S.A.Balasubramaniam, Coimbatore V. DCIT, Coimbatore

ITA 10/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1198 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-03-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA IRS
• Assessee Lawyers: K RAGHU
• Keywords: Unexplained cash credit; Salary income; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI S.S.GODARA, JUDICIAL MEMBER I.T.A.NO. 10/MDS/2012 ASSESSMENT YEAR : 2008-09 S.A.BALASUBRAMANIAM, 2/67, VIP NAGAR, VILANKURICHI P.O., COIMBATORE 641 035. PAN ACJPB5690G VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-III, COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. RAGHU, CA RESPONDENT BY : DR. S. MOHARANA, IRS, CIT DATE OF HEARING : 6 TH MARCH, 2013 DATE OF PRONOUNCEMENT : 6 TH MARCH, 2013 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2008-09. THE APPEAL IS DIRECT ED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-I AT COIMBATORE DATED 25.11.2011. THE APPEAL ARISES O UT OF THE ASSESSMENT COMPLETED UNDER SEC.143(3) OF THE INCOME -TAX ACT, 1961. ITA 10/12 :- 2 -: 2. THE ASSESSEE IS EARNING INCOME FROM SALARY, BUSI NESS AND OTHER SOURCES. IN THE COURSE OF ASSESSMENT PROCEED INGS, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD AVAILED A NUMBER OF CASH CREDITS/LOAN TRANSACTIONS FROM DIF FERENT PERSONS. THE TOTAL OF SUCH CASH CREDITS AND LOAN TRANSACTION S AMOUNTED TO ` 1,62,51,280/-. THIS WAS ADDED TO THE INCOME OF TH E ASSESSEE UNDER SEC.68 AS UNEXPLAINED CASH CREDITS. THE MATT ER WAS TAKEN IN FIRST APPEAL, BUT DISMISSED. THE ASSESSEE IS AG GRIEVED AND, THEREFORE, THE SECOND APPEAL BEFORE US. 3. THE EFFECTIVE GROUNDS RAISED BY THE ASSESSEE IN THE PRESENT APPEAL READ AS BELOW : 1. THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS), HAS ERRED IN CONFIRMING THE TOTAL ADD ITION OF ` 1,62,51,280/-, U/S.68 OF THE INCOME TAX ACT, 1961, IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS), OUGHT TO HAVE HELD THAT THE ADDITION SHOULD BE RESTRICTED ONLY TO THE AMOUNT OF PEAK CREDIT OF ` 59,34,000/- ON 10.07.2007, AS CONFIRMED BY THE ASSESSING OFFICER, IN THE REMAND REPORT RECEIVED FR OM ITA 10/12 :- 3 -: HIM, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. 3. THE LEARNED THE COMMISSIONER OF INCOME- TAX(APPEALS) OUGHT TO HAVE HELD THAT THE ADDITION O F ` 1,22,51,280/- AND A FURTHER ADDITION OF ` 40,00,000/- WERE NOT WARRANTED AND THE PEAK CREDIT, ARRIVED AT BY THE APPELLANT, CONSIDERING ALL THE CREDIT ENTRIES IN A CHRONOLOGICAL SEQUENCE, AND NOT DISPUTED, AFTER VERIFICATION, BY THE ASSESSING OFFICER, AS ONLY ` 59,34,000/-, SHOULD BE ADDED IN THE PLACE OF ` 1,62,51,280/- ADDED IN THE ASSESSMENT, IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW. 4. WE HEARD SHRI K. RAGHU, THE LEARNED CHARTERED AC COUNTANT APPEARING FOR THE ASSESSEE AND DR. S. MOHARANA, THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENU E. 5. THE CASE OF THE ASSESSEE IS THAT AS THE CREDITS ARE CONTINUOUS AND CONCURRENT WITH OUTGOINGS OF CASH, T HE PEAK CREDIT ALONE SHOULD BE TREATED AS UNEXPLAINED FOR THE PURP OSE OF ADDITION UNDER SEC.68. THE ASSESSEE HAS WORKED OUT THE PEAK ITA 10/12 :- 4 -: CREDIT AT ` 59,34,000/-. IT IS THE CASE OF THE ASSESSEE THAT THE SAID AMOUNT ALONE CAN BE CONSIDERED AND NOT SEVERAL AMOU NTS TOTALLING TO ` 1,62,51,280/-. 6. WE CONSIDERED THE MATTER IN DETAIL. THE PRINCIP LE OF PEAK CREDIT CANNOT BE ADOPTED IN THIS CASE AS SUCH. THE PEAK CREDIT IS FOLLOWED IN CASES WHERE THE ACCOUNTS ARE RUNNING WI TH A PARTICULAR PERSON. IN THAT PARTICULAR PERSONAL ACCOUNT, THERE MUST BE CONTINUOUS OUTFLOW AND INFLOW OF CASH. FOR EXAMPLE IN AN UNDISCLOSED RUNNING BANK ACCOUNT, IT IS POSSIBLE TO ADOPT THE PRINCIPLE OF PEAK CREDIT ADDITION. 7. IN THE PRESENT CASE, ON THE OTHER HAND, THE CRED ITS ARE WITH DIFFERENT PERSONS FOR DIFFERENT PARTIES AND THE CON TINUITY CANNOT BE ESTABLISHED WITH REFERENCE TO A PARTICULAR CREDITOR . THEREFORE, WE ARE NOT ABLE TO ACCEPT THE PRINCIPLE OF PEAK CREDIT , AS SUCH, IN THE PRESENT CASE. 8. BUT AT THE SAME TIME, WE FIND THAT ALL THE SEVER AL AMOUNTS REFLECTED IN THE BOOKS OF ACCOUNT CANNOT BE TREATED SEVERALLY AND ADDED AS SUCH AMOUNTING TO ` 1,62,51,280/-. THIS IS BECAUSE IN RESPECT OF CERTAIN AMOUNTS THERE IS A CLEAR PROXIMI TY OF INFLOW AND ITA 10/12 :- 5 -: OUTFLOW, WHICH SHOULD REASONABLY BE SET OFF EACH OT HER. THE BENEFIT ARISING OUT OF THIS SITUATION IS TO BE GIVE N TO THE ASSESSEE. 9. THEREFORE, TAKING INTO ACCOUNT ALL THE ASPECTS O F THE CASE, WE FIND THAT LUMPSUM ADDITION OF ` 85 LAKHS IS TO BE RETAINED AND THE BALANCE AMOUNT HAS TO BE DELETED. ACCORDINGLY, WE MODIFY THE ADDITION UNDER SEC.68 TO ` 85 LAKHS AND THE BALANCE AMOUNT OF ADDITION IS DELETED. 10. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON WEDNESDAY, THE 6 TH OF MARCH, 2013 AT CHENNAI. SD/- SD/- (S.S.GODARA) (D R.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 6 TH MARCH, 2013 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.