ASHISH P. SHAAH (HUF), MUMBAI V. ITO 32(1)(2), MUMBAI

ITA 6692/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9850 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 15-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Opportunity of being heard; Peak credit
• Section: 44AD

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 6692 /MUM/ 2 016 (ASSESSMENT YEAR 20 07 - 08 ) ASHISH P. SHAH (HUF) 44, RADHESHYAM APARTMENT BEHINF BARFIWALA LANE ANDHERI WEST MUMBAI - 400 056. VS. ITO 32(1)(2) MUMBAI ( APPELLANT ) ( RESPONDENT ) PAN NO . AAEHA3903L ASSESSEE BY SHRI ANIL THAKRAR DEPARTMENT BY MS. N. HEMALATHA DATE OF HEARING 2 3 . 8 . 201 7 DATE OF PRONOUNCEMENT 23 . 8 . 201 7 O R D E R THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 08 - 09 - 2016 PASSED BY LD CIT(A) - 44, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2007 - 08. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN PARTIALLY SUSTAINING THE ADDITION MADE BY THE AO RELATING TO BANK DEPOSITS. 2. THE ASSESSE E IS ENGAGED IN TRANSPORT BUSINESS AND FILED HIS RETURN OF INCOME DECLARING INCOME U/S 44AD OF THE ACT. THE AO RECEIVED INFORMATION THROUGH AIR THAT THE ASSESSEE HAS MADE CASH DEPOSITS INTO HIS BANK ACCOUNT. THE AGGREGATE AMOUNT OF DEPOSIT MADE IN THE AC COUNT MAINTAINED WITH ORIENTAL BANK OF COMMERCE WAS RS.177.52 LAKHS. THE AO ESTIMATED INCOME FROM THESE DEPOSITS AT 15% THEREOF AND ACCORDINGLY MADE AN ADDITION OF RS.26.62 LAKHS. 3. BEFORE LD CIT(A), THE ASSESSEE SUBMITTED THAT IT IS HAVING FOUR BAN K ACCOUNTS AND THE WITHDRAWALS MADE FROM BANK ACCOUNTS WERE DEPOSITED EITHER IN THE SAME BANK OR IN OTHER BANK. THE LD CIT(A) NOTICED THAT THE AGGREGATE AMOUNT OF DEPOSITS MADE IN ALL THE FOUR BANK ACCOUNTS WAS ASHISH P. SHAH (HUF) 2 RS.195.25 LAKHS AND THE AGGREGATE AMOUNT OF WITHDRAWALS MADE FROM ALL THE FOUR BANK ACCOUNTS WAS RS.257.03 LAKHS. THE LD CIT(A), HOWEVER, TOOK THE VIEW THAT THE PROFIT SHOULD BE ESTIMATED ON THE AGGREGATE AMOUNT OF WITHDRAWALS. THE LD CIT(A) ALSO FELT THAT THE RATE OF PROFIT OF 15% ADOPTED BY TH E AO WAS ON THE HIGHER SIDE. ACCORDINGLY HE ESTIMATED THE INCOME AT 8% OF THE AGGREGATE AMOUNT OF WITHDRAWALS AND ACCORDINGLY CONFIRMED THE ADDITION TO THE EXTENT OF RS.20.56 LAKHS. STILL AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 4. THE LD A.R SUBMITTED THAT THE TAX AUTHORITIES HAVE NOT RECOGNISED THE FACT THAT THE WITHDRAWALS MADE FROM ONE BANK ACCOUNT WAS DEPOSITED INTO EITHER IN THE SAME BANK ACCOUNT OR IN ANOTHER BANK ACCOUNT. ACCORDINGLY HE SUBMITTED THAT THE ENTIRE DEPOS ITS OR WITHDRAWALS CANNOT BE CONSIDERED AS TRADING RECEIPTS. HE SUBMITTED THAT THERE WILL NOT BE ANY NEGATIVE BALANCE IF A PEAK CREDIT STATEMENT IS PREPARED. HE SUBMITTED THAT THE TAX AUTHORITIES HAVE NOT CONSIDERED OPENING BANK BALANCES AVAILABLE WITH T HE ASSESSEE AND SUCH OPENING BALANCES CANNOT BE CONSIDERED TO BE CURRENT YEARS INCOME. 5. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE HAS DECLARED GROSS RECEIPTS OF RS.26.43 LAKHS ONLY IN HIS BANK ACCOUNT. HENCE IT WAS CONSIDERED THAT TH E ASSESSEE HAS SUPPRESSED THE RECEIPTS TO THE EXTENT OF DEPOSITS/WITHDRAWALS. 6. IN THE REJOINDER, THE LD A.R SUBMITTED THAT THE ASSESSEE HAS DECLARED INCOME U/S 44AD OF THE ACT AND HENCE THE ASSESSEE IS NOT OBLIGED TO EXPLAIN EACH SINGLE ENTRY. 7. WHEN IT WAS POINTED OUT THAT THE ASSESSEE HAS DECLARED GROSS RECEIPTS OF RS.26.43 LAKHS ONLY IN HIS RETURN OF INCOME AND HENCE THE ASSESSEE IS UNDER OBLIGATION TO EXPLAIN THE ENTRIES IN EXCESS OF THE GROSS RECEIPTS, THE LD A.R SUBMITTED THAT THE TAX AUTHO RITIES HAVE FILED TO APPLY PEAK CREDIT THEORY IN THIS MATTER AS ALL THE RECEIPTS CANNOT BE CONSIDERED AS TRADING RECEIPTS AND ALSO FAILED TO CONSIDER OPENING BALANCES. ASHISH P. SHAH (HUF) 3 8. I TEND TO AGREE WITH THE CONTENTIONS OF THE ASSESSEE. IN MY VIEW, THE ASSESSEE S HOULD BE GIVEN SET OFF OF DEPOSITS MADE IN THE BANK ACCOUNT OUT OF WITHDRAWALS MADE EARLIER. THE DEPOSITS MADE OUT WITHDRAWALS MADE FROM OPENING BALANCES CANNOT BE CONSIDERED AS CURRENT YEARS RECEIPTS/INCOME AT ALL. HENCE IN MY VIEW, THE ISSUE BEFORE THE TAX AUTHORITIES HAVE TO BE EXAMINED BY CONSIDERING PEAK CREDIT STATEMENT ALSO. ACCORDINGLY I AM OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE AO BY CONSIDERING THE PEAK CREDIT THEORY ALSO. ACCORDINGLY I SET ASIDE THE ORDER PAS SED BY LD CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO FOR EXAMINING IT AFRESH BY DULY CONSIDERING THE PEAK CREDIT STATEMENT. THE AO MAKE TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW, AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 3 . 8 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 2 3 / 8 / 20 1 7 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. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGIS TRAR) PS ITAT, MUMBAI