IN INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JM AND SHRI SANJAY ARORA, AM . I.T.A. No. 5813 Mum 2014 ( Assessment Year: 2010-11) Prashant Toraskar Asst. CIT-25(1), st 101, 1 Floor, Sunflower CHS, Mumbai St. Francis Road, Vile Parle (W), Vs. Mumbai-400 057 . . PAN GIR No. AAAPT 5707 B ( Appellant) : ( Respondent) Appellant by : Shri Tarun Ghia Respondent by : Shri Vijay Kumar Soni : 07.7.2016 Date of Hearing : 21.9.2016 Date of Pronouncement ORDER Per Sanjay Arora, A. M.: This is Appeal preferred by Assessee against Order by Commissioner of Income Tax (Appeals)-35, Mumbai ( CIT(A) for short) dated 09.6.2014, partly allowing Assessee s appeal contesting its assessment u s.143(3) of Income Tax Act, 1961 ( Act hereinafter) for assessment year (A.Y.) 2010-11 vide order dated 07.3.2013. 2. appeal is delayed by one day. same is explained by way of Affidavit dated 11.4.2016 by appellant as caused under bona fide impression of having been filed in time; he being engaged in identifying counsel for advice and representation before Tribunal and, thus, in filing appeal, resulting in it being 2 ITA No. 5813 Mum 2014 (A.Y. 2010-11) Prashant Toraskar vs. Asst. CIT deferred to last day. We find same reasonable. appeal was accordingly admitted and its hearing proceeded with. 3. brief facts of case are that assessee-individual, Thane based retailer in pharmaceuticals (by trade name M s. Biotrol ) was on basis of AIR information found to be maintaining bank account with ICICI bank (# 021101502990), which was not disclosed per his return of income for year, filed on 15.10.2010 at income of Rs.9.61 lacs (revised to Rs.12,79,420 - on 23.11.2012). On being questioned in its respect, assessee admitted to said bank account being not disclosed to Revenue, agreeing for being charged to tax on profit relatable to credits appearing in said bank account (Rs.71.10 lacs), which were claimed to represent sale receipts. debits in this account, it was further explained, were toward purchase and expenses. separate profit and loss account, titled as Personal P & L Account , was prepared in respect of assessee s transactions routed through this bank account, disclosing net profit of Rs.5,33,867 - (at PB pg. 37). reconciliation of purchases claimed therein (at Rs.101.81 lacs), stated to be from three parties, with that reflected in assessee s account as appearing in their books of account, was prepared, also submitting copy of purchase bills. same did not find favour with Revenue. assessee had not furnished all purchase bills so as to verify its claim of debits in bank account as being toward purchases. Then, again, same does not explain cash deposits in undisclosed bank account, claimed to be sales, qua which claim no evidence stood adduced. entire amount credited to ICICI bank account (Rs.71,09,920 -) was accordingly added and confirmed, placing reliance on decisions in following cases, holding burden of proof to be on assessee, and in absence of explanation no onus lay on Revenue to show if credit is from particular source: 1) Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC); 2) Roshan Di Hatti vs. CIT [1977] 107 ITR 938(SC); 3) CIT vs. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC); 4) CIT vs. M. Ganapathi Mudaliar [1964] 53 ITR 623 (SC); 3 ITA No. 5813 Mum 2014 (A.Y. 2010-11) Prashant Toraskar vs. Asst. CIT 5) Kale Khan Mohammad Hanif vs. CIT [1963] 50 ITR 1 (SC); and 6) A. Govindarjulu Mudaliar vs. CIT [1958] 34 ITR 807 (SC). Aggrieved, assessee is in second appeal. 4. We have heard parties, and perused material on record. Without doubt, burden to prove nature and source of credit deposit in his bank account is on assessee, in absence of which same is liable to be deemed as his unexplained income for relevant year. Why, onus to prove claim which in present case extends to proving nexus of withdrawals in his (ICICI) bank account with deposits therein, is only on assessee (refer: Sudhir Kumar Sharma (HUF) vs. CIT (ITA Nos. 123 & 124 of 2014 dated 28.7.2014 (P&H), SLP against which stands dismissed by Hon ble Apex Court (in CC No. 394 2016)), also CIT vs. Calcutta Agency Ltd. [1951] 19 ITR 191 (SC)). assessee states withdrawals to be toward payment against purchase of traded goods, i.e., in main, with credits representing sale proceeds of said goods. payments stand substantiated on basis of account statement of assessee s account, depicting payments, both from his ICICI bank and other (Axis) bank account in books of suppliers, one of whom, M s. S. D. BIO Standard Diagnostics (P.) Ltd. is stated to have furnished same directly to Assessing Officer (A.O.) u s. 133(6). In our clear view, Revenue s approach is not reasonable; assessee having adduced sufficient evidence to exhibit said bank account as being bank account of his undisclosed business transactions. We, however, refrain from issuing any final finding s in matter, as said account bears and, in any case, there is distinct possibility of it bearing, credits other than by way of cash deposits, which could be by way of deposit of direct incomes, viz. rent, interest, professional fees, etc. as well. In fact, we observe that turnover in respect of undisclosed transactions (per P & L c. PB pg.37), i.e., Rs.80.32 lacs, exceeds total credit (Rs.71.10 lacs) in assessee s ICICI bank account. How? Similarly, withdrawals could also be in respect of personal expenses, or which cannot be considered as incurred 4 ITA No. 5813 Mum 2014 (A.Y. 2010-11) Prashant Toraskar vs. Asst. CIT wholly and exclusively for business purposes, or even for personal savings investment. assessee s personal P & L account (at PB pg. 37) would therefore require being verified, both with respect to gross profit reflected and indirect expenditure claimed therein. This, we consider to be principal concern or issue arising in present case. Our preliminary examination reveals assessee to have disclosed gross profit at 15.25%, which compares favourably with (pre- VAT) gross profit of 15.86% on disclosed turnover sales of Rs.25.15 lacs (PB pg. 40). This is as undisclosed turnover attracts no tax (VAT). This gross profit rate, though not conclusive, should recommend itself for acceptance in absence of anything to contrary. We may in this context also add that assessee has furnished copy of sale bills (on its letter-head) together with courier receipts (PB pgs. 44-51), signifying sale to outstation parties. That apart, cash stands deposited from various stations, viz. Bhuvaneswar, Dhule, Nasik, etc. gives credence to assessee s claim of same representing sale proceeds received from different stations (refer Ground 2 before us). said sale bills would also reveal profit component therein, i.e., with reference to corresponding purchase bills. Would that, however, impact assessee s business profile stated to be of retailer and, thus, profit, is question that would require being examined? Further, indirect expenses claimed (Rs.7.09 lacs) are much higher, both in value and in percentage terms, than that claimed against disclosed turnover, i.e., Rs.0.74 lacs. Though by itself not conclusive of matter, onus to justify his claims would be on assessee. receipt of cash or funds from out-station parties may though perhaps explain inordinate increase in postage expenses claimed qua undisclosed transactions. We are in this regard, however, not in agreement with ld. counsel for direction to AO to adopt particular percentage as net profit, i.e., as claimed to have been accepted by him for other years. assessment orders for those years are not on record. AO, where he has issued definite findings upon examination verification, would though be obliged to take guidance from factual findings or inferences drawn for those years. He has to, we may though add, act in reasonable, yet, cogent 5 ITA No. 5813 Mum 2014 (A.Y. 2010-11) Prashant Toraskar vs. Asst. CIT manner, taking broad view of matter in that full details and evidences in respect of expenses, hitherto undisclosed, may not be forthcoming. That apart, even assessee s undisclosed capital, i.e., capital deployed in assessee s undisclosed business, would have to be separately considered for addition. Toward this, in our view, AO shall himself or cause assessee to compile consolidated balance sheet, incorporating erstwhile undisclosed bank account also. This, on comparison with balance-sheet already furnished, would reveal additional capital, so that same, to extent unexplained, would merit being separately added u s.69 69A. Whether opening capital, and if so to what extent, gets explained on basis of similar transactions unearthed for preceding year, is matter of fact. It may be argued that we are, in so directing, exceeding our jurisdiction. argument is facile and without merit. addition arises only in consequence of assessee s non-disclosure of his bank account, which stands discovered by Revenue. accounts, including final accounts, compiled on basis of said account, are only assessee s explanation toward credits appearing therein, also enabling determination of correct income, i.e., liable to be brought to tax qua said credits, which Revenue has extended to entire credit, disbelieving assessee s explanation. A.O. shall, accordingly, redo assessment with reference to assessee s undisclosed bank account, determining amount that is in facts and circumstances of case properly assessable as income. We decide accordingly. 5. In result, assessee s appeal is allowed for statistical purposes. Order pronounced in open court on September 21, 2016 Sd - Sd - (Mahavir Singh) (Sanjay Arora) Judicial Member Accountant Member Mumbai; Dated : 21.09.2016 . . . Roshani, Sr. PS 6 ITA No. 5813 Mum 2014 (A.Y. 2010-11) Prashant Toraskar vs. Asst. CIT Copy of Order forwarded to : 1. Appellant 2. Respondent 3. ( ) CIT(A) 4. CIT - concerned 5. , , DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy. Asstt. Registrar) , ITAT, Mumbai Prashant Toraskar v. Asst. CIT-25(1), Mumbai