M/s. Shamanur Kallappa & Sons, Davangere V. Deputy Commissioner Of Income Tax, Central Circle - 1(3), Bangalore

ITA 1669/BANG/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6471 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 22-07-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: STDG. COUNSEL DEPT
• Keywords: Peak credit; Source of fund
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN , VICE PRESIDENT ITA NO. 1886/ BANG / 2019 ASSESSMENT YEAR : 2005 - 06 E. KRISHNAPPA & COMPANY, 21 ST KM, TUMKUR ROAD, ADAKAMARANAHALLI, MAKALI POST, BENGALURU 562 123. P AN: AAAFE 8076C VS. THE INCOME TAX OFFICER, WARD 8(4), BANGALORE. APP ELLANT RESPONDENT APP ELLANT BY : SHRI BALRAM R. RAO, ADVO CA TE RESPONDENT BY : SHRI GANESH R. GHALE, ADVO CAT E & STD G. CO UNSEL FOR DEPT. DATE O F HEAR ING : 10 . 1 0 .2019 DATE OF PRONOUNCEMENT : 16 . 1 0 .2019 O R D E R THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORD ER DATED 13.06.2019 OF THE CIT(APPEALS), BANGALORE-12, BANGALORE RELA TING TO ASSESSMENT YEAR 2005-06. 2. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL IS AS TO, WHETHER THE CIT(APPEALS) WAS JUSTIFIED IN SUSTAININ G AN ADDITION OF RS.9,30,000 FOR UNEXPLAINED CASH INTRODUCED IN THE CASH BOOK AS AGAINST ADDITION OF RS.12,95,000 MADE BY THE AO. 3. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF CIVIL CONSTRUCTION. IN THE COURSE OF ASSESSMENT PROCEEDI NGS, THE AO NOTICED THAT THERE WERE FOLLOWING CASH INTRODUCTION IN THE CASH BOOK OF ASSESSEE:- ITA NO. 1886/BANG/2019 PAGE 2 OF 6 DATE A MOUNT (RS.) 02.04.20 04 1,00,000 05.05.2004 2,00,000 01.06.2004 65,0 00 08 . 07 . 2004 9,30,000 TOTAL 1 2,95,000 4. THE AO CALLED UPON THE ASSESSEE TO EXPLAIN THE S OURCE OF FUNDS OUT OF WHICH CASH IS DEPOSITED IN THE BANK ACCOUNT. TH E ASSESSEE EXPLAINED THE CASH WITHDRAWALS FROM THE ASSESSEES BANK ACCOU NT NO.356, CHIKKABIDARAKALLU BRANCH, JINDALNAGAR, BANGALORE. THE AO, HOWEVER, OBSERVED IN THE ORDER OF ASSESSMENT THAT THERE WAS NO WITHDRAWAL IN THE SAID BANK ACCOUNT ON THOSE DATES AND THEREFORE THE AO REJECTED THE EXPLANATION OF ASSESSEE AND ADDED A SUM OF RS.12,95 ,000 AS UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT U/S. 69 OF THE AC T. 5. BEFORE THE CIT(APPEALS), THE ASSESSEE SUBMITTED THAT ENTRY IN THE CASH BOOK WOULD BE MADE WHEN SELF-CHEQUES ARE ISSUE D ON THE DATE MENTIONED IN THE SELF-CHEQUES, BUT ULTIMATELY CASH IS WITHDRAWN FROM THE BANK AT A LATER DATE AND THIS IS THE REASON WHY THE AO WAS UNABLE TO CORELATE ENTRIES OF CASH WITHDRAWAL FROM THE BANK A CCOUNT WITH THE ENTRIES OF CASH DEPOSIT IN THE CASH ACCOUNT. THE ASSESSEE GAVE THE FOLLOWING DETAILS IN THIS REGARD BEFORE THE CIT(APPEALS):- DATE ENTRY IN THE CASH BOOK FOR ISSUAL OF SELF CH E QUE AMOUNT (RS.) DATE OF ACTUAL WITHDRAWAL OF THE SELF CHEQUE AMOUNT (RS) 02.04.20 04 1,00,000 13.04.04 1,00,000 05.05.2004 2,00,000 15.05.04 2,00,000 01.06.2004 65,000 24.06.04 65,0 00 08 . 07 . 2004 9,30,000 16.07.04 9,30,000 ITA NO. 1886/BANG/2019 PAGE 3 OF 6 6. THE CIT(APPEALS) CALLED FOR A REMAND REPORT FROM THE AO AND THE AO IN HIS REMAND REPORT GAVE THE FOLLOWING OBJECTIO NS. HE SUBMITTED THAT ON 2.4.04, THERE IS AN ENTRY OF CASH DEPOSIT IN THE CASH ACCOUNT WITH A DESCRIPTION OF CANARA BANK A/C 356 AND CHEQUE NO. 0 08566. THIS CHEQUE WAS PRESENTED FOR PAYMENT AND CASH WITHDRAWN ONLY O N 13.04.04. BETWEEN THE PERIOD 2.4.04 AND 13.4.04, THE ASSESSEE HAS SHOWN CASH PAYMENTS IN THE CASH BOOK. ACCORDING TO THE AO, IF THE CASH WAS ACTUALLY RECEIVED ONLY ON 13.4.04, THE ASSESSEE WOULD NOT HA VE BEEN ABLE TO MAKE PAYMENT OF CASH. IN THIS REGARD, THE ASSESSEE POIN TED OUT THAT IF THE CASH PAYMENTS IN BANK AFTER 13.4.04 IS CONSIDERED, THEN BALANCE AVAILABLE WITH ASSESSEE ON 12.4.04 IS ONLY RS.2,000. THE AO THUS POINTED OUT THAT THE STAND TAKEN BY ASSESSEE IS NOT ACCEPTABLE AND THE S OURCE OF CASH FOR DEPOSIT IN THE BANK ACCOUNT REMAINS UNEXPLAINED. T HE FOLLOWING IS THE EXTRACT OF THE AOS REMAND REPORT:- THE CASH DEPOSIT IN THE REGULAR BOOKS OF ACCOUNT CASH BOOK DATE ENTRY IN THE CASH BOOK FOR ISSUAL OF SELF CH E QUE AMOUNT (RS.) DATE OF ACTUAL WITHDRAWAL OF THE SELF CHEQUE AMOUNT (RS) 02.04.20 04 1,00,000 13.04.04 1,00,000 05.05.2004 2,00,000 15.05.04 2,00,000 01.06.2004 65, 00 0 24.06.04 65,0 00 08 . 07 . 2004 9,30,000 16.07.04 9,30,000 4. AS PER THE EXPLANATION AND IN PARTICULAR, THE RECONCILIATION TABLE, AN AMOUNT OF RUPEES 1,00,000/- IS CREDITS/DEPOSITED IN THE CASH BOOK AS CANARA BANK ACCOUNT 356 CH-NO. 008566 CASH WITHDRA WN'. IN OTHER WORDS. THE SOURCE FOR THE SAID SUM OF RS.1,00 ,000/-, THIS IS CREDITED AND ALSO DISBURSED AS PER THE CASH BOOK, IS WITHDRA WAL FROM THE BANK ACCOUNT IN CANARA BANK ACCOUNT NO. 356. BUT THE WIT HDRAWAL IS MADE BY SELF CHEQUE NO. 8566 ONLY ON 13.04.2004 10 DAYS AFTER THE CASH IS RECEIVED AND ALSO DISBURSED AS PER CASH BOOK. HENCE THE EXPLANATION OF THE ASSESSEE IS TOTALLY CONTRADICTORY TO THE FACTS AS CAN BE SEEN FROM THE DOCUMENTS PRODUCED BY THE ASSESSEE ITSELF. SIMILARL Y IS THE CASE WITH ITA NO. 1886/BANG/2019 PAGE 4 OF 6 REGARD TO THE OTHER CASH DEPOSITS IN THE CASH BOOK AS SEEN FROM THE RECONCILIATION STATEMENT FURNISHED BEFORE THE LD. C IT(APPEALS). THE SUM OF RS. 2,00,000/- WHICH IS DEPOSITED IN THE CASH BO OK ON 5.5.2004 IS USUALLY WITHDRAWN ONLY AFTER 10 DAYS ON 15.5.2004 B Y CHEQUE NO.8576. WHICH COULD NOT HAVE BEEN THE CASE. THE RECONCILIAT ION STATEMENT ALSO SHOWS HOW OTHER SUM OF RS. 65,000/- AND RS. 9,30,00 0/- ARE DEPOSITED AND ALSO DISBURSED RESPECTIVELY ON 1.6.2004 AND 8.7 .2004 AS PER THE CASH BOOK, BUT WITHDRAWN ONLY ON 24.6.2004 AND 16.7.2004 RESPECTIVELY. 7. ON A CONSIDERATION OF THE ABOVE, THE CIT(APPEALS ) HELD THAT THE ASSESSEE CAN GET ONLY THE BENEFIT OF PEAK CREDIT AN D THEREFORE RESTRICTED THE ADDITION OF RS.9,30,000. THE FOLLOWING WERE THE CO NCLUSIONS OF THE CIT(APPEALS):- 7. I HAVE EXAMINED THE SUBMISSIONS OF THE APPELLAN T AND THE ORDER OF THE AO. ON EXAMINATION OF THE CASH BOOK IT IS SEEN THAT THE APPELLANT HAS DEBITED IN CASH BOOK ON VARIOUS DATES AND THE S AME IS REFLECTED IN BANK BOOK ON VARIOUS DATES AS BELOW: DATE OF ENTRY IN CASH BOOK AMOUNT DATE OF ACTUAL WITHDRAWAL (BANK BOOK) AMOUNT 02.04.2004 1,00,000/- 13.04.2004 1,00,000/- 05.05.2004 2,00,000/- 15.05.2004 2,00,000/- 01.06.2004 65,000/ - 24.06.2004 65,00 0 / - 08.07.2004 9,30,000/- 16.07.2004 91,30,000/- 8. IT IS SEEN THAT THE DATE OF DEBIT ENTRY IN CASH BOOK IS PRIOR TO THAT OF DATE OF WITHDRAWAL. THIS MEANS THAT THE AMOUNT IS C OMING TO THE CASH BOOK OF THE APPELLANT EVEN BEFORE IT IS WITHDRAWN FROM THE BANK. THIS CLEARLY SHOWS THAT THE APPELLANT WAS ALREADY HAWING CASH IN HANDS WHICH HE INTRODUCED INTO THE BUSINESS. IF SEEN FOR THE FIRST ENTRY ABOVE, THAT CASH INTRODUCED ON 02.04.2004 IS NOT FROM EXPL AINED SOURCES FROM 02.04.2004 TILL 13.04.2004. ON 13.04.2004 CASH IS W ITHDRAWN FROM THE BANK. . .. ITA NO. 1886/BANG/2019 PAGE 5 OF 6 11. HOWEVER, PRESUMING THAT THE EARLIER CASH CREDI T WAS AVAILABLE TO THE APPELLANT FOR LATER CREDITS, PEAK CASH CREDIT IS WO RKED OUT. DATE OF ENTRY IN CASH BOOK AMOUNT REMARKS PEAK CASH CREDIT 02.04.2004 1,00,000/- UNACCOUNTED CASH INTRODUCED. 1,00,000/- 13.04.2004 1,00,000/- UNACCOUNTED CASH TAKEN OUT. 11,00,000/- 05.05.2004 2,00,000/- UNACCOUNTED CASH INTRODUCED 2,00,000/- 15.05.2004 2,00,000/- UNACCOUNTED CASH TAKEN OUT 2,00,000/- 01.06.2004 65,000/- UNACCOUNTED CASH INTRODUCED 2,00,000/- 24.06.2004 65,000/- UNACCOUNTED CASH TAKEN OUT. 2,00,000/- 08.07.2004 9,30,000/- UNACCOUNTED CASH INTRODUCED 9,30,000/- 16.07.2004 930,000/- UNACCOUNTED CASH TAKEN OUT. 9,30,000/- 12. IN VIEW OF THIS, THE ADDITION MADE BY THE AO IS SUSTAINED TO THE EXTENT OF 9,30,000/- BEING THE PEAK CASH CREDIT AND THE GROUND OF APPEAL IN RESPECT OF ADDITION OF RS.12,95,000/- IS PARTLY ALLOWED. 8. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. 9. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE STAND OF ASSESSEE TAKEN BEFORE THE CIT(APPEALS). THE LD. DR RELIED O N THE ORDER OF CIT(APPEALS). 10. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM O F THE VIEW THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF FUNDS IN THE BANK ACCOUNT. AS RIGHTLY OBSERVED BY THE CIT(APPEALS), THE MONIES SH OWN AS RECEIPT IN THE ITA NO. 1886/BANG/2019 PAGE 6 OF 6 CASH BOOK IS ON THE DATE EARLIER TO THE DATE OF WIT HDRAWAL BY CHEQUES FROM THE BANK ACCOUNT. BETWEEN THE PERIOD OF ENTRY IN T HE CASH BOOK OF RECEIPT OF CASH AND THE ENTRY OF WITHDRAWAL OF CASH FROM TH E BANK ACCOUNT IN THE BANK STATEMENT, THE ASSESSEE HAS SHOWN PAYMENTS. T HEREFORE, THE CONCLUSION OF THE CIT(APPEALS) IN PARA 7 OF HIS ORD ER IS THAT THE ASSESSEE WAS IN POSSESSION OF ACTUAL CASH ON THE DATE SHOWN IN THE CASH BOOK IS ESTABLISHED. KEEPING IN VIEW THIS FACT IN MIND, TH E CIT(APPEALS) HAS ALLOWED THE ALTERNATIVE RELIEF OF TAXING ONLY THE P EAK CREDIT AND NOT EACH AND EVERY DEPOSIT IN THE BANK ACCOUNT. THE CIT(APPEALS ) HAS DRAWN THE AVAILABILITY OF CASH FROM THE EARLIER WITHDRAWALS A ND GIVEN DUE CREDITS BEFORE TAXING THE PEAK CREDIT. I DO NOT FIND ANY G ROUND TO INTERFERE WITH THE ORDER OF CIT(APPEALS). ACCORDINGLY, I DISMISS THIS APPEAL BY THE ASSESSEE. PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF OCTOBER, 2019. SD/- ( N.V . VASUDEVAN ) VICE PRESIDENT BANGALORE, DATED, THE 16 TH OCTOBER, 2019. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, I TAT, BANGALORE. 6. GUARD FIL E BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.