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Judgment
PER SATBEER SINGH GODARA, JM
These assessee’s three appeals ITA Nos.4397, 4398 & 4399/Del/2016 for assessment years 2009-10, 2010-11 and 2011-12, arises against the Commissioner of Income Tax (Appeals)-15 [in short, the “CIT(A)”], Delhi’s orders, all dated 15.07.2016 passed in case nos.14/15-16, 15/15-16 and 16/15-16, involving proceedings under section 143(3)/148 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), respectively.
Cases called twice. None appears at the assessee’s behest. A combined perusal of the assessee’s case files indicate that this tribunal had dismissed all these instant three appeals which stood recalled as per his averments in miscellaneous applications. We thus proceed ex-parte against the assessee.
Learned departmental representative Ms. Hansra states very fairly that the assessee/appellant’s instant three appeals raise the identical issue of assessment of his impugned cash deposits involving varying sums treated as an unexplained in the Assessing Officer’s assessment in entirety which now stand assessed as business income to the extent of 25%; as per the CIT(A)’s lower appellate discussion in the “lead” assessment year 2009-10, reading as under:-
“4.In the order under appeal an addition of Rs.62,59,940/- has been made for unexplained cash deposits in the bank account. The appellant claimed that he was doing business in the name of proprietorship concern M/s Pal Enterprises. However, he did not maintain any books of account. The return of income u/s 139 was also not filed. The information regarding cash deposits was detected on the basis of AIR information. During the course of assessment proceedings, the appellant furnished certificates from two persons mentioning that appellant has been engaged in the business of trading of oil and lubricants. The Assessing Officer issued notices u/s 133(6) to both the persons in case of one person the notice was returned unserved while the other person declined knowing the appellant. The AO, therefore, rejected the claim of the appellant that the deposits represents sale proceeds and added the gross amount of all deposits including cash deposits. During the course of appellate proceedings, the appellant reiterated the submissions made at the assessment stage and again filed confirmations from Mahindra Oil Company and Jai Ambey Trading Company, mentioning that appellant has been trading in oil and lubricants. However, they mentioned inability to furnish specific details of transactions with the appellant due to lapse of time. At the assessment stage, the letter on Mahindra Oil Company was returned unserved.
5.As regards, the additional evidence in the form of above confirmations, technically the appellant has not made out a case under Rule 46A to justify acceptance of the same. Without prejudice to the same, the two confirmations do not establish the claim of the appellant as the certificates do not mention any details of transactions with the appellant. It is highly improbable that the confirming parties did not have any records of transactions with the appellant.
6.The appellant also relied on some decisions holding that the addition cannot be made for the entire amount of deposits and addition should be restricted to the net profit of the deposits in the bank account. The two, such decisions relied upon by the appellant are as under:
i.President Industries in 258 ITR 654 (Guj);
ii.BalchandAjit Kumar in 263 ITR 610 (MP)
6.1In essence the appellant requested that the deposits should be treated as undisclosed turnover of the appellant and only net profit should be estimated. Another issue raised by the appellant is that the returned income shown in the return filed in response to notice u/s 148 was worked out at 3% of the deposits in the bank account but the Assessing Officer has not given a set off of even that. This contention of the appellant is correct and the Assessing Officer should have given a set off of the same against the addition made.
7.When the facts of the case are examined in a holistic manner it is noticed that there is no dispute that the deposits in the bank account were undisclosed deposits and even the return of income u/s 139 was not filed. The matter came to the knowledge of the Assessing Officer on the basis of AIR uploaded by the bank. It is also true that the appellant does not have any details of the trading activity claimed by it and general confirmation signed by two three persons cannot establish the claim of the appellant. However, it is also true that the deposits were made in the current bank account opened in the name of M/s Pal Enterprises and there are clearing transactions in the said bank account also. The existence of current account in the name of proprietorship concerned prima facie establishes that the some business activity was in existence. Though the nature of business activity is not established the existence of some business activity cannot be denied. In the absence of evidence of nature of business, the estimation of net profit has to be at a higher rate as trade specific net profit rate cannot be applied. In view of the same, the total income is assessed at 25% of total deposits in the bank account. Consequently, the income assessed is taken at Rs.15,64,985/- instead of assessed income of Rs.64,44,740/-.”
This is what leaves the assessee aggrieved.
We have given our thoughtful consideration to the assessee’s and the Revenue’s respective stands against and in support of the impugned addition(s). It emerges from the case records that so far as correctness of the impugned assessment @ 25% is concerned, the issue does not appear to be res integra as earlier learned coordinate bench’s order in assessment years 2007-08 and 2008-09 in ITA Nos.4395 & 4396/Del/2016 duly considered NP in the assessee’s line of business @ 3% only. We further deem it appropriate to emphasize here that the assessee’s business activity trading in oil and lubricants etc. duly stood accepted in the tribunal’s earlier order. We thus conclude in this factual backdrop that the impugned estimation @ 25% in the assessee’s hands hardly carries any justification going by the principle of judicial consistency. The same is accordingly directed to be restricted @ 3% or that already declared at the assessee’s behest; whichever is higher, to be followed by necessary computation as per law.
These assessee’s three appeals ITA Nos.4397, 4398 & 4399/Del/2016 are partly allowed in above terms. A copy of this common order be placed in the respective case files.