Sh.Kamlesh Kumar Sharma, Mohali V. ITO, Mohali

ITA 1131/CHANDI/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0687 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-09-2012
• Assessment Year: misc
• Appeal Filed On: 03-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Income from undisclosed sources; Peak credit
• Section: 143(3); 142(1); 133(6); 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1131/CHD/2010 (ASSESSMENT YEAR : 2006-07) SH.KAMLESH KUMAR SHARMA, VS. THE INCOME TAX OFFI CER, R/O # 2374/A, SCL SOCIETY, WARD 6 (2), SECTOR 70, MOHALI. MOHALI. PAN: ACKPS6678N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINEET KRISHAN RESPONDENT BY : SHRI N.K. SAINI, DR DATE OF HEARING : 26.02.2013 DATE OF PRONOUNCEMENT : 28.02.2013 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE CIT (APPEALS), CHANDIGARH DATED 31.05.2010 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER: 1. THAT THE ORDER PASSED UNDER SECTION 250(6) BY T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH DATED IS CONTRARY TO LAW AND FACTS OF TH E CASE. 2. A) THAT IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN UPHOLDING TH E ACTION OF THE ID. ASSESSING OFFICER OF MAKING BEST JUDGMENT ASSESSMENT OF THE ASSESSEE UNDER SECTION 144 OF THE I.T. ACT. B) THAT THE LD CIT(A) GRAVELY ERRED IN UPHOLDING THE ORDER OF LD A.O. AS VALID EVEN THOUGH THE LD A. O. PASSED THE BEST JUDGMENT ORDER WITHOUT GIVING OPPOR TUNITY 2 OF BEING HEARD TO THE ASSESSEE. THAT BEST JUDGMENT ASSESSMENT FRAMED IS ILLEGAL AND DESERVES TO BE QUA SHED. 3. (A) THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVEL LY ERRED IN UPHOLDING THE ADDITION MADE BY THE ASSESSI NG OFFICER OF RS.25,70,000/- ON ACCOUNT OF ALLEGED UNEXPLAINED DEPOSIT IN BANK ACCOUNT OF THE ASSESSEE . ALTHOUGH ASSESSEE HAD FULLY EXPLAINED THE SOURCE OF THE DEPOSITS ALONGWITH EVIDENCE. (B) THAT THE ADDITION SUSTAINED BY THE ID. COMMISSI ONER OF INCOME TAX (APPEALS) CHANDIGARH IS HIGHLY EXCESSIVE . 3. THE GROUND NO.1 RAISED BY THE ASSESSEE IS GENERA L IN NATURE AND HENCE THE SAME IS DISMISSED. 4. THE ISSUE RAISED VIDE GROUND NO.2 IS AGAINST THE OPPORTUNITY BY THE ASSESSING OFFICER BEFORE PASSING THE ORDER UNDER SE CTION 144 OF THE ACT. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD FILED RETURN OF INCOME ON 31.8.2006 DECLARING TOTAL INCOME OF RS .91,768/-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED BY THE ITO, WARD 5(3), CHANDIGARH ON 27.6.20 07. THE ASSESSEE ATTENDED THE PROCEEDINGS AND THEREAFTER THE CASE WA S ADJOURNED SINE-DIE. ANOTHER NOTICE UNDER SECTION 142(1) OF THE ACT ALON GWITH QUESTIONNAIRE WAS ISSUED BY THE ITO, WARD 5(3), CHANDIGARH ON 27. 5.2008, WHICH REMAINED UN-COMPLIED WITH. LATER ON THE RECORDS WE RE TRANSFERRED ON TRANSFER OF JURISDICTION UNDER SECTION 120 OF THE A CT AND WERE ASSIGNED TO THE ASSESSING OFFICER WARD 6(2), MOHALI. NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 1.9.2008 WHICH WAS RETURNE D BACK BY THE NOTICE SERVER THAT THE ASSESSEE HAD SHIFTED WITHOUT ANY IN TIMATION. THE ASSESSING OFFICER HAD RECEIVED INFORMATION THROUGH AIR THAT THE ASSESSEE HAD DEPOSITED CASH AMOUNTING TO RS.25,70,0 00/- IN CENTURION BANK OF PUNJAB, SECTOR 28A, CHANDIGARH DURING THE Y EAR UNDER CONSIDERATION. THE ASSESSING OFFICER SOUGHT INFOR MATION UNDER SECTION 133(6) OF THE ACT FROM THE BRANCH MANAGER AND OBTAI NED COPY OF BANK 3 STATEMENT. FURTHER NOTICES WERE ISSUED TO THE ASSE SSEE. HOWEVER, NONCE APPEARED ON BEHALF OF THE ASSESSEE, NOR ANY REPLY W AS RECEIVED FROM THE ASSESSEE. THE ASSESSING OFFICER AFFIXED NOTICE OF HEARING BY AFFIXTURE ON THE LAST KNOWN ADDRESS OF THE ASSESSEE. IN VIEW OF THE SAME, THE ASSESSING OFFICER WAS CONSTRAINED TO PASS THE ORDER UNDER SECTION 144 OF THE ACT AND THE UNEXPLAINED CASH DEPOSITS OF RS.25, 70,000/- DEPOSITED IN THE SAVING ACCOUNT OF THE ASSESSEE WERE TREATED AS INCOME OF THE ASSESSEE. 5. BEFORE THE CIT (APPEALS) THE ASSESSEE RAISED THE OBJECTION AGAINST THE SERVICE OF NOTICE AND COMPLETION OF ASSESSMENT EX-PARTE IN THE CASE OF THE ASSESSEE. THE CIT (APPEALS) NOTED THE FACT THAT THOUGH THE ASSESSEE HAD PARTICIPATED INITIALLY IN THE PROCEEDI NGS BUT LATER CHANGED HIS RESIDENTIAL ADDRESS WITHOUT INFORMATION TO THE INCOME TAX DEPARTMENT, THOUGH FULLY KNOWING THAT THE ASSESSMEN T PROCEEDINGS WERE GOING ON IN HIS CASE. IN VIEW OF THE PROVISIONS OF INCOME TAX ACT AND RELEVANT PROVISIONS OF CODE OF CIVIL PROCEDURE IN R ELATION TO THE SERVICE OF NOTICE, THE CIT (APPEALS) REJECTED THE PLEA OF T HE ASSESSEE AND UPHELD THE ASSESSMENT FRAMED UNDER SECTION 144 OF THE ACT. THEREAFTER FROM PARA 16 AT PAGE 5 ONWARDS IT TRANSPIRES THAT IN REL ATION OF THE SOURCE OF CASH DEPOSIT THE ASSESSEE FURNISHED EXTENSIVE REPLY BEFORE THE CIT (APPEALS) WHICH WAS CONFRONTED TO THE ASSESSING OFF ICER AND FURTHER ISSUES RAISED BY THE ASSESSEE IN RESPONSE TO THE RE MAND REPORT OF THE ASSESSING OFFICER WERE ALSO REFERRED BACK TO THE AS SESSING OFFICER FOR COMMENTS. THE ASSESSING OFFICER HAD ELABORATELY DE ALT WITH EACH OF THE OBJECTIONS OF THE ASSESSEE. THEREAFTER THE CIT (AP PEALS) HAD DELIBERATED UPON THE ISSUE OF ADDITION OF CASH CREDITS BEING CA SH DEPOSITS IN THE CENTURION BANK OF PUNJAB BY THE ASSESSEE. IN VIEW OF THE ELABORATE EXERCISE CARRIED ON BY THE CIT (APPEALS) BY WAY OF AFFORDING DIFFERENT 4 OPPORTUNITIES TO THE ASSESSEE TO ESTABLISH ITS CLAI M WITH EVIDENCE IN RELATION TO THE CASH DEPOSITS IN THE BANK ACCOUNT A ND ALSO IN VIEW OF THE ISSUE BEING REFERRED TO THE ASSESSING OFFICER AND D IFFERENT REMAND REPORTS BEING SUBMITTED BY THE ASSESSING OFFICER, W E FIND NO MERIT IN THE CLAIM OF THE ASSESSEE THAT REASONABLE OPPORTUNI TY HAS NOT BEEN ALLOWED TO THE ASSESSEE. FIRST OF ALL IT IS THE DU TY OF THE ASSESSEE TO INTIMATE THE CHANGE IN ADDRESS TO THE ASSESSING OFF ICER, ESPECIALLY IN A CASE WHERE ASSESSMENT PROCEEDINGS WERE GOING ON AND THE ASSESSEE HAD CHANGED HIS ADDRESS DURING THE COURSE OF SUCH PROCE EDINGS. FURTHER THE CIT (APPEALS) HAVING ALLOWED REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE TO PRODUCE EVIDENCE AND EST ABLISH ITS CASE, WHICH IN TURN WAS CONFRONTED AND REFERRED BACK TO THE ASS ESSING OFFICER, WHO IN TURN FILED HIS REMAND REPORT AND ALSO REJOINDER, WE FIND NO MERIT IN GROUND NO.2 RAISED BY THE ASSESSEE THAT SUFFICIENT OPPORTUNITY WAS NOT AFFORDED TO THE ASSESSEE. THE GROUND NO.2 RAISED B Y THE ASSESSEE IS THUS DISMISSED. 6. NOW COMING TO GROUND NO.3 RAISED BY THE ASSESSEE WHICH IS AGAINST THE MERITS OF ADDITION OF RS.25,70,000/-. THE EXPL ANATION OF THE ASSESSEE IN RESPECT OF CASH DEPOSITS IS REPRODUCED BY THE CIT (APPEALS) UNDER PARA 16 AT PAGES 5 TO 7 OF THE PAPER BOOK. T HE REMAND REPORT OF THE ASSESSING OFFICER IS UNDER PARA 17 AT PAGE 8 OF THE APPELLATE ORDER. THEREAFTER THE ASSESSEE RAISED NEW ISSUES WHICH AR E REPRODUCED UNDER PARA 19 AT PAGES 9 AND 10 OF THE APPELLATE ORDER. THE REPORT OF THE ASSESSING OFFICER DATED 24.5.2010 RECEIVED THEREAFT ER IS REPRODUCED UNDER PARA 21 AT PAGES 10 TO 14 OF THE APPELLATE OR DER. ANOTHER SUPPLEMENTARY REPORT DATED 28.5.2010 SUBMITTED BY T HE ASSESSING OFFICER IN RESPECT OF EXAMINATION OF GENUINENESS OF THE TRA NSACTION IS REPRODUCED UNDER PARA 22 AT PAGES 14 TO 16 OF THE APPELLATE OR DER. THE CIT 5 (APPEALS) NOTED THAT THE ASSESSEE HAD CONCOCTED MA NY STORIES WITH DIFFERENT CHARACTERS APPEARING ON DIFFERENT TIMES T O JUSTIFY THE UNACCOUNTED INCOME. THE CIT (APPEALS) VIDE PARAS 2 7 AND 28 OBSERVED AS UNDER: 27. A CLOSER LOOK AT THE APPELLANT'S VERSION SHOWS FOLLOWING DEFECTS : (I) WHY WAS THE BANK ACCOUNT NOT OPENED BY SH. RAM NAND FOR DEPOSITING OF COMMISSION INCOME? (II) IF DIARY/SLIPS OR ANY RECORD WAS BEING MAINTAINED BY HIM, WHY WAS IT NOT PRODUCED? (III) WHY TRADERS COMING FROM DELHI WILL NOT MAKE PAYMEN T TO APPELLANT WHO RESIDED IN MOHALI BUT WILL GO TO A REMOTE PLACE FOR MAKING PAYMENT ON BEHALF OF THE APPELLANT? (IV) WHY SH.RAM NAND IN AFFIDAVIT CLAIMED HIMSELF PURCHASER OF FLOWERS BUT IN THE STATEMENT RECORDED ON 21.05.10, HE STATED THAT HE WORKED ON COMMISSION BA SIS? (V) IF COMMISSION WAS PAID TO HIM, WHY DID IT NOT FIGUR E IN THE EXPENSES CLAIMED? 28. FURTHER THE ASSESSING OFFICER RAISED A QUERY RE GARDING INVESTMENTOFRS.5LACS IN PURCHASE OF PLOT ON 17.05. 06 FOR WHICH AGAIN NO EVIDENCE COULD BE PRODUCED. 7. THE SECOND VERSION OF THE PLEA GIVEN BY THE ASSE SSEE WAS THAT HE HAD GIVEN COMPLETE INFORMATION TO HIS CHARTERED ACC OUNTANT WHO HAD FAILED TO REFLECT THE INCOME IN THE RETURN OF INCOM E. HOWEVER, THE CHARTERED ACCOUNTANT WAS NOT PRODUCED BEFORE THE CI T (APPEALS). THERE WAS A THIRD VERSION OF THE ASSESSEE WHEREIN IT WAS STATED THAT IN CASE THE SUMMARY OF THE TRANSACTION OF DEPOSITS AND WITHDRAW ALS ARE CONSIDERED, THEN IT IS APPARENT THAT THE WITHDRAWALS ARE MUCH M ORE THAN THE DEPOSITS AND HENCE THERE WAS NO MERIT IN ANY ADDITION. THE MAIN PLEA OF THE ASSESSEE BEFORE THE CIT (APPEALS) WAS THAT IT HAD E NGAGED IN THE BUSINESS OF FLORICULTURE AND INCOME WAS RECEIVED ON SALE OF FLOWERS WHICH WERE GROWN ON THE PIECE OF LAND WHICH WAS LEA SED BY THE ASSESSEE. HOWEVER, THE ASSESSEE WAS UNABLE TO FURNISH ON RECO RD COPY OF LEASE DEED AND EVEN THE RECORDS OF REVENUE REFLECTED THAT THE OWNER OF THE SAID 6 PLOT OF LAND WAS REFLECTED TO HAVE SELF CULTIVATED THE SAID LAND. IN VIEW THEREOF, THE ADDITION MADE BY THE ASSESSING OFFICER WAS UPHELD BY THE CIT (APPEALS). 8. THE LEARNED A.R. FOR THE ASSESSEE EXTENSIVELY AR GUED THAT NO ADDITION IS WARRANTED IN THE CASE AS THE INCOME OF THE ASSESSEE WAS BELOW TAXABLE INCOME AND EVEN IF THE AGRICULTURAL I NCOME IS ADDED IN THE HANDS OF THE ASSESSEE NO TAX IS TO BE PAID ON THE B ELOW TAXABLE INCOME. FURTHER THE LEARNED A.R. FOR THE ASSESSEE DREW OUR ATTENTION TO THE ENTRIES IN THE SAID BANK ACCOUNT WITH CENTURION BAN K OF PUNJAB AND POINTED OUT THAT PERUSAL OF THE ENTRIES WOULD REFLE CT THAT THE CASH WAS WITHDRAWN BY THE ASSESSEE ON VARIOUS DATES AND THER EAFTER IT WAS DEPOSITED AND IN CASE PEAK CREDIT THEORY IS APPLIED , THERE WOULD BE NO ADDITION. THE LEARNED A.R. FOR THE ASSESSEE FAIRLY CONCEDED THAT THE AGRICULTURAL INCOME EARNED BY THE ASSESSEE WAS NOT REFLECTED IN THE RETURN OF INCOME. 9. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE CIT (APPEALS) AND POINTED OUT THAT EXTENSIVE EX ERCISE WAS CARRIED OUT BY THE CIT (APPEALS) BY CONFRONTING THE MATERIA L FILED BY THE ASSESSEE TO THE ASSESSING OFFICER, WHO IN TURN FURN ISHED REMAND REPORT ON VARIOUS DATES AND EACH TIME THE STAND OF THE ASS ESSEE WAS CHANGED. 10. WHEN CONFRONTED ABOUT THE CHANGE IN STAND BEFOR E THE CIT (APPEALS) VIS--VIS THE SOURCES OF CASH DEPOSITED I N THE BANK ACCOUNT OF THE ASSESSEE, THE LEARNED A.R. FOR THE ASSESSEE FAI RLY AGREED TO AN ADDITION OF RS.7 LACS ON ACCOUNT OF THEORY OF PEAK CREDIT AND NON- AVAILABILITY OF SUFFICIENT EVIDENCE IN RESPECT OF C ASH DEPOSITS IN THE BANK. 7 11. THE PERUSAL OF THE BANK STATEMENT OF CENTURION BANK OF PUNJAB LTD. IN THE RELEVANT FINANCIAL YEAR, PLACED AT PAGE S 1 AND 2 OF THE PAPER BOOK, REFLECTS THAT INITIALLY THERE IS CASH DEPOSIT OF RS.2,25,000/- ON 4.5.2005 AND THEREAFTER THERE IS WITHDRAWAL BY SELF OF RS.5 LACS ON 1.6.2005. THE ASSESSEE HAD DEPOSITED CASH OF RS.1 LAC ON 18.6.2005 AND RS.3 LACS ON 16.7.2005. THEREAFTER THERE IS CROSS WITHDRAWAL OF CASH OF RS.3 LACS ON 16.8.2005 AND DEPOSIT OF RS.3 LACS IN CASH ON 24.8.2005. THE ASSESSEE HAS FURTHER DEPOSITED RS.75,000/- IN C ASH ON 9.9.2005. ON 16.9.2005 THERE IS WITHDRAWAL OF RS.4 LACS IN CASH AND FURTHER WITHDRAWAL OF RS.80,000/- IN CASH ON 25.10.2005, AG AINST WHICH RS.3 LACS HAD BEEN DEPOSITED IN CASH ON 9.12.2005 AND RS .2,75,000/- ON 26.12.2005. THE ASSESSEE HAD FURTHER WITHDRAWN RS. 3,25,000/- IN CASH ON 30.12.2005, AGAINST WHICH RS.90,000/- IN CASH WE RE DEPOSITED ON 20.1.2006 AND RS.1,95,000/- ON 3.2.2006. THE ASSES SEE HAD THEN WITHDRAWN RS.2,50,000/- IN CASH ON 16.3.2006 AND RS .7 LACS IN CASH ON 17.3.2006. THE ASSESSEE AGAINST THE SAME DEPOSITED SUM OF RS.5 LACS ON 17.3.2006 ITSELF AND RS.70,000/- ON 18.3.2006 AND R S.1,40,000/- ON 28.3.2006. IN CASE THE LAST PLEA OF THE ASSESSEE I S TAKEN NOTE OF, EVIDENTLY THERE ARE CASH WITHDRAWALS FROM THE SAID SAVING BANK ACCOUNT AND THERE ALSO CASH DEPOSITS IN THE SAID SAVING ACC OUNT. THE FIRST CASH DEPOSIT OF RS.2,25,000/- ON 4.5.2005 IS CLAIMED TO BE SOURCED OUT OF CASH WITHDRAWALS OF EARLIER YEAR. HOWEVER, WE FIND NO M ERIT IN THE SAID PLEA OF THE ASSESSEE. BUT IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PEAK CREDIT THEORY IS TO BE APPLIED IN OR DER TO DETERMINE THE QUANTUM OF ADDITION IN THE HANDS OF THE ASSESSEE. HOWEVER, IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE ADMISSION OF THE LEARNED A.R. FOR THE ASSESSEE BEFO RE US, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO RS.7 LACS OVER AND ABOVE THE 8 RETURNED INCOME FILED BY THE ASSESSEE. THE GROUND NO.3 RAISED BY THE ASSESSEE IS THUS PARTLY ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF FEBRUARY, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH FEBRUARY, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH