S.L.Shiv Raj, Nizamabad, Hyderabad V. ACIT, Central Circle-6, Hyderabad

ITA 1814/HYD/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2793 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-06-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 21-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPTH
• Assessee Lawyers: K SAI PRASAD
• Keywords: Search and seizure; Opportunity of being heard; Peak credit; Source of fund
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS.1814 TO181 6/HYD/11 ASST. YEARS 2003-04,2008-0 9 & 2009-10 SRI S.L. SHIV RAJ, NIZAMABAD. PAN:ALLPS3268 L V/S. ACIT, CENTRAL CIR-6, HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SRI K. SAI PRASAD RESPONDENT BY : SMT. AMISHA S. GUPTH DATE OF HEARING 08 - 04 - 2013 DATE OF PRONOUNCEMENT 08-04-2013 . O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THESE THREE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AG AINST SEPARATE ORDERS OF CIT (A)-I, HYDERABAD PERTAINING TO THE ASSESSMENT YEARS 2003-04, 2008-09 AND 2009-10 RESPECTIVELY. SINCE THE ASSESSEE IS COMMON AND THE POINTS INVOLVED IN ALL THESE APPEALS ARE ALSO IDENTICAL, THESE ARE CLUBBED TOGETHER AND DISPOSED OF BY THIS COMBINED ORDER FOR THE SAKE OF CONVENIENCE. 2. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT ON TH E INSTRUCTIONS OF HIS CLIENT, HE WANTS TO WITHDRAW THE APPEALS FILED B Y THE ASSESSEE IN ITA NOS.1814 TO1816 OF 2011 S.L. SHIV RAJ, NIZAMABAD. 2 ITA NOS.1815 AND 1816/HYD/2011 PERTAINING TO THE ASSESSME NT YEARS 2008-09 AND 2009-10. IN VIEW OF THE AFORESAID SUBMISSI ONS OF THE LEARNED AR, ITA NOS. 1815 AND 1816/HYD/2011 ARE DISMISSE D AS WITHDRAWN. THUS, WE ARE ONLY LEFT WITH ITA NO.1814 /HYD/2011. 3. THE ONLY ISSUE ARISING IN THIS APPEAL IS WITH REG ARD TO ADDITION OF AN AMOUNT OF RS.2,45,641/- ON ACCOUNT OF PEAK CREDIT BA LANCE. BRIEFLY THE FACTS RELATING TO THIS ISSUE IN DISPUTE ARE, THE A SSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE A SSESSEE FILED ITS RETURN OF INCOME ON 4-2-2004 DECLARING A TOTAL INCOME OF RS.2,64,340/- THE ASSESSEE WAS SUBJECTED TO A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT AT THE RAJIV GANDHI INTERNATIONAL AIRPORT ON 16-6-2008. CONSEQUENT UPON THE SEARCH AND SEIZURE OPERATION, A NOT ICE U/S 153A WAS ISSUED TO THE ASSESSEE AND IN RESPONSE TO THE SAID NOTICE , THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.2,6 4,342/-. AS A RESULT OF SEARCH AND SEIZURE OPERATION, THE DEPARTMEN T DETECTED 27 BANKS ACCOUNTS MAINTAINED BY THE ASSESSEE. ON VERIFICATION OF THE BANK ACCOUNTS, IT WAS NOTICED, THERE WERE DEPOSITS AND WIT HDRAWALS MADE IN REGULAR INTERVALS INCLUDING CASH DEPOSITS AND WIT HDRAWALS. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN SOURCES FOR DEPOSITS ON THE DATE OF SEARCH, THE ASSESSEE IN HIS STATEMENT RECORDED U/S 13 2(4) ADMITTED THAT HE MADE THE DEPOSITS OUT OF UNACCOUNTED SOURCES OF INCOME AND DISCLOSED ADDITIONAL INCOME OF RS.80 LAKHS FO R THE ASSESSMENT YEAR 2008-09. AFTER OBTAINING THE ABSTRACT OF THE BANK ACCOUNT, THE ASSESSING OFFICER DIRECTED THE ASSESSEE TO FURNI SH CASH FLOW STATEMENT. WHEN THE ASSESSING OFFICER VERIFIED TH E CASH FLOW STATEMENT SUBMITTED BY THE ASSESSEE VIS--VIS THE STATEMENTS OBTAINED FROM THE BANKS , IT WAS FOUND THAT THERE WAS EXCESS OF APPLICATION OF FUND OVER EXPLAINABLE SOURCES TO THE TUNE OF RS90,47,5 60 AS ON 31-3- ITA NOS.1814 TO1816 OF 2011 S.L. SHIV RAJ, NIZAMABAD. 3 2008. WHEN THE ASSESSING OFFICER CONFRONTED THIS FACT TO THE ASSESSEE, HE STATED BEFORE THE ASSESSING OFFICER THAT THERE WERE U NACCOUNTED DEPOSITS INTO HIS BANK ACCOUNTS TO THE TUNE OF RS.90,47,56 1/-. 4. THE ASSESSING OFFICER NOT BEING CONVINCED WITH THE EX PLANATION OF THE ASSESSEE ASKED THE ASSESSEE TO PREPARE CUMULATIVE CASH FLOW STATEMENT. THE CUMULATIVE CASH FLOW STATEMENT SUBMITTED BY THE ASSESSEE SHOWED PEAK NEGATIVE CASH BALANCE OF RS.95,90,557/ -. THE ASSESSING OFFICER ON EXAMINING THE CASH FLOW STATEMENT FOU ND THAT WHILE WORKING OUT THE NEGATIVE CREDIT, THE ASSESSEE HAS CO NSIDERED ONLY THE CASH COMPONENT OF 27 BANK ACCOUNTS NOT DISCLOSED BY T HE ASSESSEE AND FOUND DURING THE COURSE OF SEARCH. THE ASSESSING O FFICER WAS OF THE VIEW THAT THE PEAK CREDIT HAS TO BE ARRIVE D BY TAKING ALL BANK TRANSACTIONS AND NOT JUST CASH TRANSACTION. CONSIDERIN G THE FACT THAT ALL THE BANK ACCOUNTS ARE NOT DISCLOSED TO THE DEPARTMENT AS ALSO THE OVERALL TRANSACTIONS REFLECTED IN THE BANK ACCOUNT THE T OTAL CREDITS APPEARING IN THE BANK ACCOUNTS HAVE TO BE CONSIDERED AND THE PEAK CREDITS ACCORDINGLY WERE TO BE ARRIVED AT. THE ASSESSING OFFICER ON THE BASIS OF THE STATEMENT OF DIFFERENT BANK ACCOUNTS OBTA INED BY HIM FOUND THAT FOR THE IMPUGNED ASSESSMENT YEAR THE PEAK CRE DIT SHOULD BE RS.5,09,983/- AS AGAINST WHICH THE ASSESSEE HAS ADMITTED I NCOME OF RS.2,64,342/-. ACCORDINGLY, THE ASSESSING OFFICER TREATED THE DIFFERENTIAL AMOUNT OF RS.2,45,641/- AS ASSESSEES INCOME F OR THE IMPUGNED ASSESSMENT YEAR AND ADDED IT TO THE TOTAL INCOM E OF THE ASSESSEE. THE ASSESSEE BEING AGGRIEVED OF THE ADDITION PREFERRED AN APPEAL BEFORE THE CIT (A). 5. ON APPEAL, THE CIT (A) AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE WAS OF THE VIEW THAT PEAK CREDIT IS ONE OF THE ALTERNATIVES FOR ITA NOS.1814 TO1816 OF 2011 S.L. SHIV RAJ, NIZAMABAD. 4 ESTIMATION OF INCOME. WHEN BANK ACCOUNT IS NOT AT ALL DISCLOSED TO THE DEPARTMENT, OBVIOUSLY ALL THE DEPOSITS IN THE SAID ACCOU NT WHETHER CASH OR CHEQUE ARE UNEXPLAINED AND UNDISCLOSED DEPOSITS. HENCE, FOR WORKING OUT FOR ESTIMATED INCOME BY THIS METHOD, IT IS NECESSARY TO CONSIDER ALL THE DEPOSITS INCLUDING THE DEPOSITS MADE BY CHEQUE. THE CIT (A) THUS REJECTED THE ASSESSEES CONTENTION THAT THE A SSESSING OFFICER SHOULD NOT HAVE CONSIDERED THE DEPOSITS MADE BY W AY OF CHEQUES. WITH REGARD TO THE ASSESSEES CONTENTION THAT TH REE OUT OF 27 BANK ACCOUNTS HAVE ALREADY BEEN DISCLOSED TO THE DEPAR TMENT AND HENCE SHOULD NOT BEEN CONSIDERED WHILE WORKING OUT THE PEAK CREDIT, THE CIT (A) DID NOT ACCEPT IT BY OBSERVING THAT THE ASSE SSEE HIMSELF HAD CONSIDERED ALL 27 ACCOUNTS FOR WORKING PEAK NEGATIVE CASH BALANCE. THE CIT (A) FURTHER HELD THAT SINCE THE ASSESSING OFFICE R AFTER ARRIVING AT THE PEAK CREDIT HAS REDUCED THE INCOME ALREADY DISCLOSE D BY THE ASSESSEE, IT CANNOT BE SAID THAT THE INCOME ALREADY COMPUTE D CONSIDERING THE THREE BANK ACCOUNTS IS TAXED AGAIN. ON THE AFORESAID CONCLUSION, THE CIT (A) SUSTAINED THE ADDITION MADE BY T HE ASSESSING OFFICER. 6. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AND PERU SED THE MATERIAL ON RECORD. IT IS THE CONTENTION OF THE LEAR NED AR THAT THREE OF THE BANK ACCOUNTS ALREADY DISCLOSED TO THE DEPARTMENT HAVE AGAIN BEEN CONSIDERED FOR WORKING OUT THE PEAK CREDIT. IT IS FURTHER CONTENTION OF THE LEARNED AR THAT THE TRANSACTIONS MAD E IN THOSE THREE ACCOUNTS HAVING ALREADY BEEN CONSIDERED BY THE ASSESSEE WHI LE COMPUTING HIS INCOME, THE CONSIDERATION OF THE SAME TR ANSACTION OVER AGAIN WHILE WORKING OUT THE PEAK CREDIT WOULD AMOUNT TO DOUBLE ADDITION OF THE SAME AMOUNT. THE LEARNED DEPARTMENT AL REPRESENTATIVE ON THE OTHER HAND DRAWING OUR ATTENT ION TO OBSERVATION ITA NOS.1814 TO1816 OF 2011 S.L. SHIV RAJ, NIZAMABAD. 5 MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER SUBMIT TED THAT IN RESPECT OF THOSE THREE BANK ACCOUNTS STATED TO HAVE BEE N DECLARED TO THE DEPARTMENT BY THE ASSESSEE, THE ASSESSING OFFICER HAS ON LY CONSIDERED THE TRANSACTIONS TO THE EXTENT NOT SHOWN TO TH E DEPARTMENT FOR WORKING OUT THE PEAK CREDIT. FROM THE ABOVE CON TENTIONS OF THE PARTIES, IT APPEARS THAT THE DISPUTE IS WITH REGARD T O THREE BANK ACCOUNTS, THE TRANSACTIONS OF WHICH, ACCORDING TO THE ASSESSE E, HAVE BEEN DECLARED TO THE DEPARTMENT, WHEREAS IT IS THE ST AND OF THE DEPARTMENT THAT ONLY THOSE TRANSACTIONS WHICH HAVE NOT BEEN DISCLOSED BY THE ASSESSEE, HAVE BEEN CONSIDERED FOR THE PURPOSE OF W ORKING OUT THE PEAK CREDIT. CONSIDERING THE NATURE OF DISPUTE, W E ARE INCLINED TO REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICE R FOR DOING THE ASSESSMENT DE NOVO AFTER VERIFYING THE TRANSACTIONS IN ALL THE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE. IF UPON VERIFICATION IT IS FOUND THAT ANY TRANSACTION IN ANY OF THE BANK ACCOUNTS HAS ALR EADY BEEN DISCLOSED TO THE DEPARTMENT BY THE ASSESSEE WHILE COMPUTIN G HIS INCOME, THEN THE SAME HAS TO BE EXCLUDED WHILE WORKING OUT THE PEAK CREDIT FOR THE IMPUGNED ASSESSMENT YEAR. THE ASSESSING OFFICE R SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE BEFORE FINALIZING THE PROCEEDINGS. 7. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE BEING ITA NO.1814/HYD/2011 IS TREATED AS ALLOWED FOR STATISTICAL P URPOSES. ORDER PRONOUNCED IN THE COURT ON 8 TH APRIL, 2013. SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/- 8 TH APRIL, 2013. ITA NOS.1814 TO1816 OF 2011 S.L. SHIV RAJ, NIZAMABAD. 6 COPY FORWARDED TO: 1. SRI B. NARASINGH RAO & CO., CA, PLOT NO.554, ROAD NO .92, JUBILEE HILLS, HYDERABAD. 2. 3. 4. ACIT, CC-6, HYDERABAD. CIT (A)-I, HYDERABAD. CIT CONCERNED 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. JMR *