The ITO, Ward-1, Anand V. Shri Niteshkumar R.Dalwadi, Anand

ITA 53/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72963 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Unexplained investment; Peak credit; Corroborative evidences
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEM BER INCOME TAX OFFICER, WARD-1, ANAND (APPELLANT) VS SRI NITESHKUMAR R DALWADI, PROP. OF M/S NITESH CONSTRUCTION DALWADI NIWAS, STATION ROAD ANAND-388001 (RESPONDENT) REVENUE BY: SRI P.L. KUREEL, SR.D.R. ASSESSEE BY: NONE DATE OF HEARING : 11-02-2014 DATE OF PRONOUNCEMENT : 11-02-20 14 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE REVENUES APPEAL AGAINST THE ORDER OF LD. CIT(A)-IV BARODA DATED 08-10-2012. ITA NO. 53/AHD/2013 ASSESSMENT YEAR 2009-10 I.T.A NO.53/AHD/2013 A.Y. 2009-10 PAGE NO ITO VS. NITESHKUMAR R DALWADI PROP. OF M/S. NITESH CONSTRUCTION 2 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F THE ASSESSEE DESPITE THE FACT THAT NOTICE FOR TODAYS HEARING WAS SENT T O HIM. SO WE PROCEEDED TO DECIDE THE APPEAL AFTER HEARING LD. DR. 3. REVENUE HAS TAKEN FOLLOWING EFFECTIVE GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, LD. CIT(A) ERRED DELETING THE ADDITION OF RS.23,39, 951/- MADE BY AO U/S. 69 OF THE ACT WITHOUT APPRECIATING THE FACT TH AT THE ASSESSEE WAS UNABLE TO SUBSTANTIATE HIS CLAIM WITH COGENT REASON S AND SUPPORTING EVIDENCE. 4. AO WHILE MAKING THIS ADDITION OF RS. 23,39,951/- HAS OBSERVED AS UNDER:- 3.1. IN THE COURSE OF ASSESSMENT PROCEEDINGS, BANK STATEMENT WITH REGARD TO SAVINGS BANK ACCOUNT NO 15311 MAINTAINED BY THE ASSESSES WITH THE ANAND MERCANTILE CO-OPERATIVE BANK LIMITED WAS OBTAINED BY ISSUING NOTICE U/S.L33(6) TO THE SAID BANK. VERI FICATION THEREOF REVEALS THAT THE ASSESSEE HAS MADE CASH DEPOSITS AG GREGATING TO RS.18,59,951 IN THIS BANK ACCOUNT. IT IS ALSO NOTIC ED THAT THERE IS CHEQUE CLEARING OF RS.4,80,000 ON 23.6.2008. THIS S AVINGS BANK ACCOUNT WAS NOT SHOWN IN THE BOOKS MAINTAINED BY TH E ASSESSEE. 3.2. VIDE NOTICE U/S.142(1) DATED 11.11.2011, THE A SSESSES WAS REQUESTED TO EXPLAIN THE SOURCES OF CASH DEPOSITS A S WELL AS CHEQUE DEPOSIT AMOUNTING TO RS.18,59,951 AND RS.4,80,000 R ESPECTIVELY. IN RESPONSE, THE ASSESSEE'S COUNSEL VIDE HIS LETTER DA TED 21.11.2011 HAS GIVEN THE REPLY. THE SAME IS REPRODUCED HEREUNDER V ERBATIM:- 'THE ASSESSEE HAD DEPOSITED CASH IN THE ACCOUNT AS WELL AS WITHDRAWN CASH ON SEVERAL OCCASIONS DURING THE ABOVE MENTIONE D ASSESSMENT YEAR. THE ASSESSEE HAS WITHDRAWN CASH AND RE-DEPOSI TED THE SAME OR A PORTION OF THE SAME ON SUBSEQUENT DATE. THE CASH HAS ROTATED THE SAME MANNER THROUGHOUT THE YEAR. THE MAXIMUM BALANC E ON ANY SINGLE DAY DURING THE YEAR UNDER CONSIDERATION WAS RS.5,10,828 ON 23.6.2008. THIS IS NOTHING BUT THE PEAK BANK / CASH BALANCE FOR THE YEAR. FURTHER, THE PEEK ADDITION, ON IDENTICAL FACT S, WAS MADE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR OF RS. 4,35,5 14. THE COPY OF ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME-TA X ACT FOR THE A.Y. I.T.A NO.53/AHD/2013 A.Y. 2009-10 PAGE NO ITO VS. NITESHKUMAR R DALWADI PROP. OF M/S. NITESH CONSTRUCTION 3 2008-2009 HAS ALREADY BEEN SUBMITTED IN OUR FIRST S UBMISSION. THE BENEFIT OF SAID PEAK ADDITION IS AVAILABLE TO THE A SSESSEE DURING THE YEAR UNDER CONSIDERATION ALSO. HENCE, APPLYING THE PEAK THEORY ADOPTED BY THE DEPA RTMENT IN ASSESSEE'S OWN CASE, ONLY THE DIFFERENCE OF RS. 75, 314 [RS.5,10,828 - RS.4,35,514] MAY BE ADDED TO THE TOTAL INCOME OF TH E ASSESSEE FOR THE 'ASSESSMENT YEAR UNDER CONSIDERATION AS THE ASSESSE S IS NOT IN A POSITION TO RECALL THE SOURCE OF THE SAME. THE COPY OF BANK ACCOUNT IS PRODUCED FOR YOUR PERUSAL.' 3.3. I HAVE CONSIDERED THE REPLY OF THE ASSESSEE. I T SEEMS THAT THE ASSESSEE HIMSELF HAS TAKEN A DECISION THAT IN HIS C ASE ADDITION OF PEAK CREDIT CAN ONLY BE MADE. THE ASSESSEE HAS NOT FURNI SHED THE PEAK CREDIT WORKING VIDE WHICH HE HAS WORKED OUT SUCH CR EDIT AT RS.5,10,828. HE HAS ALSO CLAIMED DEDUCTION FOR THE PEAK CREDIT ADDITION MADE IN THE IMMEDIATE PRECEDING YEAR AT RS .4,35,514 I.E. ASSESSMENT YEAR 2008-2009. EVERY ASSESSMENT YEAR IS A SEPARATE YEAR AND THE ISSUES HAVE TO BE DEALT WITH ACCORDING TO T HE FACTS OF DIFFERENT ASSESSMENT YEARS. FOR APPLYING THE PEAK THEORY, THE ASSESSEE HAS TO PLACE ON RECORD THAT THE SAME CASH WITHDRAWN WAS RE -DEPOSITED IN THE SAVINGS BANK ACCOUNT AND THE REASONS FOR DOING SO. FURTHER, THE ASSESSEE HAS TO GIVE THE PURPOSE AND USAGE OF THE C ASH WITHDRAWN FROM THE BANK. PERUSAL OF THE BANK ACCOUNT REVEALS THAT THE CASH WITHDRAWN BY ISSUE OF BEARER CHEQUES. IT IS ALSO NO TICED THAT ON 2- 4.2008, THE ASSESSEE HAS DEPOSITED CASH OF RS.2,30, 000, CASH OF RS.2,00,000 WAS WITHDRAWN BY 'VIPULBHAI'. ON THE SA ME DATE CASH OF RS.70,000 WAS DEPOSITED. THE ASSESSEE HAS TO PROVE THAT THE CASH WITHDRAWN BY VIPULBHAI HAS COME TO HIM AND OUT OF T HAT CASH HE HAS DEPOSITED RS.70,000 CASH IN THE BANK ACCOUNT. HE HA S ALSO TO PROVE THAT WHO IS VIPULBHAI AND WHY HE HAS GIVEN BEARER C HEQUE TO HIM. ON 16.4.2008 AND ON 17.4.2008, THE ASSESSEE HAS DEPOSI TED CASH OF RS.1,50,000 AND RS.L , 00,000 RESPECTIVELY. FROM 26.4,2008 TO 15.5.2008, THE ASSESSEE HAS ISSUED BEARER CHEQUES T O VARIOUS PERSONS AS ALSO SELF WITHDRAWN CASH. ON 26.5.2008, HE HAS D EPOSITED CASH OF RS. 15,000. ON 30.5.2008, CASH WAS WITHDRAWN BY VIP ULBHAI AT RS.17,500. ON 19.6.2008 A CHEQUE NO. 781934 WAS CL EARED AT RS.4,80,000. NO EXPLANATION WHATSOEVER COULD BE OFF ERED BY THE ASSESSEE, NAMELY, FROM WHOM THIS CHEQUE HAS BEEN RE CEIVED AS ALSO ON WHAT ACCOUNT. AFTER THAT CASH HAS BEEN WITHDRAWN BY VARIOUS I.T.A NO.53/AHD/2013 A.Y. 2009-10 PAGE NO ITO VS. NITESHKUMAR R DALWADI PROP. OF M/S. NITESH CONSTRUCTION 4 PERSONS THROUGH BEARER CHEQUES. THE SAME SORT OF TR ANSACTION IS REPEATED UPTO 14.3.2009 AND THE CLOSING BALANCE WAS SHOWN AT RS. NIL. IN THESE CIRCUMSTANCES, THE PEAK THEORY TO BE ADOPT ED AS STATED BY THE ASSESSEE IN NO WAY CAN BE APPLIED TO THE CASE OF TH E ASSESSEE. AS DISCUSSED HEREIN ABOVE, THE ASSESSEE HAS TO OFFER H IS EXPLANATION WITH SUPPORTING EVIDENCE FOR THE CASH DEPOSITS AGGREGATI NG TO RS.18,59,951 AND CHEQUE DEPOSITED OF RS.4,80,000 IN HIS BANK ACC OUNT. AS NO EXPLANATION COULD BE OFFERED BY THE ASSESSEE, THE C ASH DEPOSITS AS WELL AS CHEQUE DEPOSITED AMOUNTING TO RS.23,39,951 IS HE LD TO BE THE UNACCOUNTED INVESTMENT OF THE ASSESSEE. THE SAME IS , THEREFORE, ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE U/S.69A OF THE INCOME-TAX ACT, 1961. PENALTY PROCEEDINGS U/S.271(L)(C) OF THE INCO ME-TAX ACT, 1961 ARE SEPARATELY INITIATED. 5. LD. CIT(A) AFTER TAKING INTO CONSIDERATION THE S UBMISSION OF THE ASSESSEE WHICH HAS BEEN REPRODUCED BY HIM IN HIS OR DER HAS ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER:- 6. THE ORDER U/S 143(3) OF THE AO AS WELL AS ABOVE SUBMISSION OF THE APPELLANT HAVE BEEN CONSIDERED. IN MY OPINION T HE AO IS NOT CORRECT IN REJECTING THE THEORY OF THE PEAK CREDIT ON THE GROUND THAT THE APPELLANT HAD NOT PLACED ON RECORD THAT THE SAM E CASH HAS BEEN WITHDRAWN AND AGAIN HAS BEEN RE-DEPOSITED. IN THE C ASE OF APPELLANT FOR EARLIER YEAR ADDITION HAS BEEN MADE ON PEAK BAL ANCE IN RESPECT OF CASH DEPOSITS IN THE SAME BANK ACCOUNT. AGAIN THE S AID ACTION OF THE AO IN MAKING THE ADDITION ON PEAK BALANCE FOR SUCH EARLIER YEAR IS FINAL AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTM ENT. IN VIEW OF THIS, THE AO IS REQUIRED TO MADE THE ADDITION ON TH E BALANCE AS THERE IS RE-CYCLING OF CASH. IN THE CASE OF APPELLANT THE PEAK OR HIGHEST OF ALL THE TRANSACTIONS TAKEN TOGETHER DURING EARLIER FINA NCIAL YEAR AND DURING THE FINANCIAL YEAR UNDER CONSIDERATION IS TH E METHOD WHICH IS REQUIRED TO BE ADOPTED BY THE AO FOR CALCULATION OF UNDISCLOSED INCOME ON THE BASIS OF PEAK CREDIT. ALL THE TRANSAC TIONS IN THE CASE OF APPELLANT FOR THESE TWO YEARS SHOULD BE CONSIDERED JOINTLY. THIS IS IN VIEW OF THE FACT THAT THE AO IN THE IMMEDIATE PRECE DING YEAR HAS MADE THE ADDITION ON PEAK BALANCE IN RESPECT TO THE CASH DEPOSIT IN THE SAME BANK ACCOUNT AND AGAIN THERE IS NO CHANGE OF T HE CIRCUMSTANCES AND THEREFORE THE AO CAN NOT DEPART FROM PREVIOUS D ECISION IN THE ABSENCE OF MATERIAL CIRCUMSTANCES OR REASONS FOR SU CH DEPARTURE. IN THIS REGARD THE SUPPORT MAY BE DRAWN FROM THE DECIS ION OF CIT VS. I.T.A NO.53/AHD/2013 A.Y. 2009-10 PAGE NO ITO VS. NITESHKUMAR R DALWADI PROP. OF M/S. NITESH CONSTRUCTION 5 VELIMALI RUBBER CO. LTD. 18 UTR 299 (KER.) AND ALSO FROM THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF TARABEN RAMANBHAI PATEL VS. ITO 215 ITR 323(GUJ.). 6. AFTER HEARING LD. DR, WE FIND THAT THERE IS NO D ISPUTE ABOUT THE FACT THAT IN THE IMMEDIATE PRECEDING YEAR AO HAS MADE TH E ADDITION BY APPLYING PEAK CREDIT THEORY IN RESPECT TO THE CASH DEPOSIT I N THE SAME BANK ACCOUNT AND THERE WAS NO CHANGE OF CIRCUMSTANCES DURING THE YEAR UNDER APPEAL, THEREFORE WE FEEL THAT LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO FOLLOW THE SAME THEORY OF PEAK CREDIT WHILE QUANTIFYING TH E UNDISCLOSED INCOME OF THE ASSESSEE. THEREFORE WE ARE NOT INCLINED TO INT ERFERE WITH ORDER PASSED LD. CIT(A) AND THE SAME IS HEREBY UPHELD. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (N.S. SAINI) ( D.K. TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 11/02/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,