REJI T SAMUEL, MUMBAI V. ITO 20(2)(4), MUMBAI

ITA 3797/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3438 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 27-05-2014
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Unexplained investment; Principle of natural justice; Peak credit
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER I.T.A. NO.3797/M/2014 (ASSESSMENT YEAR: 2009 - 2010 ) SHRI REGI T. SAMEUL, B - 208, KAMLESH APARTMENTS, SHER - E - PUNJAB, MAHAKALI CAVES, ANDHERI (E), MUMBAI 400 093. / VS. ITO - 20(2)(4), MUMBAI. ./ PAN : APWPS 0302 Q ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY MEHTA / RESPONDENT BY : SHRI B.S. BIST, SR. DR / DATE OF HEARING : 17.03.2016 / DATE OF PRONOUNCEMENT : 17.03.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 27.4.2014 IS AGAINST THE ORDER OF THE CIT (A) - 31, MUMBAI DATED 5.3.2014 FOR THE ASSESSMENT YEAR 2009 - 2010. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) WAS VALID. 2. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITIONS MADE BY THE AO ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN IMMOVABLE PROPERTIES TO THE TUNE OF RS. 33,2 4,820/ - AS WELL AS DEPOSITS MADE IN BANK ACCOUNTS TO THE TUNE OF RS. 61,83,558/ - . 3. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF EXPENSES OF RS. 47,000/ - CLAIMED AS DEDUCTION BY THE APPELLANT WHILE COMPUTING HIS INCOME. 4 . THE ORDER PASSED BY THE LD CIT (A) IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND IS PASSED WITHOUT GIVING A PROPER OPPORTUNITY OF HEARING TO THE APPELLANT. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSI NESS OF RETAILING OF TYRE. ASSESSEE FIELD THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 4,19,270/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS. 1,00,74,643/ - . IN THE ASSESSMENT, AO MADE 2 ADDITION OF RS. 9 5,08,378/ - AND THE SAME IS ARRIVED CONSIDERING ALL THE DEPOSITS FOUND IN THE BANK ACCOUNTS OF THE ASSESSEE. TOTAL OF SUCH DEPOSITS WORKS OUT TO RS. 97,08,378/ - . AFTER GIVING SET - OFF TO SOME ENTRIES, AO MADE NET ADDITION OF RS. 95,08,378/ - AS MENTIONED AB OVE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) CONFIRMED THE ADDITION OF RS. 95.08,378/ - AND UPHELD THE DECISION OF THE AO. AGAIN AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE US BY RAISING THE ABOVE MENTIONED GROUNDS. 4. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE FILED CONSOLIDATE D DETAILS OF BANK TRANSACTIONS OF THE ASSESSEE FOR THE PERIOD FROM 1.4.2008 TO 31.3.2009, TAKING INTO ACCOUNT ALL THE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE DURING THE YEAR. AS PER THE LD COUNSEL FOR THE ASSESSEE, ONLY THE PEAK CREDIT SHOULD HAVE BEEN C ONSIDERED ON MERITS FOR MAKING ADDITIONS, IF ANY, BY THE AO AND NOT THE TOTAL OF ALL THE DEPOSITS MADE BY THE ASSESSEE IN ITS BANK ACCOUNTS. FURTHER, LD COUNSEL FOR THE ASSESSEE FILED AN ADDITIONAL GROUND AND THE SAME READS AS UNDER: - THE LD CIT (A) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO TAKE INTO ACCOUNT ONLY PEAK BALANCE AFTER ADJUSTING INCOME DISCLOSED IN THE RETURN OF INCOME AS AGAINST THE TOTAL AMOUNT DEPOSITED IN THE BANK ACCOUNTS CONSIDERED BY HIM WHILE DETERMINING TOTAL INCOME OF THE APPELLANT. 5. HE FURTHER SUBMITTED THAT IF THE SAID PEAK CREDIT IS CONSIDERED IN FAVOUR OF THE ASSESSEE IN PRINCIPLE, THE RELATED ISSUES CAN BE CONSIDERED BY THE AO IN REMANDING PROCEEDINGS . IN SUCH CASE, ASSESSEE WILL NOT PRESS THE LEGAL GROUND ABOUT T HE INVALIDITY OF THE ASSESSMENT MADE U/S 143(3) OF THE ACT AS MENTIONED BY HIM IN GROUND NO.1 OF THE ORIGINAL GROUNDS OF APPEAL. 6. IN RESPONSE TO THE ABOVE SUBMISSIONS, LD CIT - DR FOR THE REVENUE MENTIONED THAT THE SAID PEAK CREDIT IS GIVEN FOR THE FIRST TIME BEFORE THE TRIBUNAL AND THIS WORKING REQUIRES TO BE REMANDED TO THE FILE OF THE AO FOR VERIFICATION ON THE CORRECTNESS OF THE SAME. 7. TODAY, IE 17.3 .2016, ON THE DATE OF HEARING, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD DR FILED A REMAND REPORT DATED 16.3.2016 AND SUBMITTED THE FOLLOWING: - 3 WE ARE IN RECEIPT OF YOUR ABOVE SAID LETTER, REQUIRING THE UNDERSIGNED TO SUBMIT THE REPORT ON THE CORRECTNESS OF THE WORKING OF PEAK CREDIT AND COMMENT THEREON. I HAVE PERUSED THE WORKING OF PEAK CREDIT SUB MITTED BY THE AR OF THE ASSESSEE TO YOUR GOODSELF DEPICTING THE CONSOLIDATED DEPOSIT WITHDRAWAL AND BALANCE AS ON VARIOUS DATES OF FY 2008 - 2009 RELEVANT TO AY 2009 - 2010 OF ALL THE THREE ACCOUNTS NAMELY SHAMRAO VITHAL CO - OP BANK A/C NO.101704180001252, ICIC I BANK A/C NO.000401617646 AND SYRIAN CATHOLIC BANK A/C NO.033900461351190001 MAINTAINED BY THE ASSESSEE. IT HAS BEEN SEEN FROM THE WORKING SUBMITTED THAT THE ASSESSEE HAS CALCULATED PEAK BALANCE WHICH COMES TO RS. 13,62,439/ - ON 30.9.2008. IT IS OBSERVED THAT THE ASSESSEE HAS ALSO INCLUDED VARIOUS PAYMENTS MADE ON ACCOUNT OF THE EXPENSES LIKE LABOUR CHARGES, TRAVELLING EXPENSES, TELEPHONE EXPENSES, CREDIT CARD PAYMENTS, BANK CHARGES, SOCIETY MAINTENANCE CHARGES, ETC. THE ASSESSEE HAS ERRED IN COMPUTING THE PEAK CREDIT BY INCLUDING THESE EXPENSES IN THE WORKING OF THE PEAK CREDIT CALCULATION. IN VIEW OF THE ABOVE, THE PEAK CALCULATION IS RECOMPUTED AS PER THE ANNEXURE ATTACHED HEREWITH EXCLUDING THE EXPENSES CLAIMED ERRONEOUSLY BY THE ASSESSEE IN THE WORKING OF THE PEAK BALANCE AS THE SAID EXPENSES ARE PAID OUT AND CEASES TO EXIST WITH THE ASSESSEE. FROM THE ABOVE, IT IS EVIDENT THAT THE PEAK CREDIT ADDITION, IF ANY, SHOULD BE RESTRICTED TO RS. 12,61 ,639/ - . 8. IN RESPONSE TO THE ABOVE, LD COUNSEL FOR THE ASSESSEE REBUTTED BY STATING THAT GROSS PEAK BALANCE AS ON 30.9.2008 IS RS. 13,62,439/ - BEFORE SETTING OFF AGAINST THE INCOME RETURNED . HOWEVER, REGARDING THE DIFFERENCES, LD AR MENTIONED THAT HE DOES NOT WANT TO LITIGATE ON THIS DISCREPANCY SO AS TO END THE LITIGATION ON THE SUBJECT. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINION, THE LEGAL ISSUE RAISED BY THE ASSESSEE VIDE GROUND NO.1 REGARDING THE INVAL IDITY OF THE ASSESSMENT ORDER SHOULD BE DISMISSED AS NOT PRESSED . WE ORDER ACCORDINGLY. 10. REGARDING GROUND NO.2 READ WITH ADDITIONAL GROUND RELATING TO THE PEAK CREDIT ADDITION, WE FIND, AO CANNOT BE ALLOWE D TO MAKE GROSS DEPOSITS OF 95,08,378/ - AS ADDITION UNDER THE FACTUAL MATRIX AS DISCUSSED ABOVE. THE AO CAN ONLY MAKE PEAK CREDIT ADDITION WHICH IS A SETTLED PROPOSITION IN THE MATTER. AFTER ANALYZING THE PEAK CREDIT WORKING OF THE ASSESSEE AS WELL AS TH E REVENUE, THE NET PEAK CREDITS ARE RS. 12,61,639/ - AND RS. 10,90,343/ - RESPECTIVELY. THESE FIGURES ARE ARRIVED AT AFTER THE PRORATA INCOME EARNED UPTO SEPTEMBER, 2009 ARE ADJUSTED. REGARDING THE PRORATA INCOME, THERE IS NO DISPUTE AND THE INCOME AGREED BY BOTH THE PARTIES IS RS. 2,72,097/ - . THUS, THERE IS A DIFFERENCE OF RS. 1 , 71 , 296 / - (IE RS. 12,61,639 RS. 10,90,343) IN THE NET PEAK CREDIT BALANCES OF THE ASSESSEE AND THE REVENUE. THE REVENUE IS OF THE OPINION THAT CERTAIN EXPENSES SUCH AS PAYMENTS TO LABOUR; 4 TRAVELLING EXPENSES; TELEPHONE EXPENSES; CREDIT CARD PAYMENT; BANK CHARG ES; SOCIETY MAINTENANCE CHARGES ETC ARE NOT AVAILABLE FOR PEAK CREDIT ANALYSIS. IN ANY CASE, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT IN ORDER TO BRING END TO THE LITIGATION, HE IS READY TO GO WITH THE WORKING OF THE AO IE FOR CONSIDERING THE SUM OF RS. 12,61,639/ - FOR MAKING PEAK CREDIT ADDITION. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION ON THIS ACCOUNT TO THE SUM AS MENTIONED BY HIM. THE AOS FIGURES BEFORE SET - OFF OF THE PRORATE OF INCOME AND AFTER SUCH SET - OFF ARE RS. 15,3 3,735/ - AND RS. 12,61,639/ - RESPECTIVELY. THUS, ADDITION ON THIS ISSUE WORKS OUT TO RS. 12,61,639/ - . ACCORDINGLY, GROUND NO.2 AND THE ADDITIONAL GROUND ARE ALLOWED PROTANTO. 11. REGARDING GROUND NO.3 , WE FIND THE FACTS INCLUDE THAT IN THE RETURN OF INCOM E, ASSESSEE DECLARED RS. 1,64,496/ - UNDER THE HEAD INCOME FROM OTHER SOURCES AND CLAIMED EXPENSES OF RS. 47,000/ - AGAINST THE SAID INCOME. IN THE ASSESSMENT, AO DID NOT ALLOW THE SAID SET - OFF OF RS. 47,000/ - IN VIEW OF THE ASSESSEES FAILURE TO SUBSTANT IATE THAT THE SAID EXPENSES ARE INCURRED FOR EARNING OF THE ABOVE INCOME. ON APPEAL, CIT (A) CONFIRMED THE SAME. EVEN BEFORE US, NO EVIDENCE WAS ADVANCES TO ESTABLISH THE NEXUS BETWEEN THE INCOME FROM OTHER SOURCES. CONSIDERING THE SAME, WE FIND THE DEC ISION OF THE CIT (A) ON THIS ISSUE GIVEN IN PARA 5.4 OF HIS ORDER IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.3 RAISED BY THE ASSESSEE IS DISMISSED . 12. GROUND NO.4 RAISED BY THE ASSESSEE IS GENERAL IN NATURE. CONSIDERING THE GENERAL NATURE, THE GROUND NO.4 IS DISMISSED AS GENERAL. 13 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 TH MARCH, 2016. SD/ - SD/ - ( RAM LAL NEGI ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 17 .3.2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 5 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI