JITENDRA M DOSHI, MUMBAI V. ASST CIT CEN CIR 9, MUMBAI

ITA 6244/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3047 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: J
• Assessment Year: 2007-2008
• Appeal Filed On: 08-10-2014
• Court: TRIBUNAL
• Department Lawyers: SHIR YASHWANT CHAVAN
• Assessee Lawyers: R N VASANI
• Keywords: Unexplained investment; Search and seizure; Peak credit
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO S . 6244 & 6245 /M/2014 (AY S 2007 - 08 & AY 2008 - 09 ) SHRI JITENDRA M. DOSHI, 401/403, 4 TH FLOOR, EXPRESS TOWER, OPP. DIAMOND CINEMA, L.T. ROAD, BORIVALI (W), MUMBAI 400 092. / VS. ACIT CIRCLE - 9, MUMBAI. ./ PAN : AABPD9971A ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI R.N. VASANI / REVENUE BY : SHIR YASHWANT CHAVAN, CIT - DR / DATE OF HEARING : 07.10.2015 / DATE OF PRONOUNCEMENT : 16 .10.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION PERTAINING TO THE AYS 2007 - 08 AND 2008 - 09. BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE COMMON ORDER OF THE CIT (A) - 37, MUMBAI DATED 31.7.2014. SINCE, THE ISSUES RAISED IN BOTH THE APPEALS ARE IDENTICAL, THEREFOR E, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. 2. IN THESE TWO APPEALS, ASSESSEE RAISED THE IDENTICAL GROUNDS. TH EREFORE, FOR THE SAKE OF REFERENCE AND ADJUDICATION PURPOSE, THE GROUNDS RAISED BY THE ASSESSEE FOR THE AY 2007 - 2008 IN APPEAL ITA NO.6244/M/20144 ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD AO AS WELL AS CIT (A) HAS ERRED IN NOT APPRECIATING THE PEAK WORKING AS SUBMITTED BY THE APPELLANT, WITHOUT GIVING ANY REASONS FOR THE SAME. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD AO AS WELL AS CIT (A) HAS ERRED IN WORKING OUT PEAK BALANCE BY NOT GIVING CREDIT OF INCOME 2 OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME EMERGING OUT OF THE SAME BANK STATEMENTS. 3. ON THE FAC TS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD AO AS WELL AS CIT (A) HAS ERRED IN WORKING OUT PEAK BALANCE BY NOT GIVING CREDIT OF KHOTARI GROUP BANK TRANSACTIONS ON WHICH ASSESSING OFFICER HAS SEPARATELY CONSIDERED COMMISSION INCOME, AS RETURNED BY T HE APPELLANT. 3 . AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUNDS AND MENTIONED THAT THIS IS THE SECOND ROUND OF PROCEEDINGS BEFORE THE TRIBUNAL. IN THIS REGARD, HE BRIEFLY NARRATED THE RELEVANT FACTS OF THE CASE AND THE SAME INCLUDE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF BILL DISCOUNTING, COMMISSION & INCOME FROM OTHER SOURCES. A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CONDUCTED IN THIS CASE ON 26.7.2007. ASSESSMENT FOR THE AYS 2002 - 0 3 WAS COMPLETED U/S 143(3) R.W.S 153A OF THE ACT ON 29.12.2009, WHEREIN THE ADDITION ON ACCOUNT OF COMMISSION INCOME , DEPOSIT MADE IN BANK ACCOUNT, CASH AND GOLD FOUND DURING THE COURSE OF SEARCH WERE MADE. AGAINST THE SAID DECISION OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) GRANTED PART RELIEF TO THE ASSESSEE VIDE HIS ORDER DATED 8.2.2011. NOT SATISFIED WITH THE ORDER OF THE CIT (A), ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNA L. AFTER HEARING BOTH THE PARTIES, THE TRIBUNAL PASSED A COMBINED ORDER VIDE ITS ORDER DATED 29.8.2012 IN APPAL ITA NOS. 3310 TO 3316/MUM/2011, WHEREIN THE TRIBUNAL DIRECTED THE AO TO COMPUTE THE ADDITION ON THE BASIS OF PEAK CREDITS OF ALL THE BANK ACCOU NTS TO TAKEN TOGETHER AND ALSO CONSIDER THE UNEXPLAINED INVESTMENT SOURCED FROM THESE BANK ACCOUNTS TO THE EXTENT OF PEAK CREDIT AVAILABLE IN THOSE ACCOUNTS FOR THAT PARTICULAR YEAR. GIVING EFFECT TO THE SAID ORDER OF THE TRIBUNAL (SUPRA) DATED 29.8.2012, AO RECOMPUTED THE ASSESSED INCOME AND PASSED THE ORDER DATED 24.10.2013. AGAIN AGGRIEVED WITH THE SAID FRESH ASSESSMENT ORDER OF THE AO, AGAIN ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). 4 . DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, B EFORE DISPOSING OF THE ASSESSEES APPEAL, CIT (A) EXAMINED THE RELEVANT RECORD AND FOUND THAT MAINLY THE GRIEVANCE WAS ON ACCOUNT OF THE CREDIT TO BE GIVEN FOR THE PEAK CREDIT COMPUTED AS TAXABLE IN A PRECEDING YEAR WHILE COMPUTING THE PEAK CREDIT FOR THE SUBSEQUENT ASSESSMENT YEAR. IN THIS REGARD, CIT (A) OBSERVED THAT THE AO COMPUTED THE PEAK CREDIT FOR EACH ASSESSMENT YEAR ON STANDALONE BASIS. FOR THAT PURPOSE, AO REDUCED THE CLOSING BALANCE AT THE END OF THE RELEVANT PREVIOUS YEAR TO ARRIVE AT THE NET PEAK 3 BALANCE FOR THE ASSESSMENT YEAR. BEFORE THE CIT (A), ASSESSEE CONTENDED THAT THE METHOD FOLLOWED BY THE AO IS NOT CORRECT. ACCORDING TO THE ASSESSEE, THE CORRECT WORKING WOULD BE TO COMPUTE THE PEAK CREDIT FOR EACH SUBSEQUENT ASSESSMENT YEAR AND TO REDUCE FROM THIS, THE PEAK CREDIT COMPUTED AS TAXABLE IN THE EARLIER ASSESSMENT YEAR. IN THAT EVENT, THE PEAK CREDIT COMPUTED IN THE EARLIER YEAR WAS MORE THAN PEAK AMOUNT COMPUTED IN THE SUBSEQUENT ASSESSMENT YEAR, AND NO ADDITION ON ACCOUNT OF PEAK CRE DIT WAS TO BE MADE FOR THAT ASSESSMENT YEAR. IN OTHER WORDS, IT WAS THE CONTENTION OF THE ASSESSEE THAT ONLY INCREMENTAL PEAK CAN BE CONSIDERED AS TAXABLE UNEXPLAINED INVESTMENT FOR THAT SUBSEQUENT YEAR. IN THIS REGARD, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) OBSERVED THAT IN THE EARLIER ROUND, THE AO HAS CONSIDERED EACH BANK ACCOUNT INDEPENDENTLY DESPITE THE DIRECTIONS OF THE ITAT TO CONSIDER ALL THE BANK ACCOUNTS TOGETHER AND ONLY THE CUMULATIVE POSITION OF THE TRANSACTIONS IN THESE B ANK ACCOUNTS SHOULD BE CONSIDERED. IT IS THE OPINION OF THE CIT (A) THAT ONCE THE CONCEPT OF PEAK CREDIT HAS BEEN DIRECTED TO BE APPLIED, IT IS PRESUMED THAT THE PREVIOUS UNEXPLAINED INVESTMENT EXPLAINS THE SUBSEQUENT INVESTMENT. ACCORDINGLY, HE CAME TO A CONCLUSION THAT THE COMPUTATION OF THE UNEXPLAINED PEAK INVESTMENT BY THE AO WHILE GIVING EFFECT TO ORDER OF THE ITAT IS ERRONEOUS. VIDE PARA 5.5 OF HIS ORDER, CIT (A) HELD THAT THE UNACCOUNTED INVESTMENTS CAN BE CONSIDERED TO BE ACCOUNTED FOR BY THE PE AK CUMULATIVE OF ALL BANK ACCOUNTS CLOSING BALANCE ONLY, IF THE DAILY BALANCE OF THE TWO IE BANK BALANCES AND THE UNEXPLAINED INVESTMENTS ARE CONSIDERED TOGETHER EACH DAY. FURTHER, CIT (A) HELD THAT THE ACTION OF THE ASSESSING OFFICER IN ACTUALLY TAKING B ALANCE AT THE END OF THE YEAR, IN ANY CASE, IS TOTALLY INCORRECT. ACCORDINGLY, HE DIRECTED THE AO TO CONSIDER THE COMPUTATION OF INCREMENTAL PEAK FOR THE RESPECTIVE ASSESSMENT YEARS COMPUTED AND PRODUCED BEFORE HIM AND WORKED OUT THE PEAK BALANCE. HE FUR THER DIRECTED THE AO THAT THE INCOME CONSIDERED IS INCLUSIVE OF AGRICULTURAL INCOME. FURTHER, THE ASSESSEES ARGUMENT THAT IN RESPECT OF KOTHARI GROUP, THE AMOUNT ASSESSED AS COMMISSION SHOULD BE EXCLUDED SINCE THE TRANSACTIONS ARE COVERED IN THE PEAK BAS ED ON CLOSING BALANCES AS PER BANK ACCOUNTS, WAS REJECTED BY THE ASSESSEE. THUS, CIT (A) PARTLY ALLOWED THE ASSESSEES APPEAL. ASSESSEE IS AGGRIEVED AGAINST THE INCLUSION OF THE REGULAR INCOME IN THE ASSESSED INCOME IN ADDITION TO THE REGULAR PEAK CREDIT RELATED ADDITIONS. 4 AGGRIEVED AND DISSATISFIED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5 . DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. IT IS THE CONTENTION OF THE ASSESSEE THAT THE REGULAR ADDITIONS NEED NOT BE MADE IN THE CASES WHERE PEAK CREDITS WERE ORDERED TO BE ADDED BY THE TRIBUNAL IN THE FIRST ROUND OF THE PROCEEDINGS. HE FURTHER CO NTENDED THAT THE REVENUE AUTHORITIES HAVE NOT APPRECIATED THE PEAK WORKING SUBMITTED BY THE ASSESSEE AS WELL AS NOT GIVEN CREDIT OF INCOME OFFERED HIM IN RETURN OF INCOME. 6 . ON THE OTHER HAND, LD DR FOR THE REVENUE HEAVILY RELIED ON THE ORDERS OF THE RE VENUE AUTHORITIES. 7 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE DECISION OF THE TRIBUNAL IN THE FIRST ROUND OF THE PROCEEDINGS AND ALSO THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE SAID DE CISION OF THE TRIBUNAL (SUPRA) IN THE FIRST ROUND, WE FIND THE TRIBUNALS DIRECTIONS ARE ONLY ON THE PEAK CREDITS AND THERE IS NO REFERENCE TO THE NORMAL STEAMS OF INCOME. IT IS OBVIOUS THAT SEPARATE DIRECTION IS UNCALLED FOR AS THE NORMAL STEAMS OF I NCOME HAS TO BE TAXED SEPARATELY. FURTHER, IN OUR OPINION, THE INCOME RECEIPTS CREDITED TO P & L ACCOUNT OR BANK ACCOUNT EARNED OUT OF BUSINESS ARE OUTSIDE THE EXERCISE OF PEAK CREDIT ANALYSIS AND THE S A I D P E A K C R E D I T S ARE SEPARATELY TAXED IE IN ADDITION TO THE N O R M A L S T R E A M S O F I N C O M E IN ANY YEAR. THE INCOME CREDITED TO THE BOOKS OF ACCOUNT OF THE ASSESSEE OR THE BANK SHOULD BE CONSIDERED EXCLUSIVE OF THE PEAK CREDIT OF ADDITIONS IN THE ASSESSMENT . THEREFORE, WE APPROVE THE VIEWS OF THE CIT (A). CONSIDERING THE SAME, THE DECISION OF THE CIT (A) VIDE PARAS 5 TO 5.8 OF HIS ORDER IS AN ORDER. THUS , THE ORDER OF THE CIT (A) ON THESE ISSUES IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED . 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED . ITA NO.6245/M/2014 (AY 2008 - 2009) 9. THIS APPEAL FILED BY THE ASSESSEE AGAINST THE SAID ORDER OF THE CIT (A) - 37, MUMBAI DATED 31.7.2014 FOR THE AY 2008 - 2009. IN THIS APPEAL, ASSESSEE RAISED THE 5 IDENT ICAL ISSUES TO THAT OF THE ONES RAISED IN APPEAL ITA NO.6244/M/2014 FOR THE AY 2007 - 2008. WHILE ADJUDICATING THE SAID APPEAL IN THE ABOVE PARAGRAPHS OF THIS ORDER, AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE UPHELD THE DECISION OF THE CI T (A) AND DISMISSED ASSESSEES APPEAL. CONSIDERING THE COMMONALITY OF THE ISSUES INVOLVED IN THE PRESENT APPEAL WITH THAT OF THE ONES RAISED BY THE ASSESSEE FOR THE AY 2007 - 2008, THE DECISION GIVEN BY US THEREIN SQUARELY APPLIES TO THE PRESENT APPEAL TOO. CONSIDERING THE SAME, ALL THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. CONCLUSIVELY, BOTH THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH OCTOBER, 2015. SD/ - SD/ - (SANDEEP GOSAIN) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 16 .10 .2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI