ITO, Ludhiana V. Smt. Karamjeet Kaur, Ludhiana

ITA 1/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73469 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 01-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Peak credit; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1/CHD/2014 ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER, VS SMT. KARAMJEET KAUR, WARD III(4), W/O SHRI LAKHVIR SINGH, LUDHIANA. VPO DAD, PAKHOWAL ROAD, LUDHIANA. PAN : ANQPK5240B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA RESPONDENT BY : NONE DATE OF HEARING : 24.02.2014 DATE OF PRONOUNCEMENT : 26.02.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), LUDHIANA DATE D 30.10.2013 RELATING TO ASSESSMENT YEAR 2010-11 AGAINST THE ORD ER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 ( 'THE A CT' FOR SHORT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION TO THE EXTENT OF RS. 29,80,000/- AND ACCEPTED THE A SSESSEE'S PLEA TO MAKE THE ADDITION ON THE BASIS OF PEAK UNEXPLAINED CREDI T INTO BANK ACCOUNT WHEREAS THE ASSESSEE IS NOT DOING ANY BUSINESS ACTI VITY. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED IN LAW AND FACTS IN DELETING THE ADDITION BY NOT CONFRONTING T HE ASSESSING OFFICER UNDER RULE 46A OF THE IT ACT, 1961 ON THE SUBMISSIO N/ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE THE LD. COMMI SSIONER OF INCOME TAX (APPEALS). 2 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL BY T HE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (A PPEALS) IN DELETING THE ADDITION OF RS. 29,80,000/-. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 2,04 ,000/-. THE CASE OF THE ASSESSEE WAS SELECTED UNDER CASS ON THE BASI S OF AIR INFORMATION OF CASH DEPOSIT OF RS. 34,25,000/- WITH THE AXIS BANK, LUDHIANA. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE TO EXPLA IN THE SOURCE OF RS. 34,25,000/-. DESPITE SEVERAL NOTICES ISSUED TO THE ASSESSEE, THERE WAS NO COMPLIANCE ON BEHALF OF THE ASSESSEE AND IN THE ABSENCE OF ANY INFORMATION, THE SUM OF RS.34,25,000/- WAS ADDE D AS INCOME OF THE ASSESSEE UNDER SECTION 69A OF THE ACT. 5. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE FILED WRITTEN SUBMISSIONS ALONGWITH CASH-FLOW STATE MENT EXPLAINING THE DEBIT AND CREDIT OF CASH IN THE BANK ACCOUNT WH ICH ARE REPRODUCED UNDER PARA 4 AT PAGES 3 TO 8 OF THE APPELLATE ORDER . THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER REQUIS ITIONED THE ASSESSEE TO FURNISH THE FOLLOWING INFORMATION IN OR DER TO UNDERSTAND THE NATURE OF CASH DEPOSITS CREDITED IN THE ASSESSE E'S BANK ACCOUNT : I) COPIES OF RETURNS FILED BY ASSESSEE TILL DATE FO R LAST FIVE YEARS. II) COPIES OF RETURNS FILED BY HER HUSBAND III) DETAILS OF ASSETS OWNED BY COUPLE, IF ANY 6. THE ASSESSEE FURNISHED PARTIAL INFORMATION IN TH E FORM OF COPIES OF INCOME TAX RETURNS FOR THE LAST FIVE YEARS OF HE RSELF AND HER HUSBAND WHICH REVEAL THAT THE ASSESSEE WAS DECLARIN G NOMINAL INCOME FOR THE PAST SEVERAL YEARS. THE COMMISSIONER OF IN COME TAX 3 (APPEALS) RESTRICTED THE ADDITION TO RS. 4,45,000/ - ON THE BASIS OF PEAK THEORY. 7. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHA LF OF THE ASSESSEE AND IN VIEW OF THE ISSUE INVOLVED IN THE P RESENT APPEAL, WE PROCEED TO DECIDE THE SAME AFTER HEARING LD. DR FOR THE REVENUE . 8. ON THE PERUSAL OF THE RECORD, WE FIND THAT THE A DDITION IN THE HANDS OF THE ASSESSEE WAS MADE ON ACCOUNT OF THE CA SH DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE. THERE WAS NON-COOPERA TION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER AND CONSEQUEN TLY, AN ADDITION OF RS. 34,25,000/- WAS MADE IN THE HANDS OF THE ASS ESSEE WHICH WAS EQUAL TO THE CASH DEPOSIT IN THE AXIS BANK, LUDHIAN A. HOWEVER, BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THE PLEA OF PEAK CASH CREDIT IN THE BANK ACCOUNT WAS RAISED FOR THE FIRST TIME AND THE COMMISSIONER OF INCOME TAX (APPEALS) HAD DELIBERATE D UPON THE ISSUE AT LENGTH VIDE PARA 7, WHICH READS AS UNDER : 7. THE PERUSAL OF THE BANK ACCOUNT NO. 196010100102 858 OWNED BY ASSESSEE FOR THE PERIOD 01.04.2009 TO 31.03.2010 RE VEALS THAT THE ASSESSEE HAS BEEN DEPOSITING AND WITHDRAWING CASH O N REGULAR BASIS FOR WHICH NO BUSINESS PURPOSE HAS BEEN SPECIFIED IN THE SUBMISSIONS MADE BEFORE THE UNDERSIGNED. IT HAS ONLY BEEN CLAIM ED THAT THE CASH FLOW STATEMENT FOR THE PERIOD 01.04.2009 TO 31.03.2 010 PREPARED ON THE BASIS OF ENTRIES IN THE IMPUGNED BANK ACCOUNT LEAD TO PEAK NEGATIVE CASH BALANCE OF RS.4,45,000/- WHICH SHOULD BE THE A DDITION TO BE MADE FOR THE YEAR UNDER CONSIDERATION. THE CLAIM OF THE APPELLANT, STATED ABOVE HAS TO BE SEEN IN THE LIGHT OF THE NATURE OF DEPOSITS AND WITHDRAWALS MADE FROM THE BANK ACCOUNT. IT IS SEEN THAT THE ASSESSEE HAD OPENING CASH IN HAND IN THE BANK ACCOUNT AT RS. 10,11,683/- AND THEREFORE THE SAID AMOUNT COULD BE SAID TO BE AVAIL ABLE TO HER FROM HER INCOME NOT PERTAINING TO THE YEAR UNDER CONSIDERATI ON BUT PERTAINING TO EITHER THE YEAR BEFORE THIS YEAR OR EARLIER YEARS. THE NEGATIVE CASH BALANCE TO THE TUNE OF RS.4,45,000/- IS WORKED OUT AS ON 13.04.2009. IT IS SEEN THAT THERE IS A REGULAR PATTERN OF CASH WIT HDRAWALS ON DIFFERENT DATES AND DEPOSITS THEREOF SUBSEQUENTLY WHICH LEADS TO ONE INESCAPABLE CONCLUSION THAT THE ASSESSEE HAD BEEN ENGAGED IN SO ME KIND OF TRADING BUSINESS AS IT WOULD NOT BE PRACTICAL TO IGNORE THE HEAVY CASH 4 WITHDRAWALS AND TAKING TO CONSIDERATION ONLY CASH D EPOSITS FOR THE PURPOSES OF TAXATION. FOR INSTANCE, THE ASSESSEE WI THDREW AN AMOUNT OF RS. 16,30,000/- IN CASH ON THREE DIFFERENT DATES BE TWEEN 17.04.2009 AND 25.04.2009 AND THERE IS CASH DEPOSIT OF RS. 10, 85,000/- ON THREE DIFFERENT DATES BETWEEN 21.05.2009 TO 01.06.2009. T HIS PATTERN KEEPS ON REPEATING ITSELF. THEREFORE, IN THE GIVEN CIRCUM STANCES, I AM INCLINED TO HOLD THE VIEW THAT THE ASSESSEE IS REQU IRED TO BE TAXED AT THE PEAK NEGATIVE CASH BALANCE AND TAXING OF ENTIRE CAS H DEPOSITS BY IGNORING THE CASH WITHDRAWALS WOULD BE ILLOGICAL. S INCE THE ASSESSEE HAD AN OPENING CASH BALANCE TO THE TUNE OF RS. 10,11,68 3/- AS ON 01.04.2009, IT WAS LOGICAL ON THE PART OF THE ASSESSING OFFICER TO HAVE INVESTIGATED THE TRANSACTIONS PERTAINING TO EARLIER YEARS AS WELL. T HE BANK STATEMENT OF THE APPELLANT FROM THE DATE OF OPENING OF THE BANK ACCO UNT TILL 31.03.2012 WAS THEREFORE CALLED FOR BY ISSUE OF SUMMONS U/S 13 1(1A) OF THE INCOME TAX ACT, 1961 BY THE UNDERSIGNED. THE INFORMATION I N THE FORM OF BANK STATEMENT SUBMITTED BY THE AXIS BANK LIMITED REVEAL ED THAT THE SAID BANK ACCOUNT HAD BEEN OPENED ON 20.08.2008 BY INITIAL DE POSIT OF RS. 1,00,000/- AND THEREAFTER AN AMOUNT OF RS. 23,78,77 6/- HAD BEEN DEPOSITED BETWEEN 20.08.2008 AND 31.12.2008 IN CASH . THIS CLEARLY REFLECTS THE BUILDUP OF CASH IN ASSESSEE'S BANK ACC OUNT AS RECORDED IN THE BANK STATEMENT OF ASSESSMENT YEAR UNDER CONSIDERATI ON. THE ASSESSING OFFICER IS THEREFORE DIRECTED TO CONSIDER THE POSSI BILITY OF REOPENING THE APPELLANT'S CASE FOR ASSESSMENT YEAR 2009-10 AS INC OME RETURNED BY HER IS ONLY TO THE TUNE OF RS.1,20,000/- FOR ASSESSMENT YEAR 2009-10. SIMILARLY, THERE ARE NUMBER OF CASH DEPOSITS FOR TH E PERIOD 01.04.2010 TO 31.03.2011 I.E ASSESSMENT YEAR 2011-12 WHICH ALSO N EED TO BE INVESTIGATED TO BRING TO TAX THE INCOME BASED UPON SUCH CASH DEPOSITS/WITHDRAWALS. IN VIEW OF THE ABOVE DETAILED ANALYSIS OF ENTRIES OF CASH DEPOSITS/WITHDRAWALS MADE IN THE ASSESSEE'S BA NK ACCOUNT, ADDITION TO THE TUNE OF RS.4,45,000/- FOR THE YEAR UNDER CON SIDERATION IS CONFIRMED AND THE REST OF THE ADDITION IS DIRECTED TO BE DELE TED. 9. THE LD. DR FOR THE REVENUE HAS FAILED TO CONTROV ERT THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). IT IS AN ADMITTED FACT THAT THERE HAS BEEN CASH WITHDRAWAL AND CASH DEPOSI T IN THE BANK ACCOUNT OF THE ASSESSEE AND ON THE BASIS OF SUCH CA SH WITHDRAWAL AND CASH DEPOSIT, THE COMMISSIONER OF INCOME TAX (APPEA LS) HAS WORKED OUT THE PEAK CASH CREDIT IN THE HANDS OF THE ASSESS EE AT RS. 4,45,000/- 5 IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES, WE ARE IN CONFORMITY WITH THE ORDER OF COMMISSIONER OF INCOME TAX (APPEA LS) AND UPHOLDING THE SAME, WE DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JU DICIAL MEMBER DATED: 26 TH FEBRUARY,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.