01-2007,

Rs.37,000/- on 27-01-2007 and Rs.12,750/- on 27-02-2007 and other deposits, are

in the form of cheques which have been duly explained by the assessee. Thus

we find that the addition of Rs. 4,22,006/- stands explained and so, the ld.

CIT(A) has rightly deleted the addition of Rs. 4,22,006/-. In view of the above,

we are of the view that no interference is called for in the order passed by the

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Ld. CIT(A), hence, we uphold the impugned order of the Ld. CIT(A) on the issue

in dispute and reject this ground of appeal raised by the Revenue.

ITA NO. 5282/DEL/12 (ITO VS. RAJNEESH DHUBAR) (A.Y. 2007-08)

11. Now we take up the appeal of the revenue against the penalty

cancelled by the ld CIT(A) ie. Rs.4,91,929/-,

12. The grounds of Appeal raised in ITA No. 5282/Del/2012 read as under:-

"On the facts and the circumstances of this case and in law, the Ld. CIT(A) has erred in deleting the penalty of Rs. 4,91,929/- levied u/s. 271(1)(c) of the Income Tax Act."

12. Since we have already upheld the decision of the Ld. CIT(A) on the

deletion of the three additions made by the AO, as aforesaid, in the quantum

appeal and since we have decided the issues in favour of the assessee and has

not found any concealment of income, therefore, we are of the view that the

no interference is called for on our part in the impugned order passed by the Ld.

CIT(A), hence, we also uphold the order of the Ld. CIT(A) on the issue of deletion

of penalty made under the Act, wherein the Ld. CIT(A) has directed the AO to

cancel the penalty imposed by him.

13. In the result, both the appeals filed by the Revenue are dismissed.

Order pronounced in the Open Court on 01. 04.2015.

Sd/- Sd/- (R.S. SYAL) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 01 /04/2015 A K Keot

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Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi

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