TaxTMI 
TaxTMI 
2019 (9) TMI 457
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....al during the course of Appellate Proceedings. 2. The relevant facts of the case are that the assessee's return was picked up for scrutiny under CASS. The AO required the assessee to justify the deposits in her HDFC Bank account. The assessee claimed these to be business receipts. The Assessing Officer not convinced with the explanation and the evidence made the addition of Rs. 5 lakh odd for the reasons set out in paras 5 to 8 of his order. These are reproduced hereunder for the sake of completeness: 5. On 26.12.2016 a written reply has been received. In the reply it is submitted that the assessee was carrying on the business of Boutique during the year under consideration. Basically, the assessee is having her own setup of sewing machines in her home and had given the setup on contract to Tailor, She used to received Order from the Customers and the stitching of that Order was to be done by the Tailor. Also all the expenses, such as on needles, on Threads, on Oil & Lubricants, on Button etc. were to be borne by the Tailor. For the above said job, the assessee and tailor used to divide the receipt in the ratio of 35:65. The Sample Copies of the bills are enclose....
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....me from boutique. The same is being part of the undisclosed income of Rs. 5,65,000/- is being assessed as undisclosed income under section 68 read with section 115BBE Tax Act as the assessee could not give satisfactory reply for the c Rs. 5,65,000/- made in HDFC Bank. As the assessee has furnished inaccurate particular of her income, therefore, penalty proceedings u/s 27 3 Section 274 of the I.T.Act, 1961 are initiated separately." 3. The assessee carried the issue in appeal before the CIT(A) and relied upon further supporting evidences to justify the claims made on the basis of the audited books of account. Though the CIT(A) remanded the evidences to the AO, however, ultimately the additions made by the AO were confirmed by him. Aggrieved by this, the assessee is in appeal before the ITAT. 4. The ld. AR inviting attention to the written submissions filed before the CIT(A) drew specific attention to page 8 of the same. Reading it alongwith the synopsis filed in the present proceedings he submitted that the attempts of the AO at the assessment stage as well as at the remand stage to link the deposits with the receipts was an exercise which was bound to fail as he h....
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....d. AR relying upon written submissions filed before the CIT(A) has argued that the assessee has explained the discrepancy in the vouchers, the cash book and deposits by stating that the full amounts reflected in the vouchers have not been entered in the cash book and it is only the 35% of the sum total of all the vouchers issued on a specific date which has been reflected in the cash book. Relying on the consistent arguments before the AO as well as the CIT(A), it has been submitted that from the total amount reflected in the vouchers of the day only 35% belonged to the assessee, consequently, only this amount is reflected in the cash book and is the basis of the deposits made in the Bank account. The remaining 65%, it has been stated belonged to the tailors who took and executed the orders from her premises. 8. A perusal of the written submissions before the CIT(A) shows that the five machines used were stated to be old as such there was no occasion to claim any depreciation which was one of the reasons which prevailed with the CIT(A) to uphold the addition. It has been claimed that the running cost of fans and two tube-lights were borne by her as her premises and contacts were....
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....ards achieving the goal of augmenting the nation's wealth. 14. With the said aim, I propose that; Firstly a Tax Advisory Cell be constituted consisting of public spirited officers of the Revenue with strong ethics, full awareness of tax laws and people skills; Secondly identify the new successful businesses, however small as the agents of economic change. The mechanism and system is already in place, it should be put to use as the deposits in idle/new/unused accounts are routinely red flagged. Thirdly a Tax Compliance Scheme specially created for the benefits of these new ventures so as to address their past lack of compliances etc. 14.1 These suggestions if implemented, I am confident will result in picking the low hanging fruit already available to us. On these suggestions I propose to deliberate in greater details hereinafter. 15. As suggested first and foremost I am of the view that a Tax Advisory Cell be created for bringing the demonstrably successful businesses from amongst the aspiring milieu from the level of tax free threshold to the level above the said threshold. This is the need of the hour. The creation of such a mechanism I beli....
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....them to become tax compliant as in the environment where he is expected to function he is already hard pressed for time with weekly, monthly targets etc. to be adhered to, he neither has the time and may also lack the skills for providing the assistance. 17. It is the Tax Advisory Cell which can only assist these agents of economic change in becoming tax compliant. It can also make available to these ventures the wealth of the institutional strengths of the State created in the financial; technical and vocational institutions of the country. 18. Carrying these suggestions further considering the provisions of the law and the precedents as available, I believe that in order to ensure the success of the Tax Advisory Cell, it is also necessary to come out with some Scheme which will enable these new businesses who may need assistance to become tax compliant. The ventures, it is noticed generally do not have any advise, experience or knowledge to fall back on and it has been noticed that unknowingly there may be transgressions of the tax laws etc. Even if these are bonafide, they need to be legally addressed. In order to assist these new ventures to come within the fold of the la....
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....t it would not be out of place to briefly explain why I consider this class of population deserving of a special treatment. No studies or statistics need be quoted to acknowledge the fact that structured education may not necessarily promote leadership and innovation and may infact at times at the cost of these skills contribute in producing able and competent employees. Equally well acknowledged is the fact that the unique and innovative way with which some people view life can not be taught, it is a gift which at times emerges in challenging situations where formal education may not have been available as an option or may have been consciously been opted out. I believe that I am not in a minority in holding that no amount of skilled workers, qualified persons can force into creation a successful business venture. Similarly the fact that business opportunities can be visualized only by the formally educated is also well accepted to be not a necessity. The oft quoted successful ventures of semi-skilled women (Lijjat Papad); semi skilled family business (Haldiram),(MDH) etc.non-expert-need based venture (Rajah Spice [UK] ) high end tailoring services provided by Tamil Nadu fisher....
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....le and profit. However, they cannot provide the spark. On the other hand, these first time assessees because of their successful venture due to their lack of awareness, understanding and existing limitations of their capabilities to adhere to Rules that tax assistance becomes necessary as they are either ignorant or too busy looking at things differently. I believe that ultimately it is such entrepreneurs who can fuel the progress of the Indian economic juggernaut. These sparks of entrepreneurial activity I would suggest consequently should be identified as agents of economic change at the earliest point of time when they come in the radar of the tax administration by virtue of deposits in banks or acquisition of assets etc. As faced with the possibility of probably not being tax compliant, these new ventures should not be allowed to fall in dubious hands where they may be so made aware that whatever they do, they are bound to flout the law. The tax administrator i.e. the Assessing Officer should then immediately pass these new assessees to the Tax Advisory Cell. These agents of economic change should not be left in the lurch trying to address the consequences of their successfu....
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....nimum tax generated by these dying ventures should not be the aim of the tax administration or the State. The aim should be to help and assist them to become big and remain tax compliant. Therein comes the role of the tax administration. It is the tax administration which as noted earlier is first alerted about successful ventures by way of deposits in bank accounts, acquisition of property, vehicle etc. The change noticed should be responded to with alacrity by the machinery specially created within the tax department which has skilled knowledge in abundance as its resource strength. 25. It is for the said purposes to highlight the concepts of a) agents of economic change; b) creation of Tax Advisory Cell; and coming out with; c) Policy/Tax Compliance Scheme for these new businesses that a copy of this order, it is considered necessary to be marked to the Chairman, CBDT, New Delhi. 26. Reverting back to the facts of the present case considering the submissions advanced on behalf of the parties in the facts which have been brought out in greater detail in paras 2 to 11 of this order, the impugned order is set aside back to the file of the AO with the direction to verify th....