TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 92
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....tions of law. [A] "Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in accepting the amount of Rs. 45,85,861/as trading receipt of the assessee though the same was never substantiated / proved by the assessee either at the time of assessment proceeding or appellate proceeding? [B] Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in holding that the onus of proving source of credit entries in an unaccounted bank account is on Revenue?" 2. Facts leading to the present tax appeal in nutshell are as under: 2.1 The assessee and individual earning earning income from salary interest filed his return of income for the AY 2008-09 on 09.03.2009 declaring total income of Rs. 1,07,160/-. The case was subsequently selected for scrutiny and a notice under Section 143(2) of the Income Tax Act, 1961 [hereinafter referred to as "IT Act"] was issued on 17.02.2010 alongwith a questionnaire requiring the assessee to file various details mentioned therein alongwith books of accounts. It was found by the assessee that AIR information shows that the assessee had a bank account with Punjab National Bank, Surat a....
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.... to business transaction of art silk cloth. (ii) As per section 69A of the Act, "wherein in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." (iii) The assessee has maintained an undisclosed bank account and deposited such cash, out of unaccounted income earned during the year under consideration. It is worthwhile to mention here that the details regarding the debit entries of the said bank account have been called for from the said bank shows that the assessee has made unaccounted investment in various assets and incurred unaccounted expenditure out of such unaccounted income reflected at....
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....owed the said appeal and has directed to treat the entire deposit of Rs. 45,85,861/- made by the assessee in his bank account as undisclosed business income of trading in art silk cloth and directed that the income of the assessee shall be estimated at 8% of the total turnover. 2.5 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal, the Revenue has preferred the present tax appeal with aforesaid substantial questions of law. 3.0 Shri Sudhir Mehta, learned advocate appearing on behalf of the appellant - Revenue has submitted that the learned Tribunal has materially erred in directing to treat the entire deposits of Rs. 45,85,861/- made by the assessee in his bank account as his undisclosed business income of trading in art silk cloth. It is submitted that as such the learned Tribunal has not properly appreciated the facts and the findings recorded by the learned AO as well as learned CIT(A) that as such there was no evidence and/or material produced by the assessee in support of his case that he was in the business of trading in art silk cloth and that the aforesaid deposits of Rs. 45,85,861/- was out of his undisclosed business ....
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....the aforesaid finding and observation is absolutely based on no evidence and on surmises and conjectures only, which cannot be sustained. 3.4 Shri Mehta, learned advocate appearing on behalf of the Revenue has heavily relied upon the decision of the Delhi High Court in the case of Commissioner of Income Tax v. Modi Stone Ltd. reported in [2011] 15 Taxmann.com 112 (Delhi) as well as the decisions of the Punjab & Haryana High Court in the case of Dayal Singh and Sons v. Commissioner of IncomeTax reported in [2011] 335 ITR 90 (P&H) and in the case of Commissioner of Income Tax v. Sanjay Chhabra, Proprietor of Sanjay Chhabra Traders reported in [2011] 3336 ITR 71 (P&H). Relying upon the above decisions and making above submissions, it is requested to allow the present tax appeal. 4. Present appeal is opposed by Shri Dipak Shah, learned advocate appearing for Shri Tej Shah, learned advocate appearing on behalf of the assessee. It is submitted that in the facts and circumstances of the case the learned Tribunal has not committed any error and in arriving at a conclusion that the entire deposits of Rs. 45,85,861/- made by the assessee in his bank account was with respect to the undiscl....
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.... silk cloth and out of the said amount, the assessee had also made various payments towards purchase of the art silk cloth to various suppliers, the assessee had not produced a single document and/or evidence to establish and prove his above case and to substantiate his case that he was also in the business of trading activities of art silk cloth. Even before the appellate stage also, the assessee could not produce any evidence to substantiate his above case. Considering the above facts and circumstances both the learned AO as well as learned CIT(A) rightly held that the entire amount of cash deposit in the Punjab National Bank account was an unaccounted income and was rightly added in the total income of the assessee under Section 69A of the IT Act. 5.1 However, on appeal before the learned Tribunal, the learned Tribunal has directed to treat the entire deposit of Rs. 45,85,861/made by the assessee in his bank account with respect to his undisclosed business of trading in art silk cloth by observing in para 6 as under: "6. On examining the bank account submitted by the assessee we find that the assessee had withdrawn cash in most of the instances by way of issuing cheques to var....
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....e aforesaid cash deposits in the bank account was his undisclosed income with respect to the undisclosed business of trading in art silk cloth. 5.2 It also appears from the impugned order and the reasoning given by the learned Tribunal in para 6 reproduced hereinabove and while holding that the assessee was also indulging in trading activities, the said finding is absolutely on surmises and conjectures. It appears that basically the learned Tribunal has wrongly shifted the burden upon the Revenue and has materially erred in observing that the Revenue has failed to find out the nature of the transactions transacted in the bank account of the assessee. 5.3 In the case of Modi Stone Ltd. (Supra), the Delhi High Court has observed and held that the onus is upon the assessee to prove the alleged payment. In the said case, the assessee claimed deduction of commission payments under head "commission/discount". A similar view has been taken by the Punjab & Haryana High Court in the cases of Dayal Singh and Sons (Supra) and Sanjay Chhabra, Proprietor of Sanjay Chhabra Traders (Supra). In the aforesaid two decisions the Punjab & Haryana High Court has held that when unexplained investment ....