The ITO, Ward-5(3), Surat V. Shri Pramod T.Jariwala, Surat

ITA 2425/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6709 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MADHUSUDAN SRDR
• Keywords: Unexplained cash credit; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI G.D. AGARWAL, HONBLE VICE-PRESIDENT (AZ) AND SHRI T.K. SHARMA, HONBLE JUDICIAL MEMBER ITA NO.2425/AHD/2009 ASSESSMENT YEAR:2006-07 DATE OF HEARING: 21.4.11 DRAFTED:27.4.11 INCOME TAX OFFICER, WARD-5(3), ROOM NO.315, AAYAKAR BHAVAN, MAJURA GATE, SURAT V/S . SHRI PRAMOD T JARIWALA, 9/317, CHAKAWALA SHERI, WADI FALIA, SURAT PAN NO.ABCPJ5933C (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI K MADHUSUDAN SR-DR RESPONDENT BY:- NONE O R D E R PER T.K. SHARMA, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DA TED21-05-2009 OF COMMISSIONER OF INCOME-TAX (APPEALS)-III, SURAT DIR ECTING THE ASSESSING OFFICER TO TREAT THE PEAK BALANCE OF THE BANK ACCOU NT AS THE ASSESSEES INCOME, INSTEAD OF THE ADDITION OF RS.32,83,310/- F OR THE ASSESSMENT YEAR 2006-07. 2. THE BRIEF FACTS ARE THAT ASSESSEE IS AN INDIVIDU AL. FOR THE ASSESSMENT OF APPEAL HE FILED RETURN OF INCOME ON 14-06-2006 DECL ARING TOTAL INCOME AT RS.1,00,030/- FROM MANUFACTURING AND TRADING OF JAR I. ASSESSING OFFICER FRAMED THE ASSESSMENT U/S.143(3) OF THE INCOME-TAX ACT, 19 61, WHEREIN HE MADE ADDITION OF RS.32,83,310/- ON ACCOUNT OF UNEXPLAINE D BANK DEPOSIT ON ITA NO.2425/AHD/2009 A.Y. 2006-07 ITO WD-5(3) SRT V. SH. PRAMOD T JRIWALA PAGE 2 SUBSTANTIVE BASIS. IN THE ASSESSMENT ORDER ASSESSIN G OFFICER OBSERVED THAT ASSESSEE FAILED TO FURNISH BANK STATEMENT. THEREFOR E A COPY OF BANK STATEMENT WAS DIRECTLY OBTAINED FROM THE BANK. ON P ERUSAL OF BANK STATEMENT THE AO NOTICED THAT ASSESSEE HAS MADE DEPOSIT OF RS .32,83,310/- OUT OF WHICH RS.29,67,725/- WERE MADE IN CASH AND REMAININ G AMOUNT WAS THROUGH CHEQUES. AO TREATED THE WHOLE CREDIT AS APPEARING I N THE BANK STATEMENT AS UNEXPLAINED DEPOSIT SINCE THE ASSESSEE FAILED TO PR ODUCE AN IOTA OF INFORMATION ABOUT THE SAID BANK ACCOUNT. ON APPEAL, IN THE IMPUGNED ORDER LD. CIT(APPEALS) DIRECTED THE AO TO TREAT THE PEAK BALANCE OF THE SAID AMOUNT AS ASSESSEES INCOME. AGGRIEVED WITH THE ORDER OF L D. CIT(A) REVENUE IS IN APPEAL BEFORE TRIBUNAL. 3. ON THE DATE FIXED FOR HEARING NEITHER APPEARED F ROM THE SIDE OF ASSESSEE NOR AN APPLICATION FOR ADJOURNMENT WAS REC EIVED. WE THEREFORE PROCEED TO DECIDE THIS APPEAL ON THE BASIS OF SUBMI SSION MADE BY LD. SR-DR. 4. AT THE TIME OF HEARING BEFORE US ON BEHALF OF RE VENUE, SHRI K MADHUSUDAN, SR-DR APPEARED AND POINTED OUT THAT THI S DECISION OF LD. CIT(A) DIRECTING THE ASSESSING OFFICER TO TREAT PEA K BALANCE OF THE ASSESSEES BANK ACCOUNT AS ASSESSEES INCOME IS NOT ACCEPTABLE BECAUSE THE ORDER OF AO WAS BASED ON RIGHT FOOTING PLACING RELIANCE OF E NORMOUS CASE LAWS. HE ALSO POINTED OUT THAT DURING THE COURSE OF ASSESSME NT PROCEEDINGS, AO HAS GRANTED MANY OPPORTUNITIES TO EXPLAIN THE DEPOSITS AS APPEARING IN THE BANK STATEMENT. THE SAID BANK CONSIST CHEQUE ENTERED ALS O WHICH WERE NOT EXPLAINED AT THE TIME OF ASSESSMENT PROCEEDINGS OR AT THE TIME OF APPELLATE PROCEEDINGS. THE BANK ACCOUNT CONSISTS OF 135 ENTRI ES AND NO PRUDENT BUSINESSMAN WILL WASTE HIS SO MUCH TIME FOR USELESS WORK. ONCE HE FINISHED HIS CASH AVAILABLE WITH HIM ONLY THEN HE WITHDRAW T HE CASH FROM BANK AND DEPOSITED CASH ANY TIME DURING THE YEAR HAS NO RELA TION WITH EARLIER DEBIT/CREDIT. IT MIGHT BE HAPPENED THAT THE CASH WA S DEPOSITED IN BANK OTHER THAN SURAT CITY IN LIEU OF UNACCOUNTED SALES OF THE ASSESSEE FOR WHICH NO ITA NO.2425/AHD/2009 A.Y. 2006-07 ITO WD-5(3) SRT V. SH. PRAMOD T JRIWALA PAGE 3 EXPLANATION WAS GIVEN BY THE ASSESSEE. FINALLY, THE LD. DR POINTED OUT THAT PROFIT OF SUCH UNACCOUNTED BUSINESS WAS ALSO NOT TA XED. SINCE THE ASSESSEE WAS NOT CO-OPERATING DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE ENTIRE DEPOSITS APPEARING IN THE BANK ACCOUNT ARE TO BE CO NSIDERED AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. TO SUM UP , LD. DR CONTENDED THAT ADDITION OF RS.32,83,310/- MADE BY ASSESSING OFFICE R BE RESTORED. 5. AFTER HEARING THE LD. SR-DR WE HAVE CAREFULLY GO ING THROUGH THE ORDER OF AUTHORITY BELOW. IT IS PERTINENT TO NOTE THAT BE FORE LD. CIT(A) ASSESSEE PLEADED THAT THE SAID BANK ACCOUNT WERE JOINTLY HEL D BY ASSESSEE WITH HIS WIFE, SMT.USHABEN P JARIWALA. THE AO MADE THE ADDIT ION WITHOUT PROVIDING SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO FURNISH T HE REQUISITE EXPLANATION. THE SAME DEPOSIT HAD BEEN ADDED IN THE HANDS OF ASSESSE ES WIFE AS WELL. IT WAS FURTHER SUBMITTED THAT DEPOSITS WERE MADE ONLY BY T HE ASSESSEE HIMSELF, AND THAT, HIS WIFE AND NO CONTRIBUTION. THOUGH THE ACCO UNT SHOWS SEVERAL DEPOSITS YET, THE SAME MONEY HAD BEEN REPEATEDLY DEPOSITED A ND WITHDRAWN BY THE ASSESSEE IN ORDER TO DISPLAY AND INCREASE HIS CREDI TWORTHINESS IN FRONT OF THOSE WHO WERE DEALING WITH HIM. IT WAS THEREFORE ONLY A MEANS OF ENHANCING HIS IMAGE AS BEING FINANCIALLY STRONG AND HEALTHY. THER EFORE, ONLY THE PEAK OF THE DAILY BALANCES WHICH SHOULD HAVE BEEN ADOPTED BY TH E AO AS THE ASSESSEES INCOME AND BROUGHT TO TAX. AFTER CONSIDERING THE AF ORESAID SUBMISSION IN THE LD. CIT(A) DIRECTED THE AO TO TAX PEAK BALANCE OF R S.1,29,174/-. THE REASONING GIVEN BY LD. CIT(A) IS AS UNDER:- I HAVE CAREFULLY PERUSED THE AR'S SUBMISSION AND H AVE ALSO GONE THROUGH THE ASSESSMENT ORDER. FIRSTLY, THE AO COULD NOT HAVE MADE THE ADDITION UNDER ALL THE SECTIONS MENTIONED BY HIM I. E. SECTIONS 68/69/69A/69B. HE OUGHT TO HAVE BEEN CLEAR ABOUT TH E SECTION UNDER WHICH HE WAS MAKING THE ADDITION. SECONDLY, A PERUS AL OF THE BANK ACCOUNT SHOWS THAT THERE WERE AS MANY WITHDRAWALS A S DEPOSITS WHICH MEANS THAT THERE WAS SUBSTANTIAL ROTATION OF MONEY. IN FACT, THE DEPOSIT MADE EACH DAY WAS WITHDRAWN THE SAME DAY OF EITHER THE SAME AMOUNT OR AN AMOUNT WHICH WAS ALMOST EQUAL TO THE DEPOSIT. WHAT THE AO DID WAS TO ADD THE TOTAL OF ALL THE DEPOSITS AND TREAT THE RESULTING FIGURE OF RS.32,83,310 AS THE ASSESSEES UNDISCLOSED INCOME. WHERE THERE WERE AS MANY WITHDRAWALS AS DEPOSITS AND WHERE THE MONEY HAD BEEN ITA NO.2425/AHD/2009 A.Y. 2006-07 ITO WD-5(3) SRT V. SH. PRAMOD T JRIWALA PAGE 4 ROTATED AND UTILIZED, THE PEAK THEORY SHOULD HAVE B EEN ADOPTED BY THE AO FOR THE PURPOSE OF DETERMINING THE INCOME OF THE ASSESSEE AS EMERGING FROM SUCH TRANSACTIONS FROM SUCH ACTIVITIE S. THE AO IS THEREFORE DIRECTED TO TREAT THE PEAK BALANCE OF THE SAID ACCOUNT AS THE ASSESSEES INCOME. A PERUSAL OF THE DETAILS OF DEPO SITS AND WITHDRAWALS AS FURNISHED BY THE AR SHOWS THAT THE PEAK BALANCE WAS OF A SUM OF RS.1,29,174/- ON 07-05-2005. THIS IS THE SUM WHICH WILL BE THE ASSESSEES UNDISCLOSED INCOME. 6. IN OUR CONSIDERED OPINION LD. CIT(A) HAS GIVEN C OGENT REASON FOR DIRECTING THE ASSESSING OFFICER TO TAX ONLY PEAK BA LANCE. WE THEREFORE DECLINE TO INTERFERE. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS DAY OF 29 TH APRIL, 2011 SD/- SD/- ( G.D.AGARWAL ) ( T.K. SHARMA ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD, DATED : 29/04/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-III, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD