ITO, Bangalore V. Shri. Basavaraj S Kallur, Vijayapur

ITA 1230/BANG/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5315 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K BIJU
• Assessee Lawyers: S RAMASUBRAMANIAN
• Keywords: Peak credit
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 1230/BANG/2016 ASSESSMENT YEAR : 2011-12 THE INCOME TAX OFFICER, WARD 2, VIJAYAPUR. VS. SHRI BASAVARAJ S. KALLUR, L/H OF SHRI ARVIND S. KALLUR, PROP: DHANVANTARI MEDICAL & GENERAL STORES, DHANVANTARI HOSPITAL, B. BAGEWADI ROAD, VIJAYAPUR. PAN: BBZPK 5843G APPELLANT RESPONDENT APPELLANT BY : SHRI M.K. BIJU, JCIT RESPONDENT BY : SHRI S. RAMASUBRAMANIAN, CA DATE OF HEARING : 22.05.2017 DATE OF PRONOUNCEMENT : 31.05.2017 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 22.03.2016 OF CIT(A) FOR THE ASSESSMENT YEAR 2011-12. THE REV ENUE HAS RAISED THE FOLLOWING GROUNDS. ITA NO. 1230/BANG/2016 PAGE 2 OF 6 2. THE AO WHILE COMPLETING THE ASSESSMENT U/S. 144 VID E ORDER DATED 28.11.2013 MADE AN ADDITION OF CASH DEPOSIT IN CORP ORATION BANK OF RS. 43,89,000/-. THE ASSESSEE CHALLENGED THE ORDER OF THE AO BEFORE THE CIT(A). THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO ON THE ITA NO. 1230/BANG/2016 PAGE 3 OF 6 SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE VER IFICATION / EXAMINATION OF BOOKS OF ACCOUNTS AND SOURCE OF DEPO SIT MADE IN THE SAID BANK ACCOUNT. THE AO SUBMITTED HIS REMAND REPORT D ATED 15.06.2015. AFTER CONSIDERING THE REMAND REPORT THE CIT(A) REST RICTED THE ADDITION TO THE PEAK CREDIT IN THE SAVINGS BANK ACCOUNT INSTEAD OF THE ENTIRE DEPOSIT MADE BY THE AO. 3. I HAVE HEARD THE LD. DR AND LD. AR AND CONSIDERED T HE RELEVANT MATERIAL ON RECORD. AT THE OUTSET IT IS NOTED THAT THE CIT( A) HAS GRANTED PART RELIEF OF RS. 35,16,911/- AND CONFIRMED THE ADDITION TO TH E EXTENT OF PEAK CREDITS IN PARA 8.1 AS UNDER: ITA NO. 1230/BANG/2016 PAGE 4 OF 6 4. THE LD. DR HAS SUBMITTED THAT EVEN IF THE PEAK CRED IT IS TAKEN INTO ACCOUNT THE WITHDRAWALS MADE BY THE ASSESSEE HIMSELF CAN BE CONSIDERED FOR THAT PURPOSE AND NOT THE PAYMENTS MADE TO THE THIRD PART Y. THUS HE HAS SUBMITTED THAT ACCEPTING THE ENTIRE WITHDRAWALS INC LUDING THE PAYMENT TO THE THIRD PARTIES BY THE CIT(A) WHILE DETERMINING THE P EAK CREDIT IS NOT PERMISSIBLE. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE PRINCIPLE OF PEAK CREDIT HAS BEEN WELL SETTLED BY VARIOUS DECISIONS. IN SUPPORT OF HIS CLAIM HE HAS RELIED UPON THE DECISIO N OF HONBLE ALLAHABAD ITA NO. 1230/BANG/2016 PAGE 5 OF 6 HIGH COURT IN CASE OF CIT VS SARAF TRADING CO. AND ANOTHER (376 ITR 534). THUS HE HAS SUBMITTED THAT THE CIT(A) HAS RIGHTLY G IVEN THE BENEFIT BY CONSIDERING THE PEAK CREDIT IN THE SAVINGS BANK ACC OUNT INSTEAD OF THE ENTIRE DEPOSITS MADE ON DIFFERENT DATES. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD IT IS NOTED THAT THERE ARE DEPOSITS AS WELL AS WITHDRAWALS IN THE SAVINGS BANK ACCOUNT OF THE ASSESSEE AS PER THE DETAILS ATT ACHED TO THE IMPUGNED ORDER OF THE CIT(A). THE CONCEPT OF PEAK CREDIT IS APPLIED IN A CASE WHERE THERE ARE CORRESPONDING WITHDRAWALS, AND THEREFORE, SUBSEQUENT DEPOSITS CAN BE EXPLAINED FROM THE EARLIER WITHDRAWAL AS A SOURC E. IN THIS CASE EXCEPT FOR SIX ENTRIES OF WITHDRAWAL WHICH APPEARS TO BE THE P AYMENT TO THE THIRD PARTIES ALL OTHER WITHDRAWALS ARE EITHER IN CASH OR SELF WI THDRAWAL BY THE ASSESSEE. ONE WITHDRAWAL IS MADE BY THE BROTHER OF THE ASSESS EE SHRI BASAVARAJ S. KALLUR WHO IS ALSO REPRESENTING THE DECEASED ASSES SEE IN THE PRESENT APPEAL. THEREFORE EXCEPT THOSE FOUR WITHDRAWALS REPRESENTIN G THE PAYMENT TO THIRD PARTIES ALL OTHER ENTRIES ARE SELF WITHDRAWALS OF T HE ASSESSEE AND HENCE, HAS TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF COMPUTING THE PEAK CREDITS. ACCORDINGLY, ON PRINCIPLE I CONCUR WITH THE VIEW OF THE CIT(A) OF TAKING ONLY PEAK CREDIT FOR THE PURPOSE OF ADDITION ON ACC OUNT OF DEPOSITS IN THE SAVINGS BANK ACCOUNT HOWEVER SINCE SOME OF THE ENTR IES ARE PAYMENTS TO THE THIRD PARTIES WHICH ARE REQUIRED TO BE EXCLUDED FRO M THE TOTAL WITHDRAWALS ITA NO. 1230/BANG/2016 PAGE 6 OF 6 MADE DURING THE YEAR. ACCORDINGLY THE AO IS DIRECT ED TO RECOMPUTE THE PEAK CREDIT BY TAKING INTO ACCOUNT THE ENTRIES OF PAYMEN T MADE TO THE THIRD PARTY. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS PARTLY A LLOWED. 7. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY, 2017 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DATED, THE 31 ST MAY, 2017. / MS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.