M/s Gelam Kondala Rao., Rajahmundry V. The ITO, Ward-4., Rajahmundry

ITA 487/VIZ/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1672 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 19-09-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGHDR
• Assessee Lawyers: C SUBRAMANYAM
• Keywords: Unexplained investment; Peak credit; Source of fund; Set aside
• Section: 69; 144

Judgement Text

PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.487/VIZAG/2008 ASSESSMENT YEAR: 2005-06 GELAM KONDALA RAO, RAJAHMUNDRY VS. ITO, WARD-4, RAJAHMUNDRY (APPELLANT) (RESPONDENT) PAN NO. AJKPG 2497 C APPELLANT BY: SHRI C. SUBRAMANYAM, CA RESPONDENT BY: SHRI D S SUNDER SINGH,DR ORDER PER SHRI B R BASKARAN, ACCOUNTANT MEMBER : THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16-07-2008 PASSED BY THE LD CIT (A) RAJAHMUNDRY AND IT RELATES TO THE ASSESSMENT YEAR 2005-06. 2. ALL THE GROUNDS RAISED BY THE ASSESSEE ARE RELAT ED TO A SINGLE ISSUE NAMELY WHETHER THE LD CIT (A) IS JUSTIFIED IN CONFI RMING THE ADDITION OF RS.24,03,019/-. 3. THE FACTS ARE STATED IN BRIEF. THE ASSESSING OFF ICER RECEIVED INFORMATION FROM THE CIB WING OF DEPARTMENT, HYDERAB AD TO THE EFFECT THAT THE ASSESSEE WAS MAKING HUGE DEPOSITS IN A BANK A/C MAINTAINED IN HIS NAME WITH THE AXIS BANK, RAJAHMUNDRY. ACCORDINGLY A NOTICE U/S 142 (1) WAS ISSUED TO THE ASSESSEE CALLING FOR RETURN OF IN COME. SINCE THE ASSESSEE DID NOT FILE THE RETURN OF INCOME AND WAS SEEKING T IME EVERY TIME, THE AO GAVE A FINAL OPPORTUNITY TO SHOW CAUSE WHY THE DEPO SITS TO THE TUNE OF PAGE 2 OF 4 RS.24,03,019/- SHOULD NOT BE TREATED AS UNEXPLAINED INVESTMENT IN HIS HANDS. SINCE THERE WAS NO COMPLIANCE FROM THE ASSE SSEE, THE AO COMPLETED THE ASSESSMENT EX PARTE U/S 144 OF THE AC T TREATING THE AGGREGATE DEPOSITS OF RS.24,03,019/- AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. THE ASSESSEE COULD NOT SUCCEED IN APPEAL F ILED BY HIM BEFORE THE LD CIT (A). HENCE THE ASSESSEE HAS PREFERRED THE APPEA L BEFORE US. 4. THE SUBMISSIONS OF THE LD AR WERE THAT THE ASSES SEE IS A CAR DRIVER AND REGULAR EMPLOYEE OF A CONCERN NAMED M/S. NAVA J YOTI TRAVELS. HE WAS ALSO DOING PART TIME WORK WITH ANOTHER CONCERN NAME D M/S GEETA FINANCIERS, A HIRE PURCHASE FINANCE CONCERN. ON BEH ALF OF M/S GEETHA FINANCIERS, THE ASSESSEE COLLECTS LOAN INSTALMENTS FROM THEIR CUSTOMERS AMD DEPOSITS THE SAME IN THE AXIS BANK A/C. SUBSEQUENT LY, THE AMOUNTS WERE WITHDRAWN THROUGH ATM AND HANDED OVER TO M/S GEETA FINANCIERS. ACCORDINGLY LD AR CONTENDED THAT THE DEPOSITS MADE IN THE AXIS BANK A/C SHOULD NOT HAVE BEEN TAXED IN HIS HANDS. ALTERNAT IVELY, LD AR SUBMITTED THAT THE AO SHOULD HAVE BROUGHT TO TAX ONLY THE PEA K CREDIT INSTEAD OF ENTIRE DEPOSIT, AS THERE WERE REPETITION OF DEPOSITS AND W ITHDRAWALS. ON THE OTHER HAND, LD DR STOOD BY THE ORDER OF LD CIT(A). 5. WE HAVE HEARD THE PARTIES AND CAREFULLY PERU SED THE PAPERS FURNISHED BY THE ASSESSEE. THOUGH THE ASSESSEE HAS FILED BANK ACCOUNT COPY, CERTIFICATE FROM NAVA JYOTHI TRAVELS, CONFIRMATION LETTER OBTAINED FROM SOME OF THE BORROWERS, WE DO NOT FIND ANY MATERIAL OR CO NFIRMATION LETTER FROM M/S. GEETA FINANCIERS CONFIRMING THE SUBMISSIONS OF THE ASSESSEE. HENCE IN OUR OPINION, THE SUBMISSION OF THE ASSESSEE THAT HE HAS COLLECTED LOAN INSTALMENTS FROM THE CUSTOMERS OF M/S GEETA FINANCI ERS IS NOT CONCLUSIVELY PROVED. HENCE THE BANK ACCOUNT HAS TO BE INDEPENDEN TLY EXAMINED. ON A CAREFUL PERUSAL OF THE AXIS BANK A/C, WE NOTICE THAT THE ASSESSEE HAS BEEN DEPOSITING THE MONEY AND WITHDRAWING THE SAME WITHI N A DAY OR TWO PAGE 3 OF 4 THROUGH ATM AND THESE TRANSACTIONS HAVE BEEN REPEAT ED THROUGH OUT THE YEAR. THERE IS NO MATERIAL TO SUGGEST THAT THE AMOU NTS SO WITHDRAWN HAVE BEEN SPENT AWAY. HENCE ONE CANNOT ALTOGETHER REJECT ED THE CONTENTIONS THAT SUCH WITHDRAWALS HAVE BEEN USED FOR MAKING SUB SEQUENT DEPOSITS. IT IS WELL ESTABLISHED THAT NO INCOME CAN BE TAXED TWICE. BY AGGREGATING ALL DEPOSITS WITHOUT GIVING CREDIT TO THE WITHDRAWALS T END TO LEAD TO DOUBLE TAXATION. THE LD AR HAS PLACED HIS RELIANCE ON THE DECISION OF THE ITAT RAJKOT BENCH IN ITO VS. MAHESH KUMAR JAYANTILAL VOR A (2004) (3 SOT 96). IN THAT CASE THE ADDITION OF PEAK CREDIT WAS ACCEPTE D AS CORRECT METHOD OF DETERMINING THE INCOME IN THE CASE OF REGULAR DEPOS ITS AND WITHDRAWALS. IN THE INSTANT CASE ALSO, THE ASSESSEE HAS BEEN DEPOSI TING THE MONEY AND ALSO WITHDRAWING THE SAME REGULARLY THROUGHOUT THE YEAR. HENCE, IN THE ABSENCE OF ANY MATERIAL TO POINT TO ANY SPECIFIC SOURCES OF INCOME, THE ADOPTION OF PEAK CREDIT METHOD TO DETERMINE THE INCOME WOULD ME ET THE ENDS OF JUSTICE AND WE ORDER ACCORDINGLY. IN VIEW OF THE FOREGOING , WE SET ASIDE THE ORDER OF LD CIT(A) AND REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DETERMINE THE INCOME OF THE ASSESSEE B Y ADOPTING THE PEAK CREDIT DETERMINED DURING THE IMPUGNED PERIOD. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS TREAT ED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 30.11.2009 SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATED 30 TH NOVEMBER, 2009. PAGE 4 OF 4 COPY TO 1 SHRI GELAM KONDALA RAO, DOOR NO.72-29-7/1, LALCHE RVU, RAJAHMUNDRY 533104 2 THE ITO WARD-4, RAJAHMUNDRY 3 THE CIT RAJAHMUNDRY 4 THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM