S.Surendar, CHENNAI V. ACIT, CHENNAI

ITA 2073/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0829 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 16-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K MEENAKSHISUNDHARAM ITP
• Keywords: Peak credit; Reasonable cause
• Section: 273B; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER] I.T.A.NOS.2072 & 2073/MDS/2012 ASSESSMENT YEAR : 2009-10 SHRI S. SUNDAR OLD NO.14/NEW NO.8 VARADARAJA PERUMAL KOIL STREET TONDIARPET CHENNAI 600 081 VS THE ASSTT. COMMISSIONER OF INCOME-TAX BUSINESS CIRCLE VII CHENNAI [PAN BBMPS6311J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. MEENAKSHISUNDHARAM, ITP RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 06-02-2013 DATE OF PRONOUNCEMENT : 12-02-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THESE ARE THE APPEALS FILED BY THE ASSESSEE AGA INST THE ORDERS OF THE CIT(A) DATED 25.9.2012 AND 21.9.2012. 2. IN I.T.A.NO. 2072/MDS/2012, THE ONLY GRIEVANCE OF T HE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF ` 17,89,000/- U/S 69 OF THE ACT. I.T.A.NOS.2072 & 2073/12 :- 2 -: 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 ON 27.9.2009 ADM ITTING AN INCOME OF ` 18,96,610/-. DURING THE ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER NOTICED FROM THE AIR INFORMATION THAT THE ASSESSEE HAS DEPOSITED CASH OF ` 17,89,900/- IN STANDARD CHARTERED BANK, RAJAJI SALAI BRANCH, CHENNAI. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE FOR SUCH CASH DEPOSITS. THE ASSESSEE SUBMITTED TH AT THIS BANK ACCOUNT WAS NOT DISCLOSED IN THE RETURN OF INCOME F ILED BY THE ASSESSEE. THE ASSESSEE SUBMITTED THAT THIS ACCOUN T HAD AN OPENING BALANCE OF ` 10,31,210/- ON 1.4.2008 AND THAT THE DEPOSITS MADE IN THIS ACCOUNT WERE OUT OF THE WITHDRAWALS MADE EARLI ER FROM THIS ACCOUNT AND HENCE, ONLY PEAK CREDIT SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER DID NOT ACCEP T THE SUBMISSION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAIL ED TO FURNISH THE SOURCE OF OPENING BALANCE AS ON 1.4.2008. THE ASS ESSEE COULD NOT EXPLAIN THE SOURCE OF CASH DEPOSIT OF ` 17,89,900/- AND THAT THE ASSESSEE COULD NOT PROVE THE NEXUS BETWEEN HE EARLI ER WITHDRAWALS MADE FROM THE ACCOUNT AND THEIR SUBSEQUENT DEPOSIT IN THE BANK ACCOUNT AND THEREFORE, HE DID NOT ACCEPT THE SUBMIS SION OF THE ASSESSEE FOR MAKING ADDITION ON ACCOUNT OF PEAK CRE DIT ONLY. THEREFORE, THE ASSESSING OFFICER MADE AN ADDITION O F ` 17,89,900/-. I.T.A.NOS.2072 & 2073/12 :- 3 -: 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE A SSESSING OFFICER. THE CIT(A) HELD THAT FROM THE BANK ACCOUN T IT IS FOUND THAT EXCEPT ON ONE OR TWO OCCASIONS, THERE IS SUFFICIENT TIME GAP BETWEEN THE DATE OF DEPOSIT AND DATE OF WITHDRAWAL AND HENC E IT IS NOT CORRECT TO SAY THAT THERE EXIST INTIMATE NEXUS BETWEEN THE DEPOSIT AND WITHDRAWAL, THEREFORE, THE ASSESSEES CONTENTION W AS NOT ACCEPTABLE. 5. THE A.R OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 6. ON THE OTHER HAND, THE DR SUPPORTED THE ORDER OF TH E CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS MAINTAIN ING A BANK ACCOUNT WITH STANDARD CHARTERED BANK, RAJAJI SALAI, CHEN NAI, AND THIS BANK ACCOUNT WAS NOT RECORDED IN THE REGULAR BOOKS OF AC COUNT MAINTAINED BY THE ASSESSEE AND WAS NOT DISCLOSED IN THE RETUR N OF INCOME FILED BY THE ASSESSEE WITH THE DEPARTMENT. FURTHER, IT IS ALSO NOT IN DISPUTE THAT THE OPENING BALANCE AS ON 1.4.2008 IN THE SAID BANK ACCOUNT WAS ` 10,31,210/-. FURTHER, DURING THE YEAR UNDER CONSI DERATION THE ASSESSEE DEPOSITED ` 17,89,900/- ON VARIOUS DATES. THERE WERE ALSO I.T.A.NOS.2072 & 2073/12 :- 4 -: WITHDRAWALS IN SAID BANK ACCOUNT ON VARIOUS DATES A ND THE CLOSING BALANCE IN THE BANK ACCOUNT AS ON 31.3.2009 WAS ` 3,86,103/-. THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF DEPOSIT OF ` 17,89,900/- DURING THE YEAR AS PER THE ASSESSING OFFICER AND TH EREFORE, THE ASSESSING OFFICER ADDED THE ENTIRE ` 17,89,900/- TO THE INCOME OF THE ASSESSEE. 8. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE A SSESSING OFFICER ON THE GROUND THAT EXCEPT ON ONE OR TWO CAS ES THERE IS CONSIDERABLE TIME GAP BETWEEN WITHDRAWAL AND SUBSEQ UENT DEPOSIT AND THEREFORE, THERE IS NO NEXUS BETWEEN THE WITHDR AWAL AND DEPOSIT. 9. BEFORE US, THE A.R OF THE ASSESSEE SUBMITTED THAT THE PEAK CREDIT BALANCE IN THE AFORESAID BANK ACCOUNT DURING THE YEAR UNDER CONSIDERATION AS ON 10.7.2008 WAS ` 10,70,453/- AND CONSIDERING THE OPENING BALANCE OF ` 10,31,210/- IN THE BANK ACCOUNT THE PEAK BALANCE OF FRESH CREDIT DURING THE YEAR WAS ` 39,243/-. HE SUBMITTED THAT THEREFORE, ` 39,243/- ONLY SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE. HE ALSO EXPLAINED THAT THE ASSESSEE IS ENGAGED IN THE TRANSPORT BUSINESS. A PART OF THE RECEIPTS OF THE SAID BUSINESS WAS DEPOSITED IN THE BANK ACCOUNT. HE EXPLAINED THAT A S THE RECEIPTS WERE NOT FROM REGULAR CUSTOMERS AND ENTERING ALL THESE T RANSACTIONS IN I.T.A.NOS.2072 & 2073/12 :- 5 -: REGULAR BOOKS WILL MAKE THE REGULAR BOOKS OF ACCOUN T VOLUMINOUS AND THEREFORE, THE SAME WERE KEPT OUTSIDE THE REGULAR B OOKS. AT LAST, THE A.R SUBMITTED THAT AS THE CLOSING BALANCE IN THE AF ORESAID BANK ACCOUNT WAS ` 3,86,103/- THE ADDITION CAN BE RESTRICTED TO ` 3,86,103/-. 10. ON THE OTHER HAND, THE DR RELIED ON THE DECISION OF HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF JHAMATMAL TAKHATMAL KIRANA MERCHANTS VS CIT, [1999] 152 CTR (MP) 311, A ND SUBMITTED THAT THERE WERE DEPOSITS ON VARIOUS DATES AND THERE WERE UNCONNECTED WITHDRAWALS ON VARIOUS DATES, THEREFORE, PEAK CREDI T SHOULD NOT BE MADE APPLICABLE IN THE INSTANT CASE. 11. WE FIND FROM THE ORDER OF THE CIT(A) WHEREIN THE CIT(A) QUOTED A CHART WHICH WAS TABULATED BY THE ASSESSEE TO SHOW THAT EXCEPT ` 39,243/- THE BALANCE DEPOSITS IN THE BANK ACCOUNT WERE LESSER THAN THE AMOUNT WHICH WERE WITHDRAWN FROM THE VERY SAME BANK ACCOUNT ON EARLIER DATES. THE PATTERN OF VARIOUS D EPOSITS AND WITHDRAWALS SHOWS THAT THE ASSESSEE WAS CARRYING O N SOME BUSINESS OUTSIDE THE BOOKS OF ACCOUNT AND RECEIPTS OF THAT B USINESS WAS DEPLOYED IN THE BANK ACCOUNT IN QUESTION. IN THE A BOVE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, THE PROFIT O F THE SAID BUSINESS OR PEAK FRESH CREDITS DURING THE YEAR WHICHEVER IS HIGHER SHOULD ONLY I.T.A.NOS.2072 & 2073/12 :- 6 -: BE TREATED AS THE ASSESSEES INCOME OF THAT BUSINE SS AND SHOULD ALONE BE ADDED IN THE INCOME OF THE ASSESSEE. IN THE IN STANT CASE, IT IS OBSERVED THAT THE ASSESSEE HAS DEPOSITED AROUND ` 18 LAKHS FROM THE RECEIPTS OF THE BUSINESS CARRIED ON OUTSIDE THE BOO KS OF ACCOUNT AND WITHDRAWN AROUND ` 22 LAKHS FOR THE PURPOSES OF THAT BUSINESS AND FRESH CREDIT IN THE BANK ACCOUNT WAS ` 39,243/- ALONE. IN THE ABOVE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, IT SHALL MEET THE ENDS OF JUSTICE TO ACCEPT THE SUBMISSION OF THE ASSESSEE T O ACCEPT ` 3,86,103/- AS INCOME FROM THE BUSINESS CARRIED ON O UTSIDE THE BOOKS OF ACCOUNT AND TO ADD THE SAME TO THE INCOME OF THE ASSESSEE. WE, THEREFORE, RESTRICT THE ADDITION TO ` 3,86,103/- IN PLACE OF ` 17,89,900/- AND CONSEQUENTLY THE GROUND OF APPEAL I S PARTLY ALLOWED. 12. I.T.A.NO. 2073/MDS/2012, THE ONLY ISSUE INVOLVED IS THE LEVY OF PENALTY U/S 271(1)(B) OF THE ACT FOR NOT APPEAR ING ON THE DATE OF HEARING FIXED BY THE ASSESSING OFFICER. 13. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER ISSUED NOTICE U/S 142(1) WHICH WAS SERVED ON THE ASSESSEE ON 12.10.2011 FIXING THE DATE OF HEARING ON 13.10.2011 . SINCE THE ASSESSEE FAILED TO APPEAR ON THE DATE OF HEARING, H E LEVIED PENALTY OF ` 10,000/- BY INVOKING THE PROVISIONS OF SECTION 271( 1)(B) OF THE ACT. I.T.A.NOS.2072 & 2073/12 :- 7 -: 14. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE A SSESSING OFFICER ON THE GROUND THAT THE A.R HAS NOT ADDUCED ANY REASONABLE CAUSE WHICH PREVENTED THE ASSESSEE FROM ATTENDING BEFORE THE ASSESSING OFFICER IN RESPONSE TO THE NOTICE ISSUED. 15. THE A.R OF THE ASSESSEE VEHEMENTLY ARGUED AND SUBM ITTED THAT THE TIME FIXED FOR HEARING WAS LESS THAN 24 H OURS AND THEREFORE, THE ASSESSEE COULD NOT APPEAR ON THE DATE OF HEAR ING FIXED BY THE ASSESSING OFFICER. HE ALSO SUBMITTED THAT ACCORDIN G TO THE PROVISIONS CONTAINED IN RULE 5 OF THE CODE OF CIVIL PROCEDURE, 1908, A STATUTORY NOTICE OF HEARING IN ANY LEGAL PROCEEDINGS SHOULD HAVE A MINIMUM PERIOD OF THREE WEEKS AND AS THE NOTICE U/S 142(1) DATED 7.10.2011 WAS SERVED ONLY ON 12.10.2011 FOR HEARING ON 13.10. 2011 NOT ALLOWING ENOUGH TIME FOR ITS COMPLIANCE, THE ASSESSEE IS NO T LIABLE FOR PENALTY. 16. THE DR, ON THE OTHER HAND, SUPPORTED THE ORDER OF T HE CIT(A). 17. AFTER HEARING THE RIVAL SUBMISSIONS AND MATERIALS A VAILABLE ON RECORD, WE FIND THAT THE UNDISPUTED FACTS ARE THAT BY ISSUE OF NOTICE U/S 142(1) ON 7.10.2011 THE ASSESSING OFFICER FIXED THE DATE FOR HEARING ON 13.10.2011 AND SUCH NOTICE WAS SERVED ON THE ASSESSEE ONLY ON 12.10.2011. THUS, THE ASSESSEE HAD A VERY SHORT NOTICE FOR I.T.A.NOS.2072 & 2073/12 :- 8 -: BEING PRESENT BEFORE THE ASSESSING OFFICER WITH THE REQUIRED INFORMATION AND DETAILS FOR THE HEARING OF ASSESSME NT. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAD REASONABLE CAUSE U/S 273B O F THE ACT FOR NOT BEING PRESENT ON THE DATE OF HEARING DUE TO VERY SH ORT NOTICE AND THEREFORE, WAS NOT LIABLE TO PENALTY U/S 271(1)(B) OF THE ACT. HENCE, WE DELETE THE LEVY OF PENALTY OF ` 10,000/- AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 18. IN THE RESULT, I.T.A.NO. 2072/MDS/2012 IS PARTL Y ALLOWED WHEREAS I.T.A.NO. 2073/MDS/2012 IS ALLOWED. ORDER PRONOUNCED ON TUESDAY, THE 12 TH OF FEBRUARY, 2013, AT CHENNAI. SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 12 TH FEBRUARY, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR