ITO, New Delhi V. Sh. Prateek Jain, Delhi

ITA 3584/DEL/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65903 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 18-09-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 05-12-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Peak credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.3584/DEL/2008 ASSESSMENT YEAR : 2005-06 ITO, SHRI PRATEEK JAIN, WARD-36 (1), H. NO.14, VIJAY BLOCK, NEW DELHI. V. LAXMI NAGAR, DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAPPJ AAPPJ AAPPJ AAPPJ- -- -6341 6341 6341 6341- -- -J J J J APPELLANT BY : SHRI SUDESH GARG, SR. DR. RESPONDENT BY : SHRI VED JAIN, C.A. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE OR DER OF LD CIT(A) DATED 29 TH SEPTEMBER, 2008. THE GROUNDS RAISED BY THE REVENUE A RE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN RESTRICTING THE ADDITION U/S 68 OF THE IN COME TAX ACT, 1961 AMOUNTING TO ` .5,59,25,000/- RESTRICTED AT AN AMOUNT OF ` .11,92,350/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN CALCULATING THE PEAK CASH CREDIT IN THE HANDS OF THE ASSESSEE AT ` .11,92,350/-. ITA NO3584/DEL/08 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D RETURN OF INCOME ON 7.2.2006 DECLARING AN INCOME OF `.62,450/ -. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. DURING ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH DETAIL A ND SOURCE OF CASH DEPOSIT OF ` .5,59,25,000/- IN THE BANK ACCOUNT MAINTAINED WITH VIJAYA BANK, DEVELOPMENT CREDIT BANK (DCB) & KHATRI COOPERATIVE BANK LTD. IN SPITE OF ASSESSEE HAVING ATTENDED THE PROC EEDINGS FROM TIME TO TIME, HE COULD NOT FURNISH ANY COGENT EVIDE NCE/CONVINCING EXPLANATION JUSTIFYING CASH DEPOSIT OF ` .5,59,25,000/- AND SINCE THE ASSESSEE HAD FAILED TO EXPLAIN THE SOURCE OF CASH, THE ASSE SSING OFFICER ADDED BACK PEAK CASH CREDIT IN THE HANDS OF ASSESSEE AMOU NTING TO ` .5,59,25,000/-. 3. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE LD CIT( A) AND SUBMITTED AS UNDER:- I) THAT SINCE THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS, THE ADDITION U/S 68 OF THE ACT CANNOT BE M ADE BECAUSE MAINTAINING OF BOOKS OF ACCOUNTS IS A PRE-REQUI SITE FOR APPLYING THE SAID SECTION. IN SUPPORT, THE LD AR R ELIED UPON VARIOUS CASE LAWS. II) THAT EVEN IF THE ADDITION MADE BY THE ASSESSING OFFICER IS HELD TO BE VALID HE HAS ERRED IN APPLYING THE PRINCIPLE OF PEAK CREDIT. III) THAT IT IS NOT THE CASE WHERE ALL CREDITS APPEARING IN THE BOOKS ARE TO BE ADDED AS PEAK CREDIT IS SOUGHT FOR TO FIND OUT WHAT MAXIMUM UNDISCLOSED BALANCE COULD HAVE BEEN CIRCULAT ED BY THE ASSESSEE. IV) THAT LD ASSESSING OFFICER HAS ADDED ALL CREDIT ENTRIES APPEARING ON THE CREDIT SIDE OF BANK STATEMENT WHICH IS ITA NO3584/DEL/08 3 PATENTLY WRONG. THE LD AR RELIED UPON VARIOUS CASE LA WS IN THIS RESPECT. 4. THE LD CIT(A) DURING APPELLATE PROCEEDINGS ASKED T HE ASSESSING OFFICER VIDE LETTER DATED 25.8.2008 TO FURNISH THE C ALCULATION OF PEAK CASH CREDIT IN THE HANDS OF THE ASSESSEE ON THE BASIS OF WH ICH THE ABOVE ADDITION WAS MADE IN THE ASSESSMENT ORDER. THE ASSE SSING OFFICER DURING REMAND PROCEEDINGS SUBMITTED THAT THE AMOUNT OF ` .5,59,25,000/- WHICH WAS ADDED BACK WAS A FIGURE OF T OTAL CASH DEPOSIT BASED ON AIR INFORMATION AND SUBMITTED THAT CA LCULATION OF PEAK CASH CREDIT MAY BE MADE. 5. IN VIEW OF THE ABOVE, THE LD CIT(A) ON THE BASIS OF PEAK CREDIT CALCULATION MADE BY THE AUTHORIZED REPRESENTATIVE UP HELD THE ADDITION TO THE EXTENT OF ` .11,92,350/- ONLY AND GAVE A RELIEF OF ` .5,47,23,650/-. 6. AGGRIEVED THE REVENUE HAS FILED THIS APPEAL BEFORE THIS TRIBUNAL. 7. AT THE OUTSET, THE LD DR SUBMITTED THAT NO P&L ACC OUNT WAS SUBMITTED ALONG WITH THE RETURN OF INCOME AND ASSESSING OFFICER HAD ADDED BACK CASH DEPOSITS IN THE BANK ON THE BASIS OF AI R. IN THIS RESPECT HE TOOK US TO PAGES 16 & 17 OF THE PAPER BOOK. HE FURTHER ARGUED THAT ASSESSEE HAD TAKEN ONLY LEGAL GROUND BEFORE LD CIT(A) AND HAD NOT DEALT WITH THE MERITS OF THE CASE. IN RESPEC T OF ASSESSING OFFICERS ASSERTION IN REMAND REPORT THAT PEAK CREDIT MAY BE CONSIDERED AT YOUR END HE ARGUED THAT IT CANNOT BE C ONSTRUED AS ADMISSION OF PEAK CREDIT SUBMITTED BY ASSESSEE AND PEAK CR EDIT IS CALCULATED TO GIVE THE BENEFIT OF CIRCULATION AFTER EXAMINATION OF BANK ACCOUNT. HE INVITED OUR ATTENTION TO PAGE 22-31 OF PAPER BOOK WHERE COPIES OF BANK STATEMENTS WERE PLACED AND AGAIN INVITE D OUR ATTENTION ITA NO3584/DEL/08 4 TO THE FACT THAT THE DEPOSITS IN THE BANK STATEMENTS WE RE CASH DEPOSITS AND WITHDRAWALS WERE THROUGH CHEQUES SO THEREFORE HE A RGUED THAT PEAK CREDIT ACCEPTED BY THE LD CIT(A) WITHOUT ANALY ZING THE BANK ACCOUNT WAS A SERIOUS ERROR ON THE PART OF LD CIT(A). IN VIEW OF THE ENTRIES IN THE BANK STATEMENTS WHEREIN CASH WAS DEPOSITE D AND WAS WITHDRAWN THROUGH CHEQUES, THE LD DR ARGUED THAT THE RE WAS NO CIRCULATION OF MONEY AND ALL DEPOSITS IN THE BANKS WER E RIGHTLY CONSIDERED FOR ADDITION U/S 68 OF THE ACT. THEREFORE, HE ARGUED THAT THE LD ASSESSING OFFICER HAD RIGHTLY MADE THE ADDITION. 8. ON THE OTHER HAND, THE LD AR ARGUED THAT LD CIT( A) HAD GONE BACK TO ASSESSING OFFICER AND ASSESSING OFFICER IN THE REMA ND REPORT HAD LEFT IT TO THE LD CIT(A) TO CALCULATE PEAK CRED IT AND THEREFORE LD CIT(A) ON THE BASIS OF SUBMISSIONS MADE BY THE ASSESSEE HAD A RRIVED AT THE FIGURE OF PEAK CREDIT AND HAD THEREFORE RIGH TLY GAVE THE RELIEF. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES A ND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER HAS ADDED ALL CREDIT ENTRIES APPE ARING IN THE BANK ACCOUNTS OF THE ASSESSEE AS THERE WAS NO EXPLANATION FURNISHED BY THE ASSESSEE. ON GOING THROUGH THE BANK STATEMENTS AND CALCULATION OF PEAK CREDIT PLACED AT PAGES 21 TO 31 OF PAPER BOOK WE FIND THAT ASSESSEE HAD CALCULATED PEAK CREDIT ON THE BA SIS OF DEPOSITS AND WITHDRAWALS IN VARIOUS BANKS WHEREAS FROM THE BANK ACCOUNT WITH DCB WE FIND THAT THERE WAS DEPOSITS IN CASH AND WITHDRA WALS WERE THROUGH CHEQUES OR TRANSFERS INTO SINGLE ACCOUNT NO.201 6630. THEREFORE, WITHDRAWALS THROUGH CHEQUES OR TRANSFER CA NNOT BE CONSIDERED FOR CALCULATION OF PEAK CREDIT AS THIS DOES NOT GIVE RISE TO CIRCULATION OF SAME MONEY. SIMILAR IS THE POSITION IN RESPECT OF BANK ACCOUNT WITH VIJAYA BANK WHEREIN THE DEPOSITS ARE IN THE FORM OF CASH ITA NO3584/DEL/08 5 AND WITHDRAWALS ARE IN THE FORM OF CHEQUES. SIMILAR P OSITION EXISTS IN RESPECT OF KHATRI COOPERATIVE BANK LTD. WHEREIN ALMO ST ALL PAYMENTS WERE TRANSFERRED THROUGH CHEQUES OR THROUGH TRANSFER E NTRY IN ACCOUNT NO. 2306AND ALL DEPOSITS WERE IN THE FORM OF CASH. THE REFORE, WE ARE OF THE OPINION THAT PEAK CREDIT CALCULATED BY THE ASSESSEE AND ACCEPTED BY LD CIT(A) IS WRONG AND IS NOT BASED UPON THE FACTS OF THE CASE. THEREFORE, IN ORDER TO MEET BOTH ENDS OF JUSTICE WE R EMIT BACK THE CASE TO THE FILE OF ASSESSING OFFICER FOR RECALCULATION OF PEAK CREDIT ON THE BASIS OF ANALYSIS OF BANK ACCOUNTS. NEEDLESS TO SAY THAT NECESSARY OPPORTUNITY WILL BE GIVEN TO ASSESSEE TO EXPLAIN HIS CASE. 10. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE R EVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 23RD DAY OF NOVEMBER, 2012. SD/- SD/- (RAJPAL YADAV) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 23.11.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO3584/DEL/08 6 DATE OF HEARING 18.9.2012 DATE OF DICTATION 9.11.2012 DATE OF TYPING 9.11.2012 DATE OF ORDER SIGNED BY 23.11.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 23.11.2012 & SENT TO THE BENCH CONCERNED.