Shri Jatin Mukeshchandra Mehta, Surat V. The Income tax Officer,Ward-3(3), Surat

ITA 1389/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9072 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 15-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 10-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Unexplained cash credit; Peak credit

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD .., , BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.1389/AHD/2013 ( / ASSESSMENT YEAR : 2008-09) SHRI JATIN MUKESHCHANDRA MEHTA 61, GAYATRI NAGAR SOCIETY B/H. GAYATRI TEMPLE ALTHAN BHATAR ROAD SURAT 395 007 / VS. THE INCOME TAX OFFICER WARD-3(3) SURAT $ ./ ./ PAN/GIR NO. : ACHPM 0952 A ( $' / APPELLANT ) .. ( ($' / RESPONDENT ) $') / APPELLANT BY : NONE ($'*) / RESPONDENT BY : SHRI DINESH SINGH, SR.DR +,*- / DATE OF HEARING 15/02/2017 ./0*- / DATE OF PRONOUNCEMENT 08/03/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-IV, SURA T [CIT(A) IN SHORT] DATED 28/02/2013 FOR THE ASSESSMENT YEAR (AY) 2008-09 . 2. THE GROUND OF APPEAL RAISED BY THE ASSESSEE RE ADS AS UNDER:- ITA NO.1389/AHD /2013 SHRI JATIN MUKESHCHANDRA MEHTA VS. ITO ASST.YEAR 2008-09 - 2 - ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED COMMISSIONER OF INCOME TAX APPEAL WAS NOT JUSTIFIED IN CONFIRM ING THE ADDITION OF RS.22,51,148/- BEING UNEXPLAINED CREDIT IN BANK DEP OSIT. 3. WHEN THE MATTER WAS CALLED FOR HEARING, NONE AP PEARED FOR THE ASSESSEE. IT IS SEEN FROM THE RECORD THAT THE NOTI CE HAS BEEN SERVED ON THE ASSESSEE BY REGISTERED POST INTIMATING THE DATE OF HEARING. THE ASSESSEE HAS NEITHER ATTENDED NOR SOUGHT ANY ADJOURNMENT. T HUS, IT CAN BE PRESUMED THAT THE ASSESSEE IS NOT INTERESTED IN PRO SECUTING THE APPEAL. ACCORDINGLY, THE MATTER IS PROCEEDED EX-PARTE IN THE ABSENCE OF THE ASSESSEE. 4. THE LD.DR REPRESENTING THE ASSESSING OFFICER (AO ) RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ISSU E HAS BEEN DISCUSSED THREADBARE BY THE CIT(A). THE ADDITION HAS BEEN MA DE ON ACCOUNT OF CASH DEPOSITS IN THE BANK WHICH WAS NOT DISCLOSED T O THE DEPARTMENT. THEREFORE, NO INTERFERENCE WITH THE ORDER OF THE CI T(A) IS CALLED FOR. 5. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE C IT(A) APPEALED AGAINST AND ALSO THE ASSESSMENT ORDER. WE NOTE THA T THE CIT(A) HAS DEALT WITH THE ISSUE IN LENGTH WHICH IS REPRODUCED HEREUN DER:- 2. IN THIS CASE, AIR INFORMATION WAS RECEIVED THAT THE APPELLANT WAS MAINTAINING AN UNDISCLOSED BANK ACCOUNT IN AXIS BAN K IN WHICH THE ITA NO.1389/AHD /2013 SHRI JATIN MUKESHCHANDRA MEHTA VS. ITO ASST.YEAR 2008-09 - 3 - TOTAL AMOUNT OF RS.27,04,907/- HAD BEEN DEPOSITED. IN REPLY TO THE SHOW CAUSE NOTICE ISSUED BY THE AO, THE APPELLANT EXPLAI NED THAT HE WAS WORKING AS AN AGENT FOR FINANCIAL INVESTMENTS LIKE MUTUAL FUND, BONDS, ETC. THE APPELLANT SUBMITTED THAT FOR THE SAKE OF C ONVENIENCE OF HIS CLIENTS HE HAS OPENED AN ACCOUNT WITH AXIS BANK SO THAT ANY AMOUNT RECEIVED FROM THE INVESTOR COULD BE DEPOSITED IN TH AT ACCOUNT AND CHEQUES ISSUED FOR INVESTMENT IN MUTUAL FUNDS OR BO ND OF THE VARIOUS COMPANIES ON BEHALF OF THE SAID PARTY. THE APPELLA NT FURTHER SUBMITTED THAT FROM THE BANK STATEMENT, IT WAS EVIDENT THAT T WO OR THREE DAYS AFTER CASH WAS DEPOSITED IN THE ACCOUNT, CHEQUES WERE ISS UED FOR INVESTMENT IN THE NAME OF THE ACTUAL INVESTOR. THE APPELLANT S TATED THAT HE WAS GETTING COMMISSION @1 TO 2% WHICH HE HAD OFFERED FO R TAXATION IN HIS RETURN OF INCOME. 3. THE AO DID NOT ACCEPT THIS CONTENTION OF THE APP ELLANT ON THE GROUNDS THAT THE APPELLANT HAS NOT GIVEN THE NAME A ND ADDRESS OF THE SO CALLED INVESTORS OR ANY OTHER DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM THAT THE CASH RECEIVED FROM THE INVESTORS WAS DEPOSITED IN HIS BANK ACCOUNT. THE AO FURTHER FOUND THAT THE APPELLA NT COULD NOT FURNISH THE DETAILS OF COMMISSION INCOME EARNED FROM SUCH U NDISCLOSED INSURANCE/MUTUAL FUND/ BOND BUSINESS ALONG WITH THE TDS CERTIFICATES. THE AO ADDED THE ENTIRE DEPOSIT OF RS.27,04,907/- C REDITED IN THE SAID BANK ACCOUNT AS UNDISCLOSED INCOME OF THE APPELLANT EARNED DURING THE YEAR. 4. IN APPEAL, THE APPELLANT REITERATED THE SUBMISSI ON MADE BEFORE THE AO THAT HE WAS WORKING AS AN AGENT FOR FINANCIA L INVESTOR AND EARNING COMMISSION OF 1 TO 2% FROM PRINCIPAL AGENTS WHICH HE OFFERED FOR TAXATION IN HIS RETURN OF INCOME. HE SUBMITTED THAT AS HE WAS A SUB AGENT HE WAS NOT RECEIVING TDS CERTIFICATES FORM TH E INSURANCE/MUTUAL FUND/BOND COMPANIES. HE SUBMITTED THAT THE ADDITION OF RS.27,04,970/- MAY BE DELETED OR REDUCED ON MERITS OR ALTERNATIVEL Y THE PEAK CREDIT IN THE BANK ACCOUNT SHOULD BE BROUGHT TO TAX. 5. I HAVE GONE THROUGH THE SUBMISSIONS OF THE APPEL LANT AND THE ASSESSMENT ORDER. IT IS A FACT THAT BANK ACCOUNT MA INTAINED WITH AXIS BANK WAS NOT DISCLOSED BY THE APPELLANT WHICH WAS A CCEPTED BY HIM ITA NO.1389/AHD /2013 SHRI JATIN MUKESHCHANDRA MEHTA VS. ITO ASST.YEAR 2008-09 - 4 - DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AP PELLANT COULD NOT GIVE THE NAME, ADDRESS & PAN OF THE SO CALLED INVES TORS FROM HE HAD RECEIVED THE MONEY IN CASH FOR INVESTMENT IN VARIOU S MUTUAL FUNDS/BONDS. DESPITE, BEING ASKED BY THE AO, THE AP PELLANT COULD NOT PRODUCED THE PAY-IN-SLIPS AS TO WHOSE CASH HAD BEE N DEPOSITED IN THE SAID UNDISCLOSED BANK ACCOUNT. AS THE APPELLANT HAD FAILED TO GIVE ANY DOCUMENTARY EVIDENCES THAT HE WAS EARNING COMMISSIO N INCOME AT 1.5% FROM THE VARIOUS INVESTORS THE AO HAD RIGHTLY REJEC TED HIS PLEA THAT HIS COMMISSION INCOME BE ESTIMATED AT 1.5% OF THE TOTAL AMOUNT DEPOSITED /CREDITED IN THE SAID BANK ACCOUNT. THE APPELLANT H AD ALSO FAILED TO SUBMIT ANY TDS CERTIFICATE FROM INSURANCE/MUTUAL FU ND/ BOND COMPANIES ON THE COMMISSION, IF ANY, PAID TO THE AP PELLANT. IN APPEAL, THE AR OF THE APPELLANT ACCEPTED THAT HE DID NOT HA VE ANY DOCUMENTARY EVIDENCE IN RESPECT OF THE BANK TRANSACTIONS. 5.2 FROM THE BANK STATEMENT OF THE APPELLANT IT IS SEEN THAT DURING THE YEAR THE TOTAL CASH DEPOSIT IS RS.24,93,500/- AND TOTAL CHEQUE DEPOSIT IS RS.2,09,677/- AGAINST THESE DEPOSITS THE APPELLANT HAS ISSUED CHEQUES OF RS.5,62,229/- WHICH HAS BEEN CLEARED BY CLEARING AND HAS ALSO TRANSFERRED FUNDS BY CHEQUE OF RS.16,38,000/- THE APPELLANT HAS NOT GIVEN ANY DETAILS OF THE NAME, ADDRESS & PAN OF THE PERSON WHOM THE CHEQUES WERE ISSUED OR FROM WHOM CHEQUES AND C ASH WERE RECEIVED. IN VIEW OF THE ABOVE FACTS, THE APPELLAN TS CONTENTION THAT HE WAS WORKING AS A COMMISSION AGENT FOR VARIOUS MUTUA L FUNDS/BONDS AND THE AMOUNT DEPOSITED IN THE BANK ACCOUNT REPRESENT S THE ACTUAL INVESTORS MONEY CANNOT BE ACCEPTED AS HE HAS FAIL ED TO GIVE THE NAME, ADDRESS & PAN OF PERSON WHOSE MONEY HE HAD DEPOSIT ED IN HIS BANK ACCOUNT. HENCE THE APPELLANTS PLEA THAT HIS INCOME BE ESTIMATED AT 1.5% OF THE TOTAL AMOUNT DEPOSITED/CREDITED IN THE SAID BANK ACCOUNT HAS BEEN RIGHTLY REJECTED BY THE A.O. 5.3 THE APPELLANTS ALTERNATE PLEA THAT ONLY THE PE AK CREDIT IN THE BANK ACCOUNT SHOULD BE BROUGHT TO TAX CANNOT ALSO B E ACCEPTED. THE APPELLANT CAN BE ALLOWED THE BENEFIT OF PEAK CREDIT IN THE BANK ACCOUNT ONLY IF HE IS ABLE TO GIVE THE NAMES, ADDRESS AND P AN OF THE PARTIES FROM WHOM HE HAS RECEIVED MONEY WHICH HAS BEEN DEPOSITED BY CHEQUE TOGETHER WITH THE NAMES, ADDRESS AND PAN OF THE PAR TIES TO WHOM THE ITA NO.1389/AHD /2013 SHRI JATIN MUKESHCHANDRA MEHTA VS. ITO ASST.YEAR 2008-09 - 5 - CHEQUES HAVE BEEN ISSUED. THE AMOUNT DEBITED BY CHE QUE CAN BE HELD TO BE AVAILABLE FOR ROTATION ONLY IF THE APPELLANT CAN PROVE THAT THE SAME AMOUNT CAME BACK TO HIM FOR WHICH HE HAS TO GIVE TH E DETAILS OF DEBIT AND CREDIT ENTRIES APPEARING IN HIS BANK ACCOUNT. T HERE ARE TWO CONCEPTS ONE PEAK CREDIT AND THE OTHER MAXIMUM BALA NCE IN THE BANK ACCOUNT DURING THE YEAR. WHAT THE APPELLANT IS OFFE RING FOR TAXATION IS THE MAXIMUM AMOUNT OUTSTANDING IN THE BANK AND NOT THE PEAK CREDIT BALANCE. THE LATTER CAN BE CALCULATED ONLY IF THE A PPELLANT PROVIDES COMPLETE DETAILS OF ALL DEBIT AND CREDIT TRANSACTI ONS AND ESTABLISHES THAT THE AMOUNT WITHDRAWN BY CHEQUE/CASH WAS AVAILA BLE FOR ROTATION OR RECYCLING. UNDER THESE CIRCUMSTANCES, THE BENEFIT O F ROTATION OF AMOUNT WITHDRAWN BY CHEQUE FOR RE-DEPOSIT BY CHEQUE/CASH CANNOT BE ALLOWED TO THE APPELLANT. AT MOST, THE APPELLANT CAN ONLY B E ALLOWED THE BENEFIT OF ROTATION OF CASH, THAT IS, THE CASH WITHDRAWALS MIGHT BE AVAILABLE FOR RE-DEPOSITING IN CASH. CONSIDERING THE COMPLETE FAC TS OF THE APPELLANTS CASE, PEAK IS ADMISSIBLE ONLY TO THE EXTENT OF CASH DEPOSIT AND CASH WITHDRAWALS. AS FAR AS CREDITS BY CHEQUE ARE CONCER NED, THE TOTAL AMOUNT DEPOSITED BY CHEQUES IS HELD TO BE THE UNEXP LAINED CASH CREDITS IN ABSENCE OF ANY SATISFACTORY EXPLANATION FROM THE APPELLANT. 5.4 FROM THE PERUSAL OF THE BANK STATEMENT OF THE U NDISCLOSED BANK ACCOUNT OF THE APPELLANT, THE FOLLOWING FACTS EMERG E: (A) PEAK OF CREDIT IS ONLY CASH TRANSACTIONS APPEAR ING IN THE BANK ACCOUNT ARE CONSIDERED: RS.20,49,500/- APPEARI NG ON 29.03.2000. (B) TOTAL OF CHEQUE DEPOSITS IN THE BANK ACCOUNT HE LD AS UNEXPLAINED CASH CREDIT: RS.2,09,648/- ACCORDINGLY, RS.22,59,148 IS HELD TO BE UNEXPLAINED CREDIT IN THE BANK DEPOSITED OUR OF APPELLANTS INCOME FROM UNEXPLAINE D SOURCES EARNED DURING THE YEAR. 6. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ITA NO.1389/AHD /2013 SHRI JATIN MUKESHCHANDRA MEHTA VS. ITO ASST.YEAR 2008-09 - 6 - 6. A PERUSAL OF THE EXTRACT NOTED ABOVE WOULD SH OW THAT BASED ON THE AIR INFORMATION, THE AO FOUND CASH DEPOSITS TO THE TUNE OF RS.27,04,907/- WITH AXIS BANK FOR ACQUIRING BONDS/D EBENTURES IN THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2008-09. WE FIND THAT THE CIT(A) HAS EXAMINED THE ISSUE IN PERSPECTIVE AND HA S GRANTED PARTIAL RELIEF THEREON. THE ORDER OF THE CIT(A) APPEARS RE ASONED AND PLAUSIBLE. IN THE ABSENCE OF ANY REBUTTAL FROM THE ASSESSEE, W E ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED EX-PARTE . THIS ORDER PRONOUNCED IN OPEN COURT ON 08/ 03 /2017 SD/- SD/- (..) ( ) ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 08/ 03 /2017 4..+,.+../ T.C. NAIR, SR. PS ITA NO.1389/AHD /2013 SHRI JATIN MUKESHCHANDRA MEHTA VS. ITO ASST.YEAR 2008-09 - 7 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 567- 8- / CONCERNED CIT 4. 8- ( ) / THE CIT(A)-IV, SURAT 5. 9:-+67 , 670 , 5 / DR, ITAT, AHMEDABAD 6. <, / GUARD FILE. / BY ORDER, (9-- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD