Shri Bashir Hajibhai Mansuri, Surat V. The Income Tax Officer, Ward-3(1)(2), Surat

ITA 2271/AHD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94526 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 31-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R N VEPAIR
• Keywords: Peak credit; Application of stay
• Section: 148; 2

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.2271/AHD/2015 WITH S.P.NO.92/AHD/2015 / ASSTT. YEAR: 2007-2008 BASHIR HAJIBHAI MANSURI 1/2734, FLAT NO.101, 1 ST FLOOR SUNKUN APARTMENT OPP: RANG UPAVGAN RAYOMOND SHOW ROOM STREET NANPURA, SURAT 395 001. PN : AKAPM 2152 P VS ITO, WARD-3(1)(2) SURAT. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI R.N.VEPAIR REVENUE BY : SMT. SMITI SAMANT, SR.DR ! / DATE OF HEARING : 22/09/2015 '#$ ! / DATE OF PRONOUNCEMENT: 14/10/2015 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE CIT(A)-3, SURAT DATED 02.06.2015 PASSED FOR THE ASS TT.YEAR 2007-2008. THE ASSESSEE HAS ALSO MOVED STAY APPLICATION NO.92/ AHD/2015 SEEKING STAY OF TAX AND INTEREST DEMAND OF RS.11,48,670/-. FIRST, WE SHALL TAKE UP THE ITA NO.2271/AHD/2015 FOR THE SAKE OF CONVENI ENCE. 2. IN THE GROUND NO.1 AND 2, THE ASSESSEE HAS CHALL ENGED REOPENING OF THE ASSESSMENT ORDER BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ITA NO.2271/AHD/2015 WITH SP 2 INCOME TAX ACT. THE LD. COUNSEL FOR THE ASSESSEE D ID NOT PRESS THIS ISSUE, HENCE, THE GROUND NO.1 AND 2 ARE REJECTED. 3. THE NEXT GRIEVANCE OF THE ASSESSEE IS THAT THE L D.FIRST APPELLATE AUTHORITY HAS ERRED IN CONFIRMING THE ADDITION OF R S.12,69,573/- WHICH WAS ADDED BY THE AO WITH THE AID OF SECTION 69A OF THE INCOME TAX ACT. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 17.7.2007 DECLARING TOTAL INCOME AT RS.1, 02,900/-. THE AO HAD RECEIVED INFORMATION THROUGH ANNUAL INFORMATION REPORT WING. THE INFORMATION EXHIBITS THAT THE ASSESSEE HAS BANK ACC OUNT WITH ICICI BANK. HE HAS MADE A DEPOSIT OF RS.12,69,573/- DURI NG THE YEAR. THE LD.AO DIRECTED THE ASSESSEE TO EXPLAIN THE SOURCE O F DEPOSITS IN THIS BANK ACCOUNT. ACCORDING TO THE AO, THE ASSESSEE F AILED TO SUBMIT ANY EVIDENCE IN SUPPORT OF HIS CONTENTION, THEREFORE, T HE LD.AO HAS MADE AN ADDITION OF RS.12,69,573/- UNDER SECTION 69A OF THE INCOME TAX ACT. 5. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 6. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUT SET, SUBMITTED THAT BEFORE THE CIT(A), THE ASSESSEE HAS RAISED A P LEA FOR CONFIRMING THE ADDITION TO THE EXTENT OF PEAK CREDIT AVAILABLE IN THIS ACCOUNT DURING THE YEAR. THIS PLEA HAS BEEN REJECTED BY THE CIT(A ). HE SUBMITTED THAT THE AMOUNTS HAVE BEEN ROTATED IN THIS ACCOUNT AFTER WITHDRAWING FROM THIS VERY ACCOUNT. THEREFORE, IF THE ASSESSEE FAIL ED TO EXPLAIN THE SOURCE OF DEPOSIT, THEN AT THE MOST ONLY PEAK CREDI T CAN BE ADDED AND NOT THE GROSS OF THE CREDIT ENTRIES. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED THAT CON CEPT OF PEAK THEORY HAS BEEN EXPLAINED BY THE LD.FIRST APPELLATE AUTHOR ITY. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. SECTION 69A OF THE INCOME TAX PR OVIDES THAT WHEREIN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, ITA NO.2271/AHD/2015 WITH SP 3 BULLION, JEWELLERY ETC. WHICH IS NOT RECORDED IN TH E BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AN D THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE O F ACQUISITION OF THE MONEY, BULLION, JEWELLERY ETC. THEN THE MONEY, BULL ION OR OTHER VALUABLE ETC. BE NEEDED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. NO DOUBT THE ASSESSEE WAS FOUND TO BE OWNER OF MONE Y DEPOSITED IN HIS SAVING BANK ACCOUNT. THE ONUS IS UPON THE ASSESSEE TO EXPLAIN THE SOURCE OF DEPOSITS. THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF DEPOSITS. THE LD.FIRST APPELLATE AUTHORITY WHILE E XPLAINING THE CONCEPT OF PEAK THEORY, HAS OBSERVED THAT THIS THEORY IS AP PLICABLE WHEN THE BANK DEPOSIT HAS BEEN USED FOR BUSINESS PURPOSE OR ANY OTHER PURPOSE WHEREIN THE ASSESSEE HAS WITHDRAWN THE MONEY FOR IT S BUSINESS PURPOSE AND RE-DEPOSITED THE MONEY IN THE SAME ACCOUNT. IN A WAY, THERE IS A ROTATION OF FUNDS, ONLY THEN, THE PEAK CREDIT AVAIL ABLE IN THE ACCOUNT WILL BE TREATED AS INCOME OF THE ASSESSEE. THE LD.CIT(A ) HAS OBSERVED THAT AMOUNTS HAVE BEEN DEPOSITED WHICH WERE WITHDRAWN TH ROUGH ATM OR SELF-WITHDRAWAL. THE HOUSEHOLD EXPENSES SHOWN BY T HE ASSESSEE ARE VERY MEAGER. THEREFORE, ACCORDING TO THE CIT(A) TH E CONCEPT OF PEAK THEORY WILL NOT APPLICABLE IN THE CASE OF THE ASSES SEE. ON DUE CONSIDERATION OF THIS ASPECT, WE FIND THAT THE LD.F IRST APPELLATE AUTHORITY HAS FAILED TO CONSTRUE THE BANK STATEMENT IN RIGHT PERSPECTIVE. THE LD.AO HAS REPRODUCED A COMPLETE STATEMENT IN THE AS SESSMENT ORDER STARTING FROM PAGE NO.3 OF THE ASSESSMENT ORDER. A PERUSAL OF THIS ACCOUNT WOULD INDICATE THAT ON 3.4.2006 THE ASSESSE E HAS WITHDRAWN RS.48,000/- IN TWO INSTALMENTS. THESE WITHDRAWALS WERE MADE THROUGH ATM/CASH. THE ASSESSEE HAS DEPOSITED A SUM OF RS.3 7,000/- ON 4.4.2006 BY CASH BUT IN TWO INSTALMENTS. SIMILARLY , HE WITHDREW RS.24,000/- ON 4.4.2006, AND THEN DEPOSITED BY CASH OF RS.15,000/- ON 6.4.2006. THERE ARE OTHER ENTRIES ALSO OF SIMILAR NATURE. ON 17.4.2006 THE ASSESSEE HAS WITHDRAWN RS.25,000/-, THEN ON 19. 4.2006 WITHDRAWN RS.21,000/-. HE MADE A DEPOSIT OF RS.49,625/- ON 2 0.4.2006. THIS ITA NO.2271/AHD/2015 WITH SP 4 WOULD INDICATE THAT THE AMOUNTS WERE WITHDRAWN BY T HE ASSESSEE FROM THE BANK ACCOUNT AND ON THE NEXT DAY OR TWO-THREE D AYS THEREAFTER, IT WAS RE-DEPOSITED. WHAT WAS THE REASON FOR DEPOSITS AND WITHDRAWALS HAS NOT BEEN DISCLOSED BY THE ASSESSEE. ONE THING IS CLEAR THAT THE FUNDS WERE ROTATED IN THIS VERY ACCOUNT. THEREFORE , IN OUR OPINION, THE LD.AO OUGHT TO HAVE MADE THE ADDITION OF THE PEAK C REDIT/DEBIT AVAILABLE ON A PARTICULAR DAY DURING THE YEAR INSTEAD OF TOTA LING THE CREDIT ENTRIES. WE, THUS, PARTLY ALLOW THIS GROUND OF THE ASSESSEE AND DIRECT THE AO TO RESTRICT THE ADDITION ONLY QUA THE PEAK CREDIT AVAILABLE ON A PARTICULAR DAY IN THE WHOLE YEAR. 8. IN THE NEXT GROUND OF APPEAL, THE ASSESSEE HAS C HALLENGED, THE CHARGING OF INTEREST UNDER SECTIONS 234A, 234B, 234 C AND 234D OF THE ACT. 9. THE CHARGING OF INTEREST IS CONSEQUENTIAL IN NAT URE. NO ARGUMENTS HAVE BEEN ADVANCED ON THIS ISSUE BY THE LD.COUNSEL FOR THE ASSESSEE, HENCE, THIS GROUND OF APPEAL IS REJECTED.. S.A.NO.92/AHD/2015 10. SINCE WE HAVE DECIDED THE APPEAL ITSELF, THE ST AY APPLICATION BECOMES INFRUCTUOUS , HENCE, REJECTED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THAT OF STAY APPLICATION IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 14 TH OCTOBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER