DEVENDRA BHARTI, UDAIPUR V. ITO, Jaipur

ITA 114/JPR/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3682 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAY SINGH
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Peak credit; Rule of consistency; Additional evidence
• Section: 201; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 114 & 308/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 & 2012-13 SHRI DEVENDRA BHARTI, 502, 5 TH FLOOR, SHREE RAM APARTMENT, HIRAN MAGRI, SECTOR NO. 14, UDAIPUR CUKE VS. THE ITO, WARD-2(3), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AFOPB5337C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA. NO. 412/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14 SHRI DEVENDRA BHARTI, 502, 5 TH FLOOR, SHREE RAM APARTMENT, HIRAN MAGRI, SECTOR NO. 14, UDAIPUR CUKE VS. THE ITO, WARD-2(4), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AFOPB5337C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI K. L. MOOLCHANDANI (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI JAY SINGH LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 10/12/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 18/03/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE THREE APPEALS FILED BY THE ASSESSEE AGAI NST THE RESPECTIVE ORDERS OF LD. CIT(A)-1, JAIPUR DATED 23. 12.2016 FOR ASSESSMENT YEAR 2011-12 AND DATED 16.02.2017 FOR TH E ASSESSMENT ITA NO. 114, 308 & 412/JP/2017 & 2018 SHRI DEVENDRA BHARTI, UDAIPUR VS. ITO, JAIPUR 2 YEAR 2012-13, AND ORDER OF LD. CIT(A), KOTA DATED 1 6.01.2018 FOR ASSESSMENT YEAR 2013-14 RESPECTIVELY. 2. IN A.Y 2011-12, THE ASSESSEE HAS EFFECTIVELY RAI SED GROUND RELATING TO ADDITION ON ACCOUNT OF UNEXPLAINED DEPO SITS IN HIS BANK ACCOUNT AMOUNTING TO RS. 44,26,000/-. IN APPEAL FOR AY 2012-13, THE SOLE GROUND RAISED BY THE ASSESSEE RELATES TO ADDIT ION OF RS. 6,61,246/- OUT OF TOTAL DEPOSITS OF RS. 28,31,000/-IN HIS BANK ACCOUNTS BASED ON PEAK THEORY APPLIED BY THE LD. CIT(A). IN AY 2013-1 4, THE SOLE GROUND OF APPEAL RELATES TO ADDITION OF RS. 10,86,600/- ON ACCOUNT OF DEPOSITS IN HIS BANK ACCOUNT IGNORING THE PEAK THEORY APPLIE D BY THE LD. CIT(A) IN THE PRECEDING ASSESSMENT YEAR 2012-13. 3. THE FACTS WHICH ARE EMANATING FROM THE RECORDS ARE THAT DURING THE YEARS UNDER CONSIDERATION, THE ASSESSEE WAS WOR KING WITH M/S GOLDEN FUTURE ADVISER PVT. LTD., WHICH WAS DOING CO MMODITY TRADING BUSINESS ON MULTI COMMODITY EXCHANGE (MCX). OVER THE PERIOD OF TIME, THE ASSESSEE ACQUIRED EXPERTISE IN THE SAID C OMMODITY TRADING BUSINESS, AND HIS FRIENDS AND RELATIVES PROVIDED MO NEY TO HIM FOR INVESTMENT IN MCX WHICH HE DEPOSITED IN HIS PERSONA L SAVINGS BANK ACCOUNTS. THE SAID DEPOSITS WERE SUBSEQUENTLY INVES TED COMMODITY TRADING BUSINESS ON MCX THROUGH M/S GOLDEN FUTURE A DVISER PVT. LTD. HOWEVER, HEAVY LOSSES WERE INCURRED IN SUCH COMMODI TY TRADING BUSINESS, THE WHOLE OF THE AMOUNT INVESTED COULDNT BE RETURNED TO THE INVESTORS. SINCE THE AMOUNT COULD NOT BE RETURNED BACK TO THE INVESTORS, VARIOUS CASES AND FIRS WERE FILED BY THE INDIVIDUAL INVESTORS AGAINST THE COMPANY M/S GOLDEN FUTURE ADVISER PVT. LTD AND THE DIRECTORS OF THE SAID COMPANY INCLUDING THE ASSESSE E WHO WAS ALSO ONE ITA NO. 114, 308 & 412/JP/2017 & 2018 SHRI DEVENDRA BHARTI, UDAIPUR VS. ITO, JAIPUR 3 OF THE DIRECTORS IN THE SAID COMPANY. COPY OF THES E FIRS HAVE BEEN PLACED ON RECORD AND ARE PART OF ASSSESSEES PAPERB OOK. FURTHER, IN THE FINANCIAL STATEMENTS OF M/S GOLDEN FUTURE ADVISER P VT. LTD. AVAILABLE ON RECORD, THE ASSESSEE HAS BEEN SHOWN AS A CREDITOR W HICH CORROBORATES THAT THE FUNDS RECEIVED IN HIS PERSONAL SAVING BANK ACCOUNTS FROM HIS RELATIVES AND FRIENDS WERE ROUTED THROUGH M/S GOLDE N FUTURE ADVISER PVT. LTD. FOR COMMODITY TRADING ON MCX. FURTHER, TH E COPIES OF THE BANK STATEMENTS OF ACCOUNTS MAINTAINED IN THE NAME OF TH E ASSESSEE AND OPERATED BY HIM REFLECTED THE MOMENT OF THE FUNDS I N TERMS OF DEPOSITS AND SUBSEQUENT PAYMENTS/TRANSFERS TO M/S GOLDEN FUT URE ADVISER PVT. LTD. AND INVESTORS IS ALSO AVAILABLE ON RECORD WHIC H CORROBORATES FREQUENT MOVEMENT OF FUNDS AMONG THE ASSSESSEE, THE INVESTORS AND M/S GOLDEN FUTURE ADVISER PVT. LTD. FOR ALL THE THR EE YEARS UNDER CONSIDERATION. 4. IN THE ABOVE FACTUAL MATRIX, WE FIND THAT IN AY 2011-12, THE AO HAS BROUGHT TO TAX THE WHOLE OF THE AMOUNT OF RS. 4 4,26,000/- FOUND DEPOSITED IN THE ASSESSEES BANK ACCOUNTS MAINTAINE D WITH ICICI BANK AND AXIS BANK AND THE ASSESSMENT WAS COMPLETED EX-PARTE U/S 144 OF THE ACT GIVEN NON-COMPLIANCE ON PART OF THE ASSESSE E. THE ASSESSEES EXPLANATION WAS THAT HE DIDNT RECEIVE THE NOTICES ISSUED BY THE ASSESSING OFFICER, HOWEVER THE SAID EXPLANATION WAS NOT ACCEPTED BY THE LD CIT(A) DURING THE APPELLATE PROCEEDINGS. ON MERITS, THE ASSESSEE SOUGHT PERMISSION TO FILE AFFIDAVITS OF 20 PERSONS, WHO WERE HIS FRIENDS AND RELATIVES AND WHO HAVE PROVIDED THE MONEY TO TH E ASSESSEE FOR INVESTMENT/TRADING ON THE MCX STOCK EXCHANGE. BEING ADDITIONAL EVIDENCE, THE LD. CIT(A) ADMITTED THE AFFIDAVITS SO FILED BY THE ASSESSEE. HOWEVER, POINTING OUT CERTAIN DISCREPANCIES IN THOS E AFFIDAVITS IN TERMS ITA NO. 114, 308 & 412/JP/2017 & 2018 SHRI DEVENDRA BHARTI, UDAIPUR VS. ITO, JAIPUR 4 OF DATE WISE DETAILS OF THE CASH GIVEN NOT BEEN SPE CIFIED, DETAILS OF THE REPAYMENT NOT BEEN SPECIFIED, THE FACT THAT THESE P ERSONS ARE NOT ASSESSED TO TAX AND NOT EVEN HAVE PAN, AND THE FACT THAT THESE PERSONS WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER DURI NG THE REMAND PROCEEDINGS, THE AFFIDAVITS SO FILED WERE HELD TO B E SELF-SERVING DOCUMENTS AND THE SAME WERE NOT ACCEPTED AND THE AD DITIONS SO MADE BY THE ASSESSING OFFICER WAS UPHELD. 5. IN SUBSEQUENT ASSESSMENT YEAR I.E, AY 2012-13, T HE ASSESSING OFFICER AGAIN MADE AN ADDITION OF UNEXPLAINED DEPOS ITS IN THE BANK ACCOUNTS OF THE ASSESSEE. WHEN THE MATTER TRAVELLE D TO THE SAME LD. CIT(A), HE HELD THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE EXACTLY IDENTICAL AS IN AY 2011-12 AND AFTER EXAMINING THE BANK STATEMENTS OF THE ASSESSEE REFLECTING FREQUENT DEPOSITS AND WITHD RAWALS HAS APPLIED PEAK CREDIT THEORY AND ADDITION OF RS. 6,61,246/- A S SO COMPUTED BY APPLYING PEAK CREDIT THEORY WAS UPHELD AGAINST THE ADDITION OF RS. 28,31,000/- MADE BY THE ASSESSING OFFICER. THE FIND INGS OF THE LD. CIT(A) HAVE NOT BEEN DISPUTED BY THE REVENUE AS THE RE IS NO APPEAL WHICH HAS BEEN FILED BY THE REVENUE. IT WOULD THERE FORE BE RELEVANT TO REFER TO THE RELEVANT FINDINGS OF THE LD. CIT(A) IN HIS ORDER FOR AY 2012- 13 WHICH ARE REPRODUCED AS UNDER:- (II) DURING THE APPELLATE PROCEEDINGS, IT WAS FURT HER SUBMITTED THAT THE CASH DEPOSITS IN ITS THREE SAVING BANK ACCOUNTS WERE MADE EITHER OUT OF THE PROFESSIONAL RECEIPTS OR FROM THE CASH W ITHDRAWALS MADE EARLIER FROM ITS SAVING BANK ACCOUNTS AND THE COPIE S OF BANK STATEMENTS OF THESE THREE SAVING BANK ACCOUNTS WERE SUBMITTED BEFORE THE AO. THE APPELLANT HAS FILED A CASH FLOW STATEMENT BASED ITA NO. 114, 308 & 412/JP/2017 & 2018 SHRI DEVENDRA BHARTI, UDAIPUR VS. ITO, JAIPUR 5 ON ITS THREE SAVING BANK ACCOUNTS, WHICH IS ENCLOSE D TO THIS ORDER AS ANNEXURE-A. IT WAS THE SUBMISSION OF THE APPELLANT THAT PEAK BALANCE AS PER THIS CASH FLOW STATEMENT WAS 6,58,24 6/- AS ON 04.01.2012, THE ADDITION SHOULD BE RESTRICTED TO RS . 6,58,246/- AS WHILE MAKING ADDITION OF RS. 28,31,000/- THE AO HAS NOT CONSIDERED THE CASH WITHDRAWALS MADE BY THE APPELLANT DURING T HE RELEVANT PERIOD. (III) I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER AND THE MATERIAL PLACED ON RECORD. IT IS EVIDENT FROM THE CASH FLOW STATEMENT FILED BY THE APPELLANT THAT THERE WERE FREQUENT CASH WITHDRAWALS AS WELL AS CASH DEPO SITS IN THE BANK ACCOUNTS OF THE APPELLANT. IT MAY BE MENTIONED THAT IN THE CASE OF SIND MEDICAL STORES VS. CIT (SUPRA), THE HO N'BLE JURISDICTIONAL HIGH COURT HELD THAT: THIS COURT IN CIT VS. ISHWARDAS MUTHA (2004) 270 I TR 597 (RAJ.) ALSO ACCEPTED THE CONTENTION TO TAKE INTO ACCOUNT, THE P EAK CREDIT THEORY. WHEN ONLY AMOUNT IS PAID, LATER WITHDRAWN FROM THE BOOK, WOULD BE AVAILABLE FOR RECYCLING AND ROTATION, UNLESS OTHERW ISE ESTABLISHED AS INVESTED ELSEWHERE BY THE REVENUE. IT WAS HELD THAT THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF PEAK CREDIT WHICH OUGHT TO HAVE BEEN ALLOWED INSTEAD OF MAKING SEPARATE ADDITION OF ENTIRE AMOUN T. HOWEVER, IT WAS OBSERVED THAT IF THE ASSESSING OFFICER COMES TO A F INDING THAT WITHDRAWN AMOUNT WAS USED OR SPENT BY THE ASSESSEE FOR ANY OT HER INVESTMENT OR EXPENDITURE THAN THE BENEFIT OF PEAK OF SUCH CREDIT , IN SUCH CIRCUMSTANCES, MAY NOT BE AVAILABLE. (IV) IN THE INSTANT CASE UNDER CONSIDERATION, NO SP ECIFIC FINDING WAS ITA NO. 114, 308 & 412/JP/2017 & 2018 SHRI DEVENDRA BHARTI, UDAIPUR VS. ITO, JAIPUR 6 GIVEN BY THE AO REGARDING THE UTILIZATION OF CASH W ITHDRAWAL BY THE ASSESSEE FROM ITS BANK ACCOUNTS IN SOME INVESTMENT OR EXPENDITURE. THEREFORE, IN VIEW OF THE ABOVE REFERRED DECISION O F JURISDICTIONAL HIGH COURT IN THE CASE OF SIND MEDICAL STORE VS. CI T (SUPRA), THE BENEFIT OF PEAK CREDIT THEORY COULD BE ALLOWED TO T HE APPELLANT. AS PER THE CASH FLOW STATEMENT, THE PEAK CASH BALANCE WAS RS. 6,61,246/- AS ON 13.03.2011 AND NOT RS. 6,58,246/- AS ON 04.01.2012. THEREFORE, OUT OF THE ADDITION OF RS. 2 8,31,000/- MADE BY THE AO, THE ADDITION IS RESTRICTED TO RS. 6,61,2 46/- U/S 69 OF THE ACT AS THE SAME REMAINED UNEXPLAINED DEPOSIT EVEN D URING THE APPELLATE PROCEEDINGS. HENCE, THE ADDITION OF RS. 6 ,61,246/- IS HEREBY SUSTAINED. (V) HOWEVER, IT MAY BE MENTIONED THAT AS PER THE AP PELLANT, THE TOTAL CASH DEPOSITS WAS TO THE TUNE OF RS. 26,30,97 6/- ONLY WHEREAS THE AO HAS TAKEN THE AMOUNT AT RS. 28,31,00 0/-. THE AO IS DIRECTED TO VERIFY THE ABOVE AND THE CASH FLOW S TATEMENT AS STATED ABOVE WITH THE THREE BANK ACCOUNTS OF THE AP PELLANT AND IF THERE IS ANY VARIATION IN THE PEAK BALANCE, THE AO IS DIRECTED TO MODIFY THE AMOUNT OF ADDITION SUSTAINED IN THIS ORD ER, ACCORDINGLY. 6. IN NEXT ASSESSEMENT YEAR I.E, AY 2013-14, THE AS SESSING OFFICER AGAIN MADE AN ADDITION OF UNEXPLAINED DEPOSITS IN T HE BANK ACCOUNTS OF THE ASSESSEE. DURING THE APPELLATE PROCEEDINGS, THE AFFIDAVITS SO FILED BY THE ASSESSEE WERE FOUND NOT ACCEPTABLE AND EVEN THE PEAK CREDIT THEORY WAS NOT FOUND ACCEPTABLE IN ABSENCE OF ANY C REDITABLE EVIDENCES AND THE ENTIRE ADDITION ON ACCOUNT OF CASH DEPOSITS IN THE BANK ACCOUNT AMOUNTING TO RS. 10,83,600/- WAS UPHELD. ITA NO. 114, 308 & 412/JP/2017 & 2018 SHRI DEVENDRA BHARTI, UDAIPUR VS. ITO, JAIPUR 7 7. HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT ONCE THE FACT RELATING TO THE ASSESSEE RECEIVING CASH FROM HIS RELATIVES AND FRIENDS FOR THE PURPOSE S OF INVESTING IN MCX OPERATIONS HAVE BEEN ESTABLISHED AND THERE ARE REGU LAR DEPOSITS AND WITHDRAWALS FROM HIS BANK ACCOUNTS MAINTAINED BY TH E ASSESSEE, THE LD. CIT(A) HAS RIGHTLY APPLIED THE PEAK CREDIT THEORY I N AY 2012-13 AND BROUGHT THE AMOUNT SO DETERMINED TO TAX. GIVEN THE UNDISPUTED FACTS, AS WE HAVE NOTED ABOVE AND EVEN NOT DISPUTED BY THE REVENUE, THE SAME FACT PATTERN EXIST FOR A.Y 2011-12 AND A.Y 201 3-14, WE DONOT SEE A JUSTIFIABLE BASIS TO ADOPT A DIFFERENT BASIS AND FOLLOWING THE PRINCIPLE OF CONSISTENCY, WE HEREBY DIRECT TO APPLY PEAK CRED IT THEORY FOR AY 2011-12 AND 2013-14 AS WELL AND THE MATTER IS SET-A SIDE TO THE FILE OF THE AO FOR THE LIMITED PURPOSES OF DETERMINING THE PEAK CREDIT IN EACH OF THE TWO YEARS UNDER CONSIDERATION, I.E, AY 2011- 12 AND AY 2013-14. NEEDLESS TO SAY, THE ASSESSEE SHALL APPEAR AND CO-O PERATE IN THE TIMELY COMPLETION OF THE PROCEEDINGS AND PROVIDE INFORMATI ON/DOCUMENTATION AS SO DIRECTED BY THE ASSESSING OFFICER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR AY 2011-12 AND 2013-14 ARE ALLOWED FOR STATISTICAL PURPOSE AND APP EAL FOR AY 2012-13 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/03/2019 . SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/03/2019. *GANESH ITA NO. 114, 308 & 412/JP/2017 & 2018 SHRI DEVENDRA BHARTI, UDAIPUR VS. ITO, JAIPUR 8 VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI DEVENDRA BHARTI, UDAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD- 2(3), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 114, 308 & 412/JP/2017 & 2018 } VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR