Sri Vishwanathan Vaidyanathan , Bangalore V. The Income Tax Officer Ward-3(2)(4), Bangalore

ITA 567/BANG/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4397 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 20-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH R GHALE TO D EPT
• Assessee Lawyers: V SRINIVASAN
• Keywords: Reopening of assessment; Peak credit; Set aside
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, A BENCH : BANGALORE BEFORE SHRI B.R BASKARAN , ACCOUNTANT MEMBER ITA NO.567/BANG/2019 ASSESSMENT YEAR : 2008-09 SRI VISHWANATHAN VAIDYANATHAN, #753, THE SUMMIT APARTMENT, POORNAPARJNA LAYOUT, 2 ND FLOOR, 20 TH MAIN, UTTARAHALLI MAIN ROAD, BENGALURU-560 061. PAN ACFPV 9655 H VS. THE INCOME-TAX OFFICER, WARD-3(2)(4), BENGALURU. APPELL ANT RESPONDENT APPELLANT BY : V SRINIVASAN, ADVOCATE RESPONDENT BY : SHRI GANESH R GHALE, ADVOCATE STANDING COUNSEL TO D EPT. DATE OF HEARING : 06.11.2019 DATE OF PRONOUNCEMENT : 27.11.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 27-02- 2019 PASSED BY LD CIT(A)-3, BENGALURU AND IT RELATE S TO THE ASSESSMENT YEAR 2008-09. 2. GROUND NO.1 AND 7 ARE GENERAL IN NATURE. GR OUND NO.6 RELATING TO LEVY OF INTEREST U/S 234B IS CONSEQUENTIAL. AT THE TIME OF HEARING, THE LD A.R DID NOT PRESS THE GROUNDS NUMBERED AS 2 & 3 REL ATING TO VALIDITY OF REOPENING OF ASSESSMENT. ACCORDINGLY, BOTH THE GRO UNDS ARE DISMISSED AS ITA NO.567 /BANG/2019 PAGE 2 OF 10 NOT PRESSED. THE REMAINING GROUNDS RELATE TO THE A DDITION RELATING TO CASH DEPOSITS SUSTAINED BY LD CIT(A). 3. THE ASSESSEE ALONG WITH TWO OTHER PERSONS NA MED SRI K SAI PRASAD AND SRI V VENKATRAMANAN HAS MAINTAINED A JOINT BANK ACCOUNT WITH BANK OF INDIA. DURING THE YEAR UNDER CONSIDERATION, A SUM OF RS.20,39,000/- WAS FOUND DEPOSITED INTO THIS BANK ACCOUNT. THE ASSESS EE COULD NOT EXPLAIN THE SOURCES OF THE DEPOSITS SO MADE. HOWEVER, HE C LAIMED BEFORE THE AO ONLY 1/3 RD DEPOSIT BELONG TO HIM. HOWEVER, THE AO COMPLETED THE ASSESSMENT BY MAKING ADDITION OF RS.20,39,000/-. 4. IT IS PERTINENT TO NOTE THAT AN IDENTICAL ADD ITION TOWARDS UNEXPLAINED DEPOSIT WAS MADE BY THE AO IN RESPECT OF DEPOSITS M ADE IN THE VERY SAME BANK ACCOUNT IN THE FINANCIAL YEAR RELEVANT TO AY 2 011-12. WHEN THE MATTER REACHED TRIBUNAL, THE ITAT RESTRICTED THE AD DITION TO 1/3 RD OF THE PEAK AMOUNT OF DEPOSITS, VIDE ITS ORDER DATED 13.04 .2017 PASSED IN ITA NO.208/BANG/2017, SINCE THE ASSESSEE WAS ONE OF THE THREE JOINT HOLDERS. BEFORE LD CIT(A), THE ASSESSEE PLACED HIS RELIANCE ON THE ORDER SO PASSED BY THE TRIBUNAL IN AY 2011-12. THE LD CIT(A), BY F OLLOWING THE ORDER OF THE TRIBUNAL, HELD IN PRINCIPLE THAT THE ASSESSEE IS LI ABLE TO BE TAXED ONLY 1/3 RD OF THE PEAK AMOUNT OF DEPOSITS. HOWEVER, THE LD CI T(A) WAS OF THE VIEW THAT THE PEAK CREDIT WORKED OUT BY THE ASSESSEE SUF FERS FROM CERTAIN MISTAKES. ACCORDINGLY, HE GAVE REDUCTION OF ONLY R S.2.00 LAKHS AND ACCORDINGLY DIRECTED THE AO TO ASSESS 1/3RD OF RS.1 8,39,000/- IN THE HANDS OF THE ASSESSEE. AGGRIEVED BY THE ORDER PASSED BY LD CIT(A), THE ASSESSEE HAS FILED THIS APPEAL. ITA NO.567 /BANG/2019 PAGE 3 OF 10 5. I HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LD A.R SUBMITTED THAT THE VARIOUS OBSERVATIONS MADE BY LD CIT(A) WITH REGARD TO WORKING OF PEAK CREDIT IN PARAGRAPH 5.4 OF HIS ORDE R ARE CONTRARY TO THE FACTS. HE INVITED MY ATTENTION TO THE PARAGRAPH 5. 4 OF THE ORDER PASSED BY LD CIT(A), WHICH READS AS UNDER:- 5.4 AS REGARDS CLAIM OF THE APPELLANT THAT ADDITIO N SHOULD BE ONLY 1/3 RD OF THE PEAK CASH DEPOSITS, TH E SAME HAS TO BE LOOKED INTO ON THE BASIS OF THE FACT S IN THE CASE UNDER CONSIDERATION. FOR AY 2011-12, THE ITAT HAS DECIDED REGARDING PEAK CREDITS ON THE BASIS OF FACTS RELEVANT TO THAT YEAR. HOWEVER FOR T HE YEAR UNDER CONSIDERATION, THERE IS NOTHING ON RECOR D TO SUGGEST THAT ALL THE WITHDRAWALS MADE FROM THE BANK ACCOUNT WERE RE-DEPOSITED IN THE BANK ACCOUNT. A PERUSAL OF THE WITHDRAWAL FROM BANK ACCOUNT SHOWS THAT AN AMOUNT OF RS.2,50,000/- WITHDRAWN ON 27.09.2007 WAS PAID BY CHEQUE TO SH V VAIDYANATHAN (MAY BE THE APPELLANT HIMSELF) AND THE SAME WAS NOT A CASH WITHDRAWAL. FURTHER RS 3,75,000/- WITHDRAWN ON 20.12.2007, RS 2,75,000/- WITHDRAWN ON 28.01.2008, RS 2,50,000/- WITHDRAWN ON 05.02.2008 ARE NOT CASH WITHDRAWALS BUT PAYMENTS MADE BY CHEQUE FOR MAKING FIXED DEPOSITS. THE NARRATION OF THESE THREE ENTRIES SHOWS 'DBD DEPOSIT', WHICH IS THE ABBREVIATION FOR 'DOUBLE BENEFIT TERM DEPOSIT' AS OFFERED BY THE BANK OF INDIA TO ITS ACCOUNT HOLDERS . SO AMOUNT TO THE EXTENT OF RS 11,50,000/- CANNOT ITA NO.567 /BANG/2019 PAGE 4 OF 10 BE CONSIDERED AS RE-DEPOSITED AS CASH BACK INTO THE BANK ACCOUNT. AS REGARDS CASH OF RS 2,75,000/- WITHDRAWN ON 27.02.2008, THE SAME CAN ALSO NOT BE CONSIDERED AS RE-DEPOSITED AS CASH BACK INTO THE BANK ACCOUNT AS NO CASH DEPOSITS ARE THERE AFTER 27.02.2008. AS REGARDS CASH OF RS 3,00,000/- WITHDRAWN ON 28.09.2007, THE SAME CAN ALSO NOT BE CONSIDERED AS RE-DEPOSITED AS CASH BACK INTO THE BANK ACCOUNT AS NO CASH DEPOSITS ARE THERE FOR A PERIOD OF 53 DAYS AFTER THIS WITHDRAWAL AND LOOKING INTO THE FREQUENCY WITH WHICH THE APPELLANT DEPOSIT S CASH IN THE BANK ACCOUNT, IT CANNOT BE ACCEPTED THA T THE APPELLANT WAS KEEPING CASH WITH HIMSELF TO BE RE-DEPOSITED LATER ON. SO AT THE MAXIMUM, CREDIT OF RS 2,00,000/- WITHDRAWN ON 03 .01.2008 CAN BE GIVEN FOR THE PURPOSES OF COMPUTING PEAK CREDIT. SO THE TOTAL UNDISCLOSED INCOME ON ACCOUNT OF THE CASH DEPOSITS IN THE BANK ACCOUNT WORKS OUT TO RS 18,39,000/-, OF WHICH 1/3TH BEING RS 6,13,000/- IS THE UNDISCLOSED INCOME OF THE APPELLANT AND THE REMAINING AMOUNT OF RS 12,26,000/- NEEDS TO BE BROUGHT TO TAX IN THE HANDS OF OTHER TWO JOINT HOLDERS OF THE BANK ACCOUNT, AS DISCUSSED IN PARA 5.3 OF THIS ORDER. THE LD A.R SUBMITTED THAT THE ASSESSEE HIMSELF HAS WITHDRAWN A SUM OF RS.2,50,000/- ON 27.09.2007 BY U SING CHEQUE AND HENCE THE LD CIT(A) WAS NOT JUSTIFIED IN NOT ITA NO.567 /BANG/2019 PAGE 5 OF 10 GIVING CREDIT OF THE SAME. WITH REGARD TO THE WITH DRAWALS MADE ON 20.12.2007, 28.01.2008 AND 05-02-2008, THE LD A.R SUBMITTED THAT THE ASSESSEE HAS NOT TAKEN THESE THREE WITHDRAWALS AS CASH WITHDRAWAL IN THE PEAK CREDIT WORKINGS. THE LD A.R INVITED MY ATTENTION TO PEAK CREDIT WORKING PLACED AT PAGES 55-56 OF PAPER BOOK TO SUB STANTIATE HIS CONTENTIONS IN THIS REGARD. THE WITHDRAWAL MAD E ON 27.02.2008 DOES NOT AFFECT THE PEAK CREDIT WORKING. THE WITHDRAWAL OF RS.3.00 LAKHS MADE ON 28-09-2007 HAS BEEN RE-DEPOSITED IN VARIOUS DATES, WHICH THE LD CIT(A) HIMSELF IS ACCEPTING. ACCORDINGLY HE SUBMITTED THAT THE DECIS ION RENDERED BY LD CIT(A) NEEDS TO BE REJECTED. 6. ON THE CONTRARY, THE LD D.R SUPPORTED THE ORD ER PASSED BY LD CIT(A). 7. I HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. DURING THE COURSE OF HEARING, THE LD A.R INVITED MY ATTENTION TO THE WORKING OF PEAK CREDIT PLACED IN T HE PAPER BOOK. FOR THE SAKE OF CONVENIENCE, I EXTRACT THE S AME BELOW:- ITA NO.567 /BANG/2019 PAGE 6 OF 10 ITA NO.567 /BANG/2019 PAGE 7 OF 10 8. AS SUBMITTED BY LD A.R, THE REFERENCE MADE BY LD CIT(A) TO FOLLOWING WITHDRAWALS ARE NOT RELEVANT, SINCE THE A SSESSEE HAS NOT INCLUDED THE SAME WHILE WORKING OUT PEAK CREDIT BAL ANCE:- 20.12.2007 - 3,75,000 28.01.2008 - 2,75,000 05-02-2008 - 2,50,000 THE WITHDRAWAL MADE ON 27.02.2008 AMOUNTING TO RS.2 ,75,000/- WILL NOT AFFECT PEAK CREDIT BALANCE, AS CAN BE SEEN FROM THE ABOVE SAID WORKINGS. HENCE THE OBSERVATIONS MADE BY LD CI T(A) WITH REGARD TO THE ABOVE SAID FOUR WITHDRAWALS ARE LIABL E TO BE SET ASIDE. 9. THE LD CIT(A) HAS NOT GIVEN CREDIT OF WITHDRA WAL OF RS.2,50,000/- MADE ON 27-09-2007 ON THE REASO NING THAT THE ITA NO.567 /BANG/2019 PAGE 8 OF 10 ASSESSEE HAS WITHDRAWN MONEY BY USING CHEQUE. I DO NOT FIND ANY RATIONALE TO THIS DECISION, SINCE IT IS THE ASSESSE E WHO HAS WITHDRAWN MONEY AND HENCE THE SAME SHOULD BE GIVEN CREDIT WHILE WORKING OUT PEAK CREDIT. WITH REGARD TO THE WITHDR AWAL OF RS.3.00 LAKHS MADE ON 28-09-2007, THE LD CIT(A) HAS NOT GIV EN CREDIT FOR THE SAME ON THE REASONING THAT THE DEPOSITS HAVE BE EN MADE AFTER EXPIRY OF 53 DAYS. IN MY VIEW, THIS TIME GAP CAN B E CONSIDERED ONLY IF IT IS SHOWN THAT THE WITHDRAWAL MADE EARLIER WAS NOT AVAILABLE WITH THE ASSESSEE WHEN SUBSEQUENT DEPOSITS WERE MAD E. IN THE ABSENCE OF ANY SUCH MATERIAL, I AM OF THE VIEW THAT THE ASSESSEE SHOULD BE GIVEN CREDIT OF WITHDRAWAL OF RS.3.00 LAK HS MADE. ACCORDINGLY, THE OBSERVATIONS MADE BY LD CIT(A) WIT H REGARD TO THE ABOVE SAID TWO WITHDRAWALS ARE ALSO LIABLE TO BE SE T ASIDE. 10. ACCORDINGLY, I SET ASIDE THE OBSERVATIONS MA DE BY LD CIT(A) IN PARAGRAPH 5.4 OF HIS ORDER. SINCE THE ASSESSING OF FICER HAS NOT VERIFIED THE PEAK CREDIT WORKINGS, I RESTORE THIS I SSUE TO HIS FILE FOR THE LIMITED PURPOSE OF VERIFYING THE PEAK CREDIT WO RKINGS AND ACCORDINGLY DIRECT THE AO TO ASSESSEE 1/3 RD OF PEAK CREDIT BALANCE IN THE HANDS OF THE ASSESSEE. ITA NO.567 /BANG/2019 PAGE 9 OF 10 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2019. SD/- (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, THE 27TH NOVEMBER, 2019. /VMS/ COPY TO: 1. APPELLANT (S) / CROSS OBJECTOR(S) 2. RESPONDENT(S) 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE ITA NO.567 /BANG/2019 PAGE 10 OF 10 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DICTATION NOTE ENCLOSED DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. .. 14. DICTATION NOTE ENCLOSED