ITO, Hyderabad V. J.Chancradeep, Hyderabad

ITA 432/HYD/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6266 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 31-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Peak credit
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI N.R.S.GANESAN AND SHRI CHANDRA POO JARI ITA NO.432/HYD/2009 (ASSESSMENT YEAR 2005-06) INCOME-TAX OFFICER, WARD-7(2), HYDERABAD. V/S SHRI J.CHANDRADEEP, HYDERABAD. ( PAN- AFDPC 0887 K ) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. NIVEDITA BISWAS RESPONDENT BY : NONE O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 20 05- 06 IS DIRECTED AGAINST THE ORDER OF THE CIT(A) III, HYD ERABAD DATED 20.1.2009. 2. EFFECTIVE GROUNDS OF THE REVENUE IN THIS APPEAL R EAD AS FOLLOWS- '1. THE CIT(A) HAS ERRED IN BOTH FACTS AND LAW IN H OLDING ON THE BASIS OF ASSESSEE'S VERSION, THAT SALES ARE RS.31.0 4 LAKHS WHEN THE TOTAL SALES DISCLOSED IN THE RETURN ARE ONLY RS .15.90,310. 2. THE CIT(A) HAS ERRED IN FACTS AND IN LAW IN DIRECTING THE A.O. TO CALCULATE THE PEAK CREDIT WHEN MOST OF THE WITHDRA WALS WERE EVIDENTLY PAYMENTS MADE TO 3RD PARTIES AND THAT TO O BY CHEQUES? 3. THE CIT(A) ERRED IN FACTS AND LAW IN IGNORING THAT THE DEPOSITS IN THE BANK ACCOUNT IN QUESTION REPRESENT UNDISCLOSED MONEY OF THE ASSESSEE ASSESSABLE U/S. 69 OF THE IT ACT 1961.' I TA NO.432/HYD/09 SHRI J CHANDRADEEP, HYDER ABAD . 2 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSING OFFI CER DURING THE COURSE OF ASSESSMENT UNDER S.143(3) OF THE ACT , TO VERIFY THE CLAIM OF THE ASSESSEE THAT THE DEPOSITS OF RS.22,99,08 2 APPEARING IN BANK ACCOUNT BEARING NO. SB 64297 WITH THE A.P. M AHESH CO- OPERATIVE URBAN BANK LTD. REPRESENTS SALE PROCEEDS OF TH E BUSINESS, ASKED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT, PURCHASE A ND SALE BILLS, BILLS AND VOUCHERS FOR EXPENSES CLAIMED BASED O N WHICH PROFIT & LOSS ACCOUNT, BALANCE SHEET WERE PREPARED. SIN CE THE ASSESSEE FAILED TO COMPLY WITH THE DIRECTIONS OF THE ASSESSI NG OFFICER IN THAT BEHALF, THE ASSESSEE OBSERVING THAT THE ASSESSEE HAS NO EXPLANATION TO OFFER, TREATED THE CREDITS/DEPOSITS OF RS.22,90,082 APPEARING IN ASSESSEE'S BANK ACCOUNT AS UNEXPLAINED CREDITS AND ADDED THE SAME TO THE ASSESSEE'S INCOME. FURTHER ESTIMATIN G THE INCOME OF THE ASSESSEE FROM BUSINESS AT 10% OF THE SALES OF RS.15,90,310, AND ACCORDINGLY DETERMINED THE SAME AT RS. 1,59,010. HE ACCORDINGLY COMPLETED THE ASSESSMENT ON THE ESTIMATED INCO ME OF RS.1,59,010 AND UNEXPLAINED BANK DESPOTS OF RS.22,90,0 82, AND THUS ON A TOTAL INCOME OF RS.24,58,092, VIDE ORDER OF ASSESSME NT DATED 31.12.2007. ON APPEAL, THE CIT(A), WHILE UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN ESTIMATING OF ASSESSEE'S INCOME FROM BUSINE SS AT 10% OF THE SALES, DEALING WITH THE OTHER ADDITION MA DE ON ACCOUNT OF DEPOSITS MADE WITH THE BANK, WHILE HOLDING THAT THE A SSESSING OFFICER SHOULD COMPUTE THE PEAK CREDIT IN THE SAID BANK ACCOUNT A ND RESTRICT THE ADDITION TO THAT EXTENT, DIRECTED THAT THE FIGU RE OF DEPOSITS IN THE BANK ACCOUNT ADOPTED BY THE ASSESSING OFFICER AT RS.22,99, 082 AND THE FIGURE STATED BY THE ASSESSEE TO BE RS.31,04,182 SHOUL D BE RECONCILED. I TA NO.432/HYD/09 SHRI J CHANDRADEEP, HYDER ABAD . 3 4. AGGRIEVED BY THE ORDER OF THE CIT(A) IN RELATIO N TO THE ADDITION MADE UNDER S.69 OF THE ACT WITH REGARD TO CR EDITS IN THE BANK ACCOUNT, REVENUE PREFERRED THE PRESENT APPEAL BEFORE U S. 5. AT THE TIME OF HEARING ON 26.10.2010, NONE APP EARED ON BEHALF OF THE ASSESSEE, THOUGH HEARING ON THE APPEAL WA S ADJOURNED TO 26.10.2010, ON THE PENULTIMATE DATE, VIZ. 2.8.2010 AT THE REQUEST OF THE ASSESSEE ONLY. EVEN ON ONE OTHER EARLIER OCCASION EAR LIER, HEARING WAS ADJOURNED AT THE REQUEST OF THE ASSESSEE. THIS TIME, THERE IS NOT EVEN AN ADJOURNMENT PETITION RECEIVED FROM THE ASSESSEE. HENCE, WE ARE NOT INCLINED TO GRANT ANY ADJOURNMENT AND PROCEED TO DISPOSE OFF THE APPEAL ON MERITS EX-PARTE QUA THE ASSESSEE. 6. WE HAVE HERD THE LEARNED DEPARTMENTAL REPRESENT ATIVE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE Q UESTION BEFORE US IS WHETHER DEPOSITS MADE BY THE ASSESSEE IN HIS BANK ACCOUNT REPRESENT HIS UNDISCLOSED INCOME UNDER S.69 OF THE ACT. WHILE THE ASSESSING OFFICER HAS TREATED THE ENTIRE AMOUNT OF DEPOSIT OF RS.22,99,082 AS UNEXPLAINED INCOME OF THE ASSESSEE, THE CI T(A) HAS DIRECTED THE ASSESSING OFFICER TO ADOPT THE PEAK CREDIT IN THE SAID BANK ACCOUNT, AND RESTRICT THE ADDITION TO SUCH PEAK CREDIT. THE CONCEPT OF PEAK CREDIT HAS NO APPLICATION TO AN ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT UNDER S.69 OF THE ACT, SINCE ASSESSEE IS OBLIGE D TO EXPLAIN THE SOURCE FOR ANY DEPOSIT OR INVESTMENT MADE BY HIM. WE FIND THAT THE CIT(A) HAS NOT EXAMINED THE MATTER FROM THAT ANG LE AND THE ASSESSING OFFICER HAS NOT PASSED ANY SPEAKING ORDER WHILE M AKING THE IMPUGNED ADDITION. IT IS EVIDENT FROM THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT THE ASSESSEE WAS NOT GIVE N REASONABLE I TA NO.432/HYD/09 SHRI J CHANDRADEEP, HYDER ABAD . 4 OPPORTUNITY TO PUT FORTH ITS CASE IN RELATION TO VARIO US DEPOSITS FOUND TO HAVE BEEN MADE IN HIS SB ACCOUNT WITH A.P. MAHESH CO-OP ERATIVE URBAN BANK LTD. IN THIS VIEW OF THE MATTER AND IN T HE INTERESTS OF JUSTICE, WE ARE OF THE CONSIDERED VIEW THAT THE MATTER REQUIRES FRESH CONSIDERATION BY THE ASSESSING OFFICER, AFTER GIVING REASON ABLE OPPORTUNITY TO THE ASSESSEE TO PUT FORTH HIS CASE WITH REG ARD TO THE DEPOSITS FOUND CREDITED IN HIS BANK ACCOUNT. THE ASSESSING OFFICER, WHILE REDECIDING THIS ISSUE, SHALL ALSO DETERMINE THE COR RECT FIGURE OF DEPOSITS FOUND CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE , WHICH AS NOTED BY THE CIT(A) IN THE IMPUGNED ORDER, APPEAR T O BE RS.31.0- 4,182 AS STATED BY THE ASSESSEE BEFORE HIM, AS AGAINST RS.2 2,99,082 AS ADOPTED BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMEN T ORDER. WE DIRECT ACCORDINGLY. 7. IN THE RESULT, REVENUE'S APPEAL IS ALLOWED FOR STAT ISTICAL PURPOSES ORDER PRONOUNCED IN THE COURT ON 26.10.2010 SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 26TH OCTOBER, 2010 COPY FORWARDED TO: 1. SHRI J.CHANDRADEEP, 14-11-72/74, MANGALHAT, DHOO LPET, HYDERABAD 2. INCOME-TAX OFFICER, WARD 7(2), HYDERABAD 3. CIT(A) III HYDERABAD 4. COMMISSIONER OF INCOME-TAX VI, HYDERABAD. 5. THE D.R., ITAT, HYDERABAD. B.V.S.