Sri.Anilkumar D, Changanacherry V. The ITO, Thiruvalla

ITA 140/COCH/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5550 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: R KRISHNAN
• Keywords: Peak credit
• Section: 142(1); 148; 144

Judgement Text

ITA NO 140/C/2017 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH (SMC) KOCHI BEFORE SHRI GEORGE GEORGE K , JUDICIAL MEMBER ITA NO 140/COCH/2017 (A SST YEAR 2005 - 06 ) SH ANIL KUMAR D SREERAMA SADANAM KURIANOOR PO CHANGANACHERRY VS THE INCOME TAX OFFICER WARD 1 THIRUVALL A ( APPELLANT) (RESPONDENT) PAN NO. AHEPD4131A ASSESSEE BY SH R KRISHNAN REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 17 TH AUG 2017 DATE OF PRONOUNCEMENT 18 TH AUG 201 7 ORDER PER GEORGE GEORGE K,J M : THIS APPEAL, AT THE INSTANCE OF THE ASS ESSEE, IS DIRECTED AGAINST THE CIT(A)S ORDER DATED 3.3.2017. THE RELEVANT ASSESSMENT YEAR IS 2005 - 06. 2 THE ONLY ISSUE THAT WAS ARGUED BY THE LD AR WAS THAT THE CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.8,90,000/ - AS UNEXPLAINED INCOME OF THE ASSESSE E. 3 BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR 2005 - 06 NO RETURN OF INCOME WAS FILED BY THE ASSESSEE. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE MADE CASH DEPOSIT S OF RS.1 5,25,000/ - ON VARIOUS DATES IN THE BANK ACCOUNT ITA NO 140/C/2017 2 WITH THONIPUZHA BRANCH OF THE FEDERAL BANK LTD. THE ASSESSING OFFICER ISSUED NOTICE S U/S 148 AND U/S 142(1) OF THE I T ACT . SINCE THERE WAS NO RESPONSE TO THE NO TICES ISSUED U/S 148 AND 142(1) OF THE ACT, BEST JUDGMENT ASSESSMENT U/S 144 R.W.S 148 WAS COMPLETED VIDE ORDER DATED 29.12.2008 . THE ASSESSING OFFICER, IN THE BEST JUDGMENT ASSESSMENT DATED 29.12.2008 ADDED THE CASH DEPOSIT MADE BY THE ASSESSEE WITH THONIPUZHA BRANCH OF THE FEDERAL BANK LTD AMOUNTING TO RS. 15,25,000/ - AS INCOME UNDER OTHER SOURCES. 4 AGGRIEVED BY THE BEST JUDGMENT ASSESSMENT, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESS EE. THE CIT(A) TOOK NOTE OF THE FACT THAT THE ASSESSEE WAS IN POSSESSION OF 19 ACRES OF AGRICULTURAL LAND AND HAD PRODUCED SALE INVOICES OF RUBBER LATEX TO THE TUNE OF RS. 7,70,036/ - . THE CIT(A) AFTER EXAMINING THE SALE INVOICES DATED 27.4.2004, 15.6.200 4, 28.8.2004, 12.9.2004 AND 14.10.2004 HELD THAT CASH DEPOSIT AMOUNTING TO RS. 6,35,000/ - WERE OUT OF SALE OF RUBBER LATEX. THE CIT(A), AFTER DEDUCTING RS. 6,35,000/ - SUSTAINED THE BALANCE OF 8,90,000/ - . 5 AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS MERELY BROUGHT TO TAX THE CASH DEPOSIT IN BANK AS INCOME WITHOUT CONSIDERING THE CASH WITHDRAWALS FROM THE SAME ACCOUNT WHICH WERE AVAILABLE FOR SUBSEQUENT DEPOSIT. THE LD COUNSEL HAS FILED THE STATEMENT SHOWING THE CASH WITHDRAWALS AND CASH DEPOSITS ON VARIOUS DATES IN THE THONIPUZHA BRANCH OF THE FEDERAL BANK LTD . IT WAS FURTHER CONTENDED BY THE LD COUNSEL THAT PEAK CREDIT IN TH E ITA NO 140/C/2017 3 FEDERAL BANK ACCOUNT WAS ONLY RS. 7,22,580/ - AND IF AT ALL THE ADDITION IS TO BE MADE, THE PEAK C REDIT ALONE NEED TO BE BROUGHT TO TAX. IT WAS FURTHER CONTENDED THAT THE ASSESSEE HAVING PRODUCE D BILLS FOR HAVING SOLD OF RUBBER LATEX TO THE TUNE OF R S. 7,70,036/ - , THE ADDITION ON ACCOUNT OF PEAK CREDIT OF RS. 7,22,580/ - IS ALSO NOT WARRANTED. 5.1 THE LD DR SUPPORTED THE ORDER OF THE CIT(A). 6 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS REGARDS THE ASSESSEES SUBMISSION THAT THE ONLY PEAK CREDIT IS TO BE BROUGHT TO TAX, I AM OF THE VIEW THAT THE PEAK CREDIT CAN BE ADDED ONLY WHEN THE BANK TRANSACTIONS ARE MANY AND VOLUMINOUS. IN THE INSTANT CASE, CASH DEPOSITS ARE VERY FEW AND THE SAME NEED TO BE EXPLAINED BY THE ASSESS EE. THE CIT(A) HAS ALREADY GRANTED CREDIT OF RS. 6,35,0 00/ - BEING SALE OF RUBBER LATEX . THEREFORE, THE CONTENTION OF THE ASSESSEE THAT ONLY PEAK CREDIT SHOULD BE TAKEN INTO CONSIDERATION WHILE MAKING ADDITION IS DEVOID OF ANY MERIT. HOWEVER, I NOTICE THA T THE ASSESSEE HAD MADE CASH WITHDRAWALS ON VARIOUS DATES AND SAME COULD NORMALLY BE AVAILABLE FOR REDEPOSIT. THE DETAILS OF DATES OF CASH WITHDRAWALS AND CASH DEPOSITS IN FEDERAL BANK ACCOUNT ARE GIVEN BELOW: DATE WITHDRAWAL DEPOSIT BALANCE 16/04/04 1,00,000.00 1,00,0 00.00 30/04/04 1,25,000.00 2,25,0 00.00 07/05/04 2,00,000.00 25,000.00 11/05/04 75,000.00 (50, 000.00) 14/05/04 15,000.00 (65,000.00) 18/06/04 1,70,000.00 1,05,000.00 28/06/04 1,70,000.00 (65,000.00) 15/07/04 1,00,000.00 (1,65,000.00) 23/07/04 1,70,000.00 5,000.00 ITA NO 140/C/2017 4 26/08/04 1,00,000.00 1,05,000.00 09/09/04 2,00,000.00 3,05,000.00 10/09/04 1,00,000.00 4,05,000.00 14/09/04 2,00,000.00 6,05,000.00 23/09/04 3,000.00 6,02,000.00 25/09/04 50,000.00 5,52,000.00 07/10/04 50,000.00 6 ,02,000.00 18/10/04 40,000.00 6,42, 000.00 20/10/04 45,000.00 6,87,000.00 12/11/04 1,920.00 6,85,080.00 13/12/04 2,500.00 6,82 ,580.00 02/12/04 40,000.00 7,22,580.00 16/12/04 2,50,000.00 4,72,580.00 17/12/04 35,000.00 5,07,580.00 18/12/04 12,000.00 4,95, 580.00 20/12/04 15,000.00 4,80, 580.00 29/12/04 40,000.00 5,20,580.00 04/01/05 5,000.00 5,15 ,580.00 06/01/05 70,000.00 4,45,580.00 11/01/05 4,800.00 4,40 ,780.00 11/02/05 70,000.00 5,10,780.00 21/02/05 40,000.00 5,50,780.00 ---------------------------------------------------------------------------------------------------- ----- 9,74,220.00 15,25,000.00 FROM THE ABOVE CHART , IT IS CLEAR THAT CASH WITHDRAWALS MADE BY THE ASSESSEE ON 7.5.2004 AND 11.5.2004 AMOUNTING TO RS.2,00,000/ - AND RS. 75,000/ - RESPECTIVELY COULD HAVE BEEN UTILIZED FOR CASH DEPOSITS OF RS. 1,75,000/ - ON 18.6.2004. SIMILARLY, CASH WITHDRAWALS ON 28.6.2004 AND 15.7.2004 AMOUNTING TO RS. 1,70,000/ - AND RS. 1,00,000/ - RESPECTIVELY COULD HAVE BEEN USED FOR REDEPOSIT ON 23.7.2004 AND 26.8.2004. T HERE WAS A CASH WITHDRAWAL BY THE ASSESSEE AMOUNTING TO RS. 2,50,000/ - ON 16. 12.2004 . THIS WITHDRAWAL COULD BE USED TO EXPLAIN THE SOURCE OF CASH DEPOSIT ON 17.12.2004 AMOUNTING TO RS. 35,000/ - . IN OTHER WORDS, THERE HAVE BEEN FREQUENT CASH WITHDRA WALS BY THE ASSESSEE AND IN THE NEARBY DATES, THERE HAVE BEEN CASH DEPOSITS BY THE ASSESSEE IN THE SAME FEDERAL BANK ACCOUNT. TAKING INTO CONSIDERATION THE ITA NO 140/C/2017 5 FACTUAL SITUATION, I AM OF THE VIEW THAT A FURTHER CREDIT OF RS. 5 LAKHS SHOULD BE GRANTED TO THE AS SESSEE IN ORDER TO EXPLAIN THE SOURCE OF CASH DEPOSIT. IF A FURTHER CREDIT OF RS. 5 LAKHS IS GRANTED TO THE ASSESSEE, THE ADDITION TO BE SUSTAINED IS ONLY RS. 3,90 - ,0 00/ - (RS. 8,90,000 5,00,000) . FOR THE AFORESAID REASONING, I AM OF THE VIEW THAT ADDIT ION ON ACCOUNT OF CASH DEPOSIT MADE WITH THONIPUZHA BRANCH OF THE FEDERAL BANK LTD NEED TO BE RESTRICTED ONLY TO THE EXTENT OF RS. 3,90,000/ - INSTEAD OF RS. 8,90,000/ - SUSTAINED BY THE CIT(A). IT IS ORDERED ACCORDINGLY. 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF AUG 201 7 . SD/ - ( GEORGE GEORGE K) JUDICIAL MEMBER COCHIN: DATED 18 TH AUG 201 7 RAJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT, 5 . DR 6 . GUARD FILE BY ORD ER ASSISTANT REGISTRAR ITAT, COCHIN