Shankar Sarkar, Kolkata vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH: KOLKATA [Before Shri P.K.Bansal, A.M. & Shri Mahavir Singh, J.M.]

I.T.A. No.510/Kol/2012 : Assessment Year : 2006-07

ITO, Ward-52(1), Kolkata -Vs- Shri Sankar Sarkar (Appellant) (Respondent) (PAN: AADCS 7858N)

Date of concluding the hearing : 21.05.2015 Date of pronouncing the Order : 21.05.2015

Appearances :For the Appellant : Shri Kanhiya Lal Kanak, Sr.DR :For the Respondent : None

ORDER

Per Shri P.K.Bansal, A.M.

This appeal filed by the Revenue is directed against the order dated 27.01.2012 of ld. CIT(A)-XXXIII, Kolkata for the assessment year 2006-07.

2. The only issue involved in this appeal relates to reducing the addition of Rs.21,05,500/- made by the AO in the income of the assessee.

3. Brief facts relating to this issue are that the AO noted from the AIR information that the a ssessee ha s deposited a cash of Rs.21,05,500/- in his sa vings account with HD FC bank, Golpark branch. The said account was not disclosed in the return. The AO treated the same as an unexplained credit and added the same in the income of the assessee. When the matter went before the CIT(A),

1 2 ITA No.510/Kol/2012 Shri Sankar Sarkar : A. Yr: 2006-07

the CIT(A) directed the AO to estimate the net profit on this amount @8% treating it to be the undisclosed turnover and accordingly reduced the addition to Rs.2,68,440/- but by mistake in para no.3 in the conclusion the amount is mentioned at Rs.2,68,440/- by observing as under:

"3.4 Next, the question arises as to what should be quantum of addition. The facts disc ussed earlier clea rly indicate that some sort of business relating to money- lending or transportation of goods was being carried out at Guwahati and the amount deposited in the bank account related to that business, wh ich explains why the amount wa s imm ediately transferred , through account of Sri Pankaj Sarkar, to Guwahati. Therefo re, the amount of Rs.21,05,500/- represents not the income per se, but the turnover of such undisclosed business. Though the appellant has claimed the business belongs to his brother and his brother has also accepted this, such self serving statements cannot be accepted in toto because of the reasons discussed earlier. Since the money wa s initially deposited in the appellant's account, in absence of any cogent evidence to the contrary, it has to be held that the said business belonged to him only. At most, it could be a 'benami'business in the name of his brother. In any case, income of such business, whe the r 'benami'or not, is required to be assessed in his hands only. As no accounts of the said business have been furnished and even the true nature of business activity i s also not clear, in my opinion it would be appropriate to estim ate net profit at the rate of 8% of turnover, which would come to Rs.1,68,440/-. Further, some investment in capital would have been required to be made in orde r to carry out such undisclosed business. Needless to sa y that source of such investment is also unexplained. Therefore, the addition for net profit worked out as above is to be increased by such investment. Afte r considering facts and circumstances of the case, including the frequency of transactions in the bank account and amount of individual deposits made, I am of the view that addition of Rs.1 lakh would be adequate to 3 ITA No.510/Kol/2012 Shri Sankar Sarkar : A. Yr: 2006-07

cover investment in capital. The addition of Rs.21,05,500/- is accordingly reduced to Rs.2,68,440/-."

4. None appeared on behalf of the assessee, even though the notice was duly sent to the assessee. We, therefore, decided to dispose of the appeal, after hearing the ld. DR. Nobody appeared on behalf of the assessee, even on the earlier occasions, when the appeal was fixed for hearing on 12.02.2015. We heard the ld. D .R and carefully considered the order of the tax authorities below. In our opinion, the CIT(A) was not correct in law in treating the ca sh deposited in the bank account to be the part of the proceeds from the business. It is a case where the assessee has deposited the ca sh in the savings account with H DFC bank. Therefore, onus is on the assessee to prove the source from where the money has come to the assessee. Whether the assessee has withdrawn or has liquidated some inve stment so that it can be said that the money has been deposited by the assessee from that particular source. The money could have been, had the money pertained to the business of the brother of the assessee. It could not have been deposited into the savings account of the asse ssee or the asse ssee could have credited back to his brother subsequently. Even, there is no evidence on record that on the basis of the income earned by the brother of the assessee, there had been generatio n of the cash in his business which would have added to its income. We, therefore, in the interest of justice and fair play to both the parties, set aside the order of the CIT(A) and restore this issue to the file of the AO with the direction tha t the AO shall reject this issue, in accordance with law, after giving proper and sufficient opportunity to the assessee 4 ITA No.510/Kol/2012 Shri Sankar Sarkar : A. Yr: 2006-07

to prove the source and nature of the cash deposited into the bank. Thus, this ground taken by the Revenue is statistically allo wed.

5. In the result, the appeal filed by the assessee is allowed statistically.

Order pronounced in the Open Court on 21st May, 2015.

Sd/- Sd/- (Mahavir Singh) (P.K.Bansal) Judicial Member Accountant Member

Dated : 21st May, 2015 Talukdar(Sr.P.S.)

Copy of the order forwarded to:

1. Shri Sankar Sarkar, 203, Priyam Apartment, 9C, Bose Pukur Road, Kolkata - 700 042.

2 ITO, Ward-52(1), Kolkata

3. The CIT(A),

4. CIT,

5. DR, True Copy, By order,

Asstt. Registrar, ITAT, Kolkata