VINAY AGGARWAL, MUMBAI V. ITO 17(2)(1), MUMBAI

ITA 1117/MUM/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2636 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 03-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA LD
• Assessee Lawyers: RUSHABH H VYAS LD
• Keywords: Peak credit; Additional evidence
• Section: 143(3); 68

Judgement Text

ITA NO.1117/MUM/2016 MR. VINAY AGGARWAL ASSESSMENT YEAR :2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.1117/MUM/2016 ( / ASSESSMENT YEAR: 2010-11) MR. VINAY AGGARWAL 20/3, HAPPY COTTAGE NO.2 WADALA SHIVADI ROAD SHIVADI, MUMBAI-400 031 / VS. INCOME T AX OFFICER - 20 (3)( 5 ) PIRAMAL CHAMBERS LALBAUG MUMBAI-400 012 ! ./ ./PAN/GIR NO. AAHPA-9602-K ( !# /APPELLANT ) : ( $!# / RESPONDENT ) ASSESSEE BY : SHRI RUSHABH H. VYAS- LD. AR REVENUE BY : SHRI RAJIV GUBGOTRA - LD. DR / DATE OF HEARING : 25/02/2019 / DATE OF PRONOUNCEMENT : 08/03/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2010-11 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-32, MUMBAI, [CIT(A)], APPEAL NO. CIT(A)-32/IT-139/17(2)(1)/13-4 DATED 04/12/2015 QUA CONFIRMATION OF CERTAIN ADDITION U/S 68 ON ACCOUNT OF CASH DEPOSITS IN THE BANK ACCOUNTS. THE ASSESSMENT FOR IMPUGNED ITA NO.1117/MUM/2016 MR. VINAY AGGARWAL ASSESSMENT YEAR :2010-11 2 ASSESSMENT YEAR WAS FRAMED BY LD. INCOME TAX OFFICE R, WARD-17(2)(1), MUMBAI [AO] U/S 143(3) ON 28/03/2013 WHEREIN INCOME OF THE ASSESSEE WAS DETERMINED AT RS.72.98 LACS AFTER CERTAIN ADDIT IONS U/S 68 FOR RS.69.30 LACS AS AGAINST RETURNED INCOME OF RS.3.68 LACS FILED BY THE ASSESSEE ON 12/10/2010. THE ADDITION U/S 68 IS THE SOLE SUBJECT MATTER OF PRESENT APPEAL BEFORE US. 2. THE ROOT OF IMPUGNED ADDITION LIES IN THE FACT T HAT IT WAS FOUND THAT THE ASSESSEE DEPOSITED AGGREGATE CASH OF RS.69.30 L ACS IN SAVINGS ACCOUNT HELD IN HIS OWN NAME AS WELL AS IN HIS DAUG HTERS NAME WITH UCO BANK . ACCORDINGLY, THE ASSESSEE WAS DIRECTED TO SUBSTAN TIATE THE SOURCE OF THE SAME. ALTHOUGH, THE ASSESSEE, IN SUPP ORT OF THE SAME, SUBMITTED BANK STATEMENT, REVISED COMPUTATION OF IN COME, BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND SUBMITTED THAT C ASH WAS DEPOSITED OUT OF PROCEEDS OF SALE OF INHERITED JEWELRY AS WELL AS FROM EARLIER WITHDRAWALS, HOWEVER, FINDING THE SAME NOT VERY CON VINCING, LD. AO ADDED THE SAME IN THE HANDS OF THE ASSESSEE U/S 68. 3. BEFORE FIRST APPELLATE AUTHORITY, THE ASSESSEE S UBMITTED CERTAIN ADDITIONAL EVIDENCES U/R 46A TO SUBSTANTIATE THE CA SH DEPOSITS, AGAINST WHICH REMAND REPORT WAS CALLED FROM LD. AO. FINALLY, AFTER CONSIDERING ASSESSEES SUBMISSIONS, REMAND REPORT AND FACTUAL MATRIX, LD. CIT(A) PARTLY ALLOWED ASSESSEES CLAIM BY OBSERVING AS UND ER: - 7. THIS BRINGS US TO A SITUATION WHERE, ADMITTEDLY NO BOOKS ARE MAINTAINED BY THE APPELLANT AND CASH HAS BEEN DEPOSITED IN TWO BANK A CCOUNTS. THE APPELLANT FAIRLY ADMITS THAT THE CASH IN BOTH THE ACCOUNTS HAS BEEN DEPOSITED BY HIM AND IS THEREFORE TO BE CLUBBED. ON AN EXAMINATION OF THE BANK ACCOUNTS, IT IS SEEN THAT CASH HAS BEEN DEPOSITED ON VARIOUS DATES. THERE ARE ALSO CASH WIT HDRAWALS ON VARIOUS DATES. THERE ARE 34 INSTANCES OF CASH DEPOSITS IN THE ACCOUNTS, WHIL E THERE ARE 14 INSTANCES OF CASH V/WITHDRAWALS FROM THESE ACCOUNTS. I ALSO OBSERVE T HAT THE DATES OF CASH DEPOSITS AND ITA NO.1117/MUM/2016 MR. VINAY AGGARWAL ASSESSMENT YEAR :2010-11 3 WITHDRAWALS ARE NOT TOO FAR AWAY FROM EACH OTHER. I AM THEREFORE INCLINED TO ACCEPT THE 2 ND GROUND OF APPEAL OF THE APPELLANT THAT PEAK CREDIT IS TO BE ASSESSED AS HIS INCOME. IT IS SETTLED LAW THAT WHEN AN INDIVIDUAL DOES NOT MAINTAIN REGULAR BOOKS OF ACCOUNTS, HIS BANK ACCOUNTS ARE TO BE ADOPTED AS HIS BOOKS. D URING THE ASSESSMENT PROCEEDINGS ALSO, THE APPELLANT HAS REQUESTED THE AO TO ADOPT T HE PEAK THEORY METHOD. IN FACT HIS 2 ND GROUND OF APPEAL BEFORE ME, SPECIFICALLY STATES TH AT THE AO ERRED IN NOT ADOPTING PEAK CREDIT METHOD. I AM INCLINED TO AGREE WITH THE APPELLANT HERE. DURING APPEAL PROCEEDINGS, THE AR ALSO FAIRLY CONCEDED THAT THERE IS NO BONAFIDE EXPLANATION FOR CASH DEPOSITS. HE ALSO SUBMITTED A WORKING OF THE PEAK C ASH CREDIT IN BOTH ACCOUNTS COMBINED TOGETHER. THE PEAK CASH CREDIT AMOUNTS TO RS 43,67,500 ON 30/03/2010. BASED ON THE DISCUSSION AND FACTS ABOVE, I HOLD THA T ONLY THE PEAK CASH CREDIT IS PROPERLY ASSESSABLE IN THIS CASE. ACCORDINGLY, I DI RECT THE AO TO ASSESS RS 43,67,500 INSTEAD OF THE WHOLE OF THE CASH DEPOSITS OF RS 69, 30,000 AS THE INCOME OF THE APPELLANT. ACCORDINGLY, GROUND 1 IS DISMISSED AND G ROUND 2 IS ALLOWED. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE PRIMARY CONTENTION OF LD. AR REVOLVES AROUND THE FACT THAT THE CASH DEPOSITS WERE FUNDED OUT OF SALE PROCEEDS OF TYRE BUSINESS BEING CARRIED OUT BY THE ASSESSEE AND THE DOCUMENTARY SUB MITTED BY ASSESSEE, IN THIS REGARD, DURING PROCEEDINGS, HAVE BEEN IGNOR ED. OUR ATTENTION HAS BEEN DRAWN TO THE RELEVANT DOCUMENTS AS PLACED IN T HE PAPER-BOOK. UNDER THESE CIRCUMSTANCES, LD. AR PLEADED FOR ANOTH ER OPPORTUNITY TO SUBSTANTIATE THE SOURCE OF CASH DEPOSITS. PER CONTRA, LD. DR SUBMITTED THAT THERE WAS NO SUBSTANCE IS ASSESSEES STAND AND THE ASSESSEE MISERABLY FAILED TO SUBSTANTIATE THE CASH DEPOSITS. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED RELEVANT MATERIAL ON RECORD. THERE COULD BE NO DOUB T THAT THE COMPLETE ONUS TO SUBSTANTIATE THE CASH DEPOSITS SQUARELY RES TED WITH THE ASSESSEE AND THE SAME HAS REMAINED UNDISCHARGED. AT THE SAME TIME, THE PERUSAL OF DOCUMENTS ON RECORD REVEAL THAT THE ASSESSEE IS IN POSSESSION OF PURCHASE INVOICES ETC. AND THE PAYMENT TO THE SUPPL IER HAS BEEN MADE THROUGH BANKING CHANNELS WHICH LEND CERTAIN CREDENC E TO ASSESSEES ITA NO.1117/MUM/2016 MR. VINAY AGGARWAL ASSESSMENT YEAR :2010-11 4 STAND. KEEPING IN VIEW THE FACT THAT THE ASSESSEE I S IN INDIVIDUAL AND IN THE INTEREST OF JUSTICE AND ON FACTS AND CIRCUMSTAN CES, WE DEEM IT APPROPRIATE TO REVERSE THE FINDING OF LD. FIRST APP ELLATE AUTHORITY AND RESTORE THE MATTER BACK TO THE FILE OF LD. AO WITH A DIRECTION TO THE ASSESSEE TO SUBSTANTIATE HIS STAND FAILING WHICH LD . AO SHALL BE AT LIBERTY TO RE-ADJUDICATE THE SAME ON THE BASIS OF MATERIAL ON RECORD. 6. THE APPEAL STANDS ALLOWED FOR STATISTICAL PURPOS ES IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH MARCH, 2019. SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08/03/2019 SR.PS, JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ,- & . , . , / DR, ITAT, MUMBAI 6. -/01 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.