MUKUND K ADAK, MUMBAI V. I.T.O.23(1)(3), MUMBAI

ITA 4557/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3667 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVAJI B GHODE
• Assessee Lawyers: B HADRES DOSHI
• Keywords: Business income; Peak credit; Tax effect
• Section: 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO. 45 5 7 /MUM/ 201 2 ( / ASSESSMENT YEAR : 2009 - 10 ) MUKUND K ADAK, A - 1802, GUNDECHA, ALTURA, NEAR BIRLA CO. LBS MARG, BHANDUP (W), MUMBAI - 400078 / VS. INCOME TAX OFFICER, 2 3 (1)( 3 ), PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400051. ./ I.T.A. NO. 4766 /MUM /201 2 ( / ASSESSMENT YEAR : 2009 - 10 ) INCOME TAX OFFICER, 2 3 (1)( 3 ), PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400051. / VS. MUKUND K ADAK, A - 1802, GUNDECHA, ALTURA, NEAR BIRLA CO. LBS MARG, BHANDUP (W), MUMB AI - 400078 . ./ PAN : AAA PA7075R / ASSESSEE BY S HRI B HADRES DOSHI / REVENUE BY SHRI SHIVAJI B GHODE / DATE OF HEARING : 3 .8 . 2016 / DATE OF PRONOUNCEMENT : 12. 8. 2016 / O R D E R PER RAJESH KUMAR, A. M: THE SE ARE THE CROSS - APPEALS FILED BY THE RESPECTIVE PARTIES AGAINST THE ORDER PASSED BY THE LD.CIT(A) - 33 , MUMBAI DATED 29.5. 2012 FOR THE 2 4 557 - 4 766 / MUM/201 2 ASSESSMENT YEAR 2009 - 10 . SINCE THESE APPEALS PERTAIN TO THE SAME ASSESSEE, THESE APPEALS ARE BEING DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. ITA NO. 4766/MUM/2012. 3. WE FIND FROM THE ORDERS OF AUTHORITIES BELOW THAT THE TAX EFFECT INVOLVED IN THE THIS CASE I S BELOW THE MONETARY LIMIT (RS. 10,00,000/ - ) PRESCRIBED BY THE CENTRAL BOARD OF DIRECTOR TAXES(CBDT), VIDE ITS CIRCULAR NO.21/2015(F.NO.L42/2007 - ITJ (PT.) DATED 10TH DECEMBER, 2015 . 4 . SHRI BHADRES DOSHI APPEARED ON BEHALF OF THE ASSESSEE AND BROUGHT TO THE NOTICE OF THE BENCH THE FACT OF TAX EFFECT BEING LESS THAN 10.00 LACS TO WHICH LD DR ALSO AGREED. CONSIDERING THESE FACTS, WE DISMISS THE APPEAL OF THE REVENUE HOLDING IT AS NOT MAINTAINABLE U/S. 268A OF THE ACT. 5 . NOW WE SHALL TAKE UP THE APPEAL IN ITA 4557/MUM/2012 6 . ONLY ISSUE RAISED IN THE SOLE GROUND OF APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.9,87,200/ - BY LD.CIT(A) ON ACCOUNT OF UNEXPLAINED INCOME ADDED BY THE AO ON ACCOUNT OF CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSES SEE. 7 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.7.2009 DECLARING TAXABLE INCOME OF RS. 2,64,720/ - . THEREAFTER, SCRUTINY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE AND STATUTORY NOTICES UNDER SECTION 143(2) AND 14 2(1) WERE ISSUED AND SERVED UPON THE 3 4 557 - 4 766 / MUM/201 2 ASSESSEE. THE ASSESSEE WAS DEALING IN AUTOMOBILE PARTS ON RETAIL BASIS UNDER THE NAME AND STYLE OF M/S STAR AUTO PARTS. THE AO D URING THE COURSE OF ASSESSMENT PROCEEDINGS FOUND THAT THE ASSESSEE HAS DEPOSITED HUGE CA SH INTO VARIOUS BANKS ACCOUNTS AND ACCORDING LY ADDED AN AMOUNT OF RS.41,16,800/ - . THE ASSESSEE FILED HIS RETURN OF INCOME ON PR ESUMPTIVE BASIS UNDER THE PROVISIONS OF SECTION 44AF OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) BY SHOWING TOTAL SALES OF RS.14,69,346/ - AND RETURNING THE PROFIT AT 20.53% WHICH WAS MORE THAN THE PERCENTAGE SPECIFIED UNDER THE PROVISIONS OF SECTION 44AF OF THE ACT . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) . DURIN G THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE S UBMI TT ED THAT THE AO HA S WRONGLY TAKEN THE FIGURE OF CASH DEPOSIT S AS RS.41,16,800/ - WHEREAS AS A MATTER OF FACT THE CASH ACTUALLY DEPOSITED WAS RS.33,72,600/ - . THE ASSESSEE ALSO SUBMITTED THAT FREQUE NT CASH WITHDRAWALS AND DEPOSITS W ERE OUT OF CASH WITHDRAWALS FROM THE VARIOUS BANKS WHICH WAS SHOWN IN ORDER TO OBTAIN LOAN FACI LITIES FROM THE BAN KS. THE COPIES OF BANKS STATEMENTS WERE ALSO FILED TO CORROBORATE THE SUBMISSIONS OF THE LD.AR WHICH HAVE B EEN PROVIDED BY THE RESPECTIVE BANKS. THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITION OF RS.9,87,200/ - OUT OF TOTAL ADDITION OF 4 4 557 - 4 766 / MUM/201 2 RS.43,81,530/ - AND DELETED THE BALANCE OF RS.33,94,330/ - BY OBSERVING AND HOLDING AS UNDE R : 3.7 I HAVE GONE THROUGH THE SAME AND I FIND THAT APPELLANT'S SUBMISSION TO THE EXTENT THAT RS.56,550 / - IS THE HIGHEST POSITIVE BALANCE APPEARING ON 19.06.2008, ON PAGE NO. 64 IN THE SAID CHART IS CORRECT, AT THE SAME TIME IT IS NOTED THAT INFACT THER E IS A NEGATIVE PEAK OF RS. 9,87,200 / - APPEARI NG 07.01.2009 ON PAGE NO. 68 IN THAT VERY CHART ( SEE ANNEXURE B). THE APPELLANT HAS STATED THAT THE PEAK CREDIT OF RS.56,550 / - IS COMING OUT OF THE OPENING BALANCE AND HENCE SAME SHOULD NOT BE ADDED, IS NOT T ENABLE ANY MORE FOR TWO REASONS; FIRSTLY THE PEAK WORKING DONE BY HIM IS WHILE NOT TAKING INTO ACCOUNT THE OPENING BALANCE OF RS. 1, 76,774 / - AS ON 01.04 .20 08 AND THEN THE ACTUAL PEAK AMOUNT IS NEGATIVE PEAK OF RS.9,87,200 / - AS ON 07.01.2009. NOW THE QUESTIO N IS WHETHER ADDITION OF RS.56,550 / - THE POSITIVE PEAK OR THE AMOUNT OF RS.9,87,200 / - SHOWING THE NEGATIVE PEAK HAS TO BE TAKEN IN THE HANDS OF THE APPELLANT AS HIS UNEXPLAINED INCOME U / S 69 OF THE ACT. SINCE PEAK SIMPLY MEANS PEAK, IT IS CLEAR THAT PEAK H AS TO BE TAKEN AT THE HIGHEST VALUE WHETHER IT IS POSITIVE OR NEGATIVE. IT IS FOR THE SIMPLE REASON THAT THE POSITIVE CASH PEAK SHOWS THE SURPLUS AMOUNT AVAILABLE IN THE HANDS OF APPELLANT AND THUS NEED NO INTERPRETATION, AND HENCE HAS TO BE ADDED SO, AT T HE SAME TIME NEGATIVE PEAK IS ONLY IMAGINARY AND NOT POSSIBLE BECAUSE THERE CANNOT BE A NEGATIVE CASH BALANCE BY ANY STRETCH OF IMAGINATION. IT IS WELL ACCEPTED THAT THE MINIMUM CASH AT ANY GIVEN POINT OF TIME CAN BE ZERO; THUS MEANING THEREBY THAT IF CAS H PEAK IS COMING TO A NEGATIVE FIGURE IT HAS TO BE BROUGHT TO ZERO BY MAKING ADDITION FOR THE SAME AMOUNT. IN THIS CASE ADDITION FOR THE AMOUNT OF RS.9,87,200 / - HAS TO BE MADE TO MAKE THE NEGATIVE BALANCE OF RS.9,87,200 / - WHICH IS APPEARING ON 07.01.2009 TO MAKE IT ZERO AND HENCE I AM OF THE CONSIDERED VIEW THAT AN AMOUNT OF RS.9,87,20 0/ - HAS TO BE ADDED AS APPELLANT'S UNEXPLAINED INCOME ON ACCOUNT OF THESE UNACCOUNTED CASH DEPOSITS AND WITHDRAWALS MADE BY HIM FOR A.Y.2009 - L0. ACCORDINGLY ADDITION FOR THE AM OUNT OF RS.9,87,200 / - IS CONFIRMED AGAINST THE ADDITION MADE BY THE A.O. AT RS.43, 81,530/ - . THE GROUND NO. 1 & 2 ARE PARTLY ALLOWED. THE GROUND NO. 3 DOES NOT NEED ANY ADJUDICATION AND HENCE NOT DEALT WITH. 5 4 557 - 4 766 / MUM/201 2 8 . THE LD. AR VEHEMENTLY SUBMITTED BEFORE US TH AT THE ORDER PA S SED BY LD. CIT(A) WAS NOT CORRECT AS HE HAS SUSTAINED THE ADDITION PARTICULARLY ON THE BASIS OF NEGATIVE HIGHEST BALANCE IN THE VARIOUS BANK STATEMENT S /PASS BOOKS OF THE ASSESSEE . THE LD. AR DREW OUR ATTENTION TO PAGES 64 TO 70 OF THE ASS ESSEES PAPER BOOK WHICH IS A STATEMENT OF PEAK CREDIT. THE LD. AR SPECIFICALLY DREW OUT ATTENTION TO PAGE 64 OF THE PAPER BOOK WHICH HAS HIGHEST PEAK CREDIT OF RS.57,550 / - AND ALSO PAGE NO.68 WHICH HAS HIGHEST PEAK DEBIT OF RS.9,33,200/ - . THE LD. AR SUB MITTED THAT THE ADDITION CONFIRMED BY THE LD.CIT(A) ON THE PRESUMPTION THAT THE DEBIT BALANCE OF R S .9 , 87 , 200/ - COULD ONLY BE MADE UP BY DEPOSIT ING CASH OF EQUAL AMOUNT AND WHICH WAS THE SOLE BASIS OF SUSTENANCE OF ADDITION WHEREAS IF AT ALL THE ADDITI ON WAS TO BE MADE THAT IS TO BE BASED ON THE SCIENTIFIC AND REASONED BASIS WHICH IS ACCUMULATED PEAK CREDIT IN ALL THE BANKS . THE LD. AR FINALLY SUBMITTED THAT SINCE AGGREGATE OF PEAK CREDIT IN ALL BANKS WAS RS.55,550 / - ON 19.06.2008 AND IN NO WAY THE ADDITION COULD BE MADE MORE THAN THE SAID AMOUNT. THE LD. AR FINALLY PRAYED THAT THE ADDITION BE REDUCED TO RS.57550/ - BEING THE MAXIMUM PEAK CREDIT IN THE ACCUMULATIVE STATEMENT S PREPARED ON THE BASIS OF ALL BANKS OF THE ASSESSEE AND THE REMAINING ADDI TION BE DELETED. ON THE CONTRARY, THE LD.DR RELIED HEAVILY ON THE ORDER OF LD.CIT(A). 6 4 557 - 4 766 / MUM/201 2 9 . WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE PARTIES, PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. WE FIND FROM THE STAT EMENT OF PEAK CREDIT THAT THE LD.CIT(A) SUSTAINED THE ADDITION TO THE EXTENT OF HIGHEST PEAK DE BIT WHICH WAS ON 7.1.2009. WE FIND THAT AT PAGE 64 THAT PEAK CREDIT WAS RS.57,550/ - ON 19.6.2008, WHEREAS THE HIGHEST PEAK DEBIT WAS AT RS.9,87,200/ - AS ON 7.1. 2009. WE FIND MERIT IN THE SUBMISSIONS OF THE LD. AR THAT T HE AD DITION CANNOT BE MADE ON T HE BASIS OF HIGHE ST PEAK DEBIT IN THE BANKS OF T HE ASSESSEE AND WHICH , IN OUR OPINION , H A S TO BE B A SED ON REASONED AND PROPER BASIS OR FORMULA WHICH IN THE PRESENT C ASE COULD ONLY BE HIGHE ST PEAK CRE D IT IN THE BANKS OF THE ASSESSEE IN WHICH T HE A S SE S SEE FREQUENTLY DEPOSITED AND WITHDR EW THE C ASH AND THAT TOO WAS FOR OBTAINING LOAN FACILITIES FROM THE BANKS. IN VI E W O F THESE FACTS , WE ARE OF THE OPINION , THAT THE ORDE R OF LD. CIT(A) CANNOT BE SUSTAINED AS THE ADDITION WAS MADE ON THE BASIS OF HIGHEST PEAK DEBIT SHOWN IN THE BANK STATEMENT S /PASSBOOK S OF THE ASSES SEE AND ACCORDINGLY WE SET ASIDE THE O R DER OF THE LD. CIT(A) AN D DIRECT THE AO TO DELETE THE ADDITION OF R S. 9,29,650/ - AND ADDITION OF RS. 57,550/0 - IS SUSTAINED BEING HIGHEST PEAK CREDIT IN THE BANKS OF THE A S SES S EE. 7 4 557 - 4 766 / MUM/201 2 10 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 12 . 0 8 . 2016. S D SD ( SHAILENDRA KUMAR YADAV ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 12 . 8 .2016 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE A PPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI