Sri Gopal Agarwal, Hyderabad V. ITO, Hyderabad

ITA 408/HYD/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5978 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-01-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 23-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VASUNDHARA SINHA
• Assessee Lawyers: C P RAMASWAMY
• Keywords: Unexplained cash credit; Peak credit; Deemed dividend
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMEBR ITA NO.408/HYD/09 : ASSTT . YEAR 2005-06 SHRI GOPAL AGARWRAL, SECUNDERABAD. ( PAN AAECS 1920 Q ) V/S. INCOME TAX OFFICER, WARD-12(4) HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.P.RAMASWAMY RESPONDENT BY : SMT. VASUNDHARA SINHA O R D E R PER G.C.GUPTA, VICE PRESIDENT: THIS APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005- 06 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME- TAX(APPEALS). 2. GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER- '1. THE ORDER OF THE LEARNED CIT(APPEALS) IS AGAIN ST LAW, WEIGHT OF EVIDENCE AND PROBABILITIES OF THE CASE. 2. THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING RS.1, 52,95,679/- AS UNEXPLAINED CREDIT WHEN THE PEAK CREDIT WAS ONLY RS .12,20,139/- 3. THE LEARNED CIT(APPEALS) ERRED IN NOT FOLLOWING TH E WELL LAID OUT JUDICIAL PRINCIPLES THAT PEAK CREDIT HAS TO BE ARRI VED AT ONLY BY TAKING ALL UNEXPLAINED CREDITS AND DEBITS INTO CONS IDERATION. CONSEQUENTLY, THE LEARNED CIT(APPEALS) ERRED IN NO T CONFIRMING ONLY A SUM OF RS.12,20,139/- THE ACTUAL PEAK CREDIT . ITA NO.408/HYD/09 SHRI GOPAL AGARWRAL, SECUNDERABAD. 2 4. THE LEARNED CIT(APPEALS) FAILED TO APPRECIATE THAT ALL THE ENTRIES IN THE BANK ACCOUNT WERE UNEXPLAINED AND CONSEQUENT LY THE PEAK CREDIT AMOUNT HAS TO BE CONFIRMED, AS OFFERED BY TH E APPELLANT. 5. THE LEARNED CIT(APPEALS) FAILED TO APPRECIATE THAT WHEN UNEXPLAINED DEPOSITS AND WITHDRAWALS ARE APPEARING ALTERNATIVELY IN THE SAME ACCOUNT THEN ALL SUCH ENTRIES HAVE TO B E CONSIDERED TOGETHER FOR MAKING THE ADDITION ON THE BASIS OF PE AK ACCREDIT.' 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS INITIALLY NOT DECLARED ONE BANK ACCOUNT AND TH E ADDITION WAS MADE ON ACCOUNT OF CREDIT ENTRIES IN THAT ACCOUNT OF T HE ASSESSEE. HE SUBMITTED THAT THE ASSESSING OFFICER HAS ADDED AN AMOUN T OF RS.1,98,26,978 AS UNEXPLAINED CASH CREDIT, WHICH REPRESEN TS TOTAL OF ALL THE CREDIT ENTRIES IN THAT BANK ACCOUNT. THE CIT( A) HAS REDUCED THE SAID ADDITION TO RS.1,52,95,679. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS WELL ESTABLISHED JUDICIAL PRINCI PLE THAT ONLY PEAK CREDIT HAS TO BE ARRIVED AT AND ADDED, BY TAKING ALL THE UNEXPLAINED CREDIT AND DEBIT ENTRIES INTO CONSIDERATION AND THE PEA K AMOUNT IN THIS CASE COMES TO RS.12,20,139. HE THEREFORE, SUBMITTED THAT THE CIT(A) SHOULD HAVE SUSTAINED THE ADDITION ON ACCOUNT OF UNEXPLA INED CREDIT ENTRIES ONLY TO THAT EXTENT. THE LEARNED COUNSEL FURT HER SUBMITTED THAT APART FROM THE PEAK CREDIT, AN AMOUNT OF RS.7,20 ,000 IS ASSESSABLE AS INCOME ON ACCOUNT OF DEEMED DIVIDEND. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND, OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. SHE SUBMITTED THAT ONUS IS ON THE ASSESSEE TO ESTABLI SH THE NEXUS BETWEEN THE CREDIT AND DEBIT ENTRIES IN THE BANK ACCOUNT OF THE ASSESSEE. SHE SUBMITTED THAT IN THE PRESENT CASE, SINCE THE ASSESSEE HAS FAILED TO ESTABLISH ANY NEXUS BETWEEN THE ENTRIES AN D HAS FAILED TO EXPLAIN THAT THE AMOUNT WITHDRAWN FROM THE BANK ACCOU NT WAS GIVEN ITA NO.408/HYD/09 SHRI GOPAL AGARWRAL, SECUNDERABAD. 3 TO WHOM AND FROM WHERE THE SAME WAS RECEIVED BACK BY TH E ASSESSEE. SHE SUBMITTED THAT THE RELIEFS CALLED FOR ON ACCO UNT OF CHEQUES DISHONOURED AND LIKEWISE HAVE ALREADY BEEN GRAN TED BY THE CIT(A). SHE RELIED ON TWO DECISIONS OF THE HON'BLE ALL AHABAD HIGH COURT IN THE CASES OF CITV/S. VIJAY AGRICULTURAL INDUST RIES (294 ITR 610) AND BHAIYALAL SHYAM BEHARI V/S. CIT (276 ITR 38 ), IN SUPPORT OF HER ARGUMENTS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND HAVE A LSO GONE THROUGH THE COPY OF THE BANK ACCOUNT OF THE ASSESSEE NOT INITIALLY DISCLOSED TO THE DEPARTMENT. WE FIND THAT THERE ARE A NUMBER OF DEBIT AND CREDIT ENTRIES REPRESENTING DEPOSITS AND WITHDRAWALS MADE IN THE UNDISCLOSED BANK ACCOUNT. IT IS WELL ESTABLISHED PRINCIP LE THAT ONLY THE PEAK CREDIT IS LIABLE TO BE ADDED AS INCOME IN THE HA NDS OF THE ASSESSEE BY CONSIDERING ALL THE UNEXPLAINED DEBIT AND CRED IT ENTRIES IN THE UNDISCLOSED ACCOUNT OF THE ASSESSEE. THE MAXIMUM AMOUN T ON A SINGLE DAY IN THE BANK ACCOUNT OF THE ASSESSEE IS RS.16,23,7 74 AND AFTER DEDUCTING CHEQUES DISHONOURED AND DEBITED LATER ON, THE ASSESSEE HAS CONCEDED THAT THE PEAK AMOUNT WORKS OUT TO RS.12,20,139. THE REVENUE COULD NOT CONTROVERT THE WOR KING OF THE PEAK AMOUNT BY THE ASSESSEE AT RS.12,20,139. WE FIND FO RCE IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE BANK ACCOUNT OF THE ASSESSEE BEING UNDISCLOSED AND THE NATURE OF ENTRIES THEREIN BEING UNEXPLAINED, ASSESSEE COULD NOT BE ASKED T O ESTABLISH THE NEXUS BETWEEN THE DEBIT AND CREDIT ENTRIES THEREIN . IN THESE FACTS OF THE CASE, WE HOLD THAT THE CIT(A) SHOULD HAVE RESTR ICTED THE ADDITION TO THE EXTENT OF PEAK AMOUNT IN THE BANK ACCOUNT OF THE ASSESSEE, WHICH COMES TO RS.12,20,139 IN THIS CASE. ACCORDINGL Y, THE ITA NO.408/HYD/09 SHRI GOPAL AGARWRAL, SECUNDERABAD. 4 ADDITION IS SUSTAINED ONLY TO THE EXTENT OF RS.12,20,13 9, IN ADDITION TO THE ADDITION OF RS.7,20,000 ON ACCOUNT OF DEEMED DIVID END. ACCORDINGLY, THE BALANCE ADDITION IS DELETED AND THE G ROUNDS OF APPEAL OF THE ASSESSEE ARE PARTLY ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE COURT ON 5.2.2010 SD/- SD/- (AKBER BASHA) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 5.2.2010 COPY FORWARDED TO: 1. SHRI GOPAL AGARWRAL, (SECUNDERABAD), C/O. DR. C. P.RAMASWAMY, ADVOCATE, FLAT NO.303, GITANJALI APARTMENTS, PLOT NO. 108, SRINAGAR COLONY, HYDERABAD 500 072. 2. INCOME TAX OFFICER, WARD 12(4), HYDERABAD. 3. COMMISSIONER OF INCOME-TAX (APPEALS) II, HYDERABAD. 4. COMMISSIONER OF INCOME-TAX-1, HYDERABAD 5 THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.