Anil Kumar Nagpal, Delhi V. ITO, New Delhi

ITA 3995/DEL/2013

• Counselvise Citation: 399520114 RSA 2013
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 27-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PNC VS ITO WARD NEW DELHI
• Assessee Lawyers: KAPIL GOEL ADV MS Y KAKKAR
• Keywords: Income from undisclosed sources; Opportunity of being heard; Peak credit; Wrong claim
• Section: 68

Judgement Text

ITA NOS. 3995 & 399 6/DEL/13 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI J. S. REDDY, ACCOUNTANT MEMBER I.T.A .NOS. 3995 & 3996/DEL /2013 (ASSESSMENT YEAR:- 2007-08) ANIL KUMAR NAGPAL C/O KAPIL GOEL, ADVOCATE A-1/25, SECTOR-15, ROHINI DELHI PAN:- ABYPN0462C (APPELLANT) VS ITO WARD- 21(1) NEW DELHI (RESPONDENT) APPELLANT BY SH. KAPIL GOEL, ADV RESPONDENT BY MS. Y. KAKKAR, DR ORDER PER R.P. TOLANI, JM: THESE ARE TWO ASSESSEES APPEALS, ONE AGAINST THE QUANTUM AND OTHER AGAINST THE PENALTY U/S 271(1) (C). THE GROUNDS IN QUANTUM APPEAL ARE READ AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF CASH DEPOSIT IN SAVING BANK ACCOUNT WITH CENTURIAN BANK OF PUNJAB LTD. ROH INI AMOUNTING TO RS.17,53,020/- IGNORING THE FAULTLESS PLEA OF AP PELLANT TO THE ASSESSED AS PER PEAK THEORY AS THERE ARE REGULAR CA SH WITHDRAWALS AND DEPOSITS IN SUBJECT BANK ACCOUNT ON MERE BASIS OF CONJECTURES AND SURMISES AND FAULTY REASONING AT PAGE 21 OF THE IMP UGNED ORDER. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF CASH DEPOSIT IN SAVING BANK ACCOUNT WITH CENTURIAN BANK OF PUNJAB LTD ROHI NI AMOUNTING TO ITA NOS. 3995 & 399 6/DEL/13 2 RS.17,53,020/- WITHOUT APPRECIATING THAT APPELLANT S CLAIM DESERVED TO BE FULLY ACCEPTED IN LIGHT OF: 2. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT WHIL E DECIDING THE APPEAL, LD. CIT(A) SUMMARILY DISMISSED THE ALTERNATE PLEA O F THE ASSESSEE TO TAX ONLY THE PEAK CREDITS INVOLVED IN THE TRANSACTIONS RELATABLE TO SECTION 68 BY FOLLOWING OBSERVATIONS:- 8.15 THE APPELLANT HAS RELIED UPON CERTAIN JUDICIA L DECISIONS AND HAS CLAIMED THAT HE SHOULD BE GIVEN THE BENEFIT OF THE PEAK CREDIT AND ONLY THE PEAK CREDIT BALANCE IN THE BANK ACCOUNT SHOULD BE TAKEN AS THE INCOME OF THE ASSESSEE FOR T HAT YEAR. THESE JUDICIAL DECISIONS RELIED UPON THE APPELLANT ARE AS UNDER:- (A) HONBLE ITAT, DELHI IN ITA NO. 2356/DEL/12 IN CASE OF ITO, WARD-2, ROHTAK VS. SHRI INDER SINGH (B) HONBLE ITAT, DELHI IN ITA NO. 2402/DEL/11 IN CASE OF ITO, WARD-6(1), NEW DELHI VS. AJAY KUMAR BAMBA (C) HONBLE DELHI HIGH COURT IN ITA 1424/DEL/2010 IN THE CASE OF COMMISSIONER OF INCOME TAX VS. INDER PAL CHAWLA (D) HONBLE ITAT, DELHI IN ITA NO. 1240/DEL/2009 AND ITA NO. 4310/DEL/2010 IN THE CASE OF ITO WARD-2 0 (3), NEW DELHI VS. MS. RENU MAINGI. 8.16 EACH OF THE ABOVE JUDGMENTS WAS CAREFULLY PE RUSED AND IT WAS SEEN THAT NO BENEFIT OF TAKING ONLY THE PEAK CR EDIT AS THE UNDISCLOSED INCOME OF THE ASSESSEE COULD BE GIVEN. IT HAS BEEN SEEN THAT IN THE CASE OF THE PRESENT ASSESSEE THE U NACCOUNTED INCOME APPEARING IN THE UNDISCLOSED BANK ACCOUNT IN THE FORM OF CASH DEPOSITS MADE ON VARIOUS DATES WAS TAXED BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME. IT WAS CL AIMED IN THE ASSESSMENT PROCEEDINGS THAT THE SOURCE OF THE CASH DEPOSITS WAS LOANS AND THE CASH WITHDRAWALS WAS GIVEN TO VARIOUS PERSONS. DURING THE APPELLATE PROCEEDINGS, THE FALSE CLAIM T HAT THE ASSESSEE WAS RUNNING SOME CLOTH BUSINESS WHOSE BOOK S OF ITA NOS. 3995 & 399 6/DEL/13 3 ACCOUNT WERE MAINTAINED AND WHOSE SALE PROCEEDS WER E DEPOSITED IN THE BANK AND THE MONEY WITHDRAWN IN CA SH AND GIVEN TO VARIOUS PERSONS WAS FOR PURCHASE OF CLOTH. HOWEVER, IT HAS BEEN PROVED DURING THE APPELLATE PROCEEDINGS T HAT NO SUCH TRADING OF CLOTH BUSINESS WAS CARRIED OUT DURING TH E PREVIOUS YEAR RELEVANT TO A.Y 2007-08, NOR ANY COMPUTERIZED BOOKS OF ACCOUNT AS CLAIMED WERE MAINTAINED, NOR THERE WAS A NY QUESTION OF ANY SALE PROCEEDS BEING DEPOSITED IN TH E BANK ACCOUNT OR THE CASH WITHDRAWALS FROM THIS BANK ACCO UNT BEING UTILIZED FOR ANY PURCHASED, AS THERE WAS NO CLOTH B USINESS AT ALL AND IT WAS ONLY A CLAIM MADE AFTER THE PASSING OF T HE ASSESSMENT ORDER IN A FAILED ATTEMPT TO TRY TO EXPL AIN THE UNACCOUNTED INCOME APPEARING IN THE BANK ACCOUNT IN THE FORM OF CASH DEPOSITS. IN THE PRESENT CASE THERE IS NO EVIDENCE AT ALL THAT THE CASH WITHDRAWALS FROM THE BANK ACCOUNT WER E USED FOR ANY SUBSEQUENT CASH DEPOSITS IN THE SAME BANK ACCOU NT. FURTHER, AS PER THE SUBMISSIONS OF THE AUTHORIZED R EPRESENTATIVE OF THE ASSESSSEE IN THE ASSESSMENT PROCEEDINGS THE AMOUNT WITHDRAWN WAS USED FOR GIVING TO VARIOUS PERSONS. THUS THERE IS NO PROOF OR EVIDENCE AT ALL REGARDING THE CASH W ITHDRAWALS FROM THIS BANK ACCOUNT HAVING BEING USED FOR RE-DEP OSITED IN THE SAME BANK ACCOUNT. FURTHER, THE BASIS OF WHIC H THE APPELLANT CLAIMED THAT THE WITHDRAWALS WERE USED FO R PURCHASED OF CLOTH WHOSE SALE PROCEEDS WERE DEPOSI TED IN THE BANK HAS BEEN PROVED TO BE TOTALLY FALSE CLAIM. HE NCE NO BENEFIT AT ALL OF THE CASH BEING WITHDRAWN FROM THI S BANK ACCOUNT AS BEING USED FOR RE-DEPOSIT IN THE SAME BA NK ACCOUNT CAN BE GIVEN AND THENCE THERE IS NO QUESTION F CALC ULATION OF THE PEAK CREDIT AS THE ENTIRE CASH DEPOSITS MADE ON VAR IOUS DATES ARE UNEXPLAINED. MERELY BECAUSE THE CASH DEPOSITS WERE ON VARIOUS DATES AND AMOUNTS WERE WITHDRAWN FROM THE A CCOUNT DOES NOT IMPLY THAT THE APPELLANT CAN BE GIVEN THE ADVANTAGE OF BEING TAXED ONLY ON THE PEAK CREDIT, WHEN THE FACTS OF THE CASE CLEARLY PROVE THAT FALSE CLAIMS WERE MADE BY THE AP PELLANT AND THE ENTIRE DEPOSITS ARE UNACCOUNTED. 2.1. LD. COUNSEL THUS PLEADED THAT IT HAS BEEN ADMI TTED BY CIT(A) HIMSELF THAT THE AMOUNTS OF CASH WERE DEPOSITED IN BANK ACCOUNT WHICH WERE WITHDRAWN AND RE- DEPOSITED WITHOUT CITING ANY SPECIFIC INSTANCE. IT HAS BEEN HELD THAT THERE IS NO ITA NOS. 3995 & 399 6/DEL/13 4 PROOF OF EVIDENCE TO SUGGEST THAT THE WITHDRAWALS F ROM THE BANKS WERE USE FOR RE- DEPOSIT. THIS FINDING IS CONTRARY TO RECORD IN AS MUCH AS ASSESSEE FILED DETAILED CASH FLOW STATEMENT INDICATING THE WITHDRAWALS FROM THE BANK ACCOUNT AND RE- DEPOSIT THEREOF IN THE BANK ACCOUNT AND WORKING OUT PEAK ACCORDINGLY. IT IS A SETTLED PROPOSITION OF LAW THAT WHEN CASH CREDITS A RE WITHDRAWN AND RE-DEPOSITED, THEN ALL THE CASH CREDITS CANNOT BE ADDED AS INCOM E OF ASSESSEE WITHOUT CITING COGENT REASONS FOR DISALLOWING PEAK CREDIT AND WITH OUT GOING INTO EITHER THE CASH FLOW STATEMENT OR THE REASONS FOR WITHDRAWAL AND D EPOSIT, ONLY IN THE LAST SENTENCE CIT(A) HELD THAT THE ASSESSEE CAN BE GIVEN ADVANTAG E OF BEING TAXED ON THE PEAK CREDIT. 2.2. THUS, THE APPLICATION OF PEAK THEORY HAS BEEN DENIED MERELY BECAUSE THE ASSESSEES MAIN CLAIM ABOUT CLOTH BUSINESS WAS REJE CTED. LD. COUNSEL CONTENDS THAT BOTH THE ISSUES WERE INDEPENDENT OF EACH OTHER AND MERELY BECAUSE ASSESSEES CLOTH BUSINESS HAS NOT BEEN ACCEPTED CANNOT DETRACT FROM THE FACT THAT PEAK THEORY IS APPLICABLE TO ASSESSEES CASE AND CANNOT BE DEN IED IN SUMMARY MANNER. IT IS SUBMITTED THAT THE CIT(A) DID NOT APPLIED HIS PROP ER MIND TO BE CASH FLOW AND SUBMISSIONS OF THE ASSESSEE AND REFUSED THE CLAIM I N A SUMMARY MANNER ONLY BECAUSE THE MAIN CONTENTION OF THE ASSESSEE WAS DIS MISSED. THUS QUA THE PEAK CREDIT THE ORDER OF CIT(A) IS NON-SPEAKING AND DOES NOT CONSIDERED THE ISSUES RAISED BY THE ASSESSEE AT ALL. THEREFORE, IN THE I NTEREST OF JUSTICE, THE ISSUE MAY BE SET ASIDE RESTORED BACK TO THE FILE OF THE CIT(A) T O EXAMINE THE ISSUE OF PEAK CREDIT TO DECIDE THE SAME AFRESH. 3. LD. DR ON THE OTHER HAND CONTENDS THAT THE CIT(A ) HAS CONSIDERED THE ISSUE OF PEAK CREDIT AND HELD THAT THE ASSESSEE IS NOT EL IGIBLE TO THE ADVANTAGE OF PEAK CREDIT BENEFIT. THERE IS NO INFIRMITY IN THE ORDE R OF THE CIT(A). RELIANCE IS ITA NOS. 3995 & 399 6/DEL/13 5 PLACED OF ALLAHABAD HIGH COURT JUDGMENT IN THE CASE OF 276 ITR 38 BHAIYA LAL SHAAM BIHARI VS. CIT FOR THE PROPOSITION THAT WHEN THE FACTUAL FOUNDATION OF THE PEAK CREDIT HAS NOT BEEN LED BY THE ASSESSEE IT WIL L NOT BE ENTITLE THE ASSESSEE THE ADVANTAGE OF PEAK CREDIT. 4. LD. COUNSEL IN REPLY CONTENDS THAT IT IS PRECISE LY THE CASE OF THE ASSESSEE THAT IT HAD SUBMITTED THE FACTUAL FOUNDATION FOR ELIGIB ILITY OF CLAIM FOR BENEFIT OF PEAK CREDIT IN AS MUCH AS THE CASH FLOW AND THE PROPER E XPLANATION WAS FURNISHED WHICH HAS NOT BEEN CONSIDERED AT ALL BY THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD, IN OUR CONSIDERED VIEW IT HAS NOT BEEN DISP UTED THAT IN THE BANK ACCOUNT THERE ARE FREQUENT WITHDRAWALS AND RE-DEPOSITS OF C ASH AND IN THIS BACKGROUND WHEN THE ASSESSEE HAS SUBMITTED FACTUAL FOUNDATION FOR CLAIMING IN THE ELIGIBILITY OF ADVANTAGE OF PEAK CREDIT. IN THESE CIRCUMSTANCE S, LD. CIT(A) HAS TO EXAMINE THE CLAIM IN PROPER MANNER AND DECIDE THE ALLOWABILITY THEREOF GIVING COGENT REASONS. FROM THE ORDER IT EMERGES THAT NONE OF THE CONTENTI ONS OF THE ASSESSEE HAS BEEN CONSIDERED AND THE CLAIM HAS BEEN SUMMARILY REJECTE D MAINLY ON THE GROUND THAT THE CLAIM OF CLOTH BUSINESS OF THE ASSESSEE WAS REJ ECTED. THUS IN OUR CONSIDERED VIEW, THE ASSESSEES CLAIM FOR PEAK CREDIT HAS NOT BEEN CONSIDERED BY THE CIT(A) IN PROPER MANNER WHICH NEEDS TO BE RECONSIDERED AS THE ASSESSESES SUBMISSIONS REMAIN UNREBUTTED OR CONTROVERTED. IN THE INTEREST OF JUSTICE WE SET ASIDE THE ISSUE BACK TO THE FILE OF CIT(A) TO DECIDE THE SAME AFRES H AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD. 5.1. SINCE WE HAVE SET ASIDE THE QUANTUM ON PEAK CR EDIT, THE PENALTY APPEAL IS CONSEQUENTLY SET ASIDE TO CIT(A) TO BE DECIDED AFTE R THE QUANTUM APPEAL. ITA NOS. 3995 & 399 6/DEL/13 6 6. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED FO R STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 05, 02 -2014. SD/- SD/- (J. S. REDDY) (R. P. TOLANI) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED: 05 /02/2014 *R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI