ITO, CHENNAI V. C.Shankar, CHENNAI

ITA 2477/CHNY/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3950 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 10-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DURAI
• Assessee Lawyers: S SRIDHAR
• Keywords: Peak credit

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , !' . #$#% , & '' ( [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO. 2072/MDS/2014 / ASSESSMENT YEAR : 2010-2011 SHRI. C. SHANKAR, NEW NO.3, 5 TH STREET, ALWARPET, CHENNAI 600 018. [ PAN AYYPS 1959A ] VS. THE INCOME TAX OFFICER, BUSINESS WARD XV(3) CHENNAI. ITA NO. 2477/MDS/2014 / ASSESSMENT YEAR : 2010-2011 THE INCOME TAX OFFICER, BUSINESS WARD XV(3) CHENNAI. VS. SHRI. C. SHANKAR, NEW NO.3, 5 TH STREET, ALWARPET, CHENNAI 600 018. [ PAN AYYPS 1959A ] ( )* / APPELLANT) ( +,)* /RESPONDENT) ASSESSEE BY : SHRI. S. SRIDHAR, ADVOCATE DEPARTMENT BY : SHRI. DURAI PANDIAN, IRS, JCIT. /DATE OF HEARING : 10-11-2016 /DATE OF PRONOUNCEMENT : 23-11-2016 ITA NO. 2072 & 2477/MDS/2014 :- 2 -: / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS FILLED BY ASSESSEE AND R EVENUE RESPECTIVELY ARE DIRECTED AGAINST AN ORDER DATED 02 .06.2014 OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-V, CHENNAI FOR THE IMPUGNED ASSESSMENT YEAR. 2. FACTS APROPOS ARE THAT ASSESSEE EARNING INCOME FRO M SALARY AND INCOME FROM OTHER SOURCES, HAD DECLARED A TOTAL INCOME OF A5,21,490/- IN HIS RETURN. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, IT WAS NOTED BY THE LD. ASSESSING OFFI CER THAT ASSESSEE HAD CASH DEPOSITS IN BANK ACCOUNT IN AXIS AND ORIEN TAL BANK OF COMMERCE. CLAIM OF THE ASSESSEE WAS THAT, HE WAS CARRYING ON A MONEY LENDING BUSINESS AND THE TRANSACTIONS APPEAR ING IN HIS BANK ACCOUNTS WERE RELATING TO SUCH MONEY LENDING ACTIVI TIES. ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE COULD NOT EXPLAIN THE SOURCE FOR THE LOANS GRANTED BY HIM IN HIS MONEY LENDING A CTIVITIES AND ALSO THE CASH BALANCE AS ON 31.03.2010 WHICH AGGREGATED TO A1,19,07,402/-. ASSESSING OFFICER TOOK A VIEW THAT ENTIRE CASH BALANCE AND LOANS WERE OUTSIDE THE BOOKS OF ACCOUNT. AN AD DITION OF A1,19,07,402/- WAS MADE. ITA NO. 2072 & 2477/MDS/2014 :- 3 -: 3. THOUGH ASSESSEE HAD STATED THAT HE WAS EARNING IN TEREST @9% PER ANNUM ON THE LOANS ADVANCED, LD. ASSESSING OFFICER WAS OF THE OPINION THAT A SEPARATE ADDITION WAS NOT REQUIR ED AS HE WAS FOLLOWING INVESTMENT METHOD RATHER THAN INCOME METH OD. LD. ASSESSING OFFICER ALSO MADE A DISALLOWANCE OF A7,59 ,438/- CLAIMED BY THE ASSESSEE AS EXPENDITURE INCURRED FOR EARNING TH E INTEREST INCOME, FOR A REASON THAT PROOF FOR EACH EXPENDITURE WAS N OT PRODUCED. 4. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) AFTER GOING THROUGH THE BANK A CCOUNTS AND STATEMENTS FOUND THAT THERE WERE LARGE NUMBERS OF D EBITS APPEARING THROUGHOUT THE YEAR IN THE BANK STATEMENTS AND SUC H DEBITS REFLECTED WITHDRAWAL OF FUNDS. ACCORDING TO HIM, ASSESSING O FFICER DID NOT BRING ANY MATERIAL ON RECORD TO ESTABLISH THAT DEBTORS A ND CASH BALANCE APPEARING IN THE BOOKS PRODUCED BY THE ASSESSEE RE ALLY EXISTED. ACCORDING TO HIM, WHAT WAS TO BE ASSESSED WAS THE P EAK CREDIT APPEARING IN THE BANK ACCOUNTS AND NOT INVESTMENTS SHOWN BY THE ASSESSEE AS LOAN TO OUTSIDE PARTIES. IN SO FAR AS, EXPENDITURE OF A7,59,438/- WAS CONCERNED, LD. COMMISSIONER OF INCO ME TAX (APPEALS) WAS OF THE OPINION THAT ASSESSING OFFICER WAS JUSTI FIED IN MAKING THE DISALLOWANCE FOR WANT OF EVIDENCE. THUS, HE WHITTLE D DOWN THE ADDITION ITA NO. 2072 & 2477/MDS/2014 :- 4 -: MADE BY THE ASSESSING OFFICER TO THE PEAK CREDIT AP PEARING IN THE BANK STATEMENTS, WHILE CONFIRMING THE DISALLOWANCE OF TH E EXPENDITURE. 5. NOW BEFORE US, ASSESSEE IS ASSAILING THE DISALLOWAN CE OF EXPENDITURE, WHEREAS REVENUE IS ASSAILING THE APPL ICATION OF PEAK CREDIT METHOD BY LD. COMMISSIONER OF INCOME TAX (AP PEALS) AGAINST INVESTMENT METHOD ADOPTED BY THE ASSESSING OFFICER. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASSESSEE ITSELF HAD ADMITTED TO THE MONEY LENDING BUSINESS AND PRODUCED BOOKS OF ACCOUNT. ACCORDING TO HIM, THE LD. COMMISSIONER O F INCOME TAX (APPEALS), IN SUCH CIRCUMSTANCES WENT WRONG IN DIRE CTING ADOPTION OF THE PEAKS CREDITS METHOD. 6. PER CONTRA, LD. AUTHORISED REPRESENTATIVE STRONGLY SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) IN SO FAR AS IT CONCERNED ADOPTION OF PEAK CREDIT AS INCOME. HO WEVER, AS PER LD. AUTHORISED REPRESENTATIVE THE DISALLOWANCE OF EXPE NDITURE WAS CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) WITHOUT GIVING AN OPPORTUNITY TO PRODUCE EVIDENCE. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTE D THAT ASSESSEE HAD PRODUCED BEFORE ASSESSING OFFICER DETAILS OF LOANS AND ADVANCES GIVEN ITA NO. 2072 & 2477/MDS/2014 :- 5 -: BY THE ASSESSEE. CLAIM OF THE ASSESSEE BEFORE ASS ESSING OFFICER WAS THAT, IT WAS DOING MONEY LENDING BUSINESS AND THE D EPOSITS IN AXIS BANK AND ORIENTAL BANK OF COMMERCE WERE TRANSACTION S RELATING TO MONEY LENDING BUSINESS. AS AGAINST THIS, LD. CIT(A ) HAD TAKEN A VIEW THAT ASSESSING OFFICER HAD NOT BROUGHT ANY EVIDENCE ON RECORD TO ESTABLISH THE EXISTENCE OF DEBTS AND CASH BALANCE A PPEARING IN THE RECORDS OF THE CASH BOOK. WE ARE OF THE OPINION TH AT CONSIDERING THE LACK OF CLARITY WITH REGARD TO THE NATURE OF BOOKS PRODUCED BY THE ASSESSEE AND LOANS GIVEN BY IT, A FRESH LOOK BY TH E LD. ASSESSING OFFICER IS REQUIRED. WHEN ASSESSEE HAD PRODUCED BOO KS OF ACCOUNT, IT WAS THE DUTY OF THE ASSESSING OFFICER TO VERIFY SUC H BOOKS OF ACCOUNT WITH THE BANK STATEMENTS AND GIVE A DETAILED LIST OF LOANS GIVEN BY THE ASSESSEE FOR WHICH NO SOURCE WAS THERE. AS AGAINS T THIS, LD. COMMISSIONER OF INCOME TAX (APPEALS) WENT HEAD TO A DOPT THE PEAK CREDIT WITHOUT MAKING SUFFICIENT ENQUIRY INTO THE CLAIM OF THE ASSESSEE THAT IT WAS DOING A MONEY LENDING BUSINESS. ASSE SSING OFFICER HAD TAKEN A VIEW THAT ASSESSEE WAS DOING ILL ORGANIZED MONEY LENDING BUSINESS AND THE CLAIM OF THE EXPENDITURE WAS BOGUS . WHETHER ORGANIZED OR ILL ORGANIZED, IT IS THE DUTY OF THE A SSESSING OFFICER TO SEPARATE THE WHEAT FROM THE CHAFF AND FIND THE CORR ECT INCOME WHICH HAS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE, I F AT ALL THERE WERE IF ANY. WE THEREFORE OF THE OPINION THAT MATTER REQUI RES A FRESH VISIT BY ITA NO. 2072 & 2477/MDS/2014 :- 6 -: THE ASSESSING OFFICER. WE SET ASIDE THE ORDERS OF L OWER AUTHORITIES AND REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING O FFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE AND REVEN UE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON WEDNESDAY, THE 23 RD DAY OF NOVEMBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( !' . #$#% ) (ABRAHAM P. GEORGE) & / ACCOUNTANT MEMBER / CHENNAI ! / DATED: 23RD NOVEMBER, 2016 KV !' # $% &% / COPY TO: 1 . '( / APPELLANT 3. ) () / CIT(A) 5. %+, # - / DR 2. #.'( / RESPONDENT 4. ) / CIT 6. ,/ 0 / GF