ITO, Sonepat V. Shri Dheeraj Ahuja, Rohtak

ITA 1398/DEL/2010

• Counselvise Citation: 139820114 RSA 2010
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 31-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AROOP KR SINHA
• Assessee Lawyers: GAUTAM JAIN CA APPEAL HEARD ON
• Keywords: Salary income; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND SHRI KULBHARAT, JUDICIAL MEMBER I.T.A .NO.- 1398/DEL/2010 (ASSESSMENT YEAR- 2007-08) ITO, VS DHEERAJ AHUJA, WARD-4, 15, BANK COLONY, SONEPAT. ROHTAK (A PPELLANT) (RESPONDENT) APPELLANT BY: SH. AROOP KR. SINHA, SR. DR RESPONDENT BY: SH. GAUTAM JAIN, CA APPEAL HEARD ON-12.09.2012 ORDER PRONOUNCED ON-14.09.2012 ORDER PER KULBHARAT, JM THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), ROHTAK DATED 28.01.2010. 2. THE REVENUE HAS RAISED SOLITARY GROUNDS WHICH RE ADS AS UNDER:- 1). IN THE FACTS AND UNDER THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT TO TH E PEAK AMOUNT OF RS. 2,57,853/- WITHOUT ANY FINDING REGARD ING ROTATION OF FUNDS BY THE ASSESSEE. SINCE THERE WAS NO BUSIN ESS IN EXISTENCE, THE QUESTION OF WORKING OUT A PEAK AMOUN T OF CASH DEPOSIT DOES NOT ARISE AS ROTATION OF FUNDS FOR ANY LEGITIMATE PURPOSE HAS NOT BEEN ESTABLISHED. 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND A NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 I.T.A .NO.- 1398/DEL/2010 2 (HEREIN AFTER REFER TO AS THE ACT) WAS ISSUED AND S ERVED UPON THE ASSESSEE AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS CALLED UPON TO EXPLAIN THE SOURCE OF DEPOSIT OF RS. 23,56,300/- IN AXIS BANK, ROHTAK. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS ENG AGED IN WHOLESALE TRADING OF CLOTH BUSINESS BUT THE UNDISCLOSED AS THE ASSESS EE FURNISHED RETURN OF INCOME IN FORM NO. ITR-2 (NON-BUSINESS), THEREFORE, ADDITION OF RS. 23,56,300/- WAS ADDED BACK INTO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), AGAINST THE ASSESSMENT ORDER AND LD. CIT(A), AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE HELD THAT THE ENDS OF JUSTICE WOULD BE MET IF ADDITION O F PEAK CREDIT AMOUNT IN THE BANK ACCOUNT OF THE APPELLANT DURING THE PREVIOUS Y EAR IS TREATED AS ITS UNDISCLOSED INVESTMENT/INCOME. THEREFORE, ADDITIO N OF RS. 2,57,853/- PEAK CREDIT AS ON 02.08.2006 WAS CONFIRMED OUT OF THE TO TAL ADDITION OF RS. 23,56,300/-. 4. THE REVENUE IS NOW IN APPEAL BEFORE THIS TRIBUNA L. LD. SENIOR DR STRONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER A ND VEHEMENTLY ARGUED THAT LD. CIT(A) OUGHT NOT TO HAVE ADOPTED THE PEAK CREDIT AND THE ADDITION MADE BY THE ASSESSING OFFICER SHOULD HAVE BEEN CONF IRMED. SINCE THE ASSESSEE HIMSELF HAS DISCLOSED IN HIS RETURN OF INC OME THAT HE WAS DERIVING INCOME FROM SALARY, HOUSE PROPERTY AND INTEREST. H E HAS NOT DISCLOSED THAT HE WAS CARRYING OUT ANY BUSINESS ACTIVITY. ON THE CONTRARY, LD. COUNSEL FOR I.T.A .NO.- 1398/DEL/2010 3 THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF LD. CI T(A) AND SUBMITTED THAT THE CASE IS COVERED BY THE VARIOUS DECISIONS OF THE HONBLE INCOME TAX APPELLATE TRIBUNAL AND HE RELIED ON THE DECISION OF THE HONBLE CO-ORDINATE BENCH, MUMBAI RENDERED IN THE CASE OF NARAYAN G. M ANDGIRI IN ITA NO. 3653/MUM/2011, IN SUPPORT OF CONTENTION THAT THE AS SESSEE HAD WITHDRAWN MONEY FROM HIS ACCOUNT, THEREFORE, PEAK CREDIT HAS TO BE ADOPTED. HE FURTHER RELIED ON THE DECISION OF HONBLE ITAT, CHANDIGARH IN THE CASE OF ITO, WARD-6(3) VS. SMT. SURJIT KAUR IN ITA NO. 1184/CHD. /2011, IN SUPPORT OF THE CONTENTION THAT THE BENEFIT OF ROTATION OF CASH IS TO BE GIVEN TO THE ASSESSEE SINCE ONLY PEAK BALANCE COULD BE ASSESSED. HE ALSO RELIED ON THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS KULWANT RAI (2007) 291 ITR 36 (DELHI). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED MATE RIAL AVAILABLE ON RECORD. THE ONLY ISSUE INVOLVED IS TAKING PEAK CRE DIT AMOUNT IN THE BANK OF THE ASSESSEE DURING THE PREVIOUS YEAR FOR TREATING THE SAME AS HIS UNDISCLOSED INVESTMENT/INCOME. THE ASSESSING OFFICER HAS MADE ADDITION ON THE BASIS THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSE E CONTENDED THAT HE IS ENGAGED IN TRADING OF CLOTH AND THE SOURCE OF INVES TMENT IN THE FORM OF BANK DEPOSIT HAS BEEN MADE OUT OF CLOTH BUSINESS. HE OB SERVED THAT ALTHOUGH THE ASSESSEE CLAIMED THAT HE IS ENGAGED IN THE WHOLE-SA LE TRADING OF CLOTH BUT I.T.A .NO.- 1398/DEL/2010 4 SUCH BUSINESS IS UNDISCLOSED AS THE ASSESSEE FURNIS HED RETURN OF INCOME IN FORM NO ITR -2(NON-BUSINESS). 6. THE UNDISPUTED FACT IS THAT THE ASSESSEE HAD MAD E CASH WITHDRAWALS FROM THE BANK AND NO OTHER MATERIAL HAS BEEN PLACED ON RECORD SUGGESTING INVESTMENT MADE IN ANY OTHER ACTIVITY, THEREFORE, W E DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) FOR ADOPTING T HE PEAK CREDIT FOR THE PURPOSE OF TREATING THE SAME AS UNDISCLOSED INVESTM ENT/INCOME. IN THIS VIEW OF THE MATTER, THIS GROUND OF THE REVENUE S APPEAL IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON14.09.2012. SD/- SD/- (S.V.MEHROTRA) (KULBHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14/09/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI I.T.A .NO.- 1398/DEL/2010 5