ITO, New Delhi V. Sh. Sunil Kumar Gupta Prop., Delhi

ITA 5296/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4745 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 01-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 16-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA
• Assessee Lawyers: S K JAIN
• Keywords: Peak credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G: NEW DELHI) BEFORE SHRI. G.D.AGRAWAL, VICE PRESIDENT AND SHRI I.C. SUDHIR, JUDICIAL MEMBER ITA NO.5296 /DEL/ 2012 (ASSESSMENT YEAR :2008-09) SANDHAR TECHNOLOGIES LTD. VS. ACIT (LTU) C-101, ANSAL PLAZA SAKET HUDCO PLACE, KHELGAON MARG NEW DELHI NEW DELHI AAACS0512J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. K. JAIN , C.A REVENUE BY : SMT. RENUKA JAIN GUPTA, SR. D.R ORDER PER I. C. SUDHIR, JUDICIAL MEMBER: THE REVENUE HAS QUESTIONED FIRST APPE LLATE ORDER ON THE SOLE GROUND THAT THE LD. CIT(A) WAS NOT CORRECT IN ACCEPTING THE PEA K CREDIT THEORY WITHOUT DISCUSSING WHETHER THE IDENTITY AND CAPACITY OF THE PERSON FROM WHOM SUCH DEPOSITS HAVE BEEN OBTAINED. 2. IN SUPPORT OF THE GROUND THE LD. D.R HAS PLACED RELIANCE ON THE ASSESSMENT ORDER AND HAS ALSO REFERRED CONTENTS OF PARA NO-3.4 OF THE FIRST APPELLATE ORDER. THE LD. AR ON THE OTHER HAND, TRIED TO JUSTIFY THE FIRS T APPELLATE ORDER ON THE ISSUE. ITA NO.5296/DEL/2012 2 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ELECT RONIC GOODS AND IS ALSO A PARTNER IN M/S RAJSHRI ENTERPRISES. ON THE BASIS O F A.I.R INFORMATION, THE A.O OBSERVED THAT THERE WAS A CASH DEPOSIT OF RS.11,068 ,22/- ON SMALLER AMOUNTS ON VARIOUS DATES IN THE ICICI BANK ACCOUNT (ACCOUNT NO . 6292-0105-6034) WHICH WAS USED AND SUBSEQUENBTLY THE ACCOUNT WAS CLOSED. LATER ON, THE ASSESSEE HAD OPENED ANOTHER ACCOUNT WITH ICICI BANK VIDE ACCOUNT NO. 6293-1-507098 AND THERE WAS A CASH DEPOSIT OF RS.8,12,204/- OF SMALLE R AMOUNTS ON VARIOUS DATES. BEFORE THE A.O, THE ASSESSEE DENIED ABOUT THE EXIST ENCE OF THE BANK ACCOUNT NO. 6292-0105-6034 WHICH WAS UTILIZED AND CLOSED AND IN WHICH THERE WAS A CASH DEPOSIT OF RS.11,06,822/-. THE A.O MADE ENQUIRY AN D FOUND THAT THE ASSESSEE WAS HAVING TWO BANK ACCOUNTS WITH ICICI BANK BUT ONE OF THE BANK ACCOUNT WAS CLOSED AND THE TOTAL CASH DEPOSITS OF SMALLER AMOUNTS ON VARIOUS DATES IN THESE TWO BANK ACCOUNTS WAS RS.19,19,026/- (RS.11,06,822+ RS.8,12, 204/-) AND HAS ACCORDINGLY MADE THE ADDITION OF THE TOTAL OR ACCUMULATED CASH DEPOSITS U/S 68 OF THE ACT. 4. THE ASSESSEE OBJECTED THE ADDITION IN QUESTION M ADE BY THEH A.O WITH THIS CONTENTION THAT THE A.O WAS NOT JUSTIFIED TO MAKE T HE ADDITION OF TOTAL CASH DEPOSITS AS THE CASH DEPOSITS WERE MADE OF SIMILAR AMOUNT ON VARIOUS DATES OUT OF THE SALE PROCEEDS OF BUSINESS AND AT THE SAME TIME THE CASH WITHDRAWLS WERE ALSOM ADE FROM THE SAME BANK ACCOUNTS FOR THE PURPOSES OF BUS INESS. IT WAS SUBMITTED THAT THE A.O HAD MADE THE ADDITION ON THE BASIS OF ACCUM ULATED CASH DEPOSITS WITHOUT ITA NO.5296/DEL/2012 3 CONSIDERING THE CORRESPONDING CASH WITHDRAWALS WHIC H WERE MADE FOR THE PURPOSE OF BUSINESS. THE SAME CASH OUT OF SALE PROCEEDS WH ICH WERE DEPOSITED AND WITHDRAWN AND AGAIN DEPOSITED AS PER THE REQUIREMEN T AND FOR THE PURPOSE OF BUSINESS. THE FURTHER CONTENTION OF THE ASSESSEE B EFORE THE LD. CIT(A) REMAINED THAT AT THE BEST THE A.O COULD HAVE TAKEN THE PEAK CREDIT OF THE CASH DEPOSITS FOR THE PURPOSE OF COMPUTING INCOME AND MAKING THE ADDI TION. RELIANCE WAS PLACED ON VARIOUS CASE LAWS IN SUPPORT OF THE PEAK CREDIT THEORY. CONSIDERING THESE SUBMISSIONS THE LD. CIT(A) HAS DELETED THE ADDITION VIDE PARA NO. 3.4 OF THE FIRST APPELLATE ORDER, REPRODUCED HEREUNDER:- 3.4/////////////////// 5. CONSIDERING ABOVE MATERIAL FACTS ON THE ISSUE OF ADDITION IN QUESTION, WE DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER IN CONCURRING WITH THE CONTENTION OF ASSESSEE THAT A.O WAS NOT JUSTIFIED TO MAKE THE ADD ITION OF THE TOTAL OR ACCUMULATED CASH DEPOSITS WITHOUT CONSIDERING THE SIMULTANEOUS OR CORRESPONDING CASH WITHDRAWLS WHICH WERE FOR THE PURPOSE OF BUSINESS W E FULLY AGREE WITH THE OBSERVATION OF THE LD. CIT()A THAT IT IS NOT UNCOMM ON FOR THE SMALL BUSINESS PEOPLE TO MAKE FREQUENT CASH DEPOSITS AND WITHDRAWL S IN THE BANK ACCOUNTS OUT OF THE SALE PROCEEDS AS PER REQUIREMENT OF BUSINESS CO NVENIENCE. THE PEAK CREDIT THEORY IS MEANT FOR TACKLING SUCHA SITUATION IN A F AIR WAY. WE THUS OF THE VIEW THAT THE LD. CIT()A APPLYING THE PEAK CREDIT THEORY HAS RIGHTLY COME TO THE ITA NO.5296/DEL/2012 4 CONCLUSION THAT ADDITION TO THE EXTENT OF PEAK CRED IT AMOUNT OF RS. 6,42,192/- IS TO BE CONFIRMED. HE WAS THUS JUSTIFIED IN DELETING TH E BALANCE ADDITION OF RS.12,76,834/-(RS.19,19,026-RS6,42,192/-). THE FIR ST APPELLATE ORDER BEING REASONED ONE. THE SAME IS UPHELD. THE GROUND IS A CCORDINGLY REJECTED. 6. CONSEQUENTLY, APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 13/8/2013. SD/- SD/- (G.D.AGRAWAL) (I.C. SUDHIR) (VICE PRESIDENT) (JUDICIAL MEMBER) DATED THE 27 TH DAY OF AUGUST , 2013 R. NAHEED COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT(ITAT), NEW DELHI. AR,ITAT NEW DE LHI.