ITO 22(1)-1, NAVI MUMBAI V. ARVIND G SHAH, MUMBAI

ITA 4322/MUM/2011

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2570 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 27-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DURG DU TT
• Keywords: Unexplained investment; Peak credit
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAMLAL NEGI, JUDICIAL MEMBER ITA NO. 3422/MUM/2011((A.Y : 2007-08) SHRI ARVIND G. SHAH, 7, KAILASH DHARA, 60, FEET ROAD, GHATKOPAR(E), MUMBAI 400075 PAN:AAHPS 5117M ... APPELLANT VS. THE INCOME TAX OFFICER -22(1)1, 4 TH FLOOR, TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI .... RESPONDENT ITA NO. 4322/MUM/2011(A.Y. 2007-08) THE INCOME TAX OFFICER -22(1)1, 4 TH FLOOR, TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI .... APPELLANT VS. SHRI ARVIND G. SHAH, 7, KAILASH DHARA, 60, FEET ROAD, GHATKOPAR(E), MUMBAI 400075 PAN:AAHPS 5117M .... RESPONDENT ITA NO. 3423/MUM/2011((A.Y : 2007-08) LATE SHRI NEMCHAND DAHYALAL SHAH, THROUGH L/H, ARVINDKUMAR SHAH, 7, KAILASH DHARA, 60, FEET ROAD, GHATKOPAR(E), MUMBAI 400075 PAN:AAHPS 5108G .... APPELLANT 2 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS VS. THE INCOME TAX OFFICER -22(1)4, MUMBAI. .... RESPONDENT ITA NO. 4300/MUM/2011((A.Y : 2007-08) THE INCOME TAX OFFICER -22(1)4, MUMBAI. ..... APPELLANT VS. SHRI NEMCHAND SHAH, (LEGAL HEIR) ARVIND G. SHAH, 7,KAILASH DHARA, 60FT. ROAD, GHATKOPAR (W), MUMBAI. PAN:AAHPS5108G ......RESPONDENT ITA NO. 3424/MUM/2011((A.Y : 2007-08) CHAMPAKLAL DAHYALAL SHAH, FLAT NO.7, KAILASH DHARA CHS, 60 FT. ROAD, GHATKOPAR (E), MUMBAI PAN: AAHPS 5116L ...... APPELLANT VS. THE INCOME TAX OFFICER -22(1)4, MUMBAI. .... RESPONDENT ITA NO. 4299/MUM/2011((A.Y : 2007-08) THE INCOME TAX OFFICER -22(1)4, MUMBAI. ..... APPELLANT VS. CHAMPAKLAL DAHYALAL SHAH, FLAT NO.7, KAILASH DHARA CHS, 60 FT. ROAD, GHATKOPAR (E), MUMBAI PAN: AAHPS 5116L ...... RESPONDENT 3 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS ITA NO. 4316/MUM/2011((A.Y : 2007-08) THE INCOME TAX OFFICER -22(1)3, MUMBAI. ..... APPELLANT VS. KAJAL A. SHAH, KAILASH DHARA CHS, PLOT NO.353/23, FLAT NO.7, R.B.MEHTA MEHTA MARG, GHATKOPAR EAST, MUMBAI 400 075 PAN:AAZPS 3092H ..... RESPONDENT C.O.116/MUM/2012 ARISING OUT OF ITA NO. 4316/MUM/2011((A.Y : 2007-0 8) KAJAL A. SHAH, KAILASH DHARA CHS, PLOT NO.353/23, FLAT NO.7, R.B.MEHTA MEHTA MARG, GHATKOPAR EAST, MUMBAI 400 075 PAN:AAZPS 3092H .....CROSS OBJECTOR VS. THE INCOME TAX OFFICER -22(1)3, MUMBAI. ..... APPELLANT IN APPEAL ITA NO. 3949/MUM/2011((A.Y : 2007-08) THE INCOME TAX OFFICER -22(1)4, MUMBAI. ..... APPELLANT VS. USHABEN BHOGILAL GANDHI, 7, KAILASH DHARA CHS, 60 FEET ROAD, GHATKOPAR EAST, MUMBAI 400075 PAN: AIZPG 8291L ..... RESPONDENT 4 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS C.O.74/MUM/2012 ARISING OUT OF ITA NO. 3949/MUM/2011(A.Y : 2007-08 ) USHABEN BHOGILAL GANDHI, THROUGH POA HOLDER MINAKSHI A. SHAH, 7, KAILASH DHARA CHS, 60 FEET ROAD, GHATKOPAR EAST, MUMBAI 400075 PAN: AIZPG 8291L ..... CROSS OBJECTOR VS. THE INCOME TAX OFFICER -22(1)4, MUMBAI. ..... APPELLANT IN APPEAL ITA NO. 4317/MUM/2011(A.Y : 2007-08) THE INCOME TAX OFFICER -22(1)3, MUMBAI. ..... APPELLA NT VS. MINAXI A. SHAH, KAILASH DHARA CHS, PLOT NO.353/23, FLAT NO.7,R.B. MEHTA MARG, GHATKOPAR EAST, MUMBAI 400 075 ...... RESPONDENT PAN: ABDPS 4871P C.O.117/MUM/2012 ARISING OUT OF ITA NO. 4317/MUM/2011(A.Y : 2007-08 ) MINAKSHI A. SHAH, KAILASH DHARA CHS, PLOT NO.353/23, FLAT NO.7,R.B. MEHTA MARG, GHATKOPAR EAST, MUMBAI 400 075 ...... CROSS OBJECTOR PAN: ABDPS 4871P VS. THE INCOME TAX OFFICER -22(1)3, MUMBAI. ..... APPELLANT IN APPEAL 5 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS ITA NO. 3421/MUM/2011(A.Y : 2007-08) (LATE) SMT. ARUNA M. DOSHI, L/H SHRI MAHESH RATILAL DOSHI, 7, KAILASH DHARA, 60 FT. ROAD, GHATKOPAR (EAST), MUMBAI 400075 PAN: AADPD 9165E ...... APPELLANT VS. THE INCOME TAX OFFICER -22(1)(1), MUMBAI. ..... RESPONDENT ITA NO. 4321/MUM/2011(A.Y : 2007-08) THE INCOME TAX OFFICER -22(1)(1), MUMBAI. ...... APPELLANT VS. (LATE) SMT. ARUNA M. DOSHI, L/H SHRI MAHESH RATILAL DOSHI, 7, KAILASH DHARA, 60 FT. ROAD, GHATKOPAR (EAST), MUMBAI 400075 PAN: AADPD 9165E .... RESPONDENT ITA NO. 3427/MUM/2011(A.Y : 2007-08) MAHESH RATILAL DOSHI, 7, KAILASH DHARA, 60 FT. ROAD, GHATKOPAR (E), MUMBAI 400075 PAN: AADPD 91790 .... .. APPELLANT VS. THE ITO -22(1)(3), MUMBAI. .... RESPONDENT 6 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS ITA NO. 4319/MUM/2011(A.Y : 2007-08) THE ITO -22(1)(3), MUMBAI. ... APPELLANT VS. MAHESH RATILAL DOSHI, 7, KAILASH DHARA, 60 FT. ROAD, GHATKOPAR (E), MUMBAI 400075 PAN: AADPD 91790 ... RESPONDENT ITA NO. 3425/MUM/2011(A.Y : 2007-08) MANSUKLAL UMEDCHAND SHAH, 7, KAILASH DHARA, 60 FT. ROAD, GHATKOPAR (E), MUMBAI 40075 PAN AAEPS 8483R .... APPELLANT VS. THE ITO -22(1)(3), MUMBAI. ... RESPONDENT ITA NO. 4320/MUM/2011(A.Y : 2007-08) THE ITO -22(1)(3), MUMBAI. ... APPELLANT VS MANSUKLAL UMEDCHAND SHAH, 7, KAILASH DHARA, 60 FT. ROAD, GHATKOPAR (E), MUMBAI 40075 PAN AAEPS 8483R .... RESPONDENT 7 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS ITA NO. 3426/MUM/2011(A.Y : 2007-08) KISHORE MANSUKLAL SHAH, 7, KAILASH DHARA, 60 FT. ROAD, GHATKOPAR (E), MUMBAI 40075 PAN: AAJPS 4539D .... APPELLANT VS. THE ITO -22(1)(3), MUMBAI. ... RESPONDENT ITA NO. 4318/MUM/2011(A.Y : 2007-08) THE ITO -22(1)(3), MUMBAI. ... APPELLANT VS KISHORE MANSUKLAL SHAH, 7, KAILASH DHARA, 60 FT. ROAD, GHATKOPAR (E), MUMBAI 40075 PAN :AAJPS4539D .... RESPONDENT ITA NO. 3428/MUM/2011(A.Y : 2007-08) MEENA C. DHRUVA 7, KAILASH DHARA, 60 FT. ROAD, GHATKOPAR (E), MUMBAI 40075 PAN: ADXPD4036D .... APPELLANT VS. THE ITO -22(1)(3), MUMBAI. ... RESPONDENT ITA NO. 4315/MUM/2011(A.Y : 2007-08) THE ITO -22(1)(3), MUMBAI. ... APPELLANT 8 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS VS MEENA C. DHRUVA, 7, KAILASH DHARA, 60 FT. ROAD, GHATKOPAR (E), MUMBAI 40075 PAN: ADXPD4036D .... RESPONDENT ASSESSEE BY : MS. RITIKA AGARWAL REVENUE BY : SHRI DURG DU TT DATE OF HEARING : 05/10/2015 DATE OF PRONOUNCEMENT : ...... ./10/2015 ORDER PER G.S. PANNU,AM: THE CAPTIONED ARE A TOTAL OF 22 APPEALS RELATING TO 11 DIFFERENT ASSESSEES BELONGING TO ONE FAMILY GROUP PERTAINING TO A SINGLE ASSESSMENT YEAR OF 2007-08. 2. SINCE THE APPEALS INVOLVE A COMMON ISSUE, WHICH HAS PERTINENTLY ARISEN FROM AIR INFORMATION RECEIVED BY THE DEPARTM ENT WITH REGARD TO THE BANK ACCOUNTS MAINTAINED BY THE FAMILY MEMBERS, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. BEFORE WE PROCEED TO DELIBERATE ON THE SPECIFIC ISSUES RAISED, BRIEF BACKGROUND IS SUMMARIZED AS FOLLOWS. THE MAI N PERSON IN THE CAPTIONED FAMILY GROUP IS ONE LATE SHRI ARVIND SH AH, WHO WAS FOUND TO BE INVOLVED IN THE ACTIVITY OF SHORT-TERM FINANCIA L ACCOMMODATION BUSINESS, WHEREBY INCOME BY WAY OF ACCOMMODATION 9 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS COMMISSION/INTEREST WAS EARNED. THE MODUS-OPERANDI FOR CARRYING OUT SUCH ACTIVITY WAS CANVASSED TO BE THROUGH OPERATIO N OF 46 BANK ACCOUNTS, WHICH WERE CLAIMED TO BE HELD IN THE NAME OF THE SAID LATE SHRI ARVIND SHAH AND OTHER FAMILY MEMBERS. OUT OF SUCH 46 BANK ACCOUNTS, 32 BANK ACCOUNTS WERE HELD BY LATE SHRI ARVIND SHAH IN HIS NAME EITHER INDIVIDUALLY OR AS JOINT HOLDER WITH OTHER FAMILY MEMBERS. THE BALANCE OF THE 14 BANK ACCOUNTS, THOUGH NOT IN THE NAME OF LATE SHRI ARVIND SHAH, BUT WERE HELD BY OTHER FAMILY MEM BERS EITHER SINGLY OR JOINTLY. BE THAT AS IT MAY, THE CONTROVERSY SUR ROUNDING THE DISTINCTION BETWEEN THE AFORESAID TWO SETS OF BANK ACCOUNTS SHALL BE ADDRESSED BY US IN DETAIL LATER, BUT THE PERTINENT POINT IS THAT THE LATE SHRI ARVIND SHAH AND OTHER CAPTIONED FAMILY MEMBER S OF THE GROUP HAVE CONSISTENTLY CANVASSED BEFORE THE LOWER AUTHOR ITIES THAT ALL SUCH BANK ACCOUNTS WERE OPERATED AND MANAGED BY LATE SH RIARVIND SHAH. THE INCOME ON ACCOUNT OF ENTRIES OF DEPOSITS AND W ITHDRAWALS APPEARING IN SUCH BANK ACCOUNTS IN THE PREVIOUS YEA R RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION IS THE SUBJECT MATTER OF DISPUTE BEFORE US. 4. INITIALLY, IN AN ASSESSMENT FINALIZED BY THE AO UNDER SECTION 143(3) DATED 14/12/2009, IN THE CASE OF LATE SHRI A RVIND SHAH, AN ADDITION OF RS.4,42,28,631/- WAS MADE WHICH WAS DEP OSITS FOUND TO HAVE BEEN MADE IN THE BANK ACCOUNTS OF EIGHT FAMILY MEMBERS ONLY, BASED ON THE AIR INFORMATION RECEIVED. SIMULTANEOU SLY, INDIVIDUAL ADDITIONS WERE ALSO MADE ON SUBSTANTIVE BASIS IN TH E HANDS OF THE OTHER FAMILY MEMBERS. AT THIS POINT, IT WOULD ALSO BE AP PROPRIATE TO NOTICE THAT THERE ARE A TOTAL OF 15 FAMILY MEMBERS INCLUDI NG LATE SHRI ARVIND 10 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS SHAH, IN WHOSE NAME SUCH BANK ACCOUNTS HAVE BEEN OP ENED. OUT OF SUCH 15 FAMILY MEMBERS,4 MEMBERS OF THE FAMILY NAM ELY, JIGNESH SHAH, LATE GAMBHIRDAS SHAH, HANSABEN SHAH AND CHAMP AKLAL DHRUVA WERE NOT ASSESSED BY THE ASSESSING OFFICER AND T HUS, THOSE INDIVIDUALS ARE NOT IN APPEAL. AT THIS STAGE IT WOULD ALSO BE PERTINENT TO OBSERVE THAT ALL THE 15 FAMILY MEMBERS I.E. THE CAPTIONED 11 AND THE AFORESATED 4 FAMILY MEMBERS, HAVE FILED THEIR INCOME TAX RETUR NS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. ASSESSMEN T YEAR 2007-08, WHEREIN THE ONLY INCOME DECLARED WAS BY WAY OF INTE REST EARNING. 5. COMING BACK TO ASSESSMENT OF TOTAL INCOME OF RS .4,44,66,965/- MADE IN THE HANDS OF LATE SHRI ARVIND SHAH, WHICH WAS INCLUSIVE OF RS.4,42,28,631/- U/S. 68 OF THE ACT ON ACCOUNT OF T HE AIR INFORMATION. ON THIS ASPECT, BEFORE THE CIT(A) THE ASSESSEE I.E . LATE SHRI ARVIND SHAH MADE VARIED SUBMISSIONS. THE PERTINENT ISSUE RAISE D AND WHICH HAS BEEN THE POINT OF AGITATION BEFORE US, RELATED TO T HE INCOME ASSESSED ON ACCOUNT OF THE DEBIT/CREDIT ENTRIES IN THE BANK AC COUNTS. IT WAS CANVASSED BEFORE THE CIT(A) THAT APART FROM THE BAN K ACCOUNTS REVEALED IN THE AIR INFORMATION, THERE WAS A TOTAL OF 46 ODD BANK ACCOUNTS AND IT WAS SUBMITTED THAT AFTER CONSIDERING ALL SUCH BANK ACCOUNTS, A PEAK CREDIT OF RS.37,79,815/- AS ON 25/5/2006 BE CONSIDE RED FOR ADDITION IN THE HANDS OF ASSESSEE, LATE SHRI ARVIND SHAH. IT W AS CANVASSED THAT LATE SHRI ARVIND SHAH WAS ACTUALLY BENEFICIARY OF TRANSA CTIONS IN ALL THE BANK ACCOUNTS EITHER HELD IN HIS NAME OR SINGLY IN THE N AMES OF OTHER FAMILY MEMBERS OR JOINTLY AMONG THEMSELVES OR JOINTLY WIT H LATE SHRI ARVIND SHAH. THE OTHER FAMILY MEMBERS WERE STATED TO BE N OT THE 11 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS BENEFICIARIES AND, THEREFORE, IT WAS CANVASSED THAT NO ADDITIONS SHOULD BE MADE IN THE HANDS OF OTHER FAMILY MEMBERS. 5.1 THE CIT(A) CONSIDERED THE REVISED CLAIM MADE BY THE ASSESSEE BASED ON THE TOTAL OF 46 BANK ACCOUNTS AS AGAINST T HE ACTION OF THE AO IN CONFINING HIMSELF TO THE BANKS ACCOUNTS NOTIFIED IN THE AIR INFORMATION. THE CIT(A) ALSO CALLED FOR THE COMMEN TS OF THE AO ON THE REVISED PLEA RAISED BY THE ASSESSEE. 5.2 AFTER CONSIDERING THE RIVAL STANDS, THE CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE IN PRINCIPLE THAT WHAT WAS LIABLE TO B E ADDED AS INCOME WAS THE PEAK CREDIT AS UNEXPLAINED INCOME UNDER S ECTION 69 OF THE ACT, AND NOT THE ENTIRE AMOUNT OF DEPOSITS APPEARIN G IN THE BANK ACCOUNTS. HOWEVER, THE CIT(A) DID NOT CONSIDER THE PEAK CREDIT IN RELATION TO THE ALL 46 BANK ACCOUNTS AS ASSESSABLE IN THE HANDS OF THE ASSESSEE LATE SHRI ARVIND SHAH. INSTEAD, THE CIT (A) CONFINED SUCH ADDITION IN THE HANDS OF LATE SHRI ARVIND SHAH ONL Y IN RELATION TO BANK ACCOUNTS, WHERE THE NAME OF LATE SHRI ARVIND SHAH W AS APPEARING EITHER IN SINGLE CAPACITY OR JOINTLY WITH OTHER FA MILY MEMBERS. IN OTHERWORDS, IN RELATION TO SUCH BANK ACCOUNTS WHER E THE NAME OF SHRI ARVIND SHAH WAS NOT APPEARING EITHER SINGLY OR IN J OINT, THE PEAK CREDIT WAS CONSIDERED IN THE HANDS OF THE RESPECTIVE INDIV IDUAL FAMILY MEMBERS. ACCORDINGLY, THE CIT(A) EXCLUDED SUCH BAN K ACCOUNTS, WHICH TOTALLED TO 14 BANK ACCOUNTS. IN THE BALANCE 32 BANK ACCOUNTS WHICH WAS FOUND TO BE IN THE NAME OF SHRI ARVIND SHAH EIT HER SINGLY OR JOINTLY WITH OTHER FAMILY MEMBERS, THE PEAK OF THE CREDIT A PPEARING WAS DETERMINED AT RS.29,85,359/-, WHICH WAS ASSESSED I N THE HANDS OF SHRI ARVIND G. SHAH UNDER SECTION 69A OF THE ACT, AND BALANCE OF THE 12 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS ADDITION WITH REGARD TO THE BANK ACCOUNTS STANDI NG IN THE NAME OF OTHER FAMILY MEMBERS WAS DELETED. SIMULTANEOUSLY, ADDITIONS WERE SUSTAINED BY THE CIT(A) IN THE HANDS OF RESPECTIVE FAMILY MEMBERS. 5.3 IN THIS BACKGROUND, THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS PRIMARILY CONTENDED THAT THE 46 BANK ACCOUNTS IN QU ESTION WERE INTER- MINGLED AND THE SAME ARE LIABLE TO BE CONSIDERED IN THE HANDS OF LATE SHRI ARVIND SHAH ONLY. THE LD. REPRESENTATIVE FOR THE ASSESSEE VEHEMENTLY POINTED OUT THAT THE CIT(A) HAS ACCEPTED THE PLEA OF THE ASSESSEE THAT ALL THE BANK ACCOUNTS WERE INTER-MING LED. THE MODUS- OPERANDI CARRIED OUT BY THE ASSESSEE FOR THE FINANC ING BUSINESS WAS EXPLAINED BY THE LD. REPRESENTATIVE IN DETAIL IN THE COURSE OF THE HEARING. IT WAS POINTED OUT THAT, FOR INSTANCE, TH E FUNDS OBTAINED FROM THE THIRD PARTY WOULD BE DEPOSITED IN THE ACCOUNT O F MR. A FAMILY MEMBER, WHO WOULD EITHER WITHDRAW THE CASH AND DEPO SIT IN THE ACCOUNT OF ONE MR. B OR HE WOULD PAY THROUGH CHE QUE TO MR. B. THEN MR. B WOULD ISSUE A LOAN TO A THIRD PARTY AN D WHEN THIS THIRD PARTY WOULD RE-PAY THE LOAN, THE AMOUNT WOULD HAVE BEEN DEPOSITED IN ANY OTHER ACCOUNT, SAY IN THE ACCOUNT OF MR. C, W HO WOULD AGAIN TRANSFER IT TO ANOTHER FAMILY MEMBER MR.D AND SIM ILAR ROUND OF TRANSACTIONS WOULD BE REPEATED. THE LD. REPRESENTA TIVE FOR THE ASSESSEE POINTED OUT THAT SUCH MODUS-OPERANDI HAS B EEN NOTED BY THE CIT(A) IN PAGES 10 TO 11 OF THE IMPUGNED ORDER AND IS NOT IN DISPUTE. THEREFORE, IT WAS POINTED OUT THAT THE BALANCE 14 A CCOUNTS ALSO HAVE TO BE CONSIDERED ON THE SAME FOOTING AS THE 32 BANK A CCOUNTS CONSIDERED BY THE CIT(A). THEREFORE, THE ADDITIONS HAVE TO BE CONFINED IN THE HANDS 13 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS OF SHRI ARVIND G. SHAH BASED ON THE PEAK CREDIT WOR KING OF 46 BANK ACCOUNTS WHICH CAME TO RS.37,79,815/- 6. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE HAS OPPOSED THE PLEA OF THE ASSESSEE AND CONTENDED THAT THE CIT(A) ERRED IN ACCEPTING THE PEAK CREDIT THEORY FOR DETERMINING THE INCOME ASSESSABLE IN THE HANDS OF THE ASSESSES FOR THE IN STANT ASSESSMENT YEAR. WITH REGARD TO THE SPECIFIC PLEA OF THE LD. REPRES ENTATIVE FOR THE ASSESSES THAT SUBSTANTIVE ADDITION ON ACCOUNT OF AL L 46 BANK ACCOUNTS BE MADE IN THE HANDS OF LATE SHRI ARVIND SHAH, THE LD. DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT THE CIT(A) HAS FAIR LY INCLUDED THE INCOME ONLY FROM SUCH BANK ACCOUNTS WHERE THE NAME OF SHRI ARVIND SHAH WAS APPEARING EITHER SINGLY OR JOINTLY WITH O THER FAMILY MEMBERS. FOR THE 14 BANK ACCOUNTS, WHERE THE NAMES OF OTHER FAMILY MEMBERS WERE ONLY APPEARING, THE INCOME THEREFROM BE ASSESS ED IN RESPECTIVE HANDS. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. FIRSTLY, IN SO FAR AS THE APPROACH OF THE AO TO ASSESS THE ENTIRE AMOUNT OF DEPOSITS IN THE BANK ACCOUNTS AS INCOME, IS QUITE FLAWED IN A S MUCH AS IT DOES NOT TAKE INTO CONSIDERATION THE REPEATED WITHDRAWALS AN D DEPOSITS, WHICH CLEARLY STAND OUT FROM A PERUSAL OF THE BANK ACCOUN TS. THEREFORE, THE APPROACH OF THE CIT(A) IN THIS CONTEXT OF BRINGING TO TAX UNEXPLAINED INCOME CORRESPONDING TO THE PEAK CREDIT APPEARING I N THE BANK ACCOUNTS IS PRUDENT AND IS PLAUSIBLE, HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE BEFORE US. 14 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS 8. THE OTHER CONTROVERSY BEFORE US IS TO CONSIDER THE BANK ACCOUNTS IN THE HANDS OF LATE SHRI ARVIND SHAH OR NOT. IN THIS CONTEXT, IN OUR VIEW, THE APPROACH OF THE CIT(A) IN PRINCIP LE DESERVES TO BE AFFIRMED. THE CIT(A) HAS PROCEEDED ON THE BASIS THAT IT WAS LATE SHRI ARVIND SHAH, WHO WAS KING-PIN OF THE ROTATION OF MO NEY IN ALL BANK ACCOUNTS MAINTAINED BY THE FAMILY. THE MODUS-OPERA NDI OF THE ACCOMMODATION FINANCING ACTIVITY INDULGED BY SHRI A RVIND SHAH IS NOT DISPUTED FROM EITHER SIDE. THE CIT(A) HOWEVER, CON FINED HIS APPROACH TO THE BANK ACCOUNTS WHICH STOOD IN THE NAME OF SH RI ARVIND G. SHAH EITHER SINGLY OR JOINTLY WITH SOME OTHER FAMILY ME MBERS. THOSE OF THE BANK ACCOUNTS, WHICH WERE STANDING IN THE NAME OF O THER FAMILY MEMBERS WERE EXCLUDED BY THE CIT(A) ON THE GROUND THAT PEAK CREDIT IN SUCH BANK ACCOUNTS BE TAXED IN THE RESPECTIVE HA NDS. IN OUR CONSIDERED OPINION, WHEN THE CIT(A) ACCEPTED THE PLEA THAT IT WAS SHRI ARVIND SHAH, WHO WAS THE PERSON BEHIND THE ROTATION OF MONEY IN THE BANK ACCOUNTS, THEN UNEXPLAINED INCOME FROM SUCH BA NK ACCOUNTS(ALL THE 46 BANK ACCOUNTS INSTEAD OF 32 BANK ACCOUNTS CO NSIDERED BY CIT(A)) IS LIABLE TO BE CONSIDERED IN THE HANDS OF SHRI ARV IND SHAH ALONE. IT WOULD ALSO BE PERTINENT TO OBSERVE THAT EVEN THE IN DIVIDUAL FAMILY MEMBERS CANVASSED THAT ALL BANK ACCOUNTS WERE WIT HIN THE CONTROL AND DOMAIN OF SHRI ARVIND SHAH AND SHOULD BE CONSID ERED FOR TAXING IN THE HANDS OF SHRI ARVIND SHAH ALONE. 8.1 AT THIS STAGE WE MAY ALSO REFER TO AN OBSERVAT ION MADE BY THE CIT(A) IN PARA-7(I) OF HIS ORDER TO THE EFFECT THAT BANK ACCOUNTS ARE UNDISCLOSED. ON THIS ASPECT, THE LD. REPRESENTAT IVE FOR THE ASSESSEE CONTENDED THAT ALL THE 46 BANK ACCOUNTS COULD NOT B E CONSIDERED AS 15 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS UNDISCLOSED BECAUSE THE FAMILY MEMBERS I.E. CAPTIO NED ASSESSEES AND THE OTHER FOUR MEMBERS OF THE FAMILY BEING JIGNA S HAH, LATE GAMBHIRDAS SHAH, HANSABEN SHAH AND CHAMPAKLAL DHRUV HAD DULY OFFERED INCOME FROM SUCH ACCOUNTS IN THE RESPECTIVE RETURNS OF INCOME. NOTABLY, ALL THE ASSESSES HAD FILED THE RETURNS OF INCOME FOR ASSESSMENT YEAR 2007-08, WHEREIN INTEREST INCOME WAS DECLARED. THE QUESTION BEFORE US IS WITH REGARD TO THE INVESTMENT REQUIRED TO BE MADE IN THE ACCOMMODATION FINANCING ACTIVITY BEING CARRIED OUT BY LATE SHRI ARVIND SHAH ON HIS OWN AND THROUGH HIS FAMILY MEMBERS, WHI CH IS EMBEDDED IN THE TRANSACTIONS FOUND IN THE 46 BANK ACCOUNTS I N QUESTION. ONCE THE FACT-SITUATION OF LATE SHRI ARVIND SHAH BEING THE PERSON BEHIND THE ROTATION OF MONEY IN THESE BANK ACCOUNTS IS ACCEPTE D THEN, THE CONSEQUENCES HAVE TO BE GIVEN FULL EFFECT. IN OTHE R WORDS, THE INCOME ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE ACCOMMO DATION BUSINESS, BASED ON THE PEAK CREDIT OF THE RESPECTIVE BANK AC COUNTS, HAS TO BE ASSESSED IN THE HANDS OF LATE SHRI ARVIND SHAH AL ONE. THEREFORE, ON THIS ASPECT, WE HEREBY AFFIRM THE STAND OF THE ASSE SSEE. 8.2 WITH REGARD TO THE QUANTIFICATION OF SUCH INCOM E, LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT P EAK CALCULATION OF 46 BANK ACCOUNTS AMOUNTING TO RS.37,79,815/- WAS FURNI SHED TO THE CIT(A), COPY OF WHICH HAS ALSO BEEN PLACED IN THE PAPER BOO K FROM PAGES 34 TO 47. IT HAS BEEN POINTED OUT THAT THE CIT(A) HAD CA LLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER, WHEREIN SUCH WOR KING OF THE PEAK CREDIT HAS BEEN EXAMINED. ON THIS BASIS THE LD. RE PRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE AO OBJECTED TO THE ADOP TION OF PEAK THEORY, YET IN SO FAR AS THE CALCULATION OF PEAK C REDIT WAS CONCERNED, NO 16 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS ERROR WAS POINTED OUT BY THE AO. THEREFORE, IT WAS CONTENDED THAT THE ADDITION ON ACCOUNT OF PEAK CREDIT BE MADE AT RS.37 ,79,815/- IN THE HANDS OF SHRI ARVIND SHAH AND THE CORRESPONDING ADD ITIONS MADE IN THE HANDS OF THE RESPECTIVE INDIVIDUAL FAMILY MEMBERS B E DELETED. 8.3 IN OUR CONSIDERED OPINION, QUANTIFICATION OF PE AK CREDIT IS A MATTER WHICH REQUIRES FACTUAL APPRECIATION AND THE SAME CAN BE DEALT WITH AT THE LEVEL OF THE ASSESSING OFFICER. SINCE WE HAVE ACCEPTED THE PLEA OF THE ASSESSEE IN PRINCIPLE, WE DEEM IT FIT A ND PROPER TO DIRECT THE ASSESSING OFFICER TO SUSTAIN THE ADDITION IN THE HA NDS OF SHRI ARVIND SHAH BASED ON THE PEAK CREDIT CALCULATION CONSIDERI NG ALL 46 BANK ACCOUNTS. 8.4 AS A CONSEQUENCE OF OUR AFORESAID DECISION, TH E PROTECTIVE ADDITIONS MADE IN THE HANDS OF LATE SHRI NEMCHAND S HAH, CHAMPAKLAL SHAH, KAJAL SHAH, USHABEN B. GANDHI AND MEENAKSHI S HAH ARE DIRECTED TO BE DIRECTED TO BE DELETED. SIMILARLY, SUBSTANTI VE ADDITIONS IN THE CASE OF LATE ARUNA DOSHI, MAHESH DOSHI, MANSUKHLAL SHA, KISHORE SHAH AND MEENA DHRUVA ARE CONCERNED, THE SAME ARE ALSO DIREC TED TO BE DELETED ONCE THE ADDITION IS UPHELD IN THE CASE OF LATE SH RI ARVIND SHAH. 8.5 APART FROM THE AFORESAID, THE ONLY ISSUE WHICH REMAINS IS THE ADDITION OF RS.5,09,287/- AND RS.4,28,479/- MADE BY THE AO IN THE CASE OF SHRI NEMCHAND SHAH AND SHRI CHAMPAKLAL SHAH RES PECTIVELY ON ACCOUNT OF INTEREST INCOME. IN THIS CONTEXT, THE L D. REPRESENTATIVE FOR THE ASSESSEE HAD EXPLAINED THAT INTEREST INCOME HAS BEEN OFFERED BY ALL THE FAMILY MEMBERS ON NET BASIS AFTER REDUCING THE AMOUNT OF INTEREST PAID. IT WAS ALSO POINTED OUT THAT CREDIT FOR THE TDS CERTIFICATES WAS ALSO AVAILED BY ALL THE ASSESSES IN THEIR RESPECTI VE RETURNS OF INCOME. 17 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS THE LD. REPRESENTAIVE POINTED OUT THAT IN ALL THE C ASES EXCEPT IN THE CASE OF LATE SHRI NEMCHAND SHAH AND SHRI CHAMPAK SHAH, INTEREST INCOME WAS ASSESSED BY THE AO IN THE MANNER DECLARE D IN THE RETURN OF INCOME. ONLY IN THE AFORESAID TWO CASES, THE INTE REST WAS ASSESSED ON GROSS BASIS (I.E. WITHOUT REDUCING INTEREST PAID) B ASED ON THE TDS CERTIFICATES ISSUED BY THE PAYERS OF INCOME. LD. R EPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IN VIEW OF THE APPROACH A CCEPTED BY THE REVENUE IN OTHER CASES OF THE GROUP, IN THE CASES O F SHRI NEMCHAND SHAH AND SHRI CHAMPAK SHAH ALSO, THE INTEREST INCOM E HAS ALSO BE ASSESSED ACCORDINGLY. 8.6 BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE APPE ARING FOR THE REVENUE HAS NOT CONTROVERTED THE FACTUAL MATRIX BR OUGHT OUT BY THE LD. REPRESENTATIVE FOR THE ASSESSEE. THEREFORE, WE DE EM IT FIT AND PROPER TO DIRECT ASSESSING OFFICER TO ASSESS THE INTEREST INCOME IN THE CASE OF SHRI NEMCHAND SHAH AND SHRI CHAMPAKLAL SHAH ALSO O N THE SAME BASIS AS ACCEPTED IN THE CASE OF OTHER FAMILY MEMBERS. T HUS, ON THIS ASPECT ALSO, ASSESSEE SUCCEEDS. 8.7 IN THE END, WE THEREFORE, DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE FINAL INCOME OF SHRI ARVIND SHAH AS WELL AS OTHER FAMILY MEMBERS KEEPING IN VIEW OUR AFORESAID DIRECTIONS. NEEDLESS TO MENTION, THE AO SHALL ALLOW THE ASSESSEE AN APPROPR IATE OPPORTUNITY BEFORE QUANTIFYING THE INCOME IN THE HANDS OF EACH OF THE CAPTIONED ASSESSES, IN COMPLIANCE WITH OUR AFORESAID DIRECTIO NS AND AS PER LAW. 18 ITA NO. 3422/MUM/2011((A.Y : 2007-08)& OTHERS 9. IN THE RESULT, WHEREAS THE APPEALS OF THE ASSESS EE ARE ALLOWED, THOSE OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 /10/2015 SD/- SD/- (RAMLAL NEGI) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 30 /10/2015 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. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI VM , SR. PS