Sh. Vikrant Mehra, Amritsar. V. The Income-tax Officer, Amritsar.

CO 26/ASR/2014

• Counselvise Citation: [2016] 119 COUNSELVISE.COM (IT) 3375 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A N MISRA
• Assessee Lawyers: P N ARORA
• Keywords: Peak credit; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER CROSS OBJECTION NO. 26(ASR)/2014 (ARISING OUT OF ITA NO. 373(ASR)/2014) ASSESSMENT YEAR: 2009-10 SHRI VIKRANT MEHRA, C/O M/S. GEETA TRADERS, MAQBOOL ROAD, AMRITSAR. PAN:AASPM2851M VS. INCOME TAX OFFICER, WARD-5(4), AMRITSAR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY: SH. P. N. ARORA (ADV.) RESPONDENT BY: SH. A. N. MISRA (DR.) DATE OF HEARING: 23.05.2016 DATE OF PRONO UNCEMENT: 15.06.2016 ORDER PER T. S. KAPOOR (AM): THIS CROSS OBJECTIONS HAS BEEN FILED AGAINST THE O RDER OF CIT(A), DATED 29.03.2014 FOR THE ASST. YEAR:2009-10. 2. THE APPEAL FILED BY THE DEPARTMENT HAS ALREADY B EEN DISMISSED BY ITAT, AS THE APPEAL AFFECT WAS LESS THAN RS.10,00,0 00/-. THEREFORE, CROSS OBJECTIONS FILED BY ASSESSEE HAS BEEN TREATED AS AN INDEPENDENT APPEAL. 3. THE ASSESSEE IS AGGRIEVED WITH THE PART ADDITION SUSTAINED BY LEARNED CIT(A) WHICH THE ASSESSING OFFICER HAD MADE ON ACCOUNT OF UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT OF ASSESSE E. THE ASSESSING OFFICER HAD MADE AN ADDITION OF RS.23,18,500/- ON A CCOUNT OF C.O. NO.26 (ASR)/2 014 ARISING OUT OF ITA NO.373 (ASR)/ 2014 ASST. YEAR: 2009-10 2 UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT WHICH THE CIT(A) HAS RESTRICTED TO RS.9,33,659/-. THE LEARNED CIT(A) HAS ARRIVED AT THIS AMOUNT ON THE BASIS OF DIFFERENCE BETWEEN TOTAL ASS ETS AT THE BEGINNING OF THE YEAR AND TOTAL ASSETS AT THE CLOSE OF FINANC IAL YEAR. 4. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT LEA RNED CIT(A) SHOULD HAVE CONSIDERED THE PEAK BALANCE THEORY AND SHOULD HAVE RESTRICTED THE ADDITION TO RS.3,34,441/- ON THE BASIS OF PEAK CRED IT OF RS.5,99,092/- LESS THE OPENING BALANCE AND INCOME RETURNED DURING THE YEAR. 5. THE LEARNED DR, ON THE OTHER HAND, PLACED HIS RE LIANCE ON THE ORDER OF LEARNED CIT(A), AND SUBMITTED THAT APPROPR IATE RELIEF AS ALREADY BEEN PROVIDE TO ASSESSEE. 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON THE RECORD. WE FIND THAT THE LEA RNED CIT(A) HAD REJECTED THE THEORY OF PEAK CREDIT AND HAD ARRIVED AT THE ADDITION ON THE BASIS OF DIFFERENCES BETWEEN OPENING BALANCE OF ASS ETS AND CLOSING BALANCE OF ASSETS. THE FINDINGS OF LEARNED CIT(A) I N THIS REGARD ARE REPRODUCED BELOW. THUS IT CAN BE SEEN THAT TOTAL ASSETS HAVE REACHE D TO RS.13,91,986/- AS COMPARE TO INITIAL INVESTMENT (INCLUDING ACCRUED IN TEREST) OF RS.4,58,327/-. THUS IT CAN BE SEEN THAT ASSESSEE HAS EARNED DURING THE YEAR RS.9,33,659/- FROM HIS BUSINESS ACTIVITY, WHEREAS A SSESSEE HAS SHOWN ESTIMATED INCOME OF RS.2,60,000/- ONLY. PEAK CREDIT BALANCE CAN NOT BE ASSESSED IN THIS CASE, AS IT CAN BE SEEN FROM ABOVE THAT LARGE NUMBER OF C.O. NO.26 (ASR)/2 014 ARISING OUT OF ITA NO.373 (ASR)/ 2014 ASST. YEAR: 2009-10 3 INVESTMENT HAS BEEN MADE FROM THESE 3 BANKS ACCOUNT WHICH ON ADDITION TO THE PEAK BANK BALANCE WILL AGAIN GIVE SAME FIGUR E AS DERIVED ABOVE. IN VIEW OF ABOVE FINDINGS, IT WILL BE CORRECT TO ASSES INCOME OF THE ASSESSEE DURING THE YEAR ON THE BASIS OF ACCRETION TO THE ASSETS AND IN VIEW OF SAME INCOME OF THE ASSESSEE IS BEING COMPUTED AT RS.9,33,659/- AND THE ADDITION MADE BY THE AO IS RESTRICTED TO RS. 9,33,659 /- IN PLACE OF RS. 23,18,500/-. FROM THE ABOVE FINDINGS OF LEARNED CIT(A), WE FIND THAT WHILE RESTRICTING THE AMOUNT OF ADDITION, HE HAS IGNORED THE AMOUNT OF INCOME RETURNED BY ASSESSEE DURING THE YEAR UNDER C ONSIDERATION AND THE AMOUNT OF INCOME AS PER REVISED RETURN AND AS NOTED BY LEARNED CIT(A) AT PAGE 12 OF HIS ORDER IS RS.4,12,3 36/-. THEREFORE, IN OUR OPINION, THE ADDITION SHOULD HAVE BEEN RESTR ICTED TO RS.5,21,323/- BEING THE ACCRETION TO NET ASSETS AS CALCULATED BY LEARNED CIT(A) MINUS THE RETURNED INCOME FILED BY A SSESSEE FOR THE YEAR UNDER REFERENCE. THE ARGUMENT OF LEARNED AR TH AT LEARNED CIT(A) SHOULD HAVE CONSIDERED THE PEAK CREDIT DOES NOT HOLD ANY FORCE IN VIEW OF THE FACT THAT ASSESSEE HAD BEEN DI SPOSING CASH IN THE BANK ACCOUNT AND WAS NOT WITHDRAWING THEM IN TH E FORM OF CASH AND WAS INVESTING IN VARIOUS SCHEMES OF MUTUAL FUNDS. THEREFORE, THE LEARNED CIT(A) HAS RIGHTLY REJECTED THE THEORY OF PEAK CREDIT AND HAS RIGHTLY CALCULATED THE AMOUNT OF ADD ITION ON THE BASIS OF DIFFERENCES BETWEEN OPENING AND CLOSING BA LANCES OF ASSETS. HOWEVER, HE IGNORED TO GIVE CREDIT TO THE A SSESSEE FOR THE C.O. NO.26 (ASR)/2 014 ARISING OUT OF ITA NO.373 (ASR)/ 2014 ASST. YEAR: 2009-10 4 AMOUNT OF RETURNED INCOME OF ASSESSEE AND THEREFORE , WE RESTRICT THE ADDITION TO RS.5,21,323/- AS CALCULATED ABOVE A FTER GIVING CREDIT OF RETURN OF INCOME. 7. IN VIEW OF THE ABOVE, THE CROSS OBJECTIONS FILED BY ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JUNE, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15.06.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER