ITO, UDAIPUR V. Shri Ajay Samnani, UDAIPUR

ITA 304/JODH/2009

• Counselvise Citation: 30423314 RSA 2009
• Duration Of Justice: 2 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 03-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R H GOHEL
• Assessee Lawyers: D C AGARWAL
• Keywords: Unexplained cash credit; Depreciation; Income from undisclosed sources; Principle of natural justice; Peak credit; Source of fund
• Section: 131; 144; 68

Judgement Text

1 ` IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR (BEFORE SHRI R.K. GUPTA AND SHRI .N.L. KALR A ) ITA NO.304/JU/2009 ASSESSMENT YEAR : 2005-06 PAN: AEYPS 2691 K THE ITO VS. SHRI AJAY SAMNANI WARD- 1(2) 3-KA-38, PRABHAT NAGAR UDAIPUR HIRAN MAGRI, UDAIPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI R.H. GOHEL ASSESSEE BY : SHRI D.C. AGARWAL DATE OF HEARING: 07-12-2011 DATE OF PRONOUNCEMENT: 16-12-2011 ORDER PER N.L. KALRA, AM:- THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD.CIT(A), UDIAPUR DATED 31-03-2009 FOR THE ASSESSMENT YEAR 2005-06. 2.1 ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD.CI T(A) HAS ERRED IN REDUCING THE ADDITION OF RS. 28,49,866/- TO RS. 31,143/- MADE U/ S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE BANK ACCOUNT OF THE ASSESSEE. 2.2 THE LD.CIT(A) HAS MENTIONED THE FACTS AS OBSERV ED BY THE AO, CONTENTION OF THE ASSESSEE MADE BEFORE HIM AND HAS GIVEN HIS DECISION . IT WILL BE USEFUL TO PRODUCE PARAS 3 TO 17 OF THE APPELLATE ORDER. 3. THE FACTS OF THE CASE AS OBSERVED BY THE AO I N THE ORDER ARE THE COURSE OF ASSESSMENT PROCEEDINGS IT HAD TR ANSPIRED THAT THE ASSESSEE WAS HAVING SB ACCOUNT WITH AXIS BANK LTD NO.0970101000048806, HDFC BANK LTD, BANK OF BAORDA, UDAIPUR . 2 THE AO ASKED THE ASSESSEE TO FURNISH COPY OF AIL BA NK STATEMENTS WITH EXPLANATION OF SOURCES OF FUND CREDITED THEREIN. TH E ASSESSEE FURNISHED SUBMISSION ON 6-11-2007 ALONGWITH COPY OF SB ACCOUN T OF UTI BANK LTD. THE A/R OF THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE WAS EARNING INTEREST ON PETTY ADVANCES TO VARIOUS PERSO NS REGULARLY FOR WHICH A BANK ACCOUNT WAS OPERATED BY HIM IN UTI BANK, UDAIP UR VIDE WHICH THE ADVANCE/LOAN AMOUNTS WERE GIVEN AND RECEIVED BACK N UMBER OF TIMES. THE ASSESSEE RECEIVED INTEREST OF RS.3,917/- ON THE SE ADVANCES DURING THE YEAR WHICH COULD NOT BE SHOWN AS INCOME. HENCE IT WAS REQUESTED TO INCLUDE THE SAME AS INCOME. THE ASSESSEE MAINTAINED CASH BOOK AND LENDER FOR THE INTEREST AND TAXI BUSINESS WHICH WAS BEING PRODUCED FOR VERIFICATION. THE COPY OF BANK ACCOUNT SHOWING TRAN SACTIONS IN UTI BANK FOR THE FINANCIAL YEAR 2004-05 WAS ALSO FURNISHED. THE AO CONSIDERED THE SUBMISSION AND DOCUMENTS THE OBSERVED THAT THE ASSE SSEE HAS ALSO HAVE OTHER BANK ACCOUNTS ABOUT WHICH NO INFORMATIONS FUR NISHED. THEREFORE, THE AO AGAIN REQUIRED TO FURNISH THE COPY OF BANK ACCOU NT OF BOB, BUT UNCOMPLIED WITH. THEREFORE, THE AO ISSUED NOTICE -U /S 142(L)(II) OF THE ACT REQUIRING TO PRODUCE ALL BOOKS OF ACCOUNT WITH SUPPORTING BILLS AND VOUCHERS AND TO FURNISH COPY OF ALL BANK ACCOUNTS W ITH EXPLANATION REGARDING SOURCE OF FUND CREDITED INTO SUCH ACCOUNT S AND ASKED THE ASSESSEE AS TO WHY THE CASE SHALL NOT BE FINALIZED U/S 144 OF THE ACT BY ADDING THE TOTAL CASH DEPOSITS WITH THE BANKS AS UN EXPLAINED CREDITS. THIS ALSO UNCOMPLIED WITH. ON 13-12-2007 SHRI N.K. SINGH VI C.A. AND A/R ATTENDED WITH THE ASSESSEE AND FURNISHED COPY O F BOB SB ACCOUNT STATEMENTS FOR THE PERIOD 2-11-2004 TO 31-3-2005 AN D CONFIRMATIONS OF THE FOLLOWING PERSONS SHOWING CASH CREDITORS ON PLA IN PAPER WITHOUT MENTIONING COMPLETE ADDRESS AND SOURCE OF INCOME OF SUCH SO CALLED CASH CREDITORS :- 1. BHARTI PURSANI W/O SHRI PHOOLCHAND PURSANI RS. 18,000/- 3 2. PRADEEP JAIN S/O SHRI SHANTILAL JAIN RS. 18,000/- 3. KHUMAN SINGH ASOLIA S/O SHRI UDAI SINGH ASOLIARS. 19,000/- 4. NAVEEN ASTHANA S/O SHRI RAM AVATAR ASTHANA RS. 18,0 00/- 5. SHRI ANIL SAMNANI S/O SHRI RAM NARAYAN SAMNANI RS. 19,000/- 6. LAXMAN SINGH S/O SHRI HARI SINGH RS. 18,000/- 7. BABULAL INANI S/O SHRI SRIKRISHAN INANI RS. 19,000/ - 8. NARPAT SINGH S/O SHRI ROOP SINGH CHUNDAWAT RS. 15,0 00/- 9. RAMESH LAI CHOUNDHARY S/O SHRI PADAM /CHOUNDARY RS. 17000/- THE AO CONSIDERED THE SUB MISSIONS AND CONFIRMATION AND CAME TO THE CONCLUSION THAT THE ASSESSEE HAD CREDITED CASH IN HIS BANK ACCOUNTS OUT OF HIS UNDISCLOSED SOURCES ON THE REAS ON THAT FIRSTLY THE ASSESSEE HAS NOT FURNISHED ANY COPY OF HIS BANK ACCOUNTS. SECONDLY HE HAS ONLY FURNISHED COPY OF BANK ACCOUNT OF UI BANK AND COPY OF LEDGER ACCOUNT OF CREDITORS AND DEBTORS . THE ASSESSEE HAS SHOWN THE CASH DEPOSITS AS HE HAS DEALT WITH SU CH PERSONS AS MONEY LENDING ACTIVITIES AND EARNED INTEREST FROM S UCH PERSONS WHICH WORKS OUT TO RS.3,917/-, WHICH IS NOT A REALISTIC ACTIVITY OF THE ASSESSEE. THIRDLY IT HAS NOTICED TH AT THE ASSESSEE WAS ALSO HAVING ANOTHER BANK ACCOUNT WITH BOB, SUKH ER AND THEN HE HAS FURNISHED THE SAID BANK ACCOUNT STATEMENT ON 13-12-2007 ALONGWITH CONFIRMATIONS. FURTHER LATERON IT HAS ALS O NOTICED THAT THE ASSESSEE WAS ALSO HAVING ANOTHER BANK ACCOUNT W ITH HDFC, CHETAK CIRCLE, UDAIPUR WITH WAS OPENED ON 23-7-2004 . THE ASSESSEEHAS SHOWN MS BANK ACCOUNT AT UTI BANK AND F URNISHED COPY OF LEDGER ACCOUNTS OF SHOWING DEBTORS/CREDITOR S ACCORDINGLY. LATER ON, IT IS CAME TO THE KNOWLEDGE OF THE AO THA T THE ASSESSEE HAS SHOWN THE CASH CREDITORS AND FURNISHED THEIR 4 CONFIRMATIONS WITHOUT CONTAINING THEIR COMPLETE ADD RESS. HE HAS NOT PRODUCED ANY BOOKS OF ACCOUNT FROM WHICH TO VER IFY THE SO CALLED ACTIVITIES OF THE ASSESSEE AND SOURCE OF FUN D, WHICH INTRODUCED AS CASH DEPOSITS WITH HIS ALL BANK ACCOU NTS. IHE ASSESSEE HAS TRIED TO SHOW THE CASH TRANSACTION S WERE MADE BY HIM AS TO USE OF SUCH MONEY TO LEND HIS DEBTORS AND INITIALLY HE PREPARED BOOKS OF ACCOUNT ON THE BASIS OF TRANSACTIONS MADE THROUGH UTI BANK ACCOUNT AND LATE R ON WHEN THE AO REQUIRED TO FURNISH COPY OTHER BANK ACCOUNT STATEMENTS EXPLAINING SOURCE OF FUND DEPOSITED WITH SUCH BANK ACCOUNTS, THE ASSESSEE TRIED TO SHOW SUCH MONEY WERE TAKEN FROM O THER PERSONS AS UNSECURED LOAN, BUT ON PERUSAL OF THESE CONFIRMATIO NS, IT HAS NOTICED THAT SOME PERSONS ARE INITIALLY SHOWN DEBTO R AND LATER ON ALSO SHOWN AS CREDITORS WAS CONTRADICTORY ITSELF. T HEREFORE, THE AO ISSUED SUMMONS U/S 131 DATED 28-12-2007 FOR 31-1 2-2007 REQUIRING THE ASSESSEE TO ATTEND PERSONALLY ALONGWI TH EXPLANATION IN RESPECT OF THE SOURCE OF DEPOSIT IN THE BANK ACC OUNT (2) TO PRODUCE THE CREDITORS FOR EXAMINATION (3) PRODUCE B OOKS OF ACCOUNT FOR THE CURRENT YEAR. THE ASSESSEE NEITHER ATTENDED ON 31- 12-2007 PERSONALLY NOR PRODUCED BOOKS OF ACCOUNT OR CASH CREDITORS. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTA NCES THE AO HELD THAT THE ASSESSEE HAD CREDITED/DEPOSITED THE C ASH INTO HIS ALL BABNK ACCOUNT VIS. UTI BANK LTD AT RS.23,74,726/-, HDFC BANK LTD RS.3,23,800/- AND BOB AT RS.1,51,340/- , TOTALI NG TO RS.28,49,866/- WAS TREATED AS UNEXPLAINED CASH CRED ITS/DEPOSITS OUT OF HIS UNDISCLOSED SOURCES OF INCOME AND ADDED TO THE TOTAL INCOME OF THE APPELLANT. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS THE LD. A/R SUBMITTED AS UNDER:- 'THE LD. A.O. ERRED IN LAW, FACTS AND CIRCUMSTANCES OF THE CASE IN MAKING AN ADDITION OF RS. 28,49,866/- STATI NG THAT SUCH 5 SUM OF MONEY IS UNDISCLOSED AND HAS NO SUPPORT OF I TS ORIGIN. THE LD. A.O. ASKED THE ASSESSEE TO FURNISH THE DETAILS OF ALL THREE BANK ACCOUNTS ONE BY ONE. THE ASSESSEE PRODUCED COPY OF ALL THE BANK ACCOUNTS AND ALSO EXPLAINED ALL ENTRIES IN THE BANK ACCOUNTS. BUT THE LD. A.O. DID NOT POINT OUT ANY SPECIFIC DEFECTS AND MADE ADDITION OF RS. 28,49,866/- WITHOUT ANY BASIS. 5. THE FACT IS THAT THE LD. A.O. WAS SHOWN THE B OOKS OF ACCOUNTS FOR THE MONEY LENDINGBUSINESS AND NO DEFEC TS WERE POINTED BY HIM. ALL THE SOURCES OF DEPOSITS AND WITHDRAWALS WE RE RECORDED FOR THIS BUSINESS IN THESE BOOKS AND WERE OPERATED FOR DEPOS IT AND WITHDRAWAL IN UTI BANK A/C. THE COPIES OF CERTAIN LEDGER A/C'S RE QUIRED BY HIM SUPPORTING DEPOSITS AND REUSE OF WITHDRAWALS WERE ALSO FILED BUT NO DEFECTS WERE POINTED BY HIM DURING THE HEARING. THE LD. A.O. ERRED IN NOT CONSI DERING / REJECTING THE EXPLANATION AND EVIDENCES FOR THE SOURCE OF DEPOSIT S AND ALSO THE FACT THAT MANY TIMES THE WITHDRAWALS WERE REUSED FOR DEPOSITS . IN RESPECT OF OTHER TWO BANK A/C'S ASKED AND SUBMITTED LATER DURING HEA RING ON ALL ENTRIES WERE EXPLAINED WITH SUPPORTING LOAN CONFIRMATIONS F OR MONEY DEPOSITED IN THESE BANK A/CS BUT THE LD. A.O.DID NOT CONSIDER THE SAME CORRECTLY AND ADDED ALL THOSE CREDITS AS INCOME WRO NGLY. THE LD. A.O. HAS TAKEN HURRIEDLY VERY UNJUST VIEW IN TREATING TH ESE DEPOSITS AND WITHDRAWALS USED AS UNDISCLOSED DEPOSITS AND RAISED HUGE DEMAND ARBITRARILY WITHOUT ANY BASIS. 7. THE ASSESSEE IS MAINLY ACCOUNTANT EMPLOYEE IN TWO F IRMS FOR ALMOST FULL TIME IN PART TIME HE DOES TAXI CAR (ONE ONLY) BUSINESS AND PETTY MONEY LENDING BUSINESS AND HAS NO OTHER SOURCE OF I NCOME. 8. FURTHER THE MISTAKE OF THE ASSESSEE IS THAT THAT HE DID NOT DECLARE THE INTEREST INCOME MADE ON FROM THESE ACCOUNTS IN THE RETURN BUT SUBSEQUENTLY DECLARED THE SAME DURING THE HEARING. THE UTI BANK ACCOUNT WAS MAINLY USED FOR ASSESSEE'S BUSINESS OF MONEY LENDING ON 6 INTEREST FOR SHORT TERM. THE OTHER TWO ACCOUNTS OF THE ASSESSEE WERE NAMELY IN BANK OF BARODA UDAIPUR AND HDFC BANK UDAI PUR IN RESPECT OF WHICH ALL ENTRIES WERE EXPLAINED ALONG WITH THE SUPPORTING LOAN CONFIRMATIONS. 9. THE APPELLANT FILED TO THE LD. A.O. ALL THE DOCUMEN TS OF THE ACCOUNTS WHICH THE SOURCE OF ALL THE ENTRY AND, CON FIRMATIONS, ETC. AND THESE WERE ADMITTED BY THE LD.A.O. AND NO DEFECTS W ERE POINTED OUT BY HIM. IN WHOLE PHASE OF THE HEARING WHEN ALL THE CON FIRMATIONS WERE FILED VIDE LETTER DATED 13.12.2007, 20.12.2007 . THE LD. A.O. THAT TIME DID NOT ASK TO PRODUCE THE CREDITORS AND NEITH ER DID HE ISSUED SUMMONS TO THE CREDITORS BUT ALL OF SUDDEN WHEN CAS E WAS GETTING TIME BARRED IN DECEMBER ON 20 TH DECEMBER HE ASKED THE ASSESSEE AL! OF SUDDEN TO PRODUCE THE CREDITORS ON 29 TH DECEMBER BUT SINCE THE ASSESSEE WAS NOT WELL ON29.12.2007 SO HE COULD NOT INFORM THE CREDITORS, AND MEDICAL CERTIFICATEDT.29.12.2007REGA RDING THE ASSESSEE'S SICKNESS WAS ALSO FILED BUT THE LD. A.O. IGNORED TH E SAME AND ADDED ALL AMOUNT OF CREDITS WITHOUT ISSUING SUMMONS DIREC TLY TO THE CREDITORS. FURTHER THE LD.A.O.WAS FURNISHED WITH ALL CONFIRMAT IONS CONTAINING THE NAME OF THE CREDITORS, ADDRESS OF CREDITORS, SO URCES OF CREDITORS, PAN OF CREDITORS WHEREVER APPLICABLE BUT THE TOO TH E LD. A.O. IGNORED THE SAME AND ADDED THE ENTIRE CREDITS. THUS THE CREDITS WERE SATISFACTORILY ESTABLISHED BY THE ASSESSEE BUT THEN TOO THE LD. A.O. IGNORED THE SAME AND WAS UNJUST IN ADDING THE CREDI TS. THE HON. JAIPUR ITAT IN CASE OF RAJARAM RAJENDRA BHANDARI & PARTY VS. ASSTT.CIT (2005) 95 TTJ (JP) 97 IT WAS HELD THAT WHEN THE GENUINENES S OF CASH CREDIT WAS ESTABLISHED AND THE ASSESSEE PRODUCES THE CONFIRMAT ION OF THE CREDITORS ALONG WITH THEIR PAN, ADDRESS AND DETAIL OF PAYMENT S IS ALSO FURNISHED BUT IS UNABLE TO PRODUCE THE CREDITORS AND ALSO THE A.O. DOES NOT ISSUES SUMMONS TO THE CREDITORS U/S 131 THEN IN SUCH CASE THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 WILL STA ND INVALID. IN MAKING 7 SUCH DECISION THE THEN JAIPUR TRIBUNAL RELIED ON DE CISION IN CASE OF CIT VS. ORISSA CORPORATION (P) LTD. (1986) 52 CTR (SC) 138: (1986) 1 59 ITR 78 (SC). 10. WITHOUT PREJUDICES TO THE AFORESAID EVEN IF IT IS ASSUMED THAT AIL AMOUNT DEPOSITED IN CASH IN ALL BANK ACCOU NT DURING THE YEAR ARE UNEXPLAINED THEN TOO ONLY THE PEAK CREDIT SHOULD HAVE BEEN TAKEN BY THE LD. A.O. BUT HE HAS WRONGLY TAKEN ALL CASH DEPOSITS WITHOUT GIVING CREDIT OF CASH WITHDRAWALS REUSED IN GIVEN A/C SUBSEQUENTLY IN THE SAME YEAR. HENCE THE PEAK CREDIT EXCLUDING SPECIFIC PURPOSES WITHDRAWALS WORKS UNDER : - BANK PARTICULARS TOTAL WITHDRAWALS BALANCE TOTAL NET PEAK FOR F.Y. 2004-05 DEPOSITS REUSED WITHDRA WALS WITHDRAWALS (UTILIZATION OF FUNDS LIKE (5=3+4) (6=2-3) BANK CHARGES, INT. ETC.) (1) (2) (3) (4) (5) (6) A.UTI BANK 24,74,759.00 24,70,550.00 4,2 52.50 24,74,802.50 4,209.00 A/C B.BANK OF 1,51,360.00 1,38,300.00 240.00 1,38,540.00 13,060.00 BARODA A/C C. HDFC 5,06,757.10 4,92,883.18 630.84 4,93,514.02 13.873.9 2 BANK A/C ___________________________________________________ _________________________ TOTAL 31,32,876.10 31,01.733.18 5,123.34 31, 06,856.52 31,142.92 ___________________________________________________ ________________________ 11. THUS THE PEAK CREDIT WORKED ABOVE TOTALS TO RS. 311 42.92/- CAN BE ADDED TO THE TOTAL INCOME AT THE MOST INSTEA D OF RS. 28,49,866/-. FURTHER THE ASSESSEE IS HAVING INCOME FOR PAST SO MANY YEARS AND IS FILING RETURN OF INCOME FOR PAST YEARS ALSO, HENCE THE OPENING BALANCE OF RS. 49950/- DEPOSITED IN UTI BANK WAS OUT OF PAST SAVINGS PARTICULARLY PPF WITHDRAWALS OF RS. 41630/- & RS. 20899/- (PROOF ALREADY FILED TO THE LD. A.O.) AS EX PLAINED TO LD. 8 A.O. VIDE LETTER DT. 21.11.2007. HENCE THIS AMOUNT OF RS. 31141.92/- ALSO STAND PROVED ACCORDINGLY NO ADDITIO N IS CALLED FOR. 12. FURTHER BANK ACCOUNT WISE EXPLANATION IS AS UNDER: - A. RE: - DEPOSITS IN UTI BANK : - IN RESPECT OF ABOVE MATTERS THE CHART SHOWING NARRA TION OF EACH ENTRY IN ALL THREE BANK ACCOUNTS ARE ENCLOSED ALONG WITH RESPECT IVE DEPOSITORS LEDGER A/C AS PER WHICH IT IS CLEAR THAT IN MONEY LENDING BUSINESS THE MONEY WAS GIVEN TO VARIOUS DEBTORS AND RECOVERED BACK AS PER LEDGER ACCOUNT (ALSO FILED TO LD. A.O.), HENCE ONLY AT THE MOST PEAK CRE DIT IN BANK ACCOUNT SHOULD BE ADDED BY THE LD. A.O. AS IN MONEY LENDING BUSINESS MONEY IS LENDED AND RECEIVED BACK ARE NORMALLY REUSED. THE I NTEREST INCOME OF RS. 3917/- ON THIS MONEY LENDING BUSINESS WAS OFFERED A S INCOME BUT THE A.O. DID NOT INCLUDED THE SAME AS INCOME WHICH SHOULD HA VE BEEN TAKEN AS INCOME BY THE BANK. B. RE: - DEPOSITS IN BANK OF BARODA THE DETAILED CHART SHOWING NARRATIONS/ SOURCES OF ENTRIES ON AFORESAID ACCOUNT ALONGWITH: - . 1. NAME OF CREDITORS WHO ADVANCED MONEY WHICH WAS DEPO SITED IN THE AFORESAID BANK ACCOUNT. 2. ADDRESS OF CREDITORS 3. PAN OF CREDITORS WHEREVER APPLICABLE 4. AMOUNTS OF CREDIT 5. COPIES OF CONFIRMATION FILED TO A.O. 6. AS PER ABOVE CHART THE LD. A.O. HAD NO REASON TO ADD ANY OF THE CREDITS IN BANK ACCOUNT, AS EACH ENTRY NARRATION WAS EXPLAINED ALONGWITH CONFIRMATIONS. 9 C. RE: - DEPOSITS IN HDFC BANK THE DETAILED CHART SHOWING NARRATIONS/ SOURCES OF E NTRIES ON AFORESAID ACCOUNT ALONGWITH: - 1. NAME OF CREDITORS WHO ADVANCED MONEY WHICH WAS DEPO SITED IN THE AFORESAID BANK ACCOUNT. 2. ADDRESS OF CREDITORS 3. PAN OF CREDITORS WHEREVER APPLICABLE 4. AMOUNTS OF CREDIT 5. COPIES OF CONFIRMATION FILED TO A.O. ARE ENCLOSED. AS PER ABOVE CHART THE LD. A.O. HAD NO REASON TO AD D ANY OF THE CREDITS IN BANK ACCOUNT, AS EACH ENTRY NARRATION WA S EXPLAINED ALONGWITH CONFIRMATIONS. 13. FURTHER AS PER RETURN FILED AND AS PER WHICH T HERE WAS A BUSINESS LOSS OF RS. 19911/-DUE TO DEPRECIATION ON ACCOUNT OF TAXI BUSINESS BUT THE LD. A.O. FAILED TO CONSIDER THE SAME NEITHE R DID HE GIVE REASONS TO DISALLOW THE SAME , BUT DIRECTLY IGNORED THE SAME. HENCE THE SAME ALSO DESERVES TO BE ALLOWED. SO THE ADDITION MADE BY THE LD. A.O. IN TOTAL OF RS. 28,49,866/- DESERVES TO BE DELETED'. DECISION: I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMIS SION OF THE LD. A/R AND FOUND THAT THE AO MADE THE ADDITION OF THE AMOUNT DEPOSITED IN BANK ACCOUNT AT RS.28,49,866/- ON THE GROUND THAT APPELLANT DID NOT PRODUCE THE CREDITORS AND ALSO DID NOT EXPLAIN THE SOURCE OF DEPOSIT IN BANK ACCOUNTS. THE LD. A/R SUBMITTED THAT THE APPEL LANT FILED TO THE LD. A.O. ALL THE DOCUMENTS OF THE ACCOUNTS IN WHICH THE SOURCE OF ALL THE ENTRY AND, CONFIRMATIONS, ETC. AND THESE WERE ADMIT TED BY THE LD. A.O. 10 AND NO DEFECTS WERE POINTED OUT BY HIM. IN WHOLE PH ASE OF THE HEARING WHEN ALL THE CONFIRMATIONS WERE FILED VIDE LETTER D ATED 13.12.2007, 20.12.2007. THE LD. A.O. AT THAT TIME DID NOT ASK T O PRODUCE THE CREDITORS AND NEITHER DID HE ISSUE SUMMONS TO THE CREDITORS B UT ALL OF SUDDEN WHEN CASE WAS GETTING TIME BARRED IN DECEMBER ON 20 TH DECEMBER HE ASKED THE ASSESSES ALL OF SUDDEN TO PRODUCE THE CRE DITORS ON 29 TH DECEMBER BUT SINCE THE ASSESSEE WAS NOT WELL ON 29. 12.2007 SO HE COULD NOT INFORM THE CREDITORS, AND MEDICAL CERTIFICATE D T. 29.12.2007 REGARDING THE ASSESSEE'S SICKNESS WAS ALSO FILED BUT THE LD. A.O. IGNORED THE SAME AND ADDED ALL AMOUNT OF CREDITS WITHOUT ISSUING SUM MONS DIRECTLY TO THE CREDITORS. FURTHER THE LD. A.O. WAS FURNISHED WITH ALL CONFIRMATIONS CONTAINING THE NAME OF THE CREDITORS, ADDRESS OF CR EDITORS, SOURCES OF CREDITORS, PAN OF CREDITORS WHEREVER APPLICABLE BUT THE LD. A.O. IGNORED THE SAME AND ADDED THE ENTIRE CREDITS. THUS THE CRE DITS WERE SATISFACTORILY ESTABLISHED BY THE ASSESSEE BUT THEN TOO THE LD. A. O. IGNORED THE SAME AND WAS UNJUST IN ADDING THE CREDITS. THE HON. JAIP UR ITAT IN CASE OF RAJARAM RAJENDRA BHANDARI & PARTY VJ . ASSTT. CIT (2005) 95 TTJ (JP) 97 IT WAS HELD THAT WHEN THE GENUINENESS OF CASH CR EDIT WAS ESTABLISHED AND THE ASSESSEE PRODUCED THE CONFIRMAT ION OF THE CREDITORS ALONG WITH THEIR PAN, ADDRESS AND DETAIL OF PAYMENT S ALSO FURNISHED BUT WAS UNABLE TO PRODUCE THE CREDITORS AND ALSO THE A. O. DID NOT ISSUE SUMMONS TO THE CREDITORS U/S 131 THEN IN SUCH CASE THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 WILL STA ND INVALID. IN MAKING SUCH DECISION THE THEN JAIPUR TRIBUNAL RELIED ON DE CISION IN CASE OF CIT VS. ORISSA CORPORATION (P) LTD. (1986) 52 CTR (SC) 138: (1986) 159 ITR 78 (SC). THE A/R FURTHER SUBMITTED THAT THE CHART S HOWING NARRATION OF EACH ENTRY IN ALL THREE BANK ACCOUNTS ARE ENCLOSED ALONG WITH RESPECTIVE DEPOSITORS LEDGER A/C AS PER WHICH IT IS CLEAR THAT IN MONEY LENDING BUSINESS THE MONEY WAS GIVEN TO VARIOUS DEBTORS AND RECOVERED BACK AS PER LEDGER ACCOUNT, HENCE ONLY AT THE MOST PEAK CREDIT IN BANK ACCOUNT SHOULD BE ADDED BY THE LD. A.O. AS IN MONEY LENDING BUSINESS MONEY IS 11 LENDED AND RECEIVED BACK ARE NORMALLY REUSED. THE I NTEREST INCOME OF RS. 3917/- ON THIS MONEY LENDING BUSINESS WAS OFFERED A S INCOME BUT THE A.O. DID NOT INCLUDE THE SAME AS INCOME WHICH SHOUL D HAVE BEEN TAKEN AS INCOME BY THE BANK. 15. WITHOUT PREJUDICES TO THE AFORESAID EVEN IF IT IS ASSUMED THAT ALL AMOUNT DEPOSITED IN CASH IN ALL BA NK ACCOUNT DURING THE YEAR ARE UNEXPLAINED THEN TOO ONLY THE P EAK CREDIT SHOULD HAVE BEEN TAKEN BY THE LD. A.O. BUT HE HAS W RONGLY TAKEN ALL CASH DEPOSITS WITHOUT GIVING CREDIT OF CASH WIT HDRAWALS REUSED IN GIVEN A/C SUBSEQUENTLY IN THE SAME YEAR. HENCE THE PEAK CREDIT EXCLUDING SPECIFIC PURPOSES WITHDRAWALS WORKS UNDER: - BANK PARTICULARS FOR F.Y. 2004-05 TOTAL DEPOSITS WITHDRAWALS REUSED BALANCE WITHDRAWALS (UTILIZATION OF FUNDS LIKE BANK CHARGES, INT. ETC.) TOTAL WITHDRAWALS (5=3+4) NET PEAK (6=2-3) (1) (2) (3) (4) (5) (6) D. UTI BANK A/C 24,74,759.00 24,70,550.00 4,252.50 24,74,802.50 4,209.00 E. BANK OF BARODA A/C 1,51,360.00 1,38,300.00 240.00 1,38,540.00 13,060.00 F. HDFC BANK A/C 5,06,757.10 4,92,883.18 630.84 4,93,514.02 13,873.92 TOTAL 31,32,876.10 31,01,733.18 5,123.34 31,06,856.52 31,142.92 16. THUS THE PEAK CREDIT WORKED ABOVE TOTALING TO RS. 31142.92/- CAN BE ADDED TO THE TOTAL INCOME AT THE MOST INSTEAD OF RS. 28,49,866/-. FURTHER THE ASSESSEE IS HAVING INC OME FOR PAST SO MANY YEARS AND IS FILING RETURN OF INCOME FOR PAST YEARS ALSO, HENCE THE OPENING BALANCE OF RS. 49950/- DEPOSITED IN UTI BAN K WAS OUT OF PAST SAVINGS PARTICULARLY PPF WITHDRAWALS OF RS. 41630/- & RS. 20899/- 12 (PROOF ALREADY FILED TO THE LD. A.O.) AS EXPLAINED TO LD. A.O. VIDE LETTER DT. 21.11.2007. HENCE THIS AMOUNT OF RS. 31141.92/- ALSO STANDS PROVED ACCORDINGLY NO ADDITION IS CALLED FOR. 17. ON GOING THROUGH THE ORDER IT IS REVEALED THAT THE AO ADDED THE TOTAL AMOUNT OF DEPOSIT IN THE BANK ACCOU NTS AS UNEXPLAINED DEPOSIT. THE APPELLANT FURNISHED CONFIRMATION OF AL L THE CREDITORS AND FURNISHED LEDGER ACCOUNT FOR VERIFICATION. NO FURTH ER QUERRIES WERE RAISED IN RESPECT OF THE CONFIRMATION OR LEDGER ACC OUNT FURNISHED. AT THE FAG END OF THE PROCEEDINGS I.E. 28-12-2007 THE AO I SSUED SUMMONS U/S 131 TO THE APPELLANT TO PRODUCE BOOKS OF ACCOUNT, T O PRODUCE ALL CASH CREDITORS ON 31-12-2007 ON WHICH DATE THE ASSESSMEN T WAS GETTING TIME BARRED. THE TIME GIVEN FOR PRODUCTION OF BOOKS OF A CCOUNT AND CASH CREDITORS WAS ONLY THREE DAYS, WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AS REASONABLE TIME SHOULD BE GIVEN. ON GOIN G FURTHER IT IS NOTICED THAT THE AO AFFORDED OPPORTUNITY AT SEVERAL STAGES BUT NEVER ASKED FOR SUCH COMPLIANCE. HAD THE AO ASKED THE SAM E BY ALLOWING REASONABLE TIME, THE APPELLANT WOULD HAVE COMPLIED WITH. FURTHER THE APPELLANT FURNISHED CONFIRMATION GIVING THE DETAILS OF CREDIT ETC., THE APPELLANT DISCHARGED HIS PRIMARY ONUS. IF THE AO WA S NOT SATISFIED WITH THE EXPLANATION AND CONFIRMATION, HE SHOULD HAVE IS SUED SUMMONS IN THE NAME OF THE CREDITORS WELL WITHIN THE TIME. THE SUMMON ISSUED BY THE AO IN THIS CASE IS FOR THE SAKE OF ALLOWING OPPORTU NITY ONLY AS THE TIME ALLOWED, TO THE APPELLANT IS UNREASONABLE. FURTHER THE APPELLANT FURNISHED COMPLETE DETAILS IN RESPECT OF BANK ACCOUNTS IN THE FORM OF LEDGER ACCOUNT AND BANK STATEMENT SHOWING THE DEPOSIT AND WITHDRAWALS. THE AO ONLY CONSIDERED THE DEPOSITS FOR MAKING ADDITION . THE AO SHOULD HAVE CONSIDERED THE DEBIT SIDE ALSO AS THE OPERATIO N OF BANK ACCOUNT INCLUDE DEPOSIT AND WITHDRAWAL. THEREFORE, PEAK CRE DIT SHOULD HAVE BEEN TAKEN IN THIS CASE THE. THE PEAK CREDIT IN THI S CASE COMES TO RS.31,143/- AS PER THE DETAILS GIVEN ABOVE. AT THE MOST THE AO COULD 13 HAVE MADE THE ADDITION OF RS.31,143/- AS PEAK CREDI T. THEREFORE, THE ADDITION IS REDUCED TO RS.31,143/- AS AGAINST THE A DDITION OF RS.28,49,866/-. THE APPEAL IS PARTLY ALLOWED ON THI S GROUND. 2.3 BEFORE US, THE LD. DR DREW OUR ATTENTION TO THE ORDER OF THE AO. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS FILED T HE CONFIRMATIONS OF THE CREDITORS WITHOUT GIVING THE COMPLETE ADDRESSES OF SUCH CREDI TORS. INITIALLY, THE ASSESSEE FURNISHED THE COPY OF THE BANK ACCOUNT IN BANK OF BARODA. THE ASSESSEE WAS HAVING BANK ACCOUNT IN UIT BANK, SUKHERN AND IN HDFC IN UDAIPUR. OUR AT TENTION WAS DRAWN TO THE FACT THAT THE ASSESSEE FILED THE CONFIRMATION OF SIX CASH CRE DITORS ON 20-12-2007 WHEN THE ASSESSMENT WAS GOING TO BE BARRED BY LIMITATION BY 31 ST DEC. 2007. THE AO REQUIRED THE ASSESSEE TO PRODUCE THE CASH CREDITORS FOR VERIFICA TION BUT THE CASH CREDITORS WERE NOT PRODUCED. THE AO ISSUED THE SUMMON ON 28-12-2007 VI DE WHICH THE ASSESSEE WAS REQUIRED TO PRODUCE THE BOOKS OF ACCOUNT AND TO PRO DUCE THE CREDITORS. IN CASE SUCH SUMMONS IS NOT COMPLIED WITH THEN THE AO WILL CONSI DER THE ENTIRE DEPOSITS AS INCOME. ON THE BASIS OF THE FACTS AVAILABLE ON RECORD, THE LD. DR STATED THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREMENT OF PRODUCING THE CRED ITORS AND PRODUCING THE BOOKS OF ACCOUNT BEFORE THE AO. 2.4 ON THE OTHER HAND, THE LD. AR DREW OUR ATTENTIO N TO THE WRITTEN SUBMISSIONS GIVEN BEFORE THE LD.CIT(A). OUR ATTENTION WAS DRAWN TOWAR DS THE CONFIRMATIONS AND THESE CONFIRMATIONS CONTAINED THE PAN OF THE CREDITORS. T HE CONFIRMATIONS WERE FILED VIDE LETTERS DATED 13-12-2007 AND 21-12-2007 AND THAT TI ME THE AO NEVER ASKED THE ASSESSEE TO PRODUCE THE CREDITORS. THE LD. AR RELIED UPON TH E ORDER OF THE LD.CIT(A). 2.5 WE HAVE HEARD BOTH THE PARTIES. IT IS TRUE THAT THE ASSESSEE HAS FILED THE CONFIRMATIONS AND THESE CONFIRMATIONS CONTAINED THE PAN. ON THE BASIS OF THE PAN, THE 14 AO COULD HAVE ASCERTAINED THE NAMES AND ADDRESS OF THE PARTIES. THE CREDITWORTHINESS OF AN INCOME TAX ASSESSEE IS TO BE LOOKED INTO BY THE AO WHO IS HAVING THE JURISDICTION OVER THE CREDITORS. MOREOVER, THE LD.CIT(A) HAS CONSIDER ED THE DEPOSITS AND WITHDRAWALS IN VARIOUS BANKS. THE LD.CIT(A) HAS ALSO UPHELD THE PE AK CREDIT. IN CASE THERE ARE WITHDRAWALS FROM ONE BANK AND ARE UTILIZED FOR DEPO SITS IN THAT BANK OR IN ANOTHER BANK THEN ONE HAS TO GIVE CREDIT FOR SUCH WITHDRAWAL AGA INST THE DEPOSITS UNLESS THERE IS SOMETHING CONTRARY AGAINST THE ASSESSEE. IF THE WIT HDRAWAL ARE IN CASH AND DEPOSITS ARE IN CASH WITHIN A REASONABLE TIME THE CREDIT OF WITHDRA WALS SHOULD BE GIVEN AGAINST THE DEPOSIT. WE THEREFORE, FEEL THAT THE LD.CIT(A) WAS JUSTIFIED IN ALLOWING RELIEF OF RS. 28,49,866/-. 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16-12-2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JODHPUR DATED: 16 /12/2011 MISHRA COPY TO: 1. THE ITO, WARD- 1(2), UDAIPUR 2. SHRI AJAY SAMNANI, UDAIPUR 3.THE LD. CIT (A) BY ORDER 4.THE CIT 5.THE D/R 6.THE GUARD FILE (ITA NO. 304/JU/09) A.R.. 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