Meghraj Jain Shikar, CHENNAI V. ITO, CHENNAI

ITA 656/CHNY/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3937 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-11-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 18-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVASJCIT
• Assessee Lawyers: D ANAND
• Keywords: Peak credit
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.656/MDS/2016 * +* / ASSESSMENT YEAR : 2012-13 SHRI MEGHRAJ JAIN SHIKAR, 1B, TVH AKHIRAA, 18, BAWA ROAD, CHENNAI - 600 018. PAN : AAHPS 8798 Q V. THE INCOME TAX OFFICER, NON-CORPORATE WARD 3(3), CHENNAI - 600 034. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SHRI D. ANAND, ADVOCATE /0-. 1 2 / RESPONDENT BY : SHRI SHIVA SRINIVAS, JCIT ' 1 3& / DATE OF HEARING : 03.11.2016 45+ 1 3& / DATE OF PRONOUNCEMENT : 27.12.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -4, CHENNA I, DATED 17.02.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2 I.T.A. NO.656/MDS/16 2. SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE ASSESSING OFFICER FOUND CASH DEPOSITS IN V ARIOUS BANK ACCOUNTS. THE ASSESSEE EXPLAINED BEFORE THE ASSESS ING OFFICER THAT THE CASH WITHDRAWN FROM BANKS WERE REDEPOSITED ALONG WITH CASH IN HAND FOR ISSUING CHEQUES. THE CASH REALIZE D FROM DEBTORS DURING THE YEAR UNDER CONSIDERATION, IS ALSO DEPOSI TED IN THE BANK ACCOUNT ON VARIOUS DATES. THE ASSESSING OFFICER RE JECTED THE CLAIM OF THE ASSESSEE AND REDRAWN THE CASH BOOK IGNORING THE CASH CREDIT AND, ESTIMATED PEAK CREDIT AT 84,50,519/-. THE ASSESSING OFFICER FOUND THAT THE PEAK CREDIT WAS NOT EXPLAINED, THERE FORE, MADE ADDITION UNDER SECTION 68 OF THE INCOME-TAX ACT, 19 61 (IN SHORT 'THE ACT'). REFERRING TO PARA 6 OF THE ASSESSMENT ORDER , THE LD.COUNSEL SUBMITTED THAT THE ASSESSING OFFICER HIMSELF ADMITS THAT THE ASSESSEE WAS ASSESSED TO TAX FOR MORE THAN TWO DECA DES AND THE ACCUMULATED INCOME WOULD BE NEARLY 2 CRORES. IF THIS OBSERVATION OF THE ASSESSING OFFICER IS TAKEN INTO CONSIDERATIO N, THEN THE ACCUMULATED INCOME WOULD BE MORE THAN SUFFICIENT FO R MAKING DEPOSITS IN BANKS, HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF 84,50,519/- IS NOT JUSTIFIED. 3 I.T.A. NO.656/MDS/16 3. REFERRING TO THE ORDER OF THE CIT(APPEALS), THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE CIT(APPEALS) CONFI RMED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT COMPLET E ADDRESS OF THE AGENT, THROUGH WHOM CASH TRANSACTION WAS CLAIMED TO BE MADE, WAS NOT FURNISHED BEFORE HIM. THE LD.COUNSEL FURTH ER SUBMITTED THAT THE CONCLUSION OF THE ASSESSING OFFICER THAT T HE ASSESSEE COULD HAVE ACCUMULATED NEARLY 2 CRORES WAS NOT CONSIDERED BY THE CIT(APPEALS) WHILE CONFIRMING THE ORDER OF THE ASSE SSING OFFICER. WHEN THE ASSESSING OFFICER HIMSELF FOUND THAT THE A SSESSEE WOULD HAVE ACCUMULATED NEARLY 2 CRORES, THERE CANNOT BE ANY ADDITION OF 84,50,519/-. 4. ON THE CONTRARY, SHRI SHIVA SRINIVAS, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THERE ARE SEVERAL CREDITS. THE RECEIPT OF FUNDS WAS CREDITED IN THE CASH BOOK UNDER THE HEAD DEBTORS. THE INDIVIDUAL NAMES OF DEBTOR S WERE NOT ENTERED IN THE CASH BOOK. HOWEVER, THE ASSESSEE CL AIMED BEFORE THE ASSESSING OFFICER A HUGE AMOUNT OF OUTSTANDING AS A BALANCE WITH DEBTORS. THE ASSESSEE WAS DIRECTED TO FILE A FLOW CHART TO EXPLAIN THE ACCUMULATED BALANCE IN THE CAPITAL ACCO UNT TO THE EXTENT 4 I.T.A. NO.656/MDS/16 OF 3,32,50,920/-. REFERRING TO THE CLAIM OF THE ASSES SEE THAT HE WAS ASSESSED TO TAX FOR MORE THAN TWO DECADES AND T HERE WAS ACCUMULATED BALANCE IN THE CAPITAL ACCOUNT, THE ASS ESSING OFFICER FOUND THAT ACCUMULATIONS OUT OF INCOME FROM ASSESSM ENT YEAR 2007-08 TO ASSESSMENT YEAR 2012-13 RESULTS IN TOTAL CREDIT TO THE CAPITAL ACCOUNT OF 50,09,618/-. ASSUMING THAT THE ASSESSEE HAD SIMILAR QUANTUM OF INCOME IN THE EARLIER ASSESSMENT YEARS, THE SAME CANNOT EXCEED MORE THAN 1.5 CRORES. THE ASSESSING OFFICER FURTHER FOUND THAT WHEN NEARLY 25 YEARS OF ACCUMULA TION IS CONSIDERED, THE TOTAL CREDIT TO THE CAPITAL ACCOUNT , AT ANY STRETCH OF IMAGINATION, CAN TOUCH ONLY 2 CRORES. THE CIT(APPEALS) AFTER CONSIDERING THE OBSERVATION OF THE ASSESSING OFFICE R, FOUND THAT THE CLAIM OF THE ASSESSEE CANNOT BE ACCEPTED. ACCORDIN GLY, THE CASH BOOK WAS REDRAWN. THE CIT(APPEALS) FOUND THAT THE CASH DEPOSITED IN THE BANK ACCOUNT DID NOT CORRESPOND TO THE KNOWN SOURCE OF THE ASSESSEE FOR RELEVANT YEAR. REFERRIN G TO THE CLAIM OF THE ASSESSEE THAT THE CASH WITHDRAWN FROM BANK WAS DEPOSITED ALONG WITH CASH IN HAND, THE ASSESSING OFFICER FOUN D THAT IT WAS NOT TENABLE. REFERRING TO THE ORDER OF THE CIT(APPEALS ), THE LD. D.R. SUBMITTED THAT THE SO-CALLED RECEIPT OF FUNDS FROM THE ALLEGED DEBTORS WAS CREDITED IN THE BOOKS UNDER THE HEAD D EBTORS WITHOUT 5 I.T.A. NO.656/MDS/16 LEDGERISING THE INDIVIDUAL DEBTORS. IN THE ABSENCE OF ANY MATERIAL TO SUBSTANTIATE THE CREDIT FOUND IN THE BOOKS OF ACCOU NT, THE CIT(APPEALS) FOUND THAT THE ASSESSEE HAS NOT DISCHA RGED HIS ONUS IN PROVING THE GENUINENESS OF THE DEBT. ACCORDINGL Y, HE RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CREDITED MONEY TO THE EXTENT OF 84,50,519/- IN THE BOOKS OF ACCOUNT. THE ASSESSEE EXPLAINED BEFORE THE ASSESSI NG OFFICER THAT THE CASH WITHDRAWN FROM THE BANK ARE DEPOSITED ALON G WITH CASH IN HAND. THE ASSESSEE ALSO CLAIMS THAT CASH RECEIVED FROM DEBTORS DURING THE YEAR UNDER CONSIDERATION WAS ALSO DEPOSI TED IN THE BANK ACCOUNT ON VARIOUS DATES. THE ASSESSEE HAS NOT FIL ED THE DETAILS OF DEBTORS AND THEIR ADDRESS. REFERRING TO THE CLAIM OF THE ASSESSEE THAT HUGE AMOUNT WAS OUTSTANDING AS BALANCE WITH TH E DEBTORS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE WOULD HAV E ACCUMULATED 50,09,618/- FOR THE PAST FIVE YEARS FROM THE ASSESS MENT YEAR 2007- 08 TO ASSESSMENT YEAR 2012-13. THE ASSESSING OFFIC ER HAS ALSO OBSERVED THAT IF HE ACCEPTS THE LOGIC FROM ASSESSME NT YEAR 2007-08 TO ASSESSMENT YEAR 2012-13 AND OTHER YEARS, THE TOT AL ACCUMULATED 6 I.T.A. NO.656/MDS/16 INCOME CANNOT EXCEED 1.5 CRORES. EVEN IF IT IS ASSUMED THAT THE ASSESSEE WAS ASSESSED TO TAX FOR NEARLY 25 YEARS, T HE ACCUMULATED INCOME WOULD TOUCH 2 CRORES ONLY. THEREFORE, THE ASSESSING OFFICER APPEARS TO HAVE REJECTED THE CLAIM OF THE A SSESSEE AND REDRAWN THE CASH BOOK BY IGNORING THE CASH CREDIT F OUND UNDER THE HEAD DEBTORS. THE ASSESSING OFFICER HAS TAKEN TH E PEAK CREDIT AS PER THE REDRAWN CASH BOOK BY HIM. 6. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 68 OF THE ACT. IN TERMS OF CREDIT IN THE BOOKS OF ACC OUNT, IF THE ASSESSEE CANNOT EXPLAIN TO THE SATISFACTION OF THE ASSESSING OFFICER THE SOURCE OF THE CREDIT, THE SAME CAN BE ADDED AS INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT. THE ASSESSI NG OFFICER FOUND THAT INTRODUCTION OF CASH CREDIT UNDER THE HE AD DEBTORS HAS TO BE IGNORED WHILE COMPUTING THE CASH BALANCE AVAI LABLE TO MAKE CASH DEPOSIT IN THE BANK ACCOUNT. THE ASSESSING OF FICER HAS ALSO OBSERVED THAT THE DEFICIT CASH BALANCE TO THE MAXIM UM EXTENT, BEING THE PEAK VALUE, SHOWS THAT THE AMOUNT TO SUCH EXTEN T REMAINS UNEXPLAINED, THEREFORE, IT HAS TO BE ADDED UNDER SE CTION 68 OF THE ACT. THE FACT REMAINS THAT THE ASSESSEE WAS ASSESS ED TO TAX MORE THAN 25 YEARS AND THE ASSESSING OFFICER HIMSELF ADM ITS THAT THE 7 I.T.A. NO.656/MDS/16 ACCUMULATED INCOME FOR THE PAST FIVE YEARS FROM THE ASSESSMENT YEARS 2007-08 TO 2012-13 WOULD COME NEARLY TO 1.5 CRORES AND BY EXTENDING THE SIMILAR LOGIC FOR OTHER YEARS, THE AS SESSEE WOULD HAVE ACCUMULATED NEARLY 2 CRORES. IF THE ACCUMULATED INCOME WAS TAKEN INTO CONSIDERATION ALONG WITH CASH BOOK REDRA WN BY THE ASSESSING OFFICER, THEN THIS TRIBUNAL IS OF THE CON SIDERED OPINION THAT THE ACCUMULATED INCOME TO THE EXTENT OF 2 CRORES HAS TO BE SET OFF AGAINST THE CREDIT FOUND IN THE REDRAWN CAS H BOOK BY THE ASSESSING OFFICER IF THE CASH CREDIT AS REDRAWN BY THE ASSESSEE WAS SET OFF AGAINST THE ACCUMULATED INCOME ESTIMATE D BY THE ASSESSING OFFICER, THEN THIS TRIBUNAL IS OF THE CON SIDERED OPINION THAT THERE CANNOT BE ANY ADDITION UNDER SECTION 68 OF THE ACT TO THE EXTENT OF 84,50,519/-. THEREFORE, THIS TRIBUNAL IS OF THE CON SIDERED OPINION THAT THE ADDITION MADE BY THE ASSESSING OFF ICER IS NOT JUSTIFIED. WHEN THE ASSESSING OFFICER HIMSELF FOUN D THAT THE ASSESSEE COULD HAVE ACCUMULATED INCOME FOR THE PAST 25 YEARS TO THE EXTENT OF 2 CRORES, MAKING ADDITION UNDER SECTION 68 OF THE A CT TO THE EXTENT OF 84,50,519/- IS NOT CALLED FOR. IN VIEW OF THE ABOV E, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, BOTH THE ORDERS OF THE AUTHORITIES BEL OW ARE SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OFFICER IS D ELETED. 8 I.T.A. NO.656/MDS/16 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 27 TH DECEMBER, 2016 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 27 TH DECEMBER, 2016. KRI. 1 /3#8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. ' :3 () /CIT(A)-4, CHENNAI-34 4. PRINCIPAL CIT-5, CHENNAI 5. 8; /3 /DR 6. * < /GF.