Shri Vijay Nanubhai Deshani, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1(3), RAJKOT-GUJARAT

ITA 521/RJT/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6682 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 04-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN SR DR
• Assessee Lawyers: MJ RANPURA
• Keywords: Peak credit; Corroborative evidences

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.521/RJT/2014 ( / ASSESSMENT YEAR : 2009-10) VIJAY NANUBAHI DESHANI AA6, AALAP HERITAGE KALAWAD ROAD NR.SATYA SAI HOSPITAL RAJKOT 360 005 / VS. THE ITO WARD-1(3) RAJKOT ./ ./ PAN/GIR NO.AEXPD 8648 A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M.J. RANPURA, AR ! / RESPONDENT BY : SHRI LALIT P. JAIN, SR.DR ' #$% ! & / DATE OF HEARING 21/02/2017 '( ! & / DATE OF PRONOUNCEMENT 14/03/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, RAJKOT [CIT(A) IN SHORT] DATED 24/06/2014 FOR THE ASSESSMENT YEAR (AY) 2009-10. 2. THE GROUND OF APPEAL RAISED BY THE ASSESSEE REA DS AS UNDER:- ITA NO.521 /RJT /2014 VIJAY NANUBHAI DESHANI VS. ITO ASST.YEAR 2009-10 - 2 - 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTAN CES OF THE CASE, THE LEARNED CIT(APPEALS)-I, RAJKOT HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF AO IN ADDI NG RS.8,26,634/- AS THE INCOME OF THE ASSESSEE BY WAY OF PEAK OF CASH DEPOSITED IN BANK ACCOUNT. 3. BRIEFLY STATED, THE ASSESSEE FILED RETURN OF INC OME DECLARING TOTAL INCOME OF RS.1,93,765/- FOR THE AY 2009-10. THEREA FTER, THE CASE WAS SUBJECTED TO SCRUTINY ASSESSMENT UNDER S.143(2) OF THE ACT. IT WAS OBSERVED BY THE ASSESSING OFFICER (AO) THAT THE ASS ESSEE HAS MADE CASH DEPOSITS OF RS.15,48,800/- IN THE BANK ACCOUNT WITH PEOPLES COOPERATIVE BANK LTD., RAJKOT WHICH WAS NOT REFLECTED IN HIS RE GULAR BOOKS OF ACCOUNTS. THE ASSESSEE IN ITS REPLY BEFORE THE AO SUBMITTED THAT HE IS CARRYING ON PROFESSION AS A MEDICAL DOCTOR IN GENER AL PRACTICE AND IS NOT MAINTAINING BOOKS OF ACCOUNTS FOR THE PROFESSIONAL INCOME OR ANY PERSONAL BOOKS OF ACCOUNTS IN THE REGULAR COURSE. HOWEVER, THE BOOKS HAVE BEEN PREPARED FOR THE LIMITED PURPOSE OF SHOWI NG THE MOVEMENT OF ASSESSEES PERSONAL AND FAMILY FUNDS. IT WAS SUBMI TTED THAT DURING THE YEAR UNDER CONSIDERATION, THE GROSS PROFESSIONAL RE CEIPT STANDS AT RS.3,42,220/- AND ASSESSEE HAS MAINTAINED TWO SAVIN GS ACCOUNTS INCLUDING BANK ACCOUNT IN WHICH THE CASH IN QUESTIO N WAS DEPOSITED. IT WAS SUBMITTED THAT THE AFORESAID AMOUNT DOES NOT RE PRESENT FRESH FUNDS BY THEMSELVES BUT ARE AGGREGATE OF CREDITS IN THE A CCOUNT AS A RESULT OF FREQUENT WITHDRAWALS AND DEPOSITS. IT WAS SUBMITTE D THAT CASH DEPOSITED DURING THE YEAR INCLUDE AGGREGATE AMOUNT OF RS.6,84 ,725/- SOURCED OUT OF ITA NO.521 /RJT /2014 VIJAY NANUBHAI DESHANI VS. ITO ASST.YEAR 2009-10 - 3 - EITHER ACCUMULATED CAPITAL OR OUT OF WIFES ACCUMUL ATED SAVINGS OR WIFES CURRENT YEARS INCOME OR SOME LOANS FROM RELATIVES AS TABULATED IN THE ASSESSMENT ORDER. IT WAS THEREFORE SUBMITTED THAT THE AMOUNT OF CASH DEPOSITS IS OUT OF KNOWN RESOURCES. IT WAS CONTEND ED IN THE ALTERNATIVE THAT ONLY PEAK CREDIT SHOULD BE ASCERTAINED AND THE FAMILY FUNDS OF RS.6.84 LACS SHOULD BE CONSIDERED AND EXCLUDED. TH E AO HOWEVER DECLINED TO ACCEPT THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE. THE AO OBSERVED THAT THE ASSESSEE FAILED TO OFFER EXPLA NATION AS TO WHY THE CASH DEPOSITS HAVE NOT BEEN RECORDED IN THE BOOKS O F ACCOUNTS. SECONDLY, THE ASSESSEE HAS FAILED TO SUBSTANTIATE T HE CASH FLOW. THE REQUISITE EVIDENCES IN SUPPORT OF CASH GENERATED BY VARIOUS PARTIES CLAIMED TO HAVE BEEN SOURCED TO THE ASSESSEE HAS NO T BEEN ADDUCED. THEREFORE, THE EXPLANATION OFFERED BY THE ASSESSEE ON PART OF MONEY SOURCED OUT OF FAMILY FUNDS IN CASH WAS NOT FOUND T ENABLE. HOWEVER, THE AO ACCEPTED THE PLEA OF THE ASSESSEE TOWARDS PEAK C REDIT THEORY. HE ACCORDINGLY MADE ADDITION OF RS.8,26,634/- TO THE T OTAL INCOME OF THE ASSESSEE AS UNEXPLAINED DEPOSITS AS PER PEAK CREDIT THEORY AFTER GRANTING CONCESSIONS TOWARDS POSSIBILITY OF RE-DEPOSITS OUT OF EARLIER WITHDRAWALS. THUS, OUT OF TOTAL CASH DEPOSITS OF RS.15,48,800/-, AN AMOUNT OF RS.8,26,634/- WAS FOUND UNEXPLAINED BY THE AO. THE CIT(A) REVISITED THE ENTIRE FACTUAL ASPECTS AND FOUND THAT THE AO HA S VERY JUDICIOUSLY CONSIDERED THE FACTUAL MATRIX AND CALCULATED THE PE AK VALUE OF CASH DEPOSITS ONLY AS AGAINST THE TOTAL CASH DEPOSITS OF LARGE AMOUNT. THE ITA NO.521 /RJT /2014 VIJAY NANUBHAI DESHANI VS. ITO ASST.YEAR 2009-10 - 4 - CIT(A) ALSO DID NOT FIND JUSTIFICATION IN HOLDING L ARGE CASH IN HAND IN THE BEGINNING OF THE YEAR AS CLAIMED AND NOT REFLECTED IN THE CAPITAL ACCOUNT OF THE ASSESSEE OR ITS RELATIVES. CONSEQUENTLY, AF TER DISCUSSION ON MERITS, HE AFFIRMED THE ACTION OF THE AO AND DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIB UNAL. 5. THE LD.AR FOR THE ASSESSEE MR.M.J. RANPURA SUBMI TTED THAT THE ASSESSEE IS A GENERAL MEDICAL PRACTITIONER SINCE 19 84. DURING THE YEAR, THE ASSESSEE HAS MADE CASH DEPOSITS OUT OF PAST SAV INGS OF RS.2.40 LACS ACCUMULATED OVER 25 YEARS IN PRACTICE. THE LD.AR A LSO OBSERVED THAT THE CIT(A) MERELY DECLINED TO ACCEPT THE PLEA OF THE AS SESSEE ON THE GROUND THAT OPENING CASH IN HAND FOR THE YEAR WAS NOT SUPP ORTED COUPLED WITH SOME VARIATIONS IN BALANCE-SHEET. HOWEVER, HE OUGH T TO HAVE APPRECIATED THE CIRCUMSTANCES OF THE CASE AND THE FACT THAT THE ASSESSEE IS A REGULAR TAXPAYER AND FILING ITS RETURN OF INCOME REGULARLY. SIMILARLY, THE ASSESSEES WIFE WHO HAS FINANCED RS.1,20,400/- OUT OF ACCUMULATED SAVINGS HAS ALSO FILED RETURN OF INCOME IN THE PAST AND CASH WERE GIVEN OUT OF PAST SAVINGS. SIMILAR PLEA WAS TAKEN TOWARD S CASH DEPOSITS OF RS.1,33,800/- OUT OF WIFES CURRENT YEARS INCOME A ND R.1,90,000/- TOWARDS LOAN FROM RELATIVES. THE LD.AR ACCORDINGLY SUBMITTED THAT THE AO OUGHT TO HAVE GIVEN RELIEF TOWARDS CASH RECEIVED FROM FAMILY ITA NO.521 /RJT /2014 VIJAY NANUBHAI DESHANI VS. ITO ASST.YEAR 2009-10 - 5 - MEMBERS WHILE DETERMINING THE PEAK CREDIT. THE LD. AR NEXT CONTENDED THAT WHILE COMPUTING THE PEAK OF RS.8,26,634/-, THE AO HAS WRONGLY TAKEN CREDITS BY CHEQUES TOTALLING TO RS.1,34,308/- WHICH IS PRIMA-FACIE DEDUCTIBLE FROM THE AMOUNT OF AFORESAID PEAK CREDIT . THE LD.AR THEREAFTER RELIED UPON THE DECISION OF HONBLE GUJA RAT HIGH COURT IN THE CASE OF CIT VS. RANCHHOD JIVABHAI NAKHAVA (21 TAXMA NN.COM 159) FOR THE PROPOSITION THAT IN THE CIRCUMSTANCES WHERE THE ASSESSEE HAS FURNISHED, THE IDENTITY AND CONFIRMATIONS, THE ADDI TIONS TOWARDS SMALL CASH CREDITS ARE NOT WARRANTED. THE LD.AR ALSO REL IED UPON THE DECISION OF THE COORDINATE BENCH OF TRIBUNAL IN THE CASE OF SANJAYARAJ PETROLEUMS AND HOTEL VS. ITO IN ITA NO.209/RJT/2014 WHEREIN I T HAS BEEN HELD THAT ONCE IT IS ESTABLISHED THAT AMOUNT HAS BEEN IN VESTED BY A PARTICULAR PERSON, BE A PARTNER OR INDIVIDUAL, THEN THE RESPON SIBILITY OF THE ASSESSEE- FIRM IS OVER. THE ASSESSEE-FIRM CANNOT ASK THAT PE RSON WHO MAKES INVESTMENT AS TO WHETHER THE MONEY SO INVESTED WAS PROPERLY TAXED OR NOT. THE LD.AR ACCORDINGLY SUBMITTED THAT THE REVE NUE AUTHORITIES HAVE FAILED TO PERCEIVE THE FACTS IN PERSPECTIVE. HE AC CORDINGLY SOUGHT SUITABLE RELIEF. 6. THE LD.DR FOR THE REVENUE MR.LALIT P.JAIN, ON TH E OTHER HAND, RELIED UPON THE ORDER OF THE AO AND THE CIT(A) AND SUBMITTED THAT THE AO HIMSELF HAS VERY JUDICIOUSLY CONSIDERED THE FACT S AND GRANTED ALL POSSIBLE RELIEF IN THE MATTER. THE LD.DR SUBMITTED THAT THE ASSESSEE ITA NO.521 /RJT /2014 VIJAY NANUBHAI DESHANI VS. ITO ASST.YEAR 2009-10 - 6 - HIMSELF HAS SOUGHT RELIEF AS PER THE PEAK CREDIT TH EORY WHICH WAS LIBERALLY GIVEN TO HIM WITHOUT DEMUR. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND THE ORDERS OF THE AUTHORITIES BELOW. WE NOTE THAT AGAINST THE CASH DEPOSITS OF RS.15.48 LACS, THE ASSESSEE HAS SOUGHT TO EXPLAIN A PART OF IT TO THE EXTENT OF RS.6.84 LACS TO BE OUT OF OWN ACCUMULATED CAPITA L AND OUT OF WIFES PAST AND CURRENT SAVINGS AND LOAN FROM RELATIVES ET C. COMBINED TOGETHER. WE SIMULTANEOUSLY NOTE THAT THE EXPLANATION OF THE ASSESSEE IS GENERIC WITHOUT ANY SUBSTANTIVE CORROBORATION OF CASH FLOW GENERATED AND DEPOSITED AFTER CHANGING HANDS. THE OWN ACCUMULATE D CAPITAL IN CASH OF RS.2,40,525/- ON THE GROUND THAT THE ASSESSEE IS IN PRACTICE FOR LONG DOES NOT CUT ICE. THE ASSESSEE BEING A PROFESSIONAL AND AN EDUCATED PERSON IS EXPECTED TO EXPLAIN THE CASH DEPOSITS METICULOUSLY. THE ASSESSEE HAS MISERABLY FAILED IN DOING SO AND IS SEEKING TO TAKE REFUGE OF GENERIC AND BALD POSSIBILITIES. THE WHOLE EXPLANATION IS COMPL ETELY BIZARRE AND IS TAINTED WITH CONJECTURES. ONE CAN SEE THROUGH THE LISTLESS EXPLANATION THAT THE CASH WAS ACCUMULATED OVER YEARS AND WAKED UP TO DEPOSIT THE SAME IN THIS YEAR NOT BY THE ASSESSEE BUT BY WIFE A ND OTHER RELATIVES IN TANDEM VIA THE UNDISCLOSED BANK ACCOUNT OF ASSESSEE . THE WHOLE EXPLANATION IS SORDID AND MARRED WITH OBSCURITY. T HE NEED TO DEPOSIT THE CASH OF OTHER PERSON IN THE BANK ACCOUNT OF ASSESSE E BY PASSING THE BANKING CHANNEL IS NOT KNOWN. COUPLED WITH THIS, WE TAKE NOTE OF THE FACT ITA NO.521 /RJT /2014 VIJAY NANUBHAI DESHANI VS. ITO ASST.YEAR 2009-10 - 7 - THAT THE BANK ACCOUNT SHOWING CASH DEPOSITS WAS UNE ARTHED BY THE REVENUE AND THAT IS HOW THE AFORESAID CASH DEPOSITS CAME TO THE LIGHT. IN THESE CIRCUMSTANCES, WE ARE NOT INCLINED TO BE DRIF TED BY THE CASE MADE OUT BY THE ASSESSEE BASED ON VAGUE POSSIBILITIES. IN THE ABSENCE OF COGENT EVIDENCE, WE ARE NOT WILLING TO DISTURB ADDITIONS M ADE BY THE AO BY ADOPTING PEAK CREDIT THEORY WHICH IS QUITE JUST AND FAIR. WE HAVE ALSO PERUSED THE DECISION OF THE HONBLE GUJARAT HIGH CO URT IN THE CASE OF RANCHHOD JIVABHAI NAKHAVA (SUPRA) WHICH WE FIND IS OF NO ASSISTANCE TO THE ASSESSEE. IN THAT CASE, THE ASSESSEE HAD ESTAB LISHED THAT HE HAS TAKEN MONEY BY WAY OF ACCOUNT PAYEE CHEQUES FROM THE LEND ERS WHICH IS NOT SO IN THE PRESENT CASE. THE ASSESSEE IS TAKING SH ELTER OF A DESIGNED THEORY TO MERELY FILL UP THE EXPLANATION OF CASH DE POSITS BY ROPING IN THEORY OF DEPOSITS OUT OF PAST SAVINGS ETC. AS AN A FTERTHOUGHT WHICH IS QUITE FLUID WITHOUT ANY SUPPORTING EVIDENCE. IT DO ES NOT AUGUR WELL TO COMMON SENSE THAT A PERSON REPORTING MEAGER INCOME OF LESS THAN 2 LAKHS P.A. WOULD RETAIN IDLE CASH IN HAND OF RS.9.56 LAKH S (5 TIME OF ANNUAL EARNING) AT THE BEGINNING OF THE YEAR AS CLAIMED. THE ONUS IS HEAVY ON ASSESSEE. THE ASSESSEE HAS DONE NOTHING TO DISPEL THE UNWELCOME PERCEPTION. THE AO HAS ALREADY GRANTED THE BENEFIT OF PEAK CREDIT THEORY WHICH IN OUR VIEW MEETS ALL THE CONTINGENCIES THAT MAY POSSIBLY EXIST IN THE CASE. LIKEWISE, DECISION OF THE COORDINATE BEN CH IN THE CASE OF SANJAYRAJ PETROLEUMS AND HOTEL (SUPRA) ALSO IS PRIMA-FACIE DISTINGUISHABLE ON FACTS. THE ASSESSEE IS NOT FOUN D TO HAVE SUCCESSFULLY ITA NO.521 /RJT /2014 VIJAY NANUBHAI DESHANI VS. ITO ASST.YEAR 2009-10 - 8 - CORRELATED THE ALLEGED RECEIPT OF CASH FROM THE VAR IOUS PARTIES INVOLVED IN THE INSTANT CASE. HENCE, WE FAIL TO COMPREHEND ME RITS IN THE CONTENTION OF THE ASSESSEE FOR FURTHER EXCLUSION OF PURPORTED SOURCE OF CASH DEPOSITS FROM OWN FAMILY MEMBERS IN ADDITION TO BENEFIT OF P EAK CREDIT. THE PLEA OF THE ASSESSEE IS THUS DISCARDED. 8. WE NOW TURN TO THE ALTERNATIVE PLEA OF THE ASSES SEE THAT WHILE COMPUTING THE PEAK AMOUNT, CERTAIN CHEQUE ENTRIES O F RS.1,34,308/- HAS BEEN WRONGLY INCLUDED. THIS PLEA, IF FOUND TO BE T RUE, DESERVES ACCEPTANCE. THIS ASPECT IS UNTESTED BEFORE THE LOW ER AUTHORITIES. ACCORDINGLY, THE ASSESSEE SHALL BE AT LIBERTY TO EX PLAIN THIS ASPECT TO THE AO AND SEEK SUITABLE RELIEF THEREON ON AO BEING SAT ISFIED ON SUCH CONTENTIONS. TO THIS LIMITED EXTENT, THE RELIEF IS GRANTED TO THE ASSESSEE SUBJECT TO VERIFICATION BY THE AO AS CONSIDERED EXP EDIENT. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE TERMS OF DIRECTION NARRATED ABOVE. ORDER PRONOUNCED IN THE COURT ON 14/03/201 7 AT AHMEDABAD. SD/- SD/- ( RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD ; DATED 14/03/2017 ..#, $.,#../ T.C. NAIR, SR. PS ITA NO.521 /RJT /2014 VIJAY NANUBHAI DESHANI VS. ITO ASST.YEAR 2009-10 - 9 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. - & ' .& / CONCERNED CIT 4. ' .& ( ) / THE CIT(A)-I, RAJKOT 5. 2$34 ,&,# , , /DR,ITAT, RAJKOT 6. 4?@ A% / GUARD FILE. / BY ORDER, 2& ,& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) %&, / ITAT, RAJKOT 1. DATE OF DICTATION .. 2.3.17 (DICTATION-PAD 22- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 2.3.17 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 14.3.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.3.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER