Shri Kamlesh Kumar Mishra, Indore V. THE ITO-3(3), Indore

ITA 379/IND/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5951 (ITAT-INDORE)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S N AGRAWAL; S K PARWAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Peak credit; Deemed to accrue or arise in india

Judgement Text

KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 379/IND/2016 A.Y.2009-10 KAMLESH KUMAR MISHRA INDORE PAN AHMPH 2917P ::: APPELLANT VS INCOME TAX OFFICER 3(3) INDORE ::: RESPONDENT APPELLANT BY SHRI S.N. AGRAWAL & SHRI S.K. PARWAL RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 25.5.2016 DATE OF PRONOUNCEMENT 2 0 .6.2016 O R D E R THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 19.2.2016 OF THE LEARNED CIT(A)-22, NEW DELHI, HAVING CONCURRENT JURISDICTION OF CIT(A), INDORE-2 KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 2 2. THE SUM AND SUBSTANCE OF THE GROUNDS OF APPEAL IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN NOT ONLY MAINTAINING THE ADDITION AS MADE BY THE ASSESSING OFFIC ER OF RS. 5,09,444/- AND RS. 4,10,279/- IN RESPECT OF AMOUNTS DEPOSITED IN THE BANK ACCOUNTS HELD WITH BANK O F INDIA AND STATE BANK OF INDIA RESPECTIVELY BUT ALSO IN ENHANCING THE AMOUNT OF ADDITIONS TO RS.37,82,500/- TAKING THE GROSS AMOUNT AS DEPOSITED IN THE BANK ACCOUNTS. 3. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM BROKERAGE CHARGES OF SHARES AND RELATED OTHER ITEMS. FROM THE BALANCE SHEET, IT WAS NOT ICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD NOT DE CLARED DETAILS OF BANK ACCOUNTS. THE ASSESSING OFFICER GATHERE D INFORMATION FROM AIR/ITS THAT THE ASSESSEE HAD MADE CASH DEPOSITS OF MORE THAN RS. 10 LACS. ON SCRUTINY, THE ASSESSING OFFICER FOUND THAT THERE WERE REGULAR CASH KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 3 DEPOSITS IN THE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE . THE BANK ACCOUNTS WERE NOT PRODUCED BY THE ASSESSEE. T HE ASSESSING OFFICER, THEREFORE, WAS OF THE VIEW THAT TH ERE IS NO OTHER WAY BUT TO ESTIMATE THE INCOME OF THE ASSESSEE FROM THE BANK TRANSACTIONS ON PEAK METHOD. THE ASSESSING OFFICER FOUND THAT THERE WAS CASH DEPOSIT OF RS.12,86, 000/- IN BANK OF INDIA. HE FURTHER FOUND THAT THERE WAS PEAK BALANCE IN BANK OF INDIA AT RS. 5,09,444/-. HE, THEREFOR E, ADDED THE SAME TO THE INCOME OF THE ASSESSEE. SIMILARL Y, THE OTHER ACCOUNT DETECTED THROUGH AIR INFORMATION WAS THAT OF STATE BANK OF INDORE IN WHICH THERE WERE CASH DEPOSITS OF RS.24,96,500/- AND IN THIS ACCOUNT THERE WAS PEAK DEPOSIT OF RS.4,10,279/-. THE ASSESSING OFFICER ACCORDINGLY ADDED THE PEAK OF THE BANK ACCOUNT AT RS.4,10,279/- TO THE TOTAL INCOME OF THE ASSESSEE. T HE BREAKUP OF ADDITION AS MADE BY THE ASSESSING OFFICER I S AS UNDER:- KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 4 S.NO NAME OF THE BANK DATE MAXIMUM CREDIT 1 BANK OF INDIA 23.05. 2008 5,09,444 2 STATE BANK OF INDIA 10.10.2008 4,10,279 9,19,723 IN THIS MANNER, THE ASSESSING OFFICER MADE TOTAL ADDIT ION OF RS.9,19,723/- TO THE TOTAL INCOME OF THE ASSESSEE . 4. BEING AGGRIEVED, THE ASSESSEE APPROACHED THE LEARNE D CIT(A). IT WAS SUBMITTED BEFORE HIM THAT THAT PEAK OF BOTH THE BANK ACCOUNTS TOGETHER IS TO BE CALCULATED AND NOT ON THE BASIS OF INDIVIDUAL BANK ACCOUNT WITH STATE BANK OF INDIA AND BANK OF INDIA. THE CONSOLIDATED PEAK ON THE BASIS OF BOTH THESE ACCOUNTS CALCULATED COMES TO RS 4,36,196/-. HOWEVER, THE LEARNED CIT(A) OBSERVED T HAT THE TOTAL CASH DEPOSIT IN TWO BANK ACCOUNTS TAKEN TOGETHER WAS RS. 37,82,500/-. THE ASSESSING OFFICER MADE THE ADDIT ION OF PEAK IN RESPECT OF EACH ACCOUNT TOTALING TO RS. 9,19,723/-. THE ASSESSEE ON THE OTHER HAND WORKED OU T A COMBINED PEAK OF BOTH THE BANK ACCOUNTS TAKEN TOGETHE R AT KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 5 RS.4,86,196/-. IN RESPECT OF INDIVIDUAL BANK ACCOUNT THERE IS A SMALL DISCREPANCY IN THE WORKING OF PEAK AS PER THE ASSESSING OFFICER AND AS PER THE ASSESSEE. IN CASE OF BANK ACCOUNT WITH SBI, THE INDIVIDUAL PEAK AS PER THE ASSESS ING OFFICER IS RS.4,10,279/- WHILE AS PER THE ASSESSEE IT IS RS.4,05,522/-. THE DIFFERENCE OF RS. 4757/- PERTAIN S TO OPENING BALANCE IN THE BANK ACCOUNT. IN THE CASE OF BANK OF INDIA THE PEAK AS PER THE ASSESSING OFFICER IS RS.5,09,444/- WHILE AS PER THE ASSESSEE IT IS RS. 4,3 6,556/- AND AS SUCH THE DIFFERENCE IS RS.72,888/- WHILE THE OPENING BALANCE IS ONLY RS.22,968/-. IN THIS MANNER, THE LEARNED CIT(A) WAS OF THE VIEW THAT THE DIFFERENCE OF RS.49,920/- HAS NOT BEEN EXPLAINED BY THE ASSESSEE. HE OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENC E IN RESPECT OF DEPOSIT OF CASH IN THE BANKS. HE OBSERV ED THAT THE BENEFIT OF PEAK HAS TO BE GIVEN ONLY WHEN THERE I S SOME EVIDENCE OR ATLEAST PREPONDERANCE OF PROBABILITIES THAT THE KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 6 DEPOSITS ARE OUT OF WITHDRAWALS AND ROTATION OF FUNDS I S INVOLVED. THE BENEFIT OF PEAK CANNOT BE GIVEN IN CASE S WHERE UNACCOUNTED INCOME IS DEPOSITED AND THEN WITHDRAWN FOR USE ELSE THE CONCEPT OF PEAK WILL BECO ME A PERPETUAL VDIS. THE LEARNED CIT(A) ACCORDINGLY ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO SHOW CAUSE AS TO WHY THE TOTAL ADDITION MADE SHOULD NOT BE ENHANCED TO THE GROSS AMOUNT OF DEPOSITS I.E. RS. 37,82,500/-. IN R ESPONSE, THE ASSESSEE FILED A REPLY STATING THAT COMBINED PEAK IS TO BE TAKEN AS UNACCOUNTED INCOME OF THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LEAR NED CIT(A) ENHANCED THE ADDITION MADE BY THE ASSESSING OFF ICER TO RS. 37,82,500/-. NOW THE ASSESSEE IS IN APPEAL BEF ORE THE TRIBUNAL. 5. BEFORE ME, THE LEARNED COUNSEL FOR THE ASSESSEE PL ACED A COMPARATIVE CHART OF ADDITIONS MADE BY THE ASSESSING OFFICER AND THE LEARNED CIT(A) AS UNDER :- KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 7 S.NO NAME OF THE BANK ADDITION MADE BY AO ON THE BASIS OF PEAK ADDITION MADE BY THE LD CIT[A] ON ACCOUNT OF ENTIRE DEPOSIT 1 BANK OF INDIA 5,09,444 12,86,000 2 STATE BANK OF INDIA 4,10,279 24,96,500 9,19,723 37,82,500 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE LEARNED CIT(A) HAS SIMPLY MADE THE ENHANCEMENT WITHOUT CONSIDERING THE EXPLANATION OF THE ASSESSEE. THE LEARN ED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WOULD BE I N THE FITNESS OF THINGS IF A COMBINED PEAK IS TAKEN FOR MAKI NG THE ADDITION AND THERE WAS NO ROOM FOR ENHANCING THE SAME. IN SUPPORT OF HIS CONTENTION, THE LEARNED COUNSEL FO R THE ASSESSEE RELIED UPON THE FOLLOWING JUDGMENTS :- (I ) AHMEDABAD BENCH OF ITAT IN THE CASE OF SHRI VISHA L R CHUGH; APPEAL NO ITA NO 866/ AHD/ 2013 (II) KOLKATA BENCH OF ITAT IN THE CASE OF SHRI BINO D KUMAR JHA; APPEAL NO ITA NO 577/ KOL/ 2013 DT 20.11.201 5 (III) RAJKOT BENCH OF ITAT IN THE CASE OF ITO VS M/ S SUBH MEDICINE;[ ITA NO 456 /RJT/ 2008 (IV) RAJKOT BENCH OF ITAT IN THE CASE OF SHRI KAUS HAL BHAI RAMCHANDRA PABARI; APPEAL NO ITA NO 811/ RJT/ 2010 KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 8 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT I N VIEW OF THE ABOVE JUDGMENTS, THE ORDER OF THE LEARNED CIT( A) DESERVES TO BE SET ASIDE . 6. ON THE OTHER HAND, THE LEARNED DR STRONGLY RELIED UPON THE ORDERS OF THE LEARNED CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS NO CASE. 7. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SID ES. I HAVE ALSO GONE THROUGH THE ABOVE CASE LAW RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE ME. IN T HE CASE OF IN THE CASE OF SHRI VISHAL R CHUGH; APPEAL NO ITA NO 866/ AHD/ 2013; THE AHMEDABAD BENCH OF ITAT HELD AS UNDER :- 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE AO AND THE CIT(A), AND ALSO COPY OF T HE BANK ACCOUNT WITH THE ICICI BANK FILED IN THE COMPILATIO N BEFORE US. WE FIND THAT THE ONLY PEAK AMOUNT WORKED OUT, I N ACCORDANCE WITH ACCEPTED PRINCIPLES OF ACCOUNTANCY, SHOULD KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 9 HAVE BEEN ADDED AS INCOME IN THE HANDS OF THE ASSES SEE. WE ARE UNABLE TO ACCEPT THE STAND OF THE REVENUE THAT THE ASSESSEE SHOULD BE PUT TO PROVE THAT THE THERE WAS A DIRECT NEXUS BETWEEN THE DEBIT AND CREDIT ENTRIES IN THE B ANK ACCOUNT OF THE ASSESSEE WITH ICICI BANK. THE LEARNE D COUNSEL FOR THE ASSESSEE CLAIMED THAT THE PEAK AMOU NT IN THIS CASE, WITH REGARD TO ICICI BANK COMES TO RS.2, 97,297/-. IN THESE FACTS OF THE CASE, WE RESTORE THE ISSUE IN THE GROUNDS OF THE APPEAL OF THE ASSESSEE TO THE FILE OF THE AO WITH DIRECTION TO MAKE THE ADDITION OF ONLY THE PEAK AMO UNT IN THE BANK ACCOUNT OF THE ASSESSEE WITH ICICI BANK. THE C LAIM OF THE ASSESSEE THAT THE PEAK AMOUNT COMES TO RS.2,97, 297/- SHOULD BE VERIFIED BY THE AO AND THE AFTER VERIFICA TION, THE CORRECT FIGURE OF PEAK AMOUNT MAY BE ADDED AS INCOM E IN THE HANDS OF THE ASSESSEE. WE DIRECT ACCORDINGLY, AND T HE GROUND OF THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. IN THE CASE OF SHRI BINOD KUMAR JHA; APPEAL NO ITA NO 577/ KOL/ 2013 IT WAS HELD BY KOLKATA BENCH OF ITAT AS UNDER :- 7. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES , WE DIRECT THE AO TO ASSESS THE PEAK CREDIT BEING A SUM OF RS.1,01,40,000/- AS COMPUTED BY ASSESSEE ON THE BAS IS OF KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 10 DEPOSITS MADE IN THESE SIX BANK ACCOUNTS WITH AXIS BANK LTD. IN LIEU OF CASH DEPOSITS ADDED BY THE AO AT RS.83,48,16,130/-. ACCORDINGLY, THE AO WILL VERIFY THE PEAK AND WILL MAKE ADDITION OF THE PEAK AMOUNT ONLY. ACC ORDINGLY, THIS ISSUE OF ASSESSEES APPEAL IS PARTLY ALLOWED F OR STATISTICAL PURPOSES. IN THE CASE OF SHRI KAUSHAL BHAI RAMCHANDRA PABARI [ APPEAL NO ITA NO 811 / RJT/ 2010; RAJKOT BENCH OF IT AT HAS HELD AS UNDER :- 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE FIND THAT THE ASSESSING OFFICER, IN THE ABSENCE OF ANY COMPLIANCE FROM THE ASSESSEE, HAS ADDED THE TOT AL DEPOSITS OF RS. 17,86,539. WHILE DOING SO, HE IGNOR ED THE FACT THAT THE AMOUNT OF RS.17,86,539 WAS THE DEPOSITS MA DE ON VARIOUS DATES. HOWEVER, THE LD.CIT(A) HAS RIGHTLY C ONCLUDED THAT ONLY THE PEAK OF THE DEPOSITS COULD BE CONSIDE RED AS UNDISCLOSED INCOME OF THE ASSESSEE. WE AGREE WITH T HE LD.CIT(A) ON THIS COUNT. HOWEVER, LEAPING A STEP FU RTHER, THE LEARNED CIT(A) HAS ALSO CONSIDERED THE WITHDRAWALS THROUGH ATM TOTALING RS. 60,900 (RS.40,000 + RS.20,900) AS UNDISCLOSED INCOME OF THE ASSESSEE. THE ALTERNATIVE CONTENTION OF THE ASSESSEE CONCENTRATES ON THIS. TH E KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 11 ARGUMENT OF THE ASSESSEE IS THAT SINCE THE AMOUNT O F RS.60,900 IS WITHDRAWALS THROUGH ATM, THE CIT(A) TR EATING THE SAME AS UNDISCLOSED INCOME IS NOT JUSTIFIED. TH E ASSESSING OFFICER HAS TAKEN RS.17,86,639 AS DEEMED INCOME U/S 68. IN SUCH CASE ONLY PEAK AMOUNT OF CREDIT IS CONSIDERED AS UNEXPLAINED CASH CREDIT. THERE ARE SE RIES OF TRANSACTIONS INVOLVING BOTH CREDITS AS WELL AS DEBI TS APPEARING IN THE BANK STATEMENT OF KOTAK MAHINDRA. THE SAME WAS ARRAIGNED BY THE ASSESSEE AS PER THE DATE OF EVERY CREDIT APPEARING AFTER DEBIT TO THE EXTENT REDUCING , ONLY THE PEAK OF THE AMOUNT CREDIT OF RS.2,89,204 WAS TREATE D AS UNEXPLAINED INCOME. IN THE CASE OF ACIT VS TRIATAN HAPPY HOME PVT LTD 94 TTJ 628 (CUT) SUCH PEAK TRANSACTION WA RECOGNIZED AND WE ARE OF THE VIEW THAT CIT(A) HAS J USTIFIED IN TAKING THE PEAK AMOUNT OF CREDIT AS UNEXPLAINED CAS H CREDIT BUT AT THE SAME TIME CIT(A) HAS TAKEN THE WITHDRAWA LS OF RS. 40,000 + 20,900 TOTALING RS.60,900 AS UNEXPLAINED C REDIT, BUT WE DO NOT AGREE WITH THIS. AS PER THE PEAK THEO RY THE AMOUNT WHICH IS WITHDRAWN BY THE ASSESSEE HAS TO BE GIVEN CREDIT FOR. THEREFORE, WE DELETE THE AMOUNT OF RS.6 0,900 WHICH WAS ADDED ON ACCOUNT OF WITHDRAWAL FROM ATM. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE IN VIEW OF THE ABOVE DECISIONS OF DIFFERENT BENC HES OF KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 12 ITAT, I AM OF THE VIEW THAT IT WOULD BE REASONABLE TO T AKE A SINGLE PEAK OF BOTH THE ACCOUNTS. IN THIS VIEW OF THE MATTER, I RESTRICT THE ADDITION TO RS. 4,36,196/-. I ORDER ACCORDINGLY. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED . PRONOUNCED IN OPEN COURT ON 20 TH JUNE, 2016 SD/- (D.T. GARASIA) JUDICIAL MEMBER 20 TH JUNE, 2016 DN/- KAMLESH KUMAR MISHRA ITA NO. 379/IND/2016 13