Income Tax Officer, Kurukshetra V. Sh.Pawan Kumar Prop, Pehowa

ITA 591/CHANDI/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1610 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH JAIN
• Keywords: Unexplained cash credit; Gift; Peak credit; Additional evidence
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO.591/CHD/2015 ASSESSMENT YEAR:2010-11 INCOME TAX OFFICER, VS. SH. PAWAN KUMAR PROP. WARD 2 KALRA COLLECTION NAVDEEP MARKET KURUKSHETRA PEHOWA PAN NO. AUWPK0339G (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. RAJINDER KAUR RESPONDENT BY : SH. RAKESH JAIN DATE OF HEARING : 24/09/2015 DATE OF PRONOUNCEMENT :30/11/2015 ORDER PER ANNAPURNA MEHROTRA A.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF CIT(A)- ROHTAK, DATED 19.03.2015. THE REVENUE HAS RAISED TH E FOLLOWING GROUNDS OF APPEALS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ACCEPTING THE ASSESSEES VERSION REGARDING RECEIPT OF CASH GIFT OF RS. 20,00,000/- WITHOUT BRINGING ON RECORD THE COPY OF THE RELEVANT SALE DEED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE,T HE LD. CIT(A) HAS ERRED IN ACCEPTING THE ADDITIONAL EVIDENCE REGARDING CLA IM OF PEAK, WITHOUT CALLING FOR THE A.O.S REMAND REPORT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS ERRED IN ACCEPTING THE ASSESSEES PLEA OF HAVING RECEIVED THE AMOUNT AS GIFT FROM HIS FATHER ESPECIALLY WHEN NEITHER DATE NOR THE AMOUNT OF DEPOSIT IN SAVING BANK ACCOUNT TALLY WITH THE DATE OF SO CALLED AGREEMENT TO CELL . 2. BRIEF FACTS OF THE CASE ARE THAT WHILE FRAMING A SSESSMENT U/S 143(3) OF THE ACT, THE A.O. ADDED AN AMOUNT OF RS. 40,09,790/- TO THE TOTAL INCOME OF THE ASSESSEE BY TREATING CASH DEPOSIT IN THE BANK ACCOU NT AS BEING FROM UNDISCLOSED SOURCES. DURING THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE HAD 2 DEPOSITED TOTAL CASH OF RS. 40,09,790/- IN HIS BANK ACCOUNT WITH ICICI BANK. THERE WERE ABOUT 100 TRANSACTIONS OF CASH DEPOSIT AND WIT HDRAWALS. THE A.O .ADDED THE ENTIRE CREDIT SIDE OF THE BANK ENTRIES AND MADE ADDITION OF THE SAME AMOUNTING TO RS. 40,09,790/-. 3. BEFORE THE LD. CIT(A) THE ASSESSEE PLEADED THAT SINCE, THERE WERE 100 OF ENTRIES CASH DEPOSIT AND WITHDRAWAL, THE PEAK INVES TMENT METHOD SHOULD HAVE BEEN ADOPTED BY THE A.O. TO CALCULATE THE UNEXPLAIN ED CASH DEPOSIT IN THE BANK INSTEAD OF ADDING THE ENTIRE CREDIT ENTRIES IN THE BANK. AS PER THE ASSESSEE THE PEAK INVESTMENT WORKED OUT TO RS. 19,04,300/-. THE ASSESSEE FURTHER SUBMITTED THAT THE SOURCE OF THIS AMOUNT WAS A GIFT OF RS. 20,00,000/- WHICH WAS RECEIVED BY HIM FROM HIS FATHER MR. PREM PRAKASH DU RING THE IMPUGNED ASSESSMENT YEAR. THE ASSESSEE FURTHER SUBMITTED THA T THIS GIFT WAS MADE BY HIS FATHER OUT OF SALE CONSIDERATION RECEIVED ON THE SA LE OF AGRICULTURAL LAND. THE ASSESSEE SUBMITTED IKRARNAMA AS PROOF OF SALE OF AG RICULTURAL LAND AND THE AFFIDAVIT FROM HIS FATHER RELATING TO THE SAME. THE ASSESSEE FURTHER SUBMITTED THAT HIS FATHER ALSO GIFTED HIM AN AMOUNT OF RS. 80,000/ - AND SUBMITTED AFFIDAVIT OF HIS FATHER TO THIS EFFECT TOO. 4. LD. CIT(A) ON CONSIDERING THE ASSESSEES SUBMISS IONS ACCEPTED THAT ONLY THE PEAK CREDIT AMOUNT OF RS. 19,04,300/- SHOULD BE CONSIDERED FOR THE PURPOSE OF MAKING ADDITION AS UNEXPLAINED CASH CREDIT. LD. CIT(A) FURTHER HELD THAT SINCE THE ASSESSEE HAD ALSO SUBSTANTIATED THE SOURCE OF P EAK CREDIT AS HAVING BEEN RECEIVED FROM HIS FATHER AS GIFT AND THE ASSESSEE H AVING SUBMITTED ALL EVIDENCES IN THIS REGARD, THE PEAK CREDIT ALSO STOOD EXPLAINE D BY THE ASSESSEE AND NO ADDITION ON THIS ACCOUNT COULD BE MADE. HE THEREFOR E, DELETED THE ENTIRE ADDITION MADE BY LD. A.O. OF RS. 40,09,790/- 3 5. BEFORE US LD. DR ARGUED THAT THE LD. CIT(A) HAD ERRED IN ACCEPTING THE ASSESSES CONTENTION THAT THE SOURCE OF DEPOSITS IN BANK WAS GIFT RECEIVED FROM FATHER WITHOUT VERIFYING THE SAME. LD. DR FURTHER A RGUED THAT THE AFFIDAVIT AND IKRARNAMA FOR SALE OF LAND DID NOT CONCLUSIVELY PRO VE THE SOURCE OF CASH AS BEING RECEIVED AS GIFT FROM FATHER. LD. DR ARGUED THAT THE LD. CIT(A) SHOULD NOT HAVE DELETED THE ADDITION BY APPLYING THE PEAK DEPO SIT THEORY, MORE SO WHEN THE SAME WAS ADVANCED FOR THE FIRST TIME BEFORE THE LD. CIT(A) AND THAT, IT SHOULD HAVE BEEN REMANDED TO THE AO FOR PROPERLY AP PRECIATING THE FACTS. LD. DR ARGUED THAT THE LD. CIT(A) HAD NEITHER INDEPENDE NTLY PROVED THE SUBMISSIONS MADE BY THE ASSESSE NOR DIRECTED THE AO TO VERIFY T HE DETAILS WHICH WERE NOT THERE BEFORE THE AO. LD. DR SUBMITTED THAT THE ORDE R OF THE CIT(A) SHOULD BE REVERSED FOR THIS REASON AND THAT OF THE AO RESTORE D. LD. AR ON THE OTHER HAND ARGUED THAT THE ASSESSEE HAD DISCHARGED ITS ONUS OF PROVING THE SOURCE OF CASH DEPOSIT TO THE EXTENT OF RS. 20,00,000/- AND RS. 8 0,000/- BY GIVING AN EXPLANATION THAT THE SAME WAS GIFTED BY HIS FATHER AND FURTHER SUBSTANTIATED THE SAME WITH THE AFFIDAVIT OF THE FATHER AND IKRARNAMA EVIDENCIN G THE SALE OF LAND. LD. AR RELYING UPON THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS. ORISSA CORP. (P) LTD. (1986) 159 ITR 78 (SC) ARGUED THAT THE ASS ESSEE HAVING DISCHARGED HIS ONUS AND THE REVENUE NOT HAVING MADE ANY FURTHER IN VESTIGATION IN THIS REGARD NO ADDITION U/S 68 COULD BE MADE. AS FOR THE APPLIC ATION OF THE PEAK CREDIT THEORY, THE ASSESSEE ARGUED THAT ALL EVIDENCES IN T HIS REGARD WERE PLACED BEFORE THE LD. CIT(A), WHO AFTER APPRECIATING THE SAME HAD APPLIED THE PEAK CREDIT THEORY. LD. AR ARGUED THAT THE POWER OF THE LD. CIT(A) BEING CO-TERMINUS WITH THAT OF THE AO, THERE WAS NO OCCASION TO REMIT THE MATTER TO THE FILE OF THE AO FOR REEXAMINATION. 6. WE HAVE HEARD THE CONTENTIONS OF BOTH THE REPRE SENTATIVES AND PERUSED THE ORDER OF THE AUTHORITIES BELOW AND THE DOCUMENT S PLACED BEFORE US. 4 7. WE FIND THAT UNDISPUTEDLY THE TOTAL CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR AM OUNTED TO RS. 40,09,790/- . IT IS ALSO NOT IN DISPUTE THAT THERE WERE NUMEROU S TRANSACTIONS OF CASH DEPOSIT AND WITHDRAWAL DURING THE YEAR AT SHORT INTERVALS O F TIME. FURTHER WE FIND THAT THE ASSESSEE HAD SUBMITTED DURING ASSESSMENT PROCEE DINGS THAT HIS FATHER HAD GIVEN HIM RS. 20 LACS BY SELLING HIS LAND, FOR GOIN G ABROAD AND THAT HE HAD GIVEN MONEY TO AGENTS FOR OBTAINING VISA. THE ASSESSEE, WE FIND HAD ALSO STATED THAT THE TRAVEL AGENTS HAD CHEATED HIM AND NOT RETURNED BACK HIS MONEY. IN THE BACKDROP OF THE ABOVE ADMITTED FACTS WE HOLD , THAT THE LD. CIT(A) OUGHT TO HAVE APPLIED THE PEAK CREDIT THEORY FOR DETERMIN ING THE UNEXPLAINED CASH DEPOSIT IN BANK, ONLY AFTER VERIFYING THE PURPOSE F OR WHICH WITHDRAWALS OF CASH WAS MADE FROM BANK. THE PEAK CREDIT THEORY OPERATES ON THE LOGIC THAT THE WHERE THERE ARE FREQUENT DEPOSITS AND WITHDRAWAL OF CASH, THE SOURCE OF DEPOSITS CAN BE ATTRIBUTED TO THE CASH WITHDRAWN ON EARLIER DATES PROVIDED IT IS NOT UTILIZED FOR ANY OTHER PURPOSE. IN THE PRESENT CASE, WE FIND THAT SINCE IT IS AN ADMITTED FACT THAT MONEY WAS PAID TO TRAVEL AGENTS BY THE ASSESSEE FOR GOING ABROAD, THE LD. CIT(A), SHOULD HAVE VERIFIED THE PU RPOSE FOR WHICH WITHDRAWAL WAS MADE AND IF THEREAFTER IT WAS FOUND THAT THE SA ME WAS USED FOR MAKING PAYMENTS TO TRAVEL AGENTS, THE PEAK CREDIT THEORY C OULD NOT HAVE BEEN APPLIED. WE THEREFORE HOLD THAT THE LD. CIT(A), WRO NGLY APPLIED THE PEAK CREDIT THEORY TO THE CASH DEPOSITS MADE IN THE BANK, WITHO UT VERIFYING THE PURPOSE FOR WHICH WITHDRAWALS WAS MADE. AT THE SAME TIME WE DO NOT AGREE WITH THE CONTENTION OF THE REVENUE THAT THE LD. CIT(A) OUGHT TO HAVE REMANDED THE ISSUE OF APPLICATION OF PEAK CREDIT TO THE A.O SINC E IT WAS RAISED FOR THE FIRST TIME BEFORE THE LD. CIT(A). UNDISPUTEDLY THE POWERS OF T HE CIT(A) ARE CO-TERMINUS WITH THAT OF THE A.O. AND IF ALL FACTS RELEVANT FOR ADJU DICATION AN ISSUE ARE BEFORE THE CIT(A), THERE IS NO NEED TO REMAND THE SAME TO THE A.O. FOR VERIFICATION PURPOSES. 5 FURTHER WE ALSO FIND THAT THE AFFIDAVIT OF THE FATH ER OF THE ASSESSEE AND THE IKRARNAMA FOR SALE OF LAND DOES NOT CONCLUSIVELY EX PLAIN THE SOURCE OF CASH DEPOSITED IN BANK. WE FIND THAT BY MERELY FILING T HESE TWO DOCUMENTS, THE ASSESSEE HAS NOT DISCHARGED HIS ONUS TO PROVING THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SOURCE OF CASH RECEIPT. WIT HOUT ESTABLISHING THE FACT WHETHER THE LAND WAS ULTIMATELY SOLD OR NOT AND WIT HOUT TAKING ON RECORD THE SALE DEED OF THE IMPUGNED LAND, THE GENUINENESS OF THE EXPLANATION OF THE ASSESSEE CANNOT BE ESTABLISHED. FURTHER WE ALSO FIN D THAT THE DECISION RENDERED BY THE HONBLE APEX COURT IN THE CASE OF ORISSA COR PORATION (P) LTD, DOES NOT HELP THE ASSESSES CASE, SINCE IN THAT CASE THE ASSE SSEE HAD DISCHARGED ITS ONUS OF ESTABLISHING THE GENUINENESS OF THE TRANSACTION. 8. IN VIEW OF THE AFORESAID DISCUSSION WE CONSIDER IT FIT TO REMIT THE MATTER BACK TO THE FILE OF THE LD. CIT(A), TO DECIDE THE A PPLICATION OF PEAK CREDIT THEORY AFTER VERIFYING THE PURPOSES FOR WHICH CASH WITHDRA WALS WERE MADE AND ALSO FOR VERIFYING THE SOURCE OF CASH DEPOSITED IN BANK AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE DUE O PPORTUNITY OF HEARING. 9. THE APPEAL OF THE REVENUE IS THEREFORE ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30/11/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR