Santosh Boddula, Hyderabad, Hyderabad V. ITO, Ward-12(4), Hyderabad, Hyderabad

ITA 134/HYD/2015

• Counselvise Citation: 13422514 RSA 2015
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 13-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 06-02-2015
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Unexplained cash credit; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 134/HYD/2015 ASSESSMENT YEAR: 2010-11 SRI SANTOSH BODDULA, HYDERABAD [PAN: AEZPB0525N] VS THE INCOME TAX OFFICER, WARD-12(4), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A. SAI PRASAD, AR FOR REVENUE : SHRI RAJAT MITRA, DR DATE OF HEARING : 13-08-2015 DATE OF PRONOUNCEMENT : 26-08-2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, HYDERABAD D ATED 27-11-2014. I.T.A. NO. 134/HYD/2015 SRI SANTOSH BODDULA :- 2 -: 2. BRIEFLY STATED, ASSESSEE IS A SALARIED EMPLOYEE. ASSESSING OFFICER (AO) NOTICED THAT ASSESSEE HAS DEPOSITED CASH IN BA NK ACCOUNTS TO AN EXTENT OF RS. 42,84,100/-. AFTER GIVING OPPORTUNIT Y TO ASSESSEE TO EXPLAIN THE SOURCES, AO CONSIDERED THE ENTIRE AMOU NT AS UNEXPLAINED CASH CREDITS INTO ASSESSEES BANK ACCOUNT AND ADDED TO THE INCOME OF ASSESSEE. BEFORE THE CIT(A), IT WAS CONTENDED THAT AO DID NOT ASK ASSESSEE TO PRODUCE THE LOAN CREDITORS FOR EXAMINAT ION AND TO SUBSTANTIATE THE GENUINENESS OF THE LOANS. ON THE DIRECTIONS OF CIT(A), AO HAS EXAMINED THE CASH CREDITORS AND REMAND REPOR T DT. 11-11-2014 WAS SENT TO THE CIT(A). OUT OF THE 16 LENDERS CLAI MED BY ASSESSEE WHO LENT THE MONEY, 10 PERSONS APPEARED AND CONFIRMED H AVING ADVANCED THE MONEY, TO AN EXTENT OF RS. 27,65,000/-. LD. CI T(A) ON THE BASIS OF THE REPORT OF THE AO DELETED THE AMOUNT TO THAT EXT ENT. 2.1 THE BALANCE SIX CREDITORS TOTALING TO RS. 12,40 ,000/- HAVE NOT APPEARED BEFORE THE AO. SUMMONS COULD NOT BE SENT AS ASSESSEE DID NOT PROVIDE THE ADDRESSES. IN VIEW OF THAT, AO REP ORTED THAT ASSESSEE HAS NOT PROVED THE GENUINENESS OF THE CASH CREDITS. IT IS ONE OF THE CONTENTIONS OF ASSESSEE THAT IF THE WITHDRAWALS AND DEPOSITS ARE CONSIDERED, THEN THE PEAK CREDIT WOULD BE AN AMOUNT OF RS. 3,85,800/- AND AT BEST THE SAME AMOUNT CAN BE BROUGHT TO TAX. LD. CIT(A) NOTED THE CONTENTION OF ASSESSEE THAT OUT OF THEM, TWO PE RSONS, MOTHAJIGARI MOTHAJI AND HIS WIFE LEFT THE VILLAGE AND THEIR WHE REABOUTS ARE NOT KNOWN AND WITH REFERENCE TO THE BALANCE OF THE AMOUNTS, N O ADDRESSES WERE FURNISHED. ACCORDINGLY, THE CIT(A) CONFIRMED THE A MOUNTS CLAIMED TO HAVE RECEIVED FROM SIX PERSONS TOTALING TO RS. 12,4 0,000/. ASSESSEE IS AGGRIEVED. I.T.A. NO. 134/HYD/2015 SRI SANTOSH BODDULA :- 3 -: 2.2 BEFORE US, LD. COUNSEL REFERRING TO THE ORDERS OF AO AND CIT(A) SUBMITTED THAT ASSESSEE BEING A SALARIED EMPLOYEE H AS BORROWED FUNDS FOR CERTAIN PROJECT AND SUBSEQUENTLY, THE AMOUNTS W ERE REPAID. AT PRESENT, ASSESSEE IS NOT HAVING ANY INFORMATION. T HEREFORE, AT THE TIME OF ASSESSMENT ITSELF, ASSESSEE HAS CONTENDED THAT P EAK CASH CREDIT CAN BE BROUGHT TO TAX. THE SAME SUBMISSION WAS ALSO MA DE BEFORE THE LD. CIT(A). LD. COUNSEL REFERRED TO THE ORDER OF CIT(A ) TO SUBMIT THAT THERE ARE CERTAIN FACTUAL ERRORS IN THE ORDER OF THE CIT( A). ASSESSEE HAS TAKEN CREDIT FOR THE WITHDRAWALS ON 03-04-2009 WHICH WAS REFLECTED IN THE ACCOUNT COPY OF ICICI BANK, WHEREAS CIT GAVE A FIND ING THAT THERE ARE NO CASH WITHDRAWALS ON 03-04-2009. REFERRING TO THE O RDER OF CIT(A) IN PAGE 6 AND COPY OF THE PEAK CASH CREDIT STATEMENT F ILED ALONG WITH THE STATEMENT OF BANK, IT WAS THE SUBMISSION THAT LD. C IT(A) HAS WRONGLY CONSIDERED THE FACTS AND REJECTED THE PEAK CREDIT C ONCEPT CLAIMED BY ASSESSEE. IT WAS SUBMITTED THAT CONSIDERING THE TO TAL CASH CREDITS ALSO, THE PEAK AMOUNT CAN BE FIXED AT RS. 3,85,000/-. TH EREFORE, ASSESSEE IS SEEKING RELIEF ON THAT ISSUE. LD. DR WHILE ADMITTI NG THAT THERE COULD BE A MISTAKE IN CONSIDERING THE STATEMENT OF ICICI BAN K WHICH INDICATES THAT THERE WERE WITHDRAWALS ON 03-04-2009, HE COULD NOT PLACE ANY ARGUMENTS ON THE CLAIM OF PEAK CREDIT AS THE SAME W ERE NOT EXAMINED BY THE AO OR CIT(A). 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND EXA MINED THE FACTS. AS FAR AS THE ADDITION OF CASH CREDITS IS CONCERNED , ASSESSEE COULD FURNISH DETAILS OF TEN CREDITORS WHICH WAS EXAMINED BY THE AO AND RELIEF TO THAT EXTENT WAS GIVEN BY THE CIT(A). WITH REFER ENCE TO BALANCE SIX CREDITS, ASSESSEE EVEN THOUGH FURNISHED NAMES, COUL D NOT FILE ANY ADDRESSES AND THEREFORE CREDITWORTHINESS AND GENUIN ENESS OF THE ABOVE CLAIMS WERE NOT ESTABLISHED. PRIMA-FACIE THE BURDEN WAS NOT DISCHARGED. EVEN THOUGH, ASSESSEE IS UNABLE TO FURNISH ANY EVID ENCE NOW ABOUT CASH I.T.A. NO. 134/HYD/2015 SRI SANTOSH BODDULA :- 4 -: CREDITS, HE MAY HAVE OTHER EVIDENCE TO JUSTIFY THE RECEIPT OF MONEY FROM THOSE PARTIES, INCLUDING THE FACT THAT THE AMOUNTS WERE STATED TO HAVE BEEN RETURNED SUBSEQUENTLY. HOWEVER, WHILE REJECTI NG THE ARGUMENT OF PEAK CREDIT MADE BY ASSESSEE, CIT(A) EMBARKED ON EX AMINING THE CASH FLOW STATEMENT AND REJECTED THE SAME STATING THAT T HERE ARE NO CASH WITHDRAWALS ON 03-04-2009 WHICH WERE REFLECTED IN S TATEMENT AT THE BEGINNING OF THE YEAR IN WORKING OUT PEAK CASH CRED IT. APPARENTLY, THERE IS A MISTAKE IN CIT(A)S ORDER AS ASSESSEE IS ABLE TO ESTABLISH THE WITHDRAWAL OF CASH ON THAT DAY FROM THE ACCOUNTS OF ICICI BANK. THEREFORE, TO THAT EXTENT, ORDER OF THE CIT(A) IS N OT BASED ON FACTS. EVEN THOUGH, AO OFFERED ONE SINGLE LINE COMMENT THAT ASS ESSEE HAS OFFERED PEAK CREDIT AT THE END OF THE REMAND REPORT THERE S EEMS TO BE NO EXAMINATION BY THE AO ALSO ABOUT THE PEAK CASH CRED IT. IT IS INCUMBENT ON THE AUTHORITIES TO EXAMINE THE CONTENTIONS AND A CCEPT OR REJECT BASED ON THE FACTS OR LAW. IN THIS CASE, THERE SEEMS TO BE NO EXAMINATION OF ASSESSEES CONTENTION THAT PEAK ACCOUNT CAN BE CONS IDERED FOR ADDITION AT RS. 3,85,000/-. THERE ARE NO DETAILS ON RECORD TO EXAMINE THE RECEIPTS AND PAYMENTS AND WITHDRAWALS IF ANY, SPENT FOR ANY OTHER PURPOSE OR INVESTMENT IN ASSETS. THEREFORE, WE ARE OF THE OPI NION THAT ENTIRE ADDITION OF CASH CREDIT TO THE EXTENT OF RS. 12,40, 000/- AS CONFIRMED BY THE CIT(A) IS TO BE RESTORED TO AO FOR GIVING ONE M ORE OPPORTUNITY TO ASSESSEE TO SUBSTANTIATE AND IN THE ABSENCE OF THE SAME WHETHER ANY PEAK CREDIT CONCEPT CAN BE ACCEPTED WHICH REQUIRE E XAMINATION BY THE AO. IN VIEW OF THIS, WE SET ASIDE THE ORDER OF CIT( A) TO THAT EXTENT AND RESTORE THE MATTER TO AO TO EXAMINE WHETHER THE CAS H FLOW STATEMENT FURNISHED BY ASSESSEE CAN BE ACCEPTED AND IF SO, TH E PEAK CREDIT ARRIVED AT BY ASSESSEE IS ACCEPTABLE FOR WHICH ASSESSEE HAS TO FURNISH NECESSARY DETAILS OF WITHDRAWALS AND PURPOSE OF WITHDRAWALS S O AS TO EXAMINE WHETHER THE CONTENTION THAT THE SAME AMOUNT WAS RE- DEPOSITED IN THE BANK ACCOUNT COULD BE ACCEPTED. FOR THIS PURPOSE, W E RESTORE THE ISSUE I.T.A. NO. 134/HYD/2015 SRI SANTOSH BODDULA :- 5 -: TO THE FILE OF AO TO EXAMINE THE MATTER AFRESH AND DECIDE. ASSESSEE IS ALSO FREE TO FURNISH ANY NECESSARY EVIDENCE EITHER IN SUPPORT OF CASH CREDITS OR IN SUPPORT OF PEAK CREDIT WORKING AND AC CORDINGLY, AO WILL DECIDE THE ISSUE ON FACTS AND LAW. 4. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH AUGUST, 2015 SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 26 TH AUGUST, 2015 TNMM COPY TO : 1. SRI SANTOSH BODDULA, FLAT NO. 203, MOHAN SURYA R ESIDENCY, HANUMAN NAGAR, MANIKONDA, HYDERABAD. C/O. CH. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOK NAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-12(4), HYDERABAD. 3. CIT(APPEALS)-I, HYDERABAD. 4. CIT-I, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.