The ITO, Ward-5(4), Surat V. Shri Shashikant Tansukhlal Mandlesara, Surat

ITA 1526/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94876 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 07-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 11-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit; Unexplained investment; Peak credit; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC-A BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO.1526/AHD/2012 (ASSESSMENT YEARS:2008-09) INCOME TAX OFFICER, WARD-5(4), ROOM NO.316, AAYAKAR BHAVAN, MAJURA GATE, SURAT APPELLANT VS. SHRI SHASHIKANT TANSUKHLAL MANDLESARA 4/539-A, GHANCHI SHERI, BEGAMPURA, SURAT 395005 RESPONDENT PAN: ABPPM8843D /BY APPELLANT : MR. JAMES KURIAN, SR. D.R. /BY RESPONDENT : SHRI M. K. PATEL, A.R. /DATE OF HEARING : 07.12.2015 /DATE OF PRONOUNCEMENT : 09.12.2015 ORDER PER RAJESH KUMAR, A.M: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-IV, SURAT, DATED 23.03.2012 FOR A.Y. 2008-09 ON FOLLOWI NG GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD.CIT(A) HAS ERRED IN RESTRICTING THE ADDITION OF RS. 11,89,200/- TO RS.85,000/- WHICH WAS MADE BY THE A.O. AS UNEXPLAINED INVESTMENT IN UNDISCLOSED BANK ACCOUNT. 2 ITA NO.1526/ AHD/ 2012 (ITO VS. SHRI SHASHIKANT T. MANDLESARA), A.Y. 08-09 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO PEAK AMOUNT OF RS.54,035/-AND TAKEN ADDITIONAL CAPITAL OF RS.25,000/- TO CARRY ON THE UNDISCLOSED BUSINESS INSTEAD OF ADDITION OF RS.11,89,200/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT ONUS WAS ON ASSESSEE TO SUBSTANTIATE THAT CASH DE POSIT WAS UTILIZED IN THE PURCHASE/SALE OF THE BUSINESS. NO EVIDENCE IN THIS REGARD WAS FURNISHED BEFORE THE A.O. NEITHER IT IS CLEAR FROM THE ORDER OF THE C IT(A) AS WHAT WAS THE END RESULT OF ALLEGED TRADING FOR WANT OF SUPPORTING EVIDENCE FOR EACH AND EVERY DEBIT/CREDIT ENTRY THE DEPOSITS/WITHDRAWALS REMAIN UNEXPLAINED. 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY ACCEPTING THE ADDI TIONAL EVIDENCES WITHOUT PROVIDING AN OPPORTUNITY TO THE A.O. TO VERIFY THE SAME AS ENVISAGED UNDER RULE 46A(2) OF THE I.T. RULES 1962. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A), SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 6. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD.CIT(A)- IV, SURAT MAY BE SET- ASIDE AND THAT OF THE ASSESSING OFFICER'S ORDER MAY BE RESTORED. 2. THE COMMON ISSUE RAISED IN GROUND NOS. 1 & 2 OF APPEAL ARE AGAINST RESTRICTING THE ADDITION TO RS.85,000/- AS AGAINST RS.11,89,200/- MADE BY THE A.O. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED HIS RETURN OF INCOME ON 23.01.2009 DECLARING AN INCOME OF RS.1,00 ,700/- THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SA LE OF JARI GOODS. THE LD. A.O. ADDED RS.11,89,200/- BEING CASH DEPOSITED INTO ACCOUNT WITH ICICI BANK AND RS.16/- INTEREST THEREON ON THE GROUND THA T THE ASSESSEE HAD DEPOSITED CASH IN THE SAID BANK ACCOUNT AND PART OF THE DEPOSITS WERE DRAWN AND THE ASSESSEE FAILED TO PROVE THE CASH UTILIZATI ON FOR BUSINESS PURPOSES AND THE SAID BANK WAS NOT APPEARING IN THE BALANCE SHEE T OF THE ASSESSEE AND THEREFORE TREATED THE SAME AS UNEXPLAINED CREDIT BY REJECTING THE SUBMISSIONS OF ASSESSEE THAT THE SAID ACCOUNT BELONG TO HIS WIF E AND HE WAS ONLY JOINT HOLDER. THE A.O. CAME TO KNOW ABOUT THE SAID ACCOU NT UPON CALLING INFORMATION U/S.133(6). 3 ITA NO.1526/ AHD/ 2012 (ITO VS. SHRI SHASHIKANT T. MANDLESARA), A.Y. 08-09 4. THE LD. CIT(A) SUSTAINED THE ADDITION OF RS.85,0 00/- BY DELETING THE REMAINING ADDITION OF RS.11,04,200/- BY OBSERVING A S UNDER: 3.2 I HAVE GONE THROUGH THE FACTS OF THE CASE. THE CLAIM OF THE APPELLANT THAT THE ACCOUNT BELONGED TO THE WIFE OF THE APPELLANT IS NOTHING BUT AN AFTERTHOUGHT. THE ACCOUNT HAD BEEN OPENED BY THE APPELLANT, HE WAS THE FIRST HOLDER IN THE ACCOUNT, HIS PAN HAD BEEN USED TO OPEN THE ACCOUNT AND THE EVIDENCES SUGGEST THAT HE OPERATED THE ACCOUNTS. THE RETURNS OF THE WIFE HAVE BEEN FILED AFTER THE UNDISCLOSED ACCOUNT WAS DISCOVERED BY THE DEPARTMENT AND THE APPELLANT WAS PUT ON NOTICE. EVEN IN THESE RETURNS THE PEAK IN THE ACCOUNT HAS BEEN OFFERED AS UNEXPLAINED CASH. IN VIEW OF ALL THESE FACTS, IT IS HELD THAT THE A.O. HAS CORRECTLY REJECTED THE CLAIM OF OWNERSHIP MADE BY THE WIFE AND NOT ATTACHED ANY SIGNIFICANCE TO THE SELF SERVING AFFIDAVITS FILED BY SMT. GITABEN BEFORE HIM. HOWE VER, AS FAR AS THE UNDISCLOSED INCOME IS CONCERNED, I AM NOT ABLE TO AGREE WITH THE A.O. I RATHER FIND MYSELF IN AGREEMENT WITH THE ALTERNATE SUGGESTION OF THE APPELLANT THAT PEAK OF CREDIT IN THE ACCOUNT SHOULD BE CONSIDERED AS THE INCOME. THE CASH HAS BEEN DEPOSITED AT VARIOUS OUTSTATION LOCATIONS AND HAS BEEN WITHDRAWN AT SURAT. NO CONNECTION HAS BEEN SHOWN BETWEEN THE APPELLANT AND THESE PLACES. IT IS THEREF ORE LOGICAL TO ASSUME THAT THE DEPOSITS WERE MADE BY CUSTOMERS OF THE APPELL ANT ON ACCOUNT OF SALE PROCEEDS AND THESE WERE WITHDRAWN FOR BUSINESS PURPOSES. IN PRINCIPLE, THE INCOME FROM THE UNDISCLOSED ACCOUNT WOULD BE THE PEAK OF CRE DIT IN THE ACCOUNT PLUS INCOME ON THE TRANSACTIONS AFTER THE DATE OF PEAK. THE PEAK OF CREDIT OF RS.50,435/- OCCURS ON 24.03.2008 AND THERE ARE NO DEPOSITS AFTER THIS DATE. THE INCOME FROM THE ACCOUNT WOULD ORDINARILY BE RESTRICTED TO THE PEAK OF CREDIT, I.E. RS.50.435/-. HOWEVER, EVEN IF 5% RATE OF PROFIT AS PRESCRIBE D IN SECTION 44AE IS APPLIED, INCOME ON TURNOVER OF RS.11,89,200/- WOULD BE RS.59,460/-. IF WE CONSIDER REQUIREMENT OF ADDITIONAL CAPITAL OF RS.25,000/- TO CARRY ON THE UNDISCLOSED BUSINESS, THIS WILL HAVE TO BE CONSIDERED AS UNEXPLAINED INVESTME NT. THEREFORE, THE TOTAL INCOME ON ACCOUNT OF THE BUSINESS TRANSACTIONS IN THE ACC OUNT WOULD BE RS.84,460/- SAY RS.85,000/-. THE A.O. IS DIRECTED TO CONSIDER THIS INSTEAD OF RS.11,89,200/-. 5. THE LD. D.R. RELIED HEAVILY ON THE ORDER OF A.O. AND SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUN T OF CASH DEPOSITED INTO THE BANK ACCOUNT WITH ICICI BANK, WHICH WAS ALSO NO T SHOWN IN THE BALANCE SHEET OF THE ASSESSEE. LD. D.R. ALSO DREW OUR ATTE NTION TO THE OBSERVATION OF THE A.R. THAT THE ACCOUNT HAS BEEN OPENED BY THE AS SESSEE BY USING HIS PAN NO. AND THE MONEY WAS ALSO WITHDRAWN UNDER HIS SIGN ATURE AND THUS, CIT(A) EVEN ACCEPTED THE FINDING OF THE A.O. TO THIS EXTEN T. THEREFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN APPLYING THE CONCEPT OF PEAK THEORY AND REQUIREMENT OF ADDITIONAL CAPITAL AND THEREFORE SUB MITTED THAT THE ORDER OF CIT(A) BE SET ASIDE AND THE ORDER OF A.O. BE RESTOR ED. THE LD. A.R., ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(A). 4 ITA NO.1526/ AHD/ 2012 (ITO VS. SHRI SHASHIKANT T. MANDLESARA), A.Y. 08-09 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND FROM THE ORDER OF AUTHORITIES BELOW, WE FIND THAT THE ASSESSEE OPENED A BANK ACCOUNT IN ICICI BANK AND DEPOSITED C ASH ON VARIOUS DATES AND ALSO MADE WITHDRAWALS. THE TOTAL DEPOSITS DURI NG THE YEAR WERE RS.11,89,200/- AND THE SAME WAS TREATED BY THE A.O. AS UNEXPLAINED CREDIT WHILE FRAMING THE ASSESSMENT. WE ALSO NOTE THAT TH E SAID ACCOUNT WAS NOT DISCLOSED BY THE ASSESSEE IN HIS BALANCE SHEET WHER EAS ALL THE WITHDRAWALS WERE MADE UNDER HIS SIGNATURES. THE CIT(A) APPLIED THE THEORY OF NET PEAK BALANCE AND SUSTAINED THE ADDITION OF PEAK BALANCE OF RS.50,435/- AND ALSO SUSTAINED RS.25,000/- AS ADDITIONAL CAPITAL REQUIRE MENT AS UNEXPLAINED INVESTMENTS AND TREATED THE SAME AS INCOME OF THE A SSESSEE. UNDER THE PRESENT CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) AS HE HAD RIGHTLY APPLIED THE THEORY OF PEAK BALANCE I .E. RS.50,435/- AND TOOK ADDITIONAL CAPITAL AT RS.25,000/-. IN VIEW OF ABOV E FACTS, THE APPEAL OF REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 09 TH DAY OF DECEMBER, 2015. SD/- SD/- (SHAILENDRA KUMAR YADAV) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 09/12/2015 TRUE COPY S K SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE $ %&%'( ) / CONCERNED CIT 4 )- / CIT (A) , -./ 00'(1 '( 1 23& / DR, ITAT, AHMEDABAD 4 /56 / GUARD FILE. 5 ITA NO.1526/ AHD/ 2012 (ITO VS. SHRI SHASHIKANT T. MANDLESARA), A.Y. 08-09 BY ORDER / 1 / 2 % '( 1 23&