Income-tax Officer, V. Shri Kharde Indrajit Rajkumar, Ahmednagar

ITA 1173/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6972 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-12-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 21-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Salary income; Peak credit
• Section: 44AD; 68; 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 1173/PUN/2015 / ASSESSMENT YEAR : 2011-12 ITO, WARD-1, AHMEDNAGAR . /APPELLANT VS. SHRI KHARDE INDRAJIT RAJKUMAR, A/P. KOLHAR, TALUKA RAHATNA, DIST. AHMEDNAGAR PAN :AKEPK1272G . / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI ACHAL SHARMA, ADDL.CIT / DATE OF HEARING : 14.12.2017 / DATE OF PRONOUNCEMENT: 15.12.2017 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-2, PUNE DATED 30-04-2015 FOR THE ASSESSMENT YEAR 2011- 12. 2. BACKGROUND FACTS OF THE CASE INCLUDE THAT THE ASSES SMENT WAS ORIGINALLY COMPLETED U/S.144 OF THE ACT MAKING ADDITION OF RS.1,43,53,255/- U/S.68 OF THE ACT. CIT(A) GRANTED PART RELIE F TO THE ASSESSEE AND CONFIRMED PART OF THE ABOVE ADDITION ASSES SEE ACCEPTED THE ORDER OF THE CIT(A). HOWEVER, THE REVENUE IS AGGRIEVE D AGAINST THE PART RELIEF GRANTED BY THE CIT(A). THEREFORE, THE REVENUE IS IN APPEAL BEFORE US WITH THE GROUNDS EXTRACTED HEREUNDER : 1. THE ORDER OF THE LD.CIT(A) IS CONTRARY TO LAW A ND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.1173/PUN/2015 SHRI KHARDE INDRAJIT RAJKUMAR 2 2. THE LD.CIT(A) ERRED IN DIRECTING THE AO TO TAX T HE PEAK CASH CREDIT INSTEAD OF AGGREGATE OF CASH DEPOSITS IN THE BANK ACCOUNTS U/S.69 OF THE I.T. ACT. 3. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING THE ORDER OF THE LD.CIT(A) MAY BE VACATED A ND THAT OF THE AO BE RESTORED. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT T HE ASSESSEE IS AN INDIVIDUAL AND STATED TO BE A PARTNER IN A FIRM NAMELY M/S. LAXMI PAPERS. ASSESSEE DERIVES INCOME FROM SALARY AND INTEREST FROM THE SAID FIRM. ASSESSEE FILED THE RETURN OF INCOME ON 13-03-2012 DECLARING TOTAL INCOME OF RS.64,366/-. SINCE THE ASSESSEE COULD NOT RESPOND TO ANY OF THE NOTICES ISSUED, THE AO COMPLETED THE ASSESSMENT U/S.144 OF THE ACT DETERMINING THE TOTAL INCOME OF RS.1,44,17,620/- ON ACCOUNT OF UNEXPLAINED CREDITS IN THE BANK ACCOUNTS. CIT(A) GRANTED PART RELIEF TO THE ASSESSEE. 4. THE FACTS RELATING TO THE ISSUE OF PEAK CREDIT RAISED B Y THE REVENUE IN THE PRESENT APPEAL INCLUDES THAT THE ASSESSEE HAS C OUPLE OF BANK ACCOUNTS; ACCOUNT NOS.4128/970 AND 4129/1141 MAIN TAINED WITH NAGAR URBAN COOPERATIVE BANK LTD. THE BANK ACCOU NT NO. 4129/1141 IS OPENED ONLY ON 20-07-2011 ONLY AND THEREFORE, THE S AME IS NOT RELEVANT FOR THE YEAR UNDER CONSIDERATION. ASSESS EE ALSO HAS OTHER BANK ACCOUNT WITH HDFC BEARING ACCOUNT NO.096619 30000424. DURING THE ASSESSMENT PROCEEDINGS U/S.144 OF THE ACT, AO NOTICED HUGE CASH AS WELL AS CHEQUE DEPOSITS AMOUNTING TO RS.1,43 ,53,255/-. OUT OF THIS, AN AMOUNT OF RS.87,64,872/- CONSTITUTES CASH D EPOSITS ONLY. ACCORDINGLY, THE ASSESSMENT WAS COMPLETED MAKIN G ENTIRE DEPOSITS OF RS.1.44 CRORES (ROUNDED OFF). 5. IN THE FIRST APPELLATE PROCEEDINGS, CIT(A) REJECTED THE ASSESSEES CLAIM OF APPLYING THE PROVISIONS OF SECTION 44AD OF THE ACT, I.E. QUANTIFICATION OF PROFITS APPLYING 8% OF THE TURNOVER. FURTH ER, THE ITA NO.1173/PUN/2015 SHRI KHARDE INDRAJIT RAJKUMAR 3 CIT(A) CONFIRMED THE ADDITION TO THE TUNE OF RS.55,88,383/- W HICH ARE BASICALLY THE CHEQUE BASED DEPOSITS. 6. FINALLY, REGARDING THE CASH DEPOSITS AMOUNTING TO RS.87,64,872/-, THE CIT(A) DIRECTED THE AO TO RESTRICT THE ADDITION ONLY TO THE PEAK CREDIT AND GRANTED PART RELIEF TO THE AS SESSEE. AGAINST THIS ISSUE OF PART RELIEF, THE REVENUE IS IN APPEAL. THUS, IN T HE GROUNDS RAISED BY THE REVENUE, IT IS EVIDENT THAT THE D ECISION OF THE CIT(A) IN DIRECTING THE AO TO ADOPT ONLY THE PEAK CREDIT IS THE SUBJECT MATTER OF LITIGATION. 7. BEFORE US, LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORDER OF THE AO. IT IS THE CASE OF THE LD. DR THAT THE ASSESSE E FAILED TO DEMONSTRATE THE MOVEMENT OF THE DEPOSITS AND THE WITHD RAWALS OF THE CASH AND THE SAME IS NOT JUSTIFIED IN THIS CASE. IN SUCH A SITUATION AND IN VIEW OF THE DECISION OF THE COORDINATE BENCH OF THE TRIB UNAL IN THE CASE OF M.H. ROMEY VS. ITO REPORTED IN 145 ITD 573 (MUMBA I TRIB.) AND SUBMITTED THAT THE SAID DECISION IS RELEVANT FOR THE P ROPOSITION WHETHER SINCE NATURE OF CASH DEPOSITS IN BANK NOR TH EIR UTILIZATION WAS EXPLAINED BY THE ASSESSEES SON SATISFACTORILY, HIS PLEA THAT ONLY PEAK AMOUNT OF RS.5.32 LAKHS OUGHT TO BE SUBJECTED TO TAX WAS NOT MAINTAINABLE- HELD, YES. AND IS IN FAVOUR OF THE REVENUE. 8. ON THE OTHER HAND, LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE FACTS OF THE CAS E AND SUBMITTED THAT THE CIT(A) RELIED HEAVILY ON THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF RAHUL VIJAY MUNOT VS. ITO IN I TA NO.1923/PN/2013 FOR A.Y. 2009-10 ORDER DATED 31-03-2015 FOR THE PROPOSITION THAT THE PEAK CREDIT ADDITION IS AN APPROVED METHOD OF ADDITIONS ON ACCOUNT OF CASH CREDITS FOR THE PURPOSE OF S ECTION 68 OF ITA NO.1173/PUN/2015 SHRI KHARDE INDRAJIT RAJKUMAR 4 THE ACT. HE ALSO SUBMITTED ON SIMILAR FACTS OF THE CASE T HE TRIBUNAL HELD THAT THE ADDITION ON ACCOUNT OF PEAK CREDIT IS MAINT AINABLE. LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE ALSO BROUGHT OUR ATTENTION TO THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. TIRUPATI CONSTRUCTION CO. REPORTED IN 55 TAXMANN.COM 308 (GUJARAT) AND READ OUT THE RELEVANT DISCUSSION WHICH RESULTED IN G IVING RELIEF TO THE ASSESSEE ON THIS ISSUE. 9. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AND THE DECISIONS RELIED UPON BY THE PARTIES. ON PERUSING THE ORDER OF THE CIT(A) IN GENERAL AND THE CONTENTS OF PARA NO.6.3.2 IN PARTICULAR ON THIS ISSUE, WE FIND IT RELEVANT TO EXTRACT THE SAID PARA AS UNDER : 6.3.2 AS COULD BE SEEN FROM THE ABOVE EXTRACT OF THE ORDER, THE ITAT CLEARLY HELD THAT THE ASSESSEE IS COMPETENT TO PLEAD FOR THE BENEFIT OF PEAK CREDIT THEORY EVEN WHEN HIS PLEA OF THE IMP UGNED BANK TRANSACTIONS WERE FROM UNACCOUNTED BUSINESS, WAS NO T ACCEPTED. IN THE PRESENT CASE ALSO, THE FACTS RELATING TO CASH DEPOS ITS AND CASH WITHDRAWALS ARE SIMILAR AND THEREFORE IN THE ABSENC E OF ANY EVIDENCE TO SHOW THAT CASH WITHDRAWALS WERE UTILIZED FOR A SPEC IFIC PURPOSE BY THE APPELLANT, PEAK CREDIT OF CASH DEPOSITS HAS TO BE W ORKED OUT FOR THE PURPOSE OF ADDITION U/S.68 OR 69 OF THE I.T. ACT. 10. THUS, THE ABOVE FINDING OF THE CIT(A) IS ARRIVED AT AFT ER CONSIDERING THE PRINCIPLES RELATING TO THE PEAK CREDIT ADDIT IONS U/S.68 OF THE ACT AS LAID DOWN BY THE TRIBUNAL OF THIS BENCH IN TH E CASE OF RAHUL VIJAY MUNOT VS. ITO IN ITA NO.1923/PN/2013 ORDER DATED 31- 03-2015. THE FACTS AND CIRCUMSTANCES ARE FOUND IDENTICAL TO THAT OF THE PRESENT CASE BY THE CIT(A). NO CONTRARY FACTS ARE BROUGHT TO OUR NOTICE TOO. CONSIDERING THE ABOVE FINDING OF THE CIT(A) IS T AKEN ON THE STRENGTH OF THE BINDING COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF RAHUL VIJAY MUNOT (SUPRA), WE ARE OF THE OPINION THAT T HE ORDER OF THE CIT(A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR A NY ITA NO.1173/PUN/2015 SHRI KHARDE INDRAJIT RAJKUMAR 5 INTERFERENCE. ACCORDINGLY, THE GROUNDS RAISED BY THE REV ENUE ARE DISMISSED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF DECEMBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 15 TH DECEMBER, 2017. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A) - 2, PUNE CIT - 2, PUNE % , , A BENCH PUNE; / GUARD FILE.