Income Tax Officer, Ward-2, Khammam V. Shri Gaddam Santosh Reddy, Khammam

ITA 225/HYD/2013

• Counselvise Citation: 22522514 RSA 2013
• Duration Of Justice: 2 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 11-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-02-2013
• Court: TRIBUNAL
• Department Lawyers: ANJALA SAHU
• Assessee Lawyers: P RAVI SESHAGIRI RAO
• Keywords: Rejection of books of accounts; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 225/HYD/2013 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER , WARD-2, KHAMMAM VS SRI GADDAM SANTOSH REDDY, KHAMMAM [PAN: AFYPG3026R] (APPELLANT) (RESPONDENT) FOR REVENUE : S MT. ANJALA SAHU , DR FOR ASSESSEE : SHRI P. RAVI SESHAGIRI RAO, AR DATE OF HEARING : 1 1 - 0 6 - 201 5 DATE OF PRONOUNCEMENT : 30 - 06 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS A REVENUE'S APPEAL AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS), VIJAYAWADA DATED 14-12-201 2. ISSUE INVOLVED IN THIS APPEAL IS WITH REFERENCE TO BRINGING TO TAX THE PEAK DEPOSIT IN THE BANK ACCOUNTS OF ASSESSEE. 2. BRIEFLY STATED, ASSESSEE AN INDIVIDUAL, ENGAGED IN GRANITE BUSINESS FILED RETURN OF INCOME ADMITTING TOTAL INCOME OF RS . 1,71,200/-. IN THE COURSE OF ASSESSMENT, IT WAS NOTICED THAT ASSESSEE HAD TWO BANK ACCOUNTS IN AXIS BANK AND ICICI BANK WHICH WERE NOT REFLECTED IN THE BOOKS OF ACCOUNTS MAINTAINED. ASSESSING OFFICER (A O) AFTER ISSUING SHOW CAUSE NOTICE AND CONSIDERING THE EXPLANATION OF THE ASSESSEE HOWEVER, WAS NOT SATISFIED BY THE EXPLANATION. SINCE THE TW O ACCOUNTS WERE NOT REFLECTED IN THE BOOKS OF ACCOUNTS, HE REJECTED THE BOOKS OF ACCOUNTS AS ITA NO. 225/HYD/2013 SRI GADDAM SANTOSH REDDY :- 2 -: CORRECTNESS AND COMPLETION OF ACCOUNT COULD NOT BE VERIFIED. HOWEVER, IN SPITE OF REJECTING THE BOOKS OF ACCOUNTS, HE ACCEPT ED THE RETURNED INCOME AND DID NOT ESTIMATE ANY INCOME FROM THE BUS INESS U/S. 145(3) OF THE INCOME TAX ACT [ACT]. WITH REFERENCE TO THE DEPOSITS IN THE BANK ACCOUNT, AO NOTICED THAT TOTAL CREDITS IN AXIS BANK ARE RS. 22,44,980/- AND ICICI BANK ARE RS. 20,63,933/-. SINCE ASSESSEE 'S EXPLANATION WAS NOT ACCEPTED, AO DEEMED IT FIT TO ASSESS ASSESSEE'S INVESTMENT IN UN- ACCOUNTED TRANSACTIONS BY TAKING PEAK CREDITS FROM BOTH THE BANKS. DOING SO, THE PEAK CREDIT IN AXIS BANK WAS DETERMIN ED AT RS. 13,34,841/- AND ICICI BANK AT RS. 13,62,416/-. THE TOTAL OF THE PEAK WAS ARRIVED AT RS. 26,97,257/- AND ACCORDINGLY, THE SAME AMOUNT WAS BROUGHT TO TAX. 3. BEFORE THE LD.CIT(A), ASSESSEE CONTENDED THAT P EAK CREDITS IN TWO BANK ACCOUNTS CANNOT BE CONSIDERED AND THESE BANK A CCOUNTS PERTAIN TO HUF STATUS. IN THE ALTERNATE, IT WAS SUBMITTED THA T PEAK CREDIT IN ONE OF THE BANKS CAN BE ACCEPTED AND NOT IN BOTH THE BANKS . LD.CIT(A) WITHOUT EXAMINING WHETHER THERE ARE ANY CROSS TRANSACTIONS BETWEEN THE BANKS, ACCEPTED ASSESSEE'S ALTERNATE CONTENTION AND CONFIR MED THE HIGHEST AMOUNT AMONG THE TWO AT RS. 13,62,416/- AS AGAINS T THE AMOUNT OF RS. 26,97,257/- ASSESSED BY THE AO. REVENUE IS AGGRIEV ED. 4. LD. DR CONTENDED THAT CIT(A) WAS NOT CORRECT IN DELETING THE AMOUNT ON THE ALTERNATE CONTENTION THAT PEAK CREDIT IN ONE OF THE BANKS CAN ONLY BE BROUGHT TO TAX WITHOUT EXAMINING THE FA CTS OR WITHOUT GIVING AN OPPORTUNITY TO AO. 5. LD. COUNSEL WHILE SUBMITTING THAT ASSESSEE HAS A CCEPTED THE CIT(A)'S ORDER, HOWEVER, RELIED ON THE CIT(A)'S ORD ER. AT OUR INSTANCE, HE HAS FILED A COMBINED STATEMENT OF AXIS BANK AND ICI CI BANK WHEREIN THE ITA NO. 225/HYD/2013 SRI GADDAM SANTOSH REDDY :- 3 -: PEAK OF THE CREDITS IN THE ACCOUNTS CAME TO RS. 19, 97,825/- ON 24-01- 2009. BY EXCLUDING THE OPENING BALANCE OF RS. 99,5 20/-, THE PEAK AMOUNT COMES TO RS. 18,98,305/-. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE RECORD. WE ARE UNABLE TO UNDERSTAND ON WHAT BASIS THE AO AR RIVED AT PEAK CREDIT IN DIFFERENT BANKS. WHILE COMPLETING THE A SSESSMENT, HE NEITHER EXAMINED THE INDIVIDUAL DEPOSITS NOR EXAMINED THE W ITHDRAWALS NOR ANALYSED NATURE OF TRANSACTIONS. EVEN THOUGH HE RE JECTED THE BOOKS OF ACCOUNTS, THERE IS NO ESTIMATION OF INCOME ON THE B USINESS TRANSACTIONS. LD.CIT(A) ALSO EQUALLY ERRED IN DELETING ONE OF THE AMOUNTS WHILE CONFIRMING THE OTHER WITHOUT EXAMINING THE COMBINED PEAK CREDIT IN BOTH THE BANKS. SINCE THE ASSESSMENT WAS COMPLETED ONLY ON THE BASIS OF THE PEAK CREDITS, WE HAVE NO OPTION THAN TO CONS IDER THE ISSUE ONLY ON THAT ISSUE. SINCE THE PEAK AMOUNT REWORKED OUT WAS DETERMINED AT RS. 18,98,305/-, WE HOLD THAT THE ABOVE AMOUNT CAN BE B ROUGHT TO TAX BY MODIFYING THE ORDER OF THE CIT(A). EVEN THOUGH LD. DR REQUESTED FOR SETTING ASIDE THE ISSUE FOR RE-EXAMINATION, WE DO N OT FIND IT NECESSARY AS THE ASSESSMENT ITSELF WAS TAKEN ON PEAK CREDIT BASI S AND A COMBINED STATEMENT PLACED ON RECORD INDICATE THE PEAK CREDIT AMOUNT. ACCORDINGLY, THE PEAK CREDIT AMOUNT TO BE BROUGHT T O TAX WAS DETERMINED AT RS. 18,98,305/-. AO IS DIRECTED TO MODIFY THE O RDER ACCORDINGLY. 7. IN THE RESULT, REVENUE'S APPEAL IS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2015. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RAM AKOTAIAH) JUDICIAL MEMBER ACC OUNTANT MEMBER HYDERABAD, DATED 30 TH JUNE, 2015 TNMM ITA NO. 225/HYD/2013 SRI GADDAM SANTOSH REDDY :- 4 -: COPY TO : 1. THE INCOME TAX OFFICER, WARD-2, AAYAKAR BHAVAN, BEHIND KINNERASANI THEATRE, RAJIV GUNJ, KHAMMAM. 2. SRI GADDAM SANTOSH REDDY, 8-1-8, BEHIND NSP GUES T HOUSE, PRASANTI NAGAR, KHAMMAM. 3. CIT(APPEALS), VIJAYAWADA. 4. CIT, VIJAYAWADA. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.