Amit Agarwal, Hyderabad, Hyderabad V. DCIT, Circle-16(1), Hyderabad, Hyderabad

ITA 371/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2346 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 02-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Peak credit; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 371/HYD/2017 ASSESSMENT YEAR: 2011-12 AMIT AGARWAL, HYDERABAD [PAN: AEXPA0098R] VS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-16(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI V. SIVA KUMAR, AR FOR REVENUE : SHRI PRABHAT KUMAR GUPTA, DR DATE OF HEARING : 04-12-2017 DATE OF PRONOUNCEMENT : 06-12-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-4 , HYDERABAD, DATED 21-12-2016, FOR THE AY. 2011-12. THE GROUNDS RAISED BY ASSESSEE ARE AS UNDER: 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING THE ADDITION OF RS.12,96,500/- MADE BY THE ASSESSIN G OFFICER TREATING THE SAID AMOUNT AS UNEXPLAINED INCOME. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE WORKING OF THE PEAK CREDIT MADE BY THE ASS ESSING OFFICER AND THE RESULTANT PEAK CREDIT OF RS.12,96,500/- ARRIVED AT BY HIM WAS NOT CORRECT AND CONSEQUENTLY ERRED IN UPHOLDING THE ADDITION MA DE BY THE ASSESSING OFFICER. GROUND NOS. 1 & 4 ARE GENERAL IN NATURE. 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN INDIVIDU AL, EXECUTIVE DIRECTOR IN M/S. NIKHIL REFINERIES PVT. LTD., AND ALSO DIRECTOR IN M/S. AMIT COTTONS PVT. LTD. DURING THE COURSE OF I.T.A. NO. 371/HYD/2017 :- 2 - : ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER (AO) OB SERVED THAT THERE ARE HUGE CASH DEPOSITS IN THE BANK ACCOUNT OF ASS ESSEE WITH ICICI BANK. THE AO REQUIRED THE ASSESSEE TO EXPLAIN T HE SOURCE OF SUCH DEPOSITS AND IN RESPONSE TO THIS ASSESSEE EXPLAI NED THAT HE IS INVOLVED IN TRADING IN COMMODITIES AND FOREX DERIVATIV ES WHICH IS THE REASON FOR INFLOWS AND OUTFLOWS OF MONIES INTO HIS BANK ACCOUNT AND ALSO AT TIMES CASH IS WITHDRAWN FOR PERSO NAL PURPOSES. AO REJECTED THE EXPLANATION OF ASSESSEE AND PROPOSED TO WORK OUT PEAK CASH DEPOSIT AND ADDED THE SAME AS UNEX PLAINED INCOME. IN RESPONSE, ASSESSEE SUBMITTED CASH FLOW STA TEMENT STATING THAT THE SAID CASH FLOW STATEMENT EXPLAINING THE SO URCES OF EACH OF THE DEPOSITS MADE INTO THE BANK ACCOUNTS OF ASSE SSEE. AS THERE ARE FREQUENT CASH DEPOSITS AND WITHDRAWALS DURI NG THE YEAR UNDER CONSIDERATION AND AO WAS OF THE OPINION THAT ASSE SSEE WAS NOT ABLE TO EXPLAIN THE SOURCE OF EACH AND EVERY DEPO SIT MADE, HE DETERMINED THE PEAK CASH DEPOSIT APPEARING ON 05-02- 2011 AT RS.19,21,000/-, FROM WHICH HE REDUCED THE OPENING CA SH BALANCE OF RS.6,34,500/-. THUS, THE AO WORKED OUT THE PEAK CR EDIT AT RS.12,86,500/- AND ADDED THE SAME TO THE INCOME RETURN ED. 3. BEFORE THE LD.CIT(A), ASSESSEE FURNISHED COPY OF CASH FLOW STATEMENT, COPIES OF BANK STATEMENTS WITH ICICI BANK, STA TE BANK OF MYSORE, STATE BANK OF HYDERABAD, HDFC BANK AND LE DGER EXTRACT IN THE RECORDS OF THE COMPANY IN WHICH CASH DEP OSITS AND WITHDRAWALS WERE REFLECTED. ASSESSEE SUBMITTED THAT HE HAD DURING THE ASSESSMENT PROCEEDINGS EXPLAINED THE SOURCE OF CAS H AVAILABLE FROM KNOWN, DISCLOSED AND RECORDED SOURCES AND HAD ADDUCED DOCUMENTARY EVIDENCE IN SUPPORT THEREOF AND EXPLAINED THAT THE INVESTMENTS WERE MADE OUT OF SUCH DISCLOSED SOURCES. A SSESSEE I.T.A. NO. 371/HYD/2017 :- 3 - : CONTENDED THAT HE HAD FURNISHED BEFORE THE AO THE CASH F LOW STATEMENT WHERE IT WAS EXPLAINED THAT ADEQUATE CASH SURPL US WAS AVAILABLE FOR THE PAYMENTS MADE. ASSESSEE ALSO CONTEND ED THAT THE AO WHILE WORKING OUT PEAK CREDIT HAS NOT TAKEN INTO CONS IDERATION AN AMOUNT OF RS.12 LAKHS WITHDRAWN BY ASSESSEE FROM M/S. AMIT COTTONS P. LTD., THE COMPANY IN WHICH ASSESSEE IS A D IRECTOR. ASSESSEE FURTHER CONTENDED THAT THE METHOD OF WORKING ADO PTED BY THE AO FOR ARRIVING AT THE AMOUNT OF ADDITION ON ACCOUNT OF PEAK CREDIT AT RS.12,96,500/- IS ERRONEOUS, SINCE THE PEAK CREDIT SHOULD REPRESENT THE MAXIMUM CREDIT BALANCE IN CASH ACCOUNT W ORKED OUT ON THE BASIS OF THE AMOUNT OF CASH AVAILABLE CONSIDE RING THE OPENING BALANCE TO WHICH WILL BE ADDED RECEIPTS AND/O R WITHDRAWALS FROM BANK AND THEN DEDUCTING THE PAYMENTS /DEPOSITS IN THE BANK ACCOUNT AND THE PEAK CREDIT WORKED OUT IN TH IS WAY IS ONLY RS. 4,62,000/- AS AGAINST RS. 12,96,500/- WORKE D OUT BY THE AO. 4. INSPITE OF THE OBJECTIONS, LD.CIT(A) HAS REJECTED TH E SAME BY STATING AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT FURNISHED COPY OF CASH F LOW STATEMENT AND COPIES OF BANK STATEMENTS WHICH WERE ALREADY SUBMIT TED BEFORE THE ASSESSING OFFICER. THE APPELLANT DID NOT SUBMIT ANY ADDITIONAL EVIDENCE. THOUGH THE BANK STATEMENTS AND THE CASH FLOW STATEM ENTS REFLECT VARIOUS DEPOSITS AND WITHDRAWALS MADE BY THE APPELLANT, NOW HERE THE SOURCES OF SUCH DEPOSITS WERE MENTIONED AND NO DOCUMENTARY EVI DENCE WAS FURNISHED EVIDENCING THE SOURCES OF DEPOSITS MADE. THOUGH THE APPELLANT CONTENDED THAT HE HAD DURING THE ASSESSMENT PROCEED INGS EXPLAINED THE SOURCE OF CASH AVAILABLE FROM KNOWN DISCLOSED AND R ECORDED SOURCES AND HAD ADDUCED DOCUMENTARY EVIDENCE IN SUPPORT THEREOF AND EXPLAINED THAT THE INVESTMENTS WERE MADE OUT OF SUCH DISCLOSED SOU RCES, NO SUCH DOCUMENTARY EVIDENCE WAS FURNISHED DURING THE APPEA L PROCEEDINGS, THUS, IN ABSENCE OF PROOF/EVIDENCE FOR SOURCES OF C ASH DEPOSITS MADE BY I.T.A. NO. 371/HYD/2017 :- 4 - : THE APPELLANT, THE ADDITION MADE BY THE ASSESSING O FFICER AMOUNTING TO RS.12,96,500/- IS CONFIRMED AND THE GROUNDS RAISED BY THE APPELLANT ARE DISMISSED. 5. IT WAS THE SUBMISSION THAT THE WORKING OF PEAK CREDI T IS NOT CORRECT AND VARIOUS SOURCES AVAILABLE HAVE NOT BEEN C ONSIDERED PROPERLY. IT WAS SUBMITTED THAT IF THE SOURCES ARE PROPER LY CONSIDERED, THERE WOULD BE LESS OR NO ADDITION. 6. AFTER CONSIDERING THE RIVAL CONTENTIONS AND EXAMININ G THE DOCUMENTS PLACED IN PAPER BOOK, I AM OF THE OPINION TH AT THE WORKING OF PEAK CREDIT REQUIRES RE-EXAMINATION BY THE AO. IN SPITE OF SPECIFIC OBJECTIONS RAISED, LD.CIT(A) FAILED TO EX AMINE THEM. AT BEST THE MATTER COULD HAVE BEEN REMANDED TO AO TO EXAMI NE THE FACTS AS CONTENDED BY ASSESSEE. SINCE THE LD.CIT(A) H AS NOT DONE THE SAME, I HAVE NO OPTION THAN TO REMIT THE ISSUE OF W ORKING OF PEAK CREDIT TO THE FILE OF AO TO RE-EXAMINE THE SOURCES AFRESH AND DECIDE ACCORDINGLY. ASSESSEE SHOULD BE GIVEN DUE O PPORTUNITY TO EXPLAIN THE SOURCES OF DEPOSITS IN BANK ACCOUNTS. T HE GROUNDS RAISED ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOS ES. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 6 TH DECEMBER, 2017 TNMM I.T.A. NO. 371/HYD/2017 :- 5 - : COPY TO : 1. AMIT AGARWAL, PLOT NO. 266/A&B, MLA COLONY, ROAD NO. 12, BANJARA HILLS, HYDERABAD. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-16 (1), HYDERABAD. 3. CIT (APPEALS)-4, HYDERABAD. 4. PR.CIT-4, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.