M/s. J.K. Gardens, Rajamahandravarm V. The Income Tax Officer, Ward-2, , Rajamahandravarm

ITA 541/VIZ/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 4022 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 06-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Peak credit; Set aside
• Section: 133A; 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM , . . , BEFORE SHRI N.K.CHOUDHRY, HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HONBLE ACCOUNTANT MEMBER ./ I.T. A.NO. 541 /VIZ/20 19 ( / A SSESSMENT Y EAR : 20 1 0 - 11 ) M/S J.K.GARDENS JAWAHARLAL NEHRU ROAD RAJAMAHENDRAVARAM [PAN : A BUPM6989K ] VS . INCOME TAX OFFICER WARD - 2 RAJAMAHENDRAVARAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI, AR / RESPONDENT BY : S MT. SUMAN MALIK, DR / DATE OF HEARING : 0 4 . 0 3 .202 1 / DATE OF PRONOUNCEMENT : 10 .0 3 . 202 1 / O R D E R P ER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)], RAJAMAHENDRAVARAM IN A PPEAL NO. 10222 / 201 3 - 1 4 DATED 0 7 . 0 6 .20 19 FOR THE ASSESSMENT YEAR (A.Y.) 20 10 - 11 . 2 I.T.A. NO . 541 /VIZ/20 19 , A.Y.20 1 0 - 11 M/S J.K.GARDENS , RAJAMAHENDRAVARAM 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO SUSTAINING THE ADDITION OF RS.1,30,652/ - REPRESENTING NEGATIVE CASH BALANCES. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS RUNNING A FUNCTION HALL AND FILED IT S RETURN OF INCOME FOR THE A.Y.2010 - 11 ON 23.07.201 0 DECLARING TOTAL INCOME OF RS.1,86,720/ - . A SURVEY U/S 133A WAS CONDUCTED IN THE CASE OF THE ASSESSEE AND SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER (AO) FOUND THE NEGATIVE CASH BALA NCES FOR THE PERIOD FROM 01.04.2009 TO 31.03.2010, IN THE CASH BOOK AS UNDER : 14.05.2009 - RS.60,270 20.05.2009 - RS.78,583 01.07.2009 - RS.42,866 12.03.2010 - RS. 9203 THE AO ASKED THE ASSESSEE AS TO WHY THE AGGREGATE NEGATIVE CASH BALANCE S SHOULD NOT BE BROUGHT TO TAX. THE ASSESSEE REQUESTED THE AO TO CONSIDER PEAK OF THE NEGATIVE CASH BALANCE FOR ADDITION INSTEAD OF MAKING THE ADDI TION OF AGGREGATE AMOUNT OF NEGATIVE BALANCES. T HE AO CONSIDERED THE ASSESSEES EXPLANATION AND TAKEN THE PEAK CREDIT OF RS.78,583/ - FOR THE NEGATIVE BALANCE AS ON 14.05.2009 AND 20.05.2009 AND SEPARATELY MADE THE 3 I.T.A. NO . 541 /VIZ/20 19 , A.Y.20 1 0 - 11 M/S J.K.GARDENS , RAJAMAHENDRAVARAM ADDITION S OF RS.42,866/ - AND RS.9,203/ - FOR NEGATIVE BALANCES ON 01.07.2009& 12.03.2010 AGGREGATING TO RS.1,30,652/ - TO THE RETURNED INCOME. THE A O VIEWED THAT THE NEGATIVE CASH BALANCES APPEARING ON 01.07.2009 AND 12.03.2010 ARE TO BE CONSIDERED INDEPENDENTLY. 3. AGAINST THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ADDITION MADE BY THE AO AND DISMISSED THE APPEAL OF THE ASSESSEE. THE LD.CIT(A) FOUND THAT THERE WERE NO LARGE NUMBER OF CREDIT AND DEBIT ENTRIES AN D THERE WA S NO SERIAL ORDER THAT THE CREDIT FOLLOWING DEBIT AND ALSO THERE WA S NO FRESH NEGATIVE CASH BALANCES AS CONTENDED BY THE AR. THEREFORE, REJECTED THE THEORY OF PEAK CREDIT IN ASSESSEES CASE. 4. AGAINST THE ORDER OF THE CIT(A), THE ASSESSEE PREF ERRED APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE ASSESSEE IS HAVING NEGATIVE BALANCES IN CASH BOOK AS ON 14.05.2009, 20.05.2009, 01.07.2009 AND 12.03.2010 AMOUNTING TO RS.60,270/ - , RS.78,583/ - RS.42,866/ - AND RS. 9,203/ - RESPECTIVELY. THE PEAK NEGATIVE CASH BALANCE WAS RS.78,583/ - AND THERE WERE CERTAIN ENTRIES OF PAYMENTS AND RECEIPTS IN BETWEEN THE DATES AND HENCE , NEGATIVE CASH BALANCE WAS REDUCED TO RS.42,866/ - ON 01.07.2009 AND RS.9,203/ - AS ON 12.03.2010 AND 4 I.T.A. NO . 541 /VIZ/20 19 , A.Y.20 1 0 - 11 M/S J.K.GARDENS , RAJAMAHENDRAVARAM T HUS ARGUED THAT THE SOURCE OF NEGATIVE CASH BALANCE OF RS.78,583/ - WOULD MEET THE NEGATIVE CASH BALANCES OF THE REMAINING DATES . T HEREFORE REQUESTED TO GIVE TELESCOPIC BENEFIT AND DELETE THE ADDITION OF RS.52,069/ - RELATED NEGATIVE CASH BALANCE AS ON 01.07.2009 AND 12.03.2010. 5. ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, THE AO MADE THE ADDIT ION OF RS.1,30,652/ - REPRESENTING NEGATIVE CASH BALANCE S . THE DETAILS OF NEGATIVE CASH BALANCES IN THE CASH BOOK ARE AS UNDER : 14.05.2009 - RS.60,270 20.05.2009 - RS.78,583 01.07.2009 - RS.42,866 RS.1,30,652/ - ADDED BY AO 12.03.2010 - RS. 9203 T HE PEAK NEGATIVE OF THE ABOVE WAS RS.78,853/ - AND SUBSEQUENT LY IT WAS REDUCED TO RS.9203/ - AND THUS, THE SOURCE OF PEAK NEGATIVE BALANCE RS.78,583/ - WOULD MEET THE REMAINING DATES NEGATIVE CASH BALANCES. THE AO OUGHT TO HAVE PREPARED THE C ASH FLOW STATEMENT AND MADE THE ADDITION OF PEAK BALANCE, INSTEAD HE ST RAIGHT AWAY ADDED THE NEGATIVE CASH BALANCE S 5 I.T.A. NO . 541 /VIZ/20 19 , A.Y.20 1 0 - 11 M/S J.K.GARDENS , RAJAMAHENDRAVARAM OF EACH DAY, WHICH IS INCORRECT. AS OBSERVED FROM THE ASSESSMENT ORDER, WE ARE OF THE VIEW THAT THE ADDITION OF RS.78,583/ - WOULD MEET THE DEFICIT CASH BALANCE IN THE REMAINING DAYS, THEREFORE, NO SEPARATE ADDITION IS WARRANTED FOR THE DEFICIT CASH BALANCES AS ON 01.07.2009 AND 12.03.2010. THUS, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DELETE THE ADDITION OF RS.52,069/ - REPRESENTING THE DEFICIT CASH BALANCE AS ON 01.07.2009 AND 12.03.2010 AND CONFIRM THE ADDITION OF RS.78,583/ - . ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH MARCH , 2021. SD/ - SD/ - ( ) ( . . ) (N.K.CHOUDHRY) (D.S.SUNDER SINGH) / JUDICIAL MEMBER / ACCOUNTANT MEMBER DATED : 10 .0 3 .2021 L.RAMA, SPS 6 I.T.A. NO . 541 /VIZ/20 19 , A.Y.20 1 0 - 11 M/S J.K.GARDENS , RAJAMAHENDRAVARAM / COPY OF THE ORDER FORWARDED TO : - 1 . / THE ASSESSEE M/S J.K.GARDENS , JAWAHARLAL NEHRU ROAD , RAJAMAHENDRAVARAM 2 . / THE REVENUE INCOME TAX OFFICER, WARD - 2, RAJAMAHENDRAVARAM 3. THE PR. COMMISSIONER OF INCOME TAX , RAJAMAHENDRAVARAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) , RAJAMAHENDRAVARAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM