Dilip Kumar Nahata, Kolkata V. DCIT, C.C. XVII, Kolkata, Kolkata

ITA 27/KOL/2012

• Counselvise Citation: 2723514 RSA 2012
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2012
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 06-01-2012
• Court: TRIBUNAL
• Department Lawyers: B K DAS
• Assessee Lawyers: J M THARD
• Keywords: Search and seizure; Peak credit
• Section: 131; 132; 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE , , , , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $%& $%& $%& $%& ' ' ' ' / ITA NO . 141/KOL/2012 () *+/ ASSESSMENT YEAR : 2005-06 (-. / APPELLANT ) D.C.I.T., CENTRAL CIRCLE-XVII, KOLKATA. - ( - - VERSUS - . (01-./ RESPONDENT ) SHRI DILIP KUMAR NAHATA, KOLKATA (PAN: ABPPN 7782 E) ' ' ' ' / ITA NO.27/KOL/2012 () *+/ ASSESSMENT YEAR : 2005-06 (-. / APPELLANT ) SHRI DILIP KUMAR NAHATA, KOLKATA. (PAN:ABPPN 7782 E) - ( - - VERSUS - . (01-./ RESPONDENT ) D.C.I.T., CENTRAL CIRCLE- XVII, KOLKATA. -. 2 3 '/ FOR THE DEPARTMENT: SHRI B.K.DAS 01-. 2 3 '/ FOR THE ASSESSEE : SHRI J.M.THARD 4(5 2 !# /DATE OF HEARING : 09.05.2012. 6* 2 !# /DATE OF PRONOUNCEMENT : 09.05.2012. '7 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THE ABOVE CROSS APPEALS ONE FILED BY THE REVENUE AN D THE OTHER FILED BY THE ASSESSEE ARE AGAINST ORDER DATED 30.11.2011 OF THE CIT(A)-CENTRAL-I, KOLKATA PERTAINING TO A.YR. 2005-06. 2 2. AT THE TIME OF HEARING BEFORE THE LD. COUNSEL A PPEARING ON BEHALF OF ASSESSEE AS ASKED FOR ADJOURNMENT BY STATING THAT NECESSARY PAP ERS FOR REPRESENTING THE CASE ARE NOT YET COLLECTED. HOWEVER ON CAREFUL PERUSAL OF TH E CROSS APPEALS WE CONSIDER IT TO DISPOSE OF THE SAME WITHOUT ANY ADDITIONAL PAPERS,. THEREFORE WE REJECT THE ADJOURNMENT APPLICATION FILED BY THE LD. COUNSEL FO R ASSESSEE. 3. THE GROUNDS TAKEN BY THE REVENUE AS WELL AS THE ASSESSEE IN THIS APPEAL ARE AS UNDER :- ITA NO.141/KOL/2012 (BY THE REVENUE): 1. THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN ALLOW ING ASSESSEE THE BENEFIT OF PEAK CREDIT IN CASES OF CHEQUES ISSUED BY HIM IN SPITE OF THE F ACT THAT THE ASSESSEE HAS FAILED TO EXPLAIN HOW THE FUNDS WITHDRAWN BY HIM BY ISSUING C HEQUES TO DIFFERENT PARTIES WERE RECYCLED FOR DEPOSITS INTO THE BANK A/CS. II. THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DIREC TING THE A.O. TO TREAT THE PEAK CREDIT OF EACH OF THE SIX ACCOUNTS AMOUNTING TO RS. 1,03,48,4 00/- AS UNDISCLOSED INCOME OF THE ASSESSEE INSTEAD OF THE PEAK CREDIT OF RS. 10,21,96 ,300/- AS CALCULATED BY THE A.O. III. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY AND/OR WITHDRAW ANY GROUND OR GROUNDS ON OR BEFORE THE HEARING OF THE APPEAL. ITA NO.27/KOL/2012 (BY THE ASSESSEE) : 1) THAT THE ORDER PASSED BY THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) IS BAD IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2) ON THE FACTS BROUGHT ON RECORD THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE ACCEPTED THE CONSOLIDATED PEAK OF ALL THE BANK ACCOUNTS TAKEN TOGETHER AS UNDISCLOSED INCOME OF THE APPELLANT INSTEAD OF AGGR EGATE OF THE SEPARATE PEAK OF THE INDIVIDUAL BANK ACCOUNTS. 3) THE APPELLANT CRAVES LEAVE TO ADD/OR AMEND ANY G ROUNDS OF THIS APPEAL 4. THE BRIEF FACTS OF THIS ISSUE ARE THAT WHILE DO ING THE SCRUTINY ASSESSMENT THE ASSESSING OFFICER HAS ADDED AN AMOUNT OF RS.23,23,9 0,320/- BY OBSERVING THAT : IN THIS CASE THE S.H.O. CHHOTI GWAL TOLI POLICE ST ATION, INDORE HAD SEIZED CASH OF RS.19.76 LAKHS FROM DURGESH PAREKH AND MANOJ BHATI OF 196, OLD CHINA BAZAR STREET, KOLKATA-700001, ON 15/16-10-2004. IN CONSEQUENCE TO THAT SEARCH AND SEIZURE OPERATION U/S 132 OF I.T.ACT WAS CONDUCTED ON DIFFERENT DATES IN THE CASE OF SIX BANK A/CS MAINTAINED WITH ICICI BANK DETAILS OF WHICH IS GIVE N BELOW :- SL.N O. NAME OF THE A/C HOLDER BANK & BRANCH A/C NO. AMOUNT FOUND (LAKHS) AMOUNT SEIZED (LAKHS) DT.OF SEARCH 1. KANKAN TEXTILES ICICI BANK, KOLKATA 000605005027 10.08 10.08 9.11.2004 2. PINKY HOSIERY ICICI BANK, KOLKATA 627605251425 5.24 5.23 26.10.2004 3 3. PUJA TRADERS ICICI BANK, KOLKATA 627605251442 14.21 14.20 26.10.2004 4. JACKUP CONSULTANT LTD. ICICI BANK, RAIPURA 016105000912 3.80 3.75 28.10.2004 5. ABHITAJ COMMERCIAL CO.LTD. ICICI BANK, MUMBAI 623505378889 22.70 22.70 25.10.2004 6. PINKY COMMERCIAL CO.LTD. ICICI BANK, GUWAHATI 634305004092 00.04 NIL 26.10.2004 TOTAL 56.07 55.96 MR.DILIP KUMAR NAHATA IN HIS STATEMENT BEFORE A.D.I .T.(INV.) KOLKATA RECORDED U/S 131 ON 1.11.2004 HAS ACCEPTED THAT THE ABOVE MENTIONED SIX BANK A/CS WERE OPERATED AS PER HIS INSTRUCTIONS AND THE PROPRIETORS AND DIRECTORS OF THE ACCOUNT HOLDERS WERE HIS EMPLOYEES. RETURN OF INCOME FOR A.Y.2005-06 WAS FILED ON 29-03 -2006 DECLARING TOTAL INCOME OF RS.1,20,920/-. DURING THE COURSE OF ASSESSMENT, ASS ESSEE CLAIMED THAT HE WAS A FINANCE BROKER AND HIS CLIENTS GAVE HIM CASH FOR INVESTMENT IN SHARES AND LOANS FOR THAT HE USED TO RECEIVE 0.3% TO 0.5% AS SERVICE CHARGE. HE ALSO CLAIMED THAT SAME CASH HAD BEEN INVESTED IN THE ABOVE MENTIONED SIX BANK A/CS. ASSE SSEE FURTHER CLAIMED THAT THE PEAK OF ALL THE DEPOSITS AND WITHDRAWALS IN/FROM THE SIX BA NK A/CS WHICH COMES TO RS.57,90,000/- SHOULD BE TAKEN AS HIS DISCLOSED INC OME. THE A.O. REJECTED THE ASSESSEES CLAIM AND THE SUM OF ALL THE DEPOSITS IN THE SAID SIX BANK A/CS OF ICICI BANK I.E RS.24,11,93,400/- WAS TAKEN AS INCOME OF THE AS SESSEE FROM UNDISCLOSED SOURCE. THE CASH OF RS. 19.76 IAKHS WHICH WAS SEIZED BY POLICE AT INDORE FROM DURGESH PAREKH AND MANOJ BHATI WAS ALSO TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE ASSESSMENT WAS COMPLETED U/S 143(3) AT A TOTAL INCOME OF RS.24 ,32,90,320/-. 4.1. ON APPEAL THE LD. CIT(A) IN HIS ORDER DATED 0 8.10.2007 DIRECTED THE AO TO TREAT RS.1,03,48,400/- AS UNDISCLOSED INCOME OF ASSESSEE IN PLACE OF RS..24,11,93,400/-.AND RS.1,03,48,400/- IS THE SUM OF THE PEAK CREDIT OF E ACH OF THE SIX BANK ACCOUNTS . THE LD. CIT(A) HAS ALSO DELETED THE ADDITION OF RS.19.7 6 LAKHS BEING SEIZED CASH TREATED AS UNDISCLOSED INCOME. 4.2. AGGRIEVED BY THIS NOW THE DEPARTMENT AS WELL A S ASSESSEE WENT IN APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL IN ITS ORDER DATE D 27.05.2009 HAS SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES BY OBSERVING AS UNDER :- ........ THE CIT(A) HAS ACCEPTED THE PEAK CREDIT THEORY OF T HE ASSESSEE WITHOUT GOING INTO THE DEBIT SIDE OF THE ACCOUNTS. THE PEAK THEORY OF THE CREDIT CANNOT BE APPLIED IN THE 4 ABSENCE OF ANY INVESTIGATION OR FINDING IN RESPECT OF THE WITHDRAWAL OF THE AMOUNT FROM THE BANK ACCOUNT. THE NATURE AND THE ULTIMATE USE O F THE WITHDRAWALS ARE VERY MUCH RELEVANT TO APPLY THE PEAK CREDIT THEORY. NEITHER T HE A. O. NOR THE CIT(A) HAS LOOKED INTO THIS ASPECT. TO DRAW THE INFERENCE BASED ON TH E PROBABILITIES NEEDS CERTAIN BASIC FACTS AND IN THIS CASE THE WITHDRAWAL SIDE OF THE A CCOUNTS MUST HAVE BEEN INVESTIGATED BEFORE APPLYING THE THEORY O PEAK CREDIT. THE RELEV ANT MATERIAL ON THE RECORD DOES NOT SUGGEST THAT SUCH PROBABILITY DID EXIST. TO ASCERTA IN THE FACT THAT THE MONEY HAS KEPT ON ROTATION IN THE FORM OF DEPOSITED WITHDRAWAL IN THE BANK ACCOUNTS DEFINITELY REQUIRES INVESTIGATION OF THE DEBIT SIDE OF THE ACCOUNTS AND IN THIS CASE NO FACTS HAVE BEEN BROUGHT ON RECORD. KEEPING THESE FACTS IN VIEW WE S ET ASIDE THE ORDERS OF THE LOWER AUTHORITIES WITH THE DIRECTION TO ASCERTAIN THE FAC TS IN RESPECT OF THE DEBIT SIDE OF THE ACCOUNTS TO APPLY THE THEORY OF PEAK CREDIT. 4.3. WHILE DOING THE RE-ASSESSMENT AS PER THE DIREC TION OF THE ITAT THE AO MADE AN ADDITION OF RS.10,21,96,300/-ON ACCOUNT OF PEAK CREDIT. 4.4. ON APPEAL THE LD. CIT(A) HAS RESTRICTED THE AD DITION TO RS.1,03,48,400/- BY TREATING THE PEAK CREDIT OF EACH OF THE SIX BANK AC COUNTS. 4.5. AGGRIEVED BY THIS ASSESSEE AS WELL AS THE REVE NUE ARE IN APPEAL BY TAKING THE ABOVE GROUNDS. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD, IT IS OBSERVED THAT NEITHER TH E AO NOR THE LD. CIT(A) HAS FOLLOWED THE DIRECTIONS GIVEN BY THIS TRIBUNAL IN ITS ORDER DATED 27.05.2009. ON CAREFUL PERUSAL OF THE GROUNDS TAKEN BY ASSESSEE WE FIND FORCE IN T HE GROUNDS TAKEN BY ASSESSEE THAT UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE WHE N THERE ARE SIX UNDISCLOSED BANK ACCOUNTS WHILE ASSIGNING THE PEAK CREDIT THE PROPER METHOD IS TO MAKE A CONSOLIDATED FUND FLOW STATEMENT BY TAKING INTO ACCOUNT OF ALL T HE UNDISCLOSED BANK ACCOUNTS AND AFTER SETTING OFF CONTRA ENTRIES, IF ANY, AND THEN THE PEAK CREDIT OF THESE CONSOLIDATED BANK TRANSACTIONS SHOULD BE TAKEN AS UNDISCLOSED IN COME OF ASSESSEE. THE ASSESSEE ALSO HAS TAKEN IN HIS GROUNDS THE SAME. THE LD. CIT (A) OUGHT TO HAVE ACCEPTED THE CONSOLIDATED PEAK OF ALL THE BANK ACCOUNTS TAKEN TO GETHER AS UNDISCLOSED INCOME OF ASSESSEE INSTEAD OF AGGREGATE OF THE SEPARATE PEAK OF THE INDIVIDUAL BANK ACCOUNTS. WE ACCEPT THE CONTENTION OF ASSESSEE AND THEREFORE WE SET ASIDE THE ORDERS OF LD.CIT(A) TO 5 THE FILE OF AO TO ARRIVE THE PEAK CREDIT OF THE CON SOLIDATED BANK ACCOUNTS TO BE TAKEN TOGETHER AND AFTER MAKING ADJUSTMENTS OF THE CONTRA ENTRIES. 6. IN THE RESULT THE APPEAL OF THE REVENUE AS WELL AS ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09.05.2012. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , ,, , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 09.05.2012. '7 2 0% 8'%*9- COPY OF THE ORDER FORWARDED TO: 1. SHRI DILIP KUMAR NAHATA, 196, OLD CHINA BAZAR STREE T, KOLKATA-700001. 2 THE D.C.I.T., CENTRAL CIRCLE-XVII, KOLKATA. 3. THE CIT, 4. THE CIT(A)-CENTRAL-I, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA 1% 0/ TRUE COPY, '7(4/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.)