Shri Sureshchand Mutha, Ahmedabad V. The Income tax Officer,Ward-11(4), Ahmedabad

CO 107/AHD/2010

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2008 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 10 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 15-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH SR D R
• Assessee Lawyers: KISHOR GOYAL
• Keywords: Unexplained investment; Peak credit
• Section: 68; 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER AN D SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 830/AHD/2010 & CO NO. 106/AHD/2010 / ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER, WARD 11 (4), AHMEDABAD .. APPELLANT VS SHRI TIKAMCHAND MUTHA, 315, P.B. PAREKH TOWER, OPP. DIWAN BALLUBHAI SCHOOL, KANKARIA, AHMEDABAD .. RESPONDENT/ PAN : AGLPM 4440 M CROSS-OBJECTOR ITA NO. 831/AHD/2010 & CO NO. 107/AHD/2010 / ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER, WARD 11 (4), AHMEDABAD .. APPELLANT VS SHRI SURESHCHAND MUTHA, 315, P.B. PAREKH TOWER, OPP. DIWAN BALLUBHAI SCHOOL, KANKARIA, AHMEDABAD .. RESPONDENT/ PAN : ACKPM 5471 B CROSS-OBJECTOR REVENUE BY : SHRI DINESH SINGH, SR-DR ASSESSEE(S) BY : SHRI KISHOR GOYAL, AR / DATE OF HEARING 11/02/2016 /DATE OF PRONOUNCEMENT 19/02/2016 / O R D E R PER SHAILENDRA K. YADAV, JUDICIAL MEMBER: THESE TWO APPEALS FILED BY THE REVENUE AND THE CROS S-OBJECTION THEREOF FILED BY THE RESPECTIVE ASSESSEES ARE DIREC TED AGAINST THE ORDERS ITA NO. 830/AHD/2010 & CO NO.106/AHD/2010 ITA NO. 831/AHD/2010 & CO NO. 107/AHD/2010 ASSESSEE : TIKAMCHAND MUTHA & SHRI SURESHCHAND MUTH A, AY : 2007-08 2 OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XVI, AH MEDABAD, DATED 13.01.2010 & 15.01.2010 FOR ASSESSMENT YEAR 2 007-08. ITA NO. 830/AHD/2010 & CO NO. 106/AHD/2010 : ASSESSEE- SHRI TIKAMCHAND MUTHA 2. IN THIS REVENUES APPEAL, THE ORIGINAL GROUNDS R AISED BY THE REVENUE READ AS UNDER:- 1. THE LD. CIT(A) IS ERRED IN LAW AND ON FACTS IN REST RICTED ADDITION OF RS. 43,73,860/-MADE ON ACCOUNT OF UNEXP LAINED CASH DEPOSITS IN THE BANK ACCOUNT BY ADOPTING PEAK CASH DEPOSITS (ON 60 DAYS BASIS) AND DIRECTING THAT PEAK INVESTMENT DEPOSIT ONLY SHOULD BE BROUGHT TO TAX, AS UNEXPLAIN ED INVESTMENT. 2. THE LD. CIT (A) HAS FAILED TO APPRECIATE THAT THERE IS NO PRESUMPTION IN LAW THAT PEAK CASH DEPOSITS ONLY SHO ULD BE ASSESSED, THE ONUS IS ON THE ASSESSEE / PERSONS MAK ING THE CLAIM THAT SUCH ADVANCES GIVEN EARLIER HAVE BEEN RE CEIVED BACK (TO SUBSTANTIATE SUCH CLAIM). IN THE ABSENCE O F SUCH CLAIM THE ENTIRE CASH DEPOSIT HAS TO BE ASSESSED AS UNEXP LAINED INVESTMENT. 3. THE LD. CIT (A) IS NOT CORRECT IN DIRECTING TO ADOP T ONLY THE PEAK DEPOSIT IN THE BANK ACCOUNT AS UNEXPLAINED INV ESTMENT U/S 69 OF THE ACT AS NO BOOKS OF ACCOUNTS ARE MAINT AINED BY THE ASSESSEE AND NO SEPARATE EVIDENCE OF RECEIPT OF SUCH ADVANCES BACK BY ASSESSEE WAS FURNISHED BEFORE ASSE SSING OFFICER CIT(A). 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 5. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. CI T (A) MAY BE SET ASIDE AND THAT OF THE ORDER OF THE ASSESSING OF FICER BE RESTORED TO THE ABOVE EXTENT. ITA NO. 830/AHD/2010 & CO NO.106/AHD/2010 ITA NO. 831/AHD/2010 & CO NO. 107/AHD/2010 ASSESSEE : TIKAMCHAND MUTHA & SHRI SURESHCHAND MUTH A, AY : 2007-08 3 2.1 APART FROM ABOVE, THE REVENUE HAS RAISED FOLLOW ING REVISED GROUNDS OF APPEAL:- 1. THE ID. CIT(A) IS ERRED IN LAW AND ON FACTS IN R ESTRICTED ADDITION OF RS. 27,02,980/- MADE ON ACCOUNT OF UNEX PLAINED CASH DEPOSITS IN THE BANK ACCOUNT BY ADOPTING PEAK CASH DEPOSITS (ON 60 DAYS BASIS) AND DIRECTING THAT PEAK INVESTMENT DEPOSIT ONLY SHOULD BE BROUGHT TO TAX, A S UNEXPLAINED INVESTMENT. 2. THE OTHER GROUNDS OF APPEAL IN SR. NO. 2 TO 5 ARE S AME AS ORIGINAL GROUNDS OF APPEAL FILED AS ABOVE. 2.3 IN THE CROSS-OBJECTION, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT APPEALS HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE ADDITION BY DIRECTING THE AO TO ADOP T PEAK ON 60 DAYS BASIS FOR THE PURPOSE OF ADDITION. 2. THE LD. CIT APPEALS HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE ADDITION ON ACCOUNT OF CASH CREDIT O F RS.7,55,000/-. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT AND CONSIDERING THE LEGAL DECISIONS, THE LD. CIT APPEAL S OUGHT TO HAVE DELETED THE SAID ADDITION ALSO AND SHOULD HAVE ACCEPTED THE RETURNED INCOME. IT BE SO HELD NOW. 4. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY OF THE GROUNDS OF CROSS OBJECTION ON OR BEFORE OF THE FINAL HEARING OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL, DERIVING INCOME FROM COMMISSION AND INTEREST. FOR T HE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME ON 13.07.2007 DECLARING TOTAL INCOME AT RS.1,02,370/-. DURING THE ASSESSMENT ITA NO. 830/AHD/2010 & CO NO.106/AHD/2010 ITA NO. 831/AHD/2010 & CO NO. 107/AHD/2010 ASSESSEE : TIKAMCHAND MUTHA & SHRI SURESHCHAND MUTH A, AY : 2007-08 4 PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH ERE WERE CASH DEPOSITS TO THE EXTENT OF RS. 27,02,980/- IN THE A/ C. NO. 1960000100118241 OF THE ASSESSEE WITH PUNJAB NATION AL BANK, KANKARIA BRANCH, AHMEDABAD. THE ASSESSEE WAS ASKED BY THE ASSESSING OFFICER TO FURNISH THE CASH BOOK AND RECE IPT & PAYMENT REGISTER. HOWEVER, THE ASSESSEE FAILED TO PRODUCE T HE SAME. THE ASSESSEE WAS SUBSEQUENTLY ASKED TO PROVE THE SOURCE OF CASH DEPOSITS IN THE ABOVE MENTIONED BANK ACCOUNT VIDE SHOW-CAUSE NOTICE DATED 08.09.2009, WHICH WAS NOT COMPLIED WITH. THE ASS ESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE HAS DEPOSITED THE CASH A ND THEN ISSUED CHEQUES TO VARIOUS PARTIES AS DISCUSSED IN PARA 4 O F THE ASSESSMENT ORDER. SINCE THE ASSESSEE HAS FAILED TO OFFER ANY E XPLANATION REGARDING THE SOURCE OF CASH DEPOSITS OF RS. 27,02,980/-, HE TREATED THE SAME AS UNEXPLAINED CASH INVESTMENT AND MADE ADDITION IN TH E TOTAL INCOME OF THE ASSESSEE. 3.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF THE AS SESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) DIRECTED THE ASSESS ING OFFICER TO WORK OUT THE PEAK BALANCE OF THE PUNJAB NATIONAL BA NK ACCOUNT OF THE ASSESSEE ON 60 DAYS BASIS AND TO TREAT THAT PEAK AM OUNT AS THE UNEXPLAINED INVESTMENT INSTEAD OF TOTAL CASH DEPOSI TS OF RS.27,02,980/. THE AFORESAID ORDER OF THE CIT(A) HAS BEEN OPPOSED BEFORE US ON BEHALF OF THE REVENUE, INTER ALIA , SUBMITTING THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTED ADDITION OF RS. 2 7,02,980/- MADE ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE BANK AC COUNT BY ADOPTING PEAK CASH DEPOSITS (ON 60 DAYS BASIS) AND DIRECTING THAT PEAK ITA NO. 830/AHD/2010 & CO NO.106/AHD/2010 ITA NO. 831/AHD/2010 & CO NO. 107/AHD/2010 ASSESSEE : TIKAMCHAND MUTHA & SHRI SURESHCHAND MUTH A, AY : 2007-08 5 INVESTMENT DEPOSIT ONLY SHOULD BE BROUGHT TO TAX, A S UNEXPLAINED INVESTMENT. THE DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE CIT (A) HAS FAILED TO APPRECIATE THAT THERE WAS NO PRESUMPTION IN LAW THAT PEAK CASH DEPOSITS ONLY SHOULD BE ASSESSED , THE ONUS IS ON THE ASSESSEE / PERSONS MAKING THE CLAIM THAT SUCH ADVAN CES GIVEN EARLIER HAVE BEEN RECEIVED BACK. IN THE ABSENCE OF SUCH CL AIM, THE ENTIRE CASH DEPOSIT HAS TO BE ASSESSED AS UNEXPLAINED INVESTMEN T. HE FURTHER CONTENDED THAT THE CIT(A) WAS NOT CORRECT IN DIRECT ING TO ADOPT ONLY THE PEAK DEPOSIT IN THE BANK ACCOUNT AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT AS NO BOOKS OF ACCOUNTS ARE MAINTAINE D BY THE ASSESSEE AND NO SEPARATE EVIDENCE OF RECEIPT OF SUCH ADVANCE S WAS FURNISHED BEFORE ASSESSING OFFICER/CIT(A). THUS, HE PLEADED T HAT THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSI NG OFFICER BE RESTORED. ON THE OTHER HAND, LD. AUTHORIZED REPR ESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE WHOLE ADDITION IN QUEST ION SHOULD BE DELETED, AS ENUNCIATED IN THE GROUNDS OF CROSS-OBJE CTIONS FILED BY THE ASSESSEE. IN THE REJOINDER, THE LD. DEPARTMENTAL R EPRESENTATIVE VEHEMENTLY OPPOSED THE CROSS-OBJECTIONS OF THE ASSE SSEE. 3.2 AFTER GOING THROUGH THE RIVAL CONTENTIONS AND M ATERIAL ON RECORD, WE FIND THAT NO BOOKS OF ACCOUNTS ARE MAINT AINED BY THE ASSESSEE FOR THE RELEVANT PERIOD. THE SOURCE OF FIN ANCE OF THE ASSESSEE WAS MAINLY FROM THE WITHDRAWAL OF HIS FATHER FROM T HE TWO PARTNERSHIP FIRMS AT RAJASTHAN, I.E., UDAYCHAND TIK AMCHAND & HAJARIMAL BADRICHAND. FROM THESE FACTS, THE CIT(A) OBSERVED THAT THE WITHDRAWALS FROM THESE FIRMS WERE MAINLY MADE DURIN G THE FINANCIAL YEAR 2004-05 AND 2005-06 AND HE WAS OF THE OPINION THAT THESE ITA NO. 830/AHD/2010 & CO NO.106/AHD/2010 ITA NO. 831/AHD/2010 & CO NO. 107/AHD/2010 ASSESSEE : TIKAMCHAND MUTHA & SHRI SURESHCHAND MUTH A, AY : 2007-08 6 WITHDRAWALS COULD NOT EXPLAIN THE CREDIT ENTRIES IN THE BOOK ACCOUNT OF THE ASSESSEE IN ASSESSMENT YEAR 2007-08. ALTERNATI VE CONTENTION OF THE ASSESSEE BEFORE CIT(A) IN THIS REGARD WAS THAT AT T HE MOST PEAK CASH DEPOSITS SHOULD BE TAXED IN THE HANDS OF THE ASSESS EE AND THE CREDIT OF OPENING CASH BALANCE OF RS.5,21,000/- SHOULD BE GIV EN TO THE ASSESSEE. IN THIS REGARD, FROM THE COPY OF THE BANK ACCOUNT O F PUNJAB NATIONAL BANK, CIT(A) FOUND THAT VARIOUS CHEQUES HAD BEEN IS SUED IMMEDIATELY AFTER THE CASH AMOUNT WERE DEPOSITED IN THIS ACCOUN T. FOR THIS, THE FATHER OF THE ASSESSEE SHRI SURESHCHAND MUTHA HAS S TATED BEFORE THE CIT(A) ON 11.01.2010 THAT MOST OF THOSE CHEQUES WER E ISSUED IN FAVOUR OF UT MOTORS - A CONCERN OF THE ASSESSEE, GIVING LO AN TO THE NEEDY PERSONS FOR BUYING CNG AUTO KITS FOR 2 TO 4 MONTHS @ 12% TO 15%. IN THIS REGARD, THE CIT(A) OBSERVED THAT EVEN IF IT WA S ACCEPTED THAT PEAK THEORY WOULD BE VALID IN THIS CASE, BECAUSE THE ASS ESSEE WAS IN THE BUSINESS OF FINANCING; THE DAY TO DAY PEAK COULD NO T BE APPLIED IN THE PRESENT CASE BECAUSE AS ADMITTED BY THE FATHER OF T HE ASSESSEE AND THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THE LOAN WAS DISBURSED BY THE ASSESSEE TO VARIOUS PERSONS FOR 2 TO 4 MONTH S. THE CIT(A), THEREFORE, HELD THAT IF PEAK THEORY IS TO BE APPLIE D, THEN THE PEAK HAS TO BE WORKED OUT ON THE BASIS OF 60 DAYS; MEANING THER EBY, IF A CASH WITHDRAWAL IS MADE ON THE FIRST DAY THEN, IT CAN BE EXPECTED TO BE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE ON OR AFTER 61ST DAY. SIMILARLY, WITHDRAWAL OF SECOND DAY COULD BE EXPECT ED TO BE DEPOSITED BACK ON OR AFTER 62ND DAY. IN THIS BACKGROUND, THE CIT(A) RIGHTLY DIRECTED THE ASSESSING OFFICER TO WORK OUT THE PEAK ON THE ABOVE BASIS AND TAX THAT PEAK AMOUNT AS UNEXPLAINED INVESTMENT OF THE ASSESSEE. THEREFORE, THESE REASONED AND FACTUAL FINDINGS OF T HE CIT(A) DO NOT ITA NO. 830/AHD/2010 & CO NO.106/AHD/2010 ITA NO. 831/AHD/2010 & CO NO. 107/AHD/2010 ASSESSEE : TIKAMCHAND MUTHA & SHRI SURESHCHAND MUTH A, AY : 2007-08 7 REQUIRE ANY INTERFERENCE FROM OUR SIDE. WE CONFIRM THE ORDER OF THE CIT(A) IN THIS REGARD. ACCORDINGLY, REVENUES APPEA L AS WELL AS GROUND NO.1 OF THE CROSS-OBJECTION OF THE ASSESSEE ARE DISMISSED. 4. GROUND NO.2 OF THE CROSS-OBJECTION OF THE ASSESS EE IS WITH REGARD TO THE ADDITION ON ACCOUNT OF CASH CREDIT OF RS.7,5 5,000/-. THIS ADDITION IN QUESTION HAS BEEN CONFIRMED THE CIT(A) IN APPEAL ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THE GE NUINENESS OF LOANS FROM THE PARTIES AND CREDITWORTHINESS OF OTHER DEPO SITORS. IT IS NOT IN DISPUTE THAT NO SUCH PROOF WAS FURNISHED BEFORE THE ASSESSING OFFICER BUT ONLY AFFIDAVITS FROM SUCH DEPOSITORS WERE PRODU CED BEFORE THE FIRST APPELLATE AUTHORITY WHICH WAS NOT ADMITTED BY HIM ON THE GROUND THAT THE SAME WAS NOT GENUINE AS PER THE REA SONS RECORDED IN THE APPELLATE ORDER. THEREFORE, IN OUR OPINION, TH E CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION OF RS.7,55,000/- AS UNEXPLAI NED CASH CREDIT U/S 68 OF THE ACT BECAUSE NO BOOKS OF ACCOUNTS ARE MAIN TAINED BY THE ASSESSEE AND THERE WERE NO SUCH DETAILS ON RECORD W HICH CAN BE VERIFIABLE. THUS, THIS GROUND OF CROSS-OBJECTION IS ALSO DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE A S WELL AS THE CROSS-OBJECTION FILED BY THE ASSESSEE, BOTH ARE DIS MISSED. ITA NO. 831/AHD/2010 & CO NO. 107/AHD/2010 SHRI SURESHCHAND MUTHA 6. SIMILAR ISSUE AROSE BEFORE US IN THIS CASE ALSO AS WE DEALT WITH IN THE CASE OF SHRI TIKAMCHAND MUTHA IN ITA NO.830/AHD/2010 CO NO. 106/AHD/2010 FOR AY 2003-04 (SUPRA). FACTS BEING SIMILAR, SO FOLLOWING THE SAM E REASONING, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF CIT(A) ITA NO. 830/AHD/2010 & CO NO.106/AHD/2010 ITA NO. 831/AHD/2010 & CO NO. 107/AHD/2010 ASSESSEE : TIKAMCHAND MUTHA & SHRI SURESHCHAND MUTH A, AY : 2007-08 8 WHO RIGHTLY DIRECTED THE ASSESSING OFFICER TO WORK OUT THE PEAK BALANCE ON 60 DAYS BASIS AND TO TREAT THAT PEAK AMO UNT AS THE UNEXPLAINED INVESTMENT INSTEAD OF TOTAL CASH DEPOSI TS OF RS.43,73,860/. ACCORDINGLY, THIS APPEAL FILED BY THE REVENUE AND C ROSS-OBJECTION FILED BY THE ASSESSEE ARE ALSO DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A S WELL AS BOTH CROSS-OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 19TH FEBRUARY 2016 AT AHMEDABAD. SD/- SD/- N.K. BILLAIYA SHAILENDRA K. YADAV (ACCOUNTANT MEMBER) (JUDICI AL MEMBER) AHMEDABAD; DATED 19/02/2016 BIJU T., PS ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' ' # / CONCERNED CIT 4. ' ' # ( ) / THE CIT(A) 5. &'( ! , ' ! , / D R, ITAT, AHMEDABAD 6. (- . / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD