CHIRAG AGGARWAL, MUMBAI V. ITO 17(2)(4), MUMBAI

ITA 4193/MUM/2016

AI Insights

This case involves an appeal by Mr. Chirag Aggarwal against the order of the Commissioner of Income-tax (Appeals)-32, Mumbai, for the assessment year 2010-11. The primary contention in the appeal was the treatment of certain cash deposits in the assessee's bank account as unexplained cash credits by the Assessing Officer. The Assessing Officer had added Rs 78,10,000 to the assessee's income, treating it as unexplained cash credit under section 68 of the Income Tax Act. The CIT(A) upheld this addition after considering the remand report from the Assessing Officer and rejecting the assessee's claim of applying the peak credit theory. The Tribunal, after hearing the arguments of the Departmental Representative and in the absence of any representation from the assessee, dismissed the appeal, agreeing with the lower authorities' findings.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 123559 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 27-12-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 16-06-2016
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI ABY T VARKEY (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 4193/MUM/2016 Assessment Year: 2010-11 Mr. Chirag Aggarwal, 20/3, Happy Cottage No. 2, Wadala Shivadi Raod, Mumbai-400031. Vs. ITO-17(2)(4), Piramal Chambers, Lalbaug, Mumbai-400012. PAN No. AIFPA 2786 C Appellant Respondent Assessee by : None Revenue by : Mr. Abi Rama Karthikeyan, DR Date of Hearing : 28/12/2022 Date of pronouncement : 29/12/2022 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 12.04.2016 passed by the Ld. Commissioner of Income-tax (Appeals)-32, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2010-11, raising following grounds: Under the facts and circumstances of the case and in law: 1. The CIT(A) had erred in considering sales receipts and sale of jewellery as cash credits. 2. The Ld. CIT(A) has erred in not adopting peak credit theory. 2. We may like to mention that despite notifying to the Ld. Counsel of the assessee who hearing, neither anyone attended on behalf of the assessee nor any request for adjournment was filed. On perusal of the record, it is found that on past many occasions none att assessee, though was of the assessee also. In view of above facts and circumstances, we were of the opinion that the assessee is not interested in prosecuting this appeal and therefore same was heard ex the assessee and Departmental Representative. 3. We find that in this case, the Assessing Officer made addition in respect of cash deposits in the bank statement and in view of failure on the part of the assessee in Assessing Officer made addition holding the same as unexplained cash credit calling the remand report in the case from the Assessing Officer sustained the addition rejecting the claim of considering the peak credit. The relevant finding of the Ld. CIT(A) is reproduced as under: “7. DECISION: I have carefully considered the matter. The grounds of appeal state that the AO erred in not considering The Ld. CIT(A) has erred in not adopting peak credit theory. We may like to mention that despite notifying to the Ld. Counsel of the assessee who appeared on 20.12.2022 for the date of neither anyone attended on behalf of the assessee nor any request for adjournment was filed. On perusal of the record, it is found that on past many occasions none attended on behalf of the as adjourned on the request of the Ld. Counsel of the assessee also. In view of above facts and circumstances, we of the opinion that the assessee is not interested in prosecuting this appeal and therefore same was heard ex the assessee and after hearing the argument of the Ld. Departmental Representative. We find that in this case, the Assessing Officer made addition in respect of cash deposits in the bank statement and in view of n the part of the assessee in explaining satisfa Assessing Officer made addition of ₹78,10,000/- u/s 68 of the Act holding the same as unexplained cash credit. The Ld. CIT(A) after calling the remand report in the case from the Assessing Officer sustained the addition rejecting the claim of the assessee of considering the peak credit. The relevant finding of the Ld. CIT(A) is reproduced as under: 7. DECISION: I have carefully considered the matter. The grounds of appeal state that the AO erred in not considering Mr. Chirag Aggarwal ITA No. 4193/M/2016 2 The Ld. CIT(A) has erred in not adopting peak credit We may like to mention that despite notifying to the Ld. appeared on 20.12.2022 for the date of neither anyone attended on behalf of the assessee nor any request for adjournment was filed. On perusal of the record, it is ended on behalf of the adjourned on the request of the Ld. Counsel of the assessee also. In view of above facts and circumstances, we of the opinion that the assessee is not interested in prosecuting this appeal and therefore same was heard ex-parte qua after hearing the argument of the Ld. We find that in this case, the Assessing Officer made addition in respect of cash deposits in the bank statement and in view of explaining satisfactorily, the u/s 68 of the Act The Ld. CIT(A) after calling the remand report in the case from the Assessing Officer the assessee of considering the peak credit. The relevant finding of the Ld. CIT(A) is 7. DECISION: I have carefully considered the matter. The grounds of appeal state that the AO erred in not considering the peak credit in the bank a income of the appellant and also in not giving credit to the cash sales made by him. From the submissions of the appellant read with the bank statement in which cash is deposited, a few discrepancies are noticed. The appellant claims to have made cash sales of Rs 38,98,087 and cash purchases from one Chetan Thakkar of Rs 36,76,190. The cash sales are apparently the source of cash deposits while the cash purchases are sourced out of the cash withdrawals. From the bank statement, it deposits are Rs 78,10,000, and the total cash withdrawals are Rs 40,60,000, the break up of which is as under: Date 14/05/2009 Cash 16/05/2009 Cash 08/06/2009 Cash 08/06/2009 Cash (self) 09/06/2009 Cash (self) 10/06/2009 Cash 10/06/2009 Cash 10/06/2009 Cash 24/07/2009 Cash (self) 28/07/2009 Cash 31/07/2009 Cash (self) 01/08/2009 Cash 07/09/2009 Cash (self) 08/09/2009 Cash 03/10/2009 Cash 03/10/2009 Cash 09/10/2009 Cash (self) 21/11/2009 Cash 21/11/2009 Cash 23/12/2009 Cash 30/12/2009 Cash 09/01/2010 Cash 15/01/2010 Cash (Self) 08/02/2010 Cash 09/02/2010 Cash 09/02/2010 Cash 15/02/2010 Cash the peak credit in the bank account as the undisclosed income of the appellant and also in not giving credit to the cash sales made by him. From the submissions of the appellant read with the bank statement in which cash is deposited, a few discrepancies are noticed. The appellant ims to have made cash sales of Rs 38,98,087 and cash purchases from one Chetan Thakkar of Rs 36,76,190. The cash sales are apparently the source of cash deposits while the cash purchases are sourced out of the cash withdrawals. From the bank statement, it is seen that the total cash deposits are Rs 78,10,000, and the total cash withdrawals are Rs 40,60,000, the break up of which is as under: Particulars Deposits Cash 2,50,000.00 Cash 2,00,000.00 Cash (self) - Cash (self) - Cash (self) - Cash 4,50,000.00 Cash 4,50,000.00 Cash 4,50,000.00 Cash (self) - Cash 3,62,000.00 Cash (self) - Cash 4,00,000.00 Cash (self) - Cash 38,000.00 Cash 10,000.00 Cash 50,000.00 Cash (self) - Cash 3,50,000.00 Cash 2,50,000.00 Cash 5,00,000.00 Cash 5,00,000.00 Cash 4,00,000.00 Cash (Self) - Cash 9,50,000.00 Cash 5,00,000.00 Cash 4,75,000.00 Cash 2,75,000.00 Mr. Chirag Aggarwal ITA No. 4193/M/2016 3 ccount as the undisclosed income of the appellant and also in not giving credit to the cash sales made by him. From the submissions of the appellant read with the bank statement in which cash is deposited, a few discrepancies are noticed. The appellant ims to have made cash sales of Rs 38,98,087 and cash purchases from one Chetan Thakkar of Rs 36,76,190. The cash sales are apparently the source of cash deposits while the cash purchases are sourced out of the cash withdrawals. is seen that the total cash deposits are Rs 78,10,000, and the total cash withdrawals are Rs 40,60,000, the break up of which is as under:- Withdrawals - - 4,50,000.00 4,50,000.00 5,00,000.00 - - - 4,50,000.00 - 4,00,000.00 - 4,00,000.00 - - 5,00,000.00 - - - - - 4,00,000.00 - - - - 15/02/2010 Cash 04/03/2010 Cash 06.03.2010 Cash 10/03/2010 Cash (self) 29/03/2010 Cash (self) Total It is seen that each cash deposit is in a round figure as also each cash withdrawal is of a round figure. It is not understood how the alleged cash sales of Rs 38,98,087 being an odd figure is subsumed into the cash deposits. Similarly, each cash purchases are Rs 36,76,190 being an odd figure is apparently subsumed into the cash withdrawals. The appellant is also not able to identify which of the cash deposits and which of the cash withdrawals are towa alleged cash sales and cash purchases. The appellant has also not been able to demonstrate that he is actually doing some business in cash. The same is apparent from the remand report submitted by the A reproduced above. The submission of the alleg only of purchases to the tune of Rs 36,76,190. explanation forthcoming of the total of the cash deposits amounting to Rs 78,10,000. On one hand, the appellant claims that the cash withdrawals have been utilized making cash purchases, and at the same time, the appellant would have me believe that the source of the cash deposits is from the cash withdrawals. Now if this proposition is to be accepted, the total of cash withdrawals is only Rs 40,60,000 out of which Rs 36,76,190 has been utilized for cash purchases. That leaves a balance of Rs 3,83,810 to explain the cash deposits of Rs 78,10,000. The proposition of the Cash 3,00,000.00 Cash 3,00,000.00 Cash 2,00,000.00 Cash (self) - Cash (self) - Total 78,10,000.00 It is seen that each cash deposit is in a round figure as also each cash withdrawal is of a round figure. It is not understood how the alleged cash sales of Rs 38,98,087 being an odd figure is subsumed into the cash deposits. Similarly, each cash withdrawal is a round figure and the cash purchases are Rs 36,76,190 being an odd figure is apparently subsumed into the cash withdrawals. The appellant is also not able to identify which of the cash deposits and which of the cash withdrawals are towa alleged cash sales and cash purchases. The appellant has also not been able to demonstrate that he is actually doing some business in cash. The same is apparent from the remand report submitted by the A reproduced above. The submission of the alleged supplier Chetan Thakkar speaks only of purchases to the tune of Rs 36,76,190. There is no explanation forthcoming of the total of the cash deposits amounting to Rs 78,10,000. On one hand, the appellant claims that the cash withdrawals have been utilized making cash purchases, and at the same time, the appellant would have me believe that the source of the cash deposits is from the cash withdrawals. Now if this proposition is to be accepted, the total of cash withdrawals is only Rs 40,60,000 ich Rs 36,76,190 has been utilized for cash purchases. That leaves a balance of Rs 3,83,810 to explain the cash deposits of Rs 78,10,000. The proposition of the Mr. Chirag Aggarwal ITA No. 4193/M/2016 4 - - - 5,00,000.00 10,000.00 40,60,000.00 It is seen that each cash deposit is in a round figure as also each cash withdrawal is of a round figure. It is not understood how the alleged cash sales of Rs 38,98,087 being an odd figure is subsumed into the cash deposits. cash withdrawal is a round figure and the cash purchases are Rs 36,76,190 being an odd figure is apparently subsumed into the cash withdrawals. The appellant is also not able to identify which of the cash deposits and which of the cash withdrawals are towards the alleged cash sales and cash purchases. The appellant has also not been able to demonstrate that he is actually doing some business in cash. The same is apparent from the remand report submitted by the A reproduced above. The ed supplier Chetan Thakkar speaks There is no explanation forthcoming of the total of the cash deposits amounting to Rs 78,10,000. On one hand, the appellant claims that the cash withdrawals have been utilized for making cash purchases, and at the same time, the appellant would have me believe that the source of the cash deposits is from the cash withdrawals. Now if this proposition is to be accepted, the total of cash withdrawals is only Rs 40,60,000 ich Rs 36,76,190 has been utilized for cash purchases. That leaves a balance of Rs 3,83,810 to explain the cash deposits of Rs 78,10,000. The proposition of the appellant is therefore contradictory and self serving as in any case there is no evidence filed conduct of the business. In the circumstances, I am of the opinion that the appellant is not able to link the alleged business undertaken by him to the bank account in question and therefore he has not been able to explain the whole of the cash deposited in his bank account. I have no hesitation therefore to hold that the cash deposited of Rs 78,10,000 has no bonafide explanation about its source and therefore deserves to be assessed as the undisclosed income. I therefore uphold the acti 3.1 Before us, no evidence in support of claim for adopting peak credit are filed, therefore, in absence of any rebuttal Ld. CIT(A) on the issue the same and accordi CIT(A). The grounds of appeal raised by the assessee are accordingly dismissed. 4. In the result, the appeal filed by the assessee is dismissed. Order pronounced 1963 on 29/12/2022. Sd/- (ABY T VARKEY JUDICIAL MEMBER Mumbai; Dated: 29/12/2022 Rahul Sharma, Sr. P.S. appellant is therefore contradictory and self serving as in any case there is no evidence filed to show the actual conduct of the business. In the circumstances, I am of the opinion that the appellant is not able to link the alleged business undertaken by him to the bank account in question and therefore he has not been able to explain the whole of the cash deposited in his bank account. I have no hesitation therefore to hold that the cash deposited of Rs 78,10,000 has no bonafide explanation about its source and therefore deserves to be assessed as the undisclosed income. I therefore uphold the action of the AO on this count. Before us, no evidence in support of claim for adopting peak therefore, in absence of any rebuttal CIT(A) on the issue-in-dispute, we do not find any infirmity in the same and accordingly we uphold the addition made by the Ld. CIT(A). The grounds of appeal raised by the assessee are accordingly dismissed. In the result, the appeal filed by the assessee is dismissed. Order pronounced under Rule 34(4) of the /2022. Sd/ ABY T VARKEY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Mr. Chirag Aggarwal ITA No. 4193/M/2016 5 appellant is therefore contradictory and self serving as in to show the actual conduct of the business. In the circumstances, I am of the opinion that the appellant is not able to link the alleged business undertaken by him to the bank account in question and therefore he has not been able to explain the whole of the cash deposited in his bank account. I have no hesitation therefore to hold that the cash deposited of Rs 78,10,000 has no bonafide explanation about its source and therefore deserves to be assessed as the undisclosed income. I on of the AO on this count.” Before us, no evidence in support of claim for adopting peak of finding of the e do not find any infirmity in ngly we uphold the addition made by the Ld. CIT(A). The grounds of appeal raised by the assessee are In the result, the appeal filed by the assessee is dismissed. under Rule 34(4) of the ITAT Rules, Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary) ITAT, Mumbai Mr. Chirag Aggarwal ITA No. 4193/M/2016 6 BY ORDER, (Sr. Private Secretary) ITAT, Mumbai