Appeal Details
Counselvise Citation
[2018] 121 COUNSELVISE.COM (IT) 4691 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-06-2018
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Assessment Year
2014-2015
Appeal Filed On
23-04-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO. 1307/BANG/2018 ASSESSMENT YEAR : 2014 - 15 MR. MAHESH AJAGOND, PLOT NO.2, PARVATI NIVAS, OM NAGAR, 2 ND STAGE, SEDAM ROAD, GULBARGA 585105. PAN: ADUPA 4046P VS. THE INCOME TAX OFFICER, WARD 1, GULBARGA. APP ELLANT RESPONDENT APP ELLANT BY : SHRI SUKESH S. PATIL, CA RESPONDENT BY : DR. NAGENDRA REBELLY, ADDL.CIT(DR)(ITAT), BENGALURU . DATE OF HEARING : 30 .05.2018 DATE OF PRONOUNCEMENT : 04 .06. 2018 O R D E R THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 30.01.2018 OF THE CIT(APPEALS), GULBARGA RELATING TO ASSESSMEN T YEAR 2014-15. 2. THE ASSESSEE IS AN INDIVIDUAL. HE DERIVES INCOM E FROM CARRYING OUT WORK AS A CONTRACTOR. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THERE WERE CASH DEPOSITS IN TWO BANK A CCOUNTS IN THE NAME OF ASSESSEE IN BANK OF INDIA, GULBARGA TOTALING RS.1,1 6,80,800. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF FUNDS O UT OF WHICH THE CASH DEPOSITS WERE MADE IN THE BANK ACCOUNT. THE ASSESS EE TRIED TO EXPLAIN THAT THE CASH DEPOSITS WERE OUT OF PREVIOUS WITHDRA WALS FROM THE VERY SAME BANK ACCOUNT, RECEIPTS FROM SUB-CONTRACT WORK CARRI ED OUT BY THE ASSESSEE, ITA NO. 1307/BANG/2018 PAGE 2 OF 7 AGRICULTURAL INCOME OF ASSESSEE AND AGRICULTURAL IN COME OF FATHER AND OTHER RELATIVES. THE ASSESSEE COULD NOT PRODUCE ANY EVID ENCE TO SUBSTANTIATE THE CLAIM MADE BY HIM AS AFORESAID. IN THE CIRCUMS TANCES, THE AO TREATED THE UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT AS REC EIPTS FROM UNDISCLOSED BUSINESS TRANSACTIONS AND APPLIED THE PROFIT EARNED BY THE ASSESSEE IN HIS DISCLOSED CONTRACT BUSINESS WHICH WAS 12.92% ON SUC H DEPOSIT. THIS RESULTED IN ADDITION OF RS.15,09,160 TO THE TOTAL I NCOME OF THE ASSESSEE. 3. THE ASSESSEE, AGGRIEVED BY THE AFORESAID ADDITIO N, FILED AN APPEAL BEFORE THE CIT(APPEALS) AND TOOK THE VERY SAME PLEA AS WAS TAKEN BEFORE THE AO WITH REGARD TO THE SOURCE OF FUNDS, OUT OF W HICH CASH DEPOSITS WERE MADE IN THE BANK ACCOUNT. IN THE PROCEEDINGS BEFOR E THE CIT(APPEALS), THE ASSESSEE GAVE EXPLANATION ONLY TO THE EXTENT OF SOU RCE OF FUNDS OF RS.75,42,000 WHICH COMPRISED OF TWO SUMS VIZ., RS.4 3,50,000 WHICH WAS EXPLAINED AS MONEY RECEIVED FROM 9 PEOPLE AND THE O THER SUM OF RS.41,31,800 FOR WHICH ALSO THE ASSESSEE DID NOT FI LE ANY SPECIFIC EVIDENCE OR EXPLANATION. THE CIT(APPEALS) WAS OF THE VIEW T HAT WITH REGARD MONEY CLAIMED TO HAVE BEEN RECEIVED FROM 9 PERSONS TOTALI NG TO RS.43,50,000, THE ASSESSEE GAVE CONFIRMATION WHEREIN THERE WAS NO DET AILS EXCEPT THE NAME OF THE CREDITORS. THERE WAS NO EVIDENCE TO PROVE T HE IDENTITY OF THE CREDITORS. IT WAS ALSO NOTICED BY THE CIT(A) THAT THE SOURCE OF FUNDS FOR WHICH THE CREDITORS WERE CLAIMED TO BE AGRICULTURAL INCOME, BUT NO EVIDENCE OF AGRICULTURAL LAND HOLDINGS BY THESE PARTIES WERE FILED. ALL THE CONFIRMATION LETTERS WERE IN STEREO TYPE FORM. TAKING NOTE OF A LL THESE CIRCUMSTANCES AND APPLYING THE PRINCIPLE LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL V. CIT, 214 ITR 801 (SC), THE CIT(APPEALS) WAS OF THE VIEW THAT THE ASSESSEE DID NOT SATISFACTORILY E XPLAIN THE SOURCE OF FUNDS, OUT OF WHICH CASH DEPOSITS ARE MADE INTO HIS BANK A CCOUNT. THE ADDITION MADE BY THE AO WAS ACCORDINGLY CONFIRMED BY THE CIT (APPEALS). ITA NO. 1307/BANG/2018 PAGE 3 OF 7 4. THE ASSESSEE, AGGRIEVED BY THE ORDER OF CIT(APP EALS), HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. T HE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READS AS FOLLOWS:- 1. THE ORDER OF HONBLE CIT(A) IS BAD IN LAW AND W ITHOUT CONSIDERING THE FACT OF THE CASE. 2. THE HONBLE CIT(A) ERRED IN NOT CONSIDERING AND CORELATING THE WITHDRAWALS WITH DEPOSITS IN THE BAN K STATEMENT. IN THE CASE OF ITO VS SHRI RAJEEV KUMAR GUPTA ITA NO 273/AGRA/2013, IT WAS HELD THAT ENTIRE DEPOSITS MAD E IN THE BANK ACCOUNT CANNOT BE SAID TO BE UNEXPLAINED, BECAUSE A FTER DEPOSIT OF CASH AMOUNTS, THERE ARE WITHDRAWALS. 3. APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEN D AND TO DELETE ANY OTHER GROUNDS AT THE TIME OF HEARING. 5. THE LD. COUNSEL FOR THE ASSESSEE BEFORE HAS SOUG HT TO PLEAD THAT THE CASH DEPOSITS IN THE BANK ACCOUNT CAN BE EXPLAINED AS EMANATING FROM AND OUT OF WITHDRAWALS MADE FROM THE VERY SAME BANK ACC OUNT AND IN THIS REGARD FILED THE FOLLOWING CHART:- CASH DEPOSITS: DATES CASH DEPOSITS WITH BANK OF INDIA A/C 848510100006664 DATES CASH DEPOSITS WITH BANK OF INDIA A/C 848530100020124 11 - 09 - 2013 42,000 03 - 04 - 2013 1,50,000 18 - 11 - 2013 11,00,000 25 - 05 - 2013 7,50,000 18 - 11 - 2013 6,00,000 13 - 06 - 2013 2,00,000 19 - 11 - 2013 15,00,000 01 - 07 - 2013 2,23,800 21 - 11 - 2013 15,00,000 30 - 10 - 2013 2,00,000 29 - 11 - 2013 15,00,000 14 - 11 - 2013 13,00,000 08-02-2014 8,00,000 18-11-2013 8,00,000 ITA NO. 1307/BANG/2018 PAGE 4 OF 7 08 - 02 - 2014 5,00,000 12 - 02 - 2014 5,00,000 10 - 03 - 2014 15,000 TOTAL (A) 75,42,000 TOTAL (B) 41,38,800 GRAND TOTAL (A)+(B) 1,16,80,800/ - CASH WITHDRAWALS WITH BANK OF INDIA A/C 84853010002 0124 : 05 - 04 - 2013 1,00,000 24 - 06 - 2013 2,00,000 10 - 04 - 2013 50,000 06 - 07 - 2013 2,50,000 15 - 04 - 2013 50,000 13 - 07 - 2013 3,40,000 17 - 04 - 2013 50,000 31 - 07 - 2013 1,50,000 22 - 04 - 2013 50,000 15 - 10 - 2013 2,00,000 29 - 04 - 2013 1.50,000 16 - 10 - 2013 2,5 0,000 02 - 05 - 2013 1,00,000 27 - 12 - 2013 50,000 08 - 05 - 2013 1,50,000 03 - 01 - 2014 50,000 28 - 05 - 2013 15,000 13 - 01 - 2014 1,50,000 29 - 05 - 2013 1,00,000 21 - 01 - 2014 1,20,000 30 - 05 - 2013 3,00,000 01 - 02 - 2014 2,00,000 04 - 06 - 2013 1,00,000 08 - 02 - 2014 5,00,000 05 - 06 - 201 3 85,000 24 - 02 - 2014 1,00,000 08 - 06 - 2013 1,00,000 10 - 03 - 2014 1,00,000 20 - 06 - 2013 3,00,000 17 - 03 - 2014 2,00,000 20 - 06 - 2013 1,00,000 21 - 03 - 2014 60,000 TOTAL (A) 18,00,000 TOTAL (B) 29,20,000 ITA NO. 1307/BANG/2018 PAGE 5 OF 7 CASH WITHDRAWALS WITH BANK OF INDIA A/C 8485101000066 64: 07-10-2013 1,00,000 09-10-2013 30,000 . 21 - 11 - 2013 22,00,000 02-12-2013 9,50,000 05-12-2013 6,50,000 27-03-2014 1,00,000 TOTAL (C) 40,30,000/- TOTAL WITHDRAWAL (A)+(B)+(C) 87,50,000/- (18,00,000+29,20,000+40,30,000) 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TO THE EXTENT OF RS.87,50,000, SOURCE OF DEPOSIT OF CASH IN THE BANK ACCOUNT SHOULD BE ACCEPTED AS DULY EXPLAINED ON THE BASIS OF WITHDRAW AL FROM THE VERY SAME BANK ACCOUNT. HIS FURTHER SUBMISSION WAS THAT WITH REGARD TO DIFFERENCE BETWEEN THE TOTAL DEPOSITS IN THE BANK ACCOUNT OF R S.1,16,80,800 AND RS.87,50,000, NET PROFIT RATE SHOULD BE APPLIED AND THE ADDITION MAY BE RESTRICTED TO THAT EXTENT ALONE. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. CO UNSEL FOR THE ASSESSEE. THE SUBMISSION MADE BY THE LD. COUNSEL F OR THE ASSESSEE IS BASED ON GROUND NO.2 RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL. IT IS NO DOUBT TRUE THAT IF THERE ARE WITHDRAWALS FROM THE BANK ACCOUNT AND SUBSEQUENT DEPOSITS IN BANK ACCOUNT THEN TO THE EXT ENT THERE ARE WITHDRAWALS, THE DEPOSITS CAN BE SAID TO BE EXPLAIN ED OUT OF WITHDRAWALS, PROVIDED THERE IS NO EVIDENCE TO SHOW THAT THE AMOU NT WITHDRAWN WERE UTILIZED BY THE PERSON WITHDRAWING MONEY IN SOME OT HER MANNER. IN SUCH A ITA NO. 1307/BANG/2018 PAGE 6 OF 7 SITUATION, THE PEAK CREDIT THEORY IS APPLIED AND TH E ADDITION IS RESTRICTED ONLY TO THE HIGHEST DEPOSIT (PEAK CREDIT) OVER A PERIOD OF TIME. THE ASSESSEE HAS NOT FILED ANY CHART TO SHOW WHAT IS THE PEAK CR EDIT BASED ON THE PATTERN OF DEPOSIT AND WITHDRAWAL OF MONEY BY ASSESSEE. IF ASSESSEE DOES NOT WANT TO APPLY THE PEAK CREDIT THEORY, THEN THE ADDI TION TO THE EXTENT OF DIFFERENCE BETWEEN THE SUM OF RS.1,16,80,800 WHICH IS THE TOTAL DEPOSITS IN THE BANK ACCOUNT AND RS.87,50,000 WHICH IS THE WITH DRAWAL FROM THE VERY SAME BANK ACCOUNT HAS TO BE ADDED TO THE TOTAL INCO ME. IF SUCH A COURSE IS ADOPTED, THE ADDITION TO BE MADE WOULD BE MUCH G REATER THAN WHAT THE AO HAS MADE IN THE ASSESSMENT PROCEEDINGS. 8. WE ARE OF THE VIEW THAT THE ASSESSEE CANNOT CHOO SE PEAK CREDIT THEORY TO DELETE A PART OF THE ADDITION AND ALSO PL EAD FOR APPLYING NET RATE ON THE REMAINING PORTION OF THE UNEXPLAINED DEPOSIT S IN THE BANK ACCOUNT. DOING SO WILL BE MUTUALLY CONTRADICTORY. IN THE GI VEN FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE AO HAS MADE A REASONABLE ESTIMATE OF INCOME OF THE ASSESSEE IN RE SPECT OF UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT BY TREATING THEM AS RE CEIPTS FROM UNDISCLOSED OR UNRECORDED BUSINESS TRANSACTIONS. THE CIT(APPEA LS) HAS RIGHTLY CONFIRMED THE ORDER OF AO. WE FIND NO GROUNDS TO I NTERFERE WITH THE ORDER OF CIT(APPEALS). ACCORDINGLY, THE APPEAL BY THE AS SESSEE IS DISMISSED. 9. IN THE RESULT, APPEAL BY THE ASSESSEE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF JUNE, 2018. SD/- ( N.V. VASUDEVAN ) JUDICIAL MEMBER BANGALORE, DATED, THE 4 TH JUNE, 2018. / D ESAI S MURTHY / ITA NO. 1307/BANG/2018 PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUA RD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.
Mehul