M/s Penugonda Murali Mohan, Rajahmundry V. THE ITO, Rajahmundry

ITA 155/VIZ/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6594 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 05-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Keywords: Salary income; Peak credit; Corroborative evidences
• Section: 68; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 155 / VIZ /201 5 (ASST. YEAR : 20 11 - 12 ) PENUGONDA MURALIMOHAN, H.NO. 4 - 458, DWARAKANAGAR, BOMMURU, RAJAHMUNDRY. V S . IT O , WARD - 3 , RAJAHMUNDRY . PAN NO. ATJPP 7446 D (APPELLANT) (RESPONDENT) ITA NO. 245 / VIZ /201 5 (ASST. YEAR : 20 11 - 12 ) IT O , WARD - 2(3), RAJAHMUNDRY. VS . PENUGONDA MURALIMOHAN, H.NO. 4 - 458, DWARAKANAGAR, BOMMURU, RAJAHMUNDRY. PAN NO. ATJPP 7446 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI D.J.P. ANAND SR. DR DATE OF HEARING : 11 / 1 0 /201 7 . DATE OF PRONOUNCEMENT : 18 / 1 0 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THESE ARE THE CROSS APPEAL S FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , RAJAHMUNDRY , DATED 18 /0 3 /201 5 FOR THE ASSESSMENT YEAR 20 11 - 12 . 2 ITA NO S . 155 & 245/VIZ/2015 ( PENUGONDA MURALIMOHAN ) ITA NO. 155/VIZ/2015 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM SALARY, FILED HIS RETURN OF INCOME BY ADMITTING TOTAL INCOME OF 1,79,690/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTED THAT THE BANK ACCOUNT HELD BY THE ASSESSEE WITH AXIS BANK (A/C. 217010100108713) , THERE ARE CASH DEPOSITS TO THE TUNE OF 58,15,229/ - . THE ASSESSING OFFICER FURTHER NOTED THAT CERTAIN AMOUNTS WERE DEPOSITED IN THE BANK ACCOUNT FROM VARIOUS PERSONS THROUGH RTGS/NEFT TO THE TUNE OF 15,94,000/ - . IN RESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFICER, THE ASSESSEE HAS SUBMITTED THAT THE AMOUNTS WERE COLLECTED ON BEHALF OF M/S. GODREJ AGROVET COMPANY FROM DIFFERENT A QUA F EED DEALERS AND NOT FOR HIS PERSONAL PURPOSE . THE ASSESSING OFFICER ALSO OBTAINED INFORMATION FROM M /S. GODREJ AGROVET COMPANY , WHEREIN THE COMPANY HAD CONFIRMED THE AMOUNTS TOTALLING TO 5,30,000/ - WERE TRANSFERRED TO THE COMPANY BY THE ASSESSEE WHICH WERE DULY CREDITED TO THE DEBTORS OF THE COMPANY . THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCES FOR THE REMAINING DEPOSITS OF 52,85,229/ - . THE ASSESSEE STATED THAT THESE AMOUNTS ARE COLLECTED FROM THE DEALERS OF THE COMPANY WHICH WERE DEPOSITED IN HIS PERSONAL BANK ACCOUNT AND THE SAME WERE TRANSFERRED TO THE COMPANYS ACCOUNT. THE ASSESSEE ALSO EXPLAINED THE SOURCE FOR 15,94,000/ - 3 ITA NO S . 155 & 245/VIZ/2015 ( PENUGONDA MURALIMOHAN ) RECEIVED FROM HIS FATHER AND 2 LAKHS FROM HI S SON - IN - LAW AND THE BALANCE AMOUNT WAS R E CE I VED FROM CATTLE FEED DEALERS. THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE NOT ED THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE FOR THE SAME. ACCORDINGLY, ASSESSING OFFICER DISALLOWED CASH DEPOSITS OF 52,85,229/ - ( 58,15,229 5,30,000) AS UNEXPLAINED. SO FAR AS THE CREDITS BY WAY OF RTGC/NEFT WERE ALSO BROUGHT TO TAX UNDER SECTION 68 OF THE ACT AS NO SUPPORTING EVIDENCE WAS GIVEN FOR THEIR SOURCE. 3 . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) , WHO FOUND THAT THE ASSESSEE HAS DEPOSITED CERTAIN AMOUNTS AND ALSO MADE CERTA IN WITHDRAWALS AND OBSERVED THAT PEAK CREDIT METHOD HAS TO BE ALLOWED AND ACCORDINGL Y , DIRECTED THE ASSESSING OFFICER TO COMPUTE THE PEAK CREDIT AND DETERMINE THE UNEXPLAINED INCOME IN RESPECT OF THESE CREDITS. 4 . BEING AGGRIEVED, ASSESSEE AS WELL AS REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 5. LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF INCOME THEREFORE, NO ADDITION CAN BE MADE. 6 . ON THE OTHER HAND, L EARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE LD. CIT(A) OUGHT NOT TO HAVE BEEN DIRECTED TO FOLLOW PEAK CREDIT METHOD FOR THE REASON THAT THE ASSESSEE HAS NOT EXPLAINED THE SOURCE OF THE DEPOSITS. 4 ITA NO S . 155 & 245/VIZ/2015 ( PENUGONDA MURALIMOHAN ) 7 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MA TERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 8 . THE ASSESSEE HAS DEPOSITED , IN HIS AXIS BANK ACCOUNT , TO THE TUNE OF 52,1 5,229/ - . THE ASSESSING OFFICER CALLED EXPLANATION FROM THE ASSESSEE. IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER TH A T THE AMOUNTS COLLECTED ON BEHALF OF M/S. GODREJ AGROVET COMPANY FROM DIFFERENT AQUA FEED DEALERS AND NOT FOR HIS PERSONAL PURPOSE AND THE SAME IS SUBSEQUENTLY TRANSFERRED TO THE COMPANYS ACCOUNT. THE ASSESSING OFFICER AFTER OBTAINING INFORMAT ION AND MAKING ENQUIRY FROM M/S. GODREJ AGROVET COMPANY, WHO CONFIRMED THAT THE AMOUNTS TOTALLING TO 5,30,000/ - WERE TRANSFERRED TO THE COMPANY BY THE ASSESSEE WHICH WERE DULY CREDITED TO THE DEBTORS OF THE COMPANY , HE AGAIN ASKED ASSESSEE TO EXPLAIN WHAT IS THE SOURCE OF REMAINING BALANCE OF 52,85,229/ - ( 58,15,229 5,30,000) . IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THESE AMOUNTS WERE COLLECTED FROM THE DEALERS OF M/S. GODREJ AGROVET COMPANY AND THE SAME WERE TRANSFERRED TO THE COMPA NYS ACCOUNT. WHEN ASSESSING OFFICER ASKED THE ASSESSEE TO FILE AN EVIDENCE TO THAT EFFECT, THE ASSESSEE HAS NOT FILED ANY EVIDENCE ABOUT THE AMOUNT COLLECTED AND DEPOSITED IN HIS ACCOUNT , IS SUBSEQUENTLY TRANSFERRED TO THE COMPANYS ACCOUNT. THEREFORE, THE ASSESSING OFFICER ADDED THE ENTIRE AMOUNT OF 52,85,229/ - AS INCOME OF THE ASSESSEE. ON APPEAL, LD. CIT(A) HAS FOUND TH A T THERE ARE CERTAIN DEPOSITS AND ALSO WITHDRAWALS, THEREFORE, H E DIRECTED THE ASSESSING 5 ITA NO S . 155 & 245/VIZ/2015 ( PENUGONDA MURALIMOHAN ) OFFICER TO CONSIDER THE INCOME RELATING TO SUCH CREDITS HAS TO BE COMPUTED BY THE PEAK CREDIT METHOD AS CASH WITHDRAWAL S HAS ALSO NOTED IN THAT ACCOUNT . THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - 5. I HAVE CONSIDE RED THE CONTENTIONS - ALONG WITH DETAILS FIFED. THE AR'S CONTENTION IS THAT THE CASH DEPOSITS NOTICED IN THE ASSESSEE'S BANK ACCOUNT WITH AXIS BANK REPRESENT MONEY COLLECTED BY HIM FROM FARMERS AND OTHERS ON BEHALF OF THE COMPANY IN RESPECT OF SALES MADE. THE FURTHER CONTENTION IS THAT WITHDRAWALS WERE MADE FROM HIS BANK ACCOUNT TO MAKE DEPOSIT INTO THE COMPANY'S BANK ACCOUNT AND WAS CONTENDED THAT AMOUNTS TO THE TUNE OF RS.37,99,999/ - WAS WITHDRAWN AND DEPOSITED INTO THE EMPLOYER'S ACCOUNT ON THE SAME DAY AND AMOUNTS TO THE TUNE OF RS. 14,85,230/ - WAS WITHDRAWN AND DEPOSITED ON DIFFERENT DATES, AN AMOUNT OF RS.5,30,000/ - WAS SAID TO BE DEPOSITED BY WAY OF RTG TRANSFER INTO THE COMPANY'S ACCOUNT. IN THIS REGARD, THE AR ALSO RELIED ON THE REPLY GIVEN BY THE C OMPANY VIDE LETTER DATED 14 . 3.2013, THE EXTRACT OF WHICH IS AS UNDER : . 1. MR.MURALI MOHAN WORKED WITH US FROM 2 ND J UNE, 2003 TO 1 ST MARCH, 2011 AND HE WAS GOVERNED BY THE 'CODE OF CONDUCT' AND EMPLOYMENT CONDITIONS OF THE COMPANY. 2. MR.MURALI MOHAN WAS RESPONSIBLE FOR SELLING AQUA FEED TO CUSTOMERS AND COLLECTING MONEY FROM THEM. 3. WE HAVE CHECKED OUR RECORDS, AND FIND THAT THE FOLLOWING CASH DEPOSITS WERE MADE BY THE CUSTOMERS HANDLED BY MR.MURALIMOBAN IN OUR COMPANY'S BANK ACCOUNT NO.016010200004497 WITH AXIS BANK, CHENNAI MAIL BRANCH, DURING FY 2010 - 11. THESE CASH DEPOSITS HAVE EITHER BEEN DEPOSITED DIRECTLY BY THE CUSTOMERS OR CASH WAS COLLECTED BY MR.MURALIMOHAN AND LATER ON DEPOSITED THE SAME IN OUR ABOVE MENTIONED AXIS BANK ACCOUNT. YOUR HONOUR WIL L OBSERVE FOR THE SAID DETAILS THAT BASED ON THE INFORMATION FROM MR.MURALI MOHAN, THE AMOUNTS TOTAL L ING TO RS. 1,13,68,700/ - WERE CREDITED TO RESPECTIVE PARTY / DEBTOR ACCOUNT. 4. WE HAVE CHECKED RTGS DETAILS GIVEN BY YOUR HONOUR AND WE CONFIRM THE RECEIPT O F AMOUNT TOTALLING TO RS.7,30,000/ - . HERE IT WOULD BE PER TINENT TO POINT THE FOLLOWING : - A. THE COMPANY'S POLICY DOES NOT PERMIT AN EMPLOYEE TO COLLECT CASH ON BEHALF OF THE COMPANY AND DEPOSIT IN HIS OWN BANK ACCOUNT PRIOR TO REMITTING THE SAME TO THE COMPANY'S BANK ACCOUNT A$ HAS BEEN DONE IN THE PRESENT CASE. THUS THE CASH DEPOSITS IN MR.MURALI MOHAN'S BANK ACCOUNT PRIOR TO TRANSFERRING THE SAME TO COMPANY'S ACCOUNT ARE CL EARLY WITHOUT AUTHORIZATION AND CONTRARY TO THE COMPANY'S POLICY. B. WHEN THESE TR ANSFERS WERE RECEIVED IN THE COMPANY'S SB1/ICICI ACCOUNT THROUGH RTGS, THE COMPANY WAS NOT AWARE THAT THE MONEY IS BEEN TRANSFERRED FROM MR. MURAL I MOHAN'S BANK ACCOUNT . C. BASED ON INFORMATION PROVIDED BY MR.MURAII MOHAN, THE RELEVANT AMOUNT WAS CREDITED TO RESPECTIVE PARTY / DEBTOR ACCOUNT. 5. WE MAY ADD THAT IN FEBRUARY, 2011 MR.MURAII MOHAN WAS FOUND TO BE MISLEADING OUR CUSTOMERS ABOUT THE RATES AND COMMITTING FINANCIAL IRREGULARITIES BY OVER CHARGING THEM. IN VIEW OF THESE IRREGULARITIES, THE 6 ITA NO S . 155 & 245/VIZ/2015 ( PENUGONDA MURALIMOHAN ) COMPANY A S KED MR.MURAII MOHAN TO RESIGN EFFECTIVE 1 ST MARCH, 2011. THUS IT COULD BE SEEN THAT THE EMPLOYER COMPANY HAS ONLY CATEGORICALLY CONFIRMED RECEIPT OF AMOUNT BY WAY OF RTG TRANSFER FROM ASSESSEE'S BANK ACCOUNT BUT THE COMPANY COULD NOT CONFIRM THAT THE CASH DEPOSITED INTO ITS BANK ACCOUNT WAS BY THE ASSESSEE. BESIDES, THE RELEVANT INQUIRY IS AS TO THE SOURCE FOR THE CASH DEPOSITS IN THE.ASSESSEE'S ACCOUNT IN RESPECT OF WHICH THE ASSESSEE HAS NOT ADDUCED ANY EVIDENCE. NO SUPPORTING INFORMATION WAS GIVEN TO SHOW THAT THE ASSESSEE HAS COLLECTED CASH FROM THE CUSTOMERS ON BEHALF OF THE EMPLOYER COMPANY. THE RELEVANT BILLS OR RECEIPTS WERE NOT PRODUCED. IN THE ABSENCE OF ANY EVIDENCE AS TO THE SOURCE FOR THE CASH CREDITS IN THE BANK ACCOUNT AND AS TO THE NATURE OF WITHDRAWALS MADE MOSTLY IN CASH, I CONSIDER THAT THE INCOME RELATING TO SUCH CREDITS HAS TO BE COMPUTED BY THE PEAK C R EDIT METHOD AS CASH WITHDRAWALS WERE ALSO NOTICED IN THE, .ACCOUNT. ACCO RDI NGLY, AO IS DIRECTED TO COMPUTE THE PEAK CREDIT AND DETERMIN E THE UNEXPLAINED INCOME, IN RESPECT OF THESE CREDITS. 9. AS REGARD S CREDITS BY WAY OF RTGS/NEFT, WHICH WERE RECEIVED FROM HIS FATHER, RELATIVES AND CUSTOMERS, NEITHER BEFORE THE ASSESSING OFFICER NOR BEFORE THE LD. CIT(A) ASSESSEE HAS FURNISHED ANY EVID ENCE . EVEN BEFORE US , NO EVIDENCE IS PRODUCED. THEREFORE, LD.CIT(A) CONFIRMED THE ADDITION , WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). THUS, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. ITA NO.245/VIZ/2015 10 . SO FAR AS REVENUES APPEAL IS CONCERNED, THE ONLY OBJECTION RAISED BY THE DEPARTMENT IS THAT THE LD. CIT(A) OUGHT NOT TO HAVE BEEN DIRECTED TO FO LLOW PEAK CREDIT METHOD. THE LD. CIT(A) HAS FOUND THAT THERE ARE DEPOSITS AS WELL AS WITHDRAWALS , THEREFORE HE DIRECTED THE ASSESSING OFFICER TO FOLLOW THE PEAK CREDIT METHOD. WE FIND NO FAULT IN THE ORDER PASSED BY THE LD. CIT(A). THUS, THIS APPEAL FILED BY THE REVENUE IS DISMISSED. 7 ITA NO S . 155 & 245/VIZ/2015 ( PENUGONDA MURALIMOHAN ) 11 . IN THE RESULT, APPEAL S FILED BY THE ASSESSEE AS WELL AS REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 1 8 T H DAY OF OCTOBER , 201 7 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 8 T H OCTOBER , 201 7 . VR/ - COPY TO: 1. THE ASSESSEE - PENUGONDA MURALIMOHAN, H.NO. 4 - 458, DWARAKANAGAR, BOMMURU, RAJAHMUNDRY. 2. THE REVENUE ITO, WARD - 3, RAJAHMUNDRY. 3. THE CIT, RAJAHMUNDRY. 4. THE CIT(A) , RAJAHMUNDRY. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.