The ITO, Ward-9(3), Surat V. Shri Pareshkumar K.Savaj, Surat

ITA 1484/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94900 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 03-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE
• Assessee Lawyers: M K PATEL
• Keywords: Peak credit
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, A M. ITA NO.1484/AHD/2012 ASST. YEAR: 2008-09 INCOME-TAX OFFICER, WD-9(3), SURAT. VS. SHRI PARESHKUMAR K. SAVAJ, PLOT NO.174-A, VITHAL NAGAR SOCIETY, HIRA BAUG, VARACHHA ROAD, SURAT. APPELLANT RESPONDENT PAN :BFJPS0006M APPELLANT BY SHRI VILAS V. SHINDE, DR RESPONDENT BY SHRI M. K. PATEL, AR DATE OF HEARING: 3/12/2015 DATE OF PRONOUNCEMENT: 10/12/2015 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER. THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-V, SURAT, IN APPEAL NO.CAS-V/207/2010-11 DAT ED 6.3.2012. ASSESSMENT WAS FRAMED U/S 143(3) OF THE I.T. ACT, 1 961 (IN SHORT THE ACT) FOR ASST. YEAR 2008-09 ON 23.12.2010 BY ITO, W D-9(3), SURAT. REVENUE HAS RAISED FOLLOWING GROUND OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.10,50,000/- MADE BY AO, ON ACCOUNT OF CASH DEPOS IT IN BANK TREATED AS UNDISCLOSED AND UNEXPLAINED MONEY U /S 69A OF THE ACT. ITA NO. 1484/AHD2012 ASST. YEAR2008-09 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF TH E AO. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHO DERIVES INCOME FROM COMMISSION FROM BUSINESS TRANSA CTION OF PURCHASE/SALES OF DIAMONDS. RETURN OF INCOME WAS FI LED ON 21.8.2008 DECLARING TOTAL INCOME AT RS.1,24,365/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143 (2) OF THE ACT WAS ISSUED ON 28.8.2009. THE ONLY ADDITION MADE BY ASSE SSING OFFICER WAS OF RS.10,50,000/- ON ACCOUNT OF UNDISCLOSED AND UNEXPLAINED MONEY U/S 69A OF THE ACT BASED ON THE REASON THAT A SSESSEE HAS NOT DISCLOSED HIS BANK ACCOUNT HELD WITH VARACHHA CO-OP . BANK LTD. IN HIS BOOKS OF ACCOUNT. 3. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE CIT(A) WHO PARTLY ALLOWED THE APPEAL OF ASSESSEE BY SUSTAINING THE AD DITION OF THE PEAK BALANCE OF CASH IN HAND WITH THE ASSESSEE ON 1,61,0 34/- AVAILABLE ON 12.12.2007. 4. AGGRIEVED REVENUE IS NOW IN APPEAL BEFORE THE TR IBUAL. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THIS APPEAL HAS ARISEN FOR THE REASON THAT ASSESSEE WHO IS REGULARLY DERIVING HIS INCOME FROM COMMISSION HAS INADVERTENTLY NOT DISCLOSED THE TRANSACTIONS ENTERE D INTO BY HIM IN HIS ITA NO. 1484/AHD2012 ASST. YEAR2008-09 3 SAVINGS BANK ACCOUNT MAINTAINED WITH VARACHHA CO-OP . BANK LTD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN REPL Y TO NOTICE U/S 142(1) OF THE ACT, ASSESSEE HAS SUBMITTED THAT HE H AD NO BANK ACCOUNT DURING THE YEAR UNDER ASSESSMENT AND, THERE FORE, THERE WAS NO BANK RECONCILIATION STATEMENT REQUIRED TO BE SUB MITTED IN REPLY TO THE NOTICE. FURTHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS REVEALED THAT ASSESSEE WAS HAVING A SAVINGS BAN K ACCOUNT WITH VARACHHA CO-OP. BANK LTD. AND IN TOTAL A CASH SUM O F RS.10,50,000/- WAS DEPOSITED RANGING BETWEEN RS.45,000/- TO RS.49, 000/- EXCEPT AT ONE INSTANCE WHEN RS.80,000/- WAS DEPOSITED IN CASH . FURTHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE SUBMI TTED THAT VARIOUS CASH DEPOSITS TOTALING RS.10,50,000/- WERE MADE TO EARN COMMISSION INCOME WHEREIN ASSESSEE HAS TO ISSUE CHE QUE BY DEPOSITING CASH RECEIVED FROM HIS PURCHASING PARTIE S AND ISSUE CHEQUES TO SELLERS AND ASSESSEE USED TO EARN COMMIS SION UPTO 2% FOR FACILITATING SUCH TRANSACTIONS. THIS FACT THAT ASSESSEES SOURCE OF INCOME IS FROM COMMISSION FROM TRANSACTIONS OF PURC HASES/SALES OF DIAMONDS WAS ACCEPTED BY LD. CIT(A) AND HE HAS THER EFORE ADOPTED PEAK BALANCE THEORY AND SUSTAINED THE ADDITION OF R S.1,61,034/-. EVEN DURING THE PROCEEDINGS BEFORE US THE LD. DR HA S NOT CONTROVERTED THIS FACT THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF EARNING COMMISSION FROM TRANSACTIONS OF PURCHASE/SA LES OF DIAMONDS WHEREIN ASSESSEE RECEIVED CASH FROM THE PURCHASERS OF GOODS AND ISSUES CHEQUES TO THE SELLERS AFTER FULLY VERIFYING THE QUALITY OF GOODS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALSO TH E ASSESSING OFFICER HAS NOT BEEN ABLE TO PROVE THAT WHAT WAS TH E DESTINATION OF ITA NO. 1484/AHD2012 ASST. YEAR2008-09 4 THE IMPUGNED UNDISCLOSED INCOME IN A SITUATION WHEN ALL THE WITHDRAWALS OUT OF THE BANK ACCOUNT WERE BY WAY OF ISSUING CHEQUES. 6. NOW IN A SITUATION WHEN ASSESSEE WHO IS EARNING COMMISSION INCOME FROM TRANSACTION OF PURCHASE/SALES OF DIAMON DS AND HAS NOT DISCLOSED A BANK A/C IN WHICH CASH IN PARTS TOTALIN G RS.10,50,000/- HAS BEEN DEPOSITED BEING INCOME FROM PURCHASERS OF DIAMONDS AND ISSUED CHEQUES TO SELLERS, THEN WHETHER SUCH AMOUNT IS TO BE TREATED AS UNDISCLOSED INCOME OR A PEAK THEORY TO BE APPLIE D, WE FIND THAT THE CO-ORDINATE BENCH IN THE CASE OF ITO VS. SHRI INDRAJEET Z. TOMAR IN ITA NO.1926/AHD/2011 FOR ASST. YEAR 2008-09 VIDE ORDER DATED2.2.2015 HAS DEALT SIMILAR TYPE OF ISSUE IN WH ICH ASSESSEE ENTERED INTO TRANSACTION IN TWO UNDISCLOSED BANK AC COUNTS AND THE CO-ORDINATE BENCH UPHELD THE FINDING OF LD. CIT(A) FOR SUSTAINING THE ADDITION TO THE EXTENT OF PEAK BALANCE OF THE TWO B ANK ACCOUNTS BY OBSERVING AS UNDER:- 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUS ED THE ORDERS OF THE AO AND THE CIT(A) ON THIS ISSUE. WE FIND THA T THE CIT(A) HAS PASSED A DETAILED ORDER ON THIS ISSUE. THE ADMITTED FACT IS THAT THE TWO BANK ACCOUNTS OF THE ASSESSEE WITH AXIS BANK AN D ICICI BANK LTD. WERE NOT DISCLOSED TO THE DEPARTMENT. HOWEVER, THE LEGAL POSITION ON THIS ISSUE IS WELL SETTLED THAT ONLY TH E PEAK AMOUNT IN SUCH TYPE OF CASE COULD BE ADDED AS INCOME IN THE HANDS OF THE ASSESSEE AND NOT AGGREGATE OF THE TOTAL CREDIT SIDE OF THE A CCOUNT. IN THIS CASE, THE CIT(A) HAS RECORDED THAT THE PEAK AMOUNT OF TWO BANK ACCOUNTS WITH AXIS BANK AND ICICI BANK LTD. TAKEN TOGETHER C OMES TO RS.22,58,223/-, AND THE SAME HAS BEEN CONFIRMED AS INCOME IN THE HANDS OF THE ASSESSEE AND THE BALANCE ADDITION HAS BEEN DELETED. THE REVENUE COULD NOT CONTROVERT THIS FINDING OF TH E CIT(A) THAT THE PEAK BALANCE IN THESE TWO UNDISCLOSED BANK ACCOUNTS OF THE ITA NO. 1484/AHD2012 ASST. YEAR2008-09 5 ASSESSEE HAS BEEN RIGHTLY CALCULATED AT RS.22,58,22 3/-. IN THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT NO INTERFERENC E IN THE ORDER OF THE CIT(A) IS CALLED FOR, AND THE GROUND NO.2 OF THE RE VENUE IS DISMISSED. 7. AS THE FACTS OF THE CASE ARE SIMILAR TO THE FACT S DECIDED IN THE ABOVE REFERRED DECISION BY CO-ORDINATE BENCH, WE AP PLY THE SAME RATIO AND CONFIRM THE ORDER OF LD. CIT(A) WHO HAS S USTAINED THE ADDITION AT RS.1,61,034/- BY ADOPTING PEAK THEORY. ACCORDINGLY THE APPEAL FILED BY THE REVENUE IS DISMISSED. 8. OTHER GROUNDS ARE OF GENERAL NATURE, WHICH NEED NO ADJUDICATION. 9. IN THE RESULT, THE APPEAL FILED BY REVENUE IS DI SMISSED.. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH DECEMBER, 2015 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 10 / 12/2015 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 1484/AHD2012 ASST. YEAR2008-09 6 1. DATE OF DICTATION: 8/12/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 9/12/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 10/12/2015 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: