ITO, New Delhi V. Sh. Madho Prashad Gupta, New Delhi

ITA 6695/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7192 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 3
• Next Hearing Date: 23-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 18-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: MANJU BHARDWAJ
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Principle of natural justice; Peak credit; Period of limitation; Time period of passing order
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 6695/DEL/2015 ASSESSMENT YEAR: 2011-12 INCOME TAX OFFICER, VS. SH. MADHO PRASHAD GUPTA, WARD 40(4) 4262-A, JAI MATA MARKET, ROOM NO. 1708, 17 TH FLOOR, TRI NAGAR, DELHI 110 035 E-2 DR. SP MUKHERJEE CIVIC CENTRE NEW DELHI 110 0002 (PAN: AIYPG3166B) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI FR MEENA, SR. DR ASSESSEE BY : MS. MANJU BHARDWAJ, CA DATE OF HEARING : 23-08-2016 DATE OF ORDER : 02-09-2016 ORDER PER H.S. SIDHU, J.M. THE DEPARTMENT HAS FILED THE APPEAL AGAINST THE IMPUGNED ORDER DATED 19.10.2015 OF LD. CIT(A)-14, N EW DELHI PERTAINING TO ASSESSMENT YEAR 2011-12. THE GROUNDS RA ISED IN THE REVENUES APPEAL READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN - 1. DELETING THE ADDITION OF RS. 39,12,860/- OUT OF TOTA L ADDITION OF RS. 41,12,860/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S. 68 OF THE I.T. ACT 1961, IGNORING THAT WHEN THE NAME AND ITA NO.6695/DEL/2015 2 ADDRESS OF SELLERS AND PURCHASERS WERE MADE AVAILABLE THEN THEIR GENUINENESS AND CREDITWORTHINESS SHOULD HAVE BEEN VERIFIED BY HIMSELF OR THROUGH AO. BY VERIFYING THESE, THE CLEAR PICTURE WOULD HAVE EMERGED AND PEAK CREDIT THEORY WOULD NOT HAVE BEEN REQUIRED. 2. THE APPELLANT CRAVES THE RIGHT TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAD FILED RETURN DECLARING AN INCOME OF RS. 1,84,300/-. THE CA SE WAS SUBSEQUENTLY SELECTED FOR SCRUTINY UNDER CASS. FIRST NOTICE U/S. 143(2) OF THE I.T. ACT WAS ISSUED ON 1.8.2012 AND WAS DULY SERVED UPON ASSESSEE WITHIN THE LIMITATION PERIOD. IN RESPONSE THEREOF, THE ACCOUNTANT OF THE ASSESSEE ATTENDED THE PROCEEDINGS FROM TIME TO TIME. DURING THE YEAR THE AS SESSEE HAS EARNED INCOME FROM BUSINESS AND OTHER SOURCE. AS PER AIR THE ASSESSEE HAD DEPOSITS CASH OF RS. 41,12,860/- IN HIS SAVING ACCOUNT DURING THE PERIOD 1.4.2010 TO 31.3.201 1. ACCORDINGLY, AS PER NOTE SHEET ENTRY DATED 6.12.2013, 17.12.2013 AND 20.12.2013 ASSESSEE WAS ASKED FILED THE DETAILS AND SOURCE OF CASH DEPOSITS ALONGWITH DOCUM ENTARY EVIDENCE TO PROVE THE GENUINENESS OF TRANSACTIONS. AS PER AO ITA NO.6695/DEL/2015 3 NO DETAILS / DOCUMENTARY EVIDENCE FILED BY THE ASSES SEE IN SUPPORT HIS CLAIM, THEREFORE, AO MADE THE ADDITION OF RS. 41,12,860/- U/S. 68 BY OBSERVING THAT IN THE ABSE NCE OF ANY EXPLANATION WITH REGARD TO CASH DEPOSIT IN HIS BANK AC COUNT AMOUNTING TO RS. 41,12,860/- WAS HELD TO BE INCOME OF THE ASSESSEE U/S. 68 OF THE INCOME TAX ACT AS UNEXPLAINE D CASH CREDIT AND ACCORDINGLY, COMPLETED THE ASSESSMENT AT RS.42,97,160/- BY PASSING AN ASSESSMENT ORDER DATED 21.3.2014 U/S. 147/143(3) OF THE I.T. ACT, 1961. 3. AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER, AS SESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 28.9.2015 HAS DELETED THE ADDITI ON IN DISPUTE AND PARTLY ALLOWED THE APPEAL OF THE ASSESSE E. 4. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNED ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNA L. 5. LD. SR. DR HAS RELIED UPON THE ORDER OF THE AO AN D REITERATED CONTENTIONS RAISED IN THE GROUNDS OF APP EAL FILED BY THE REVENUE. 6. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE HA S RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED TH AT LD. CIT(A) HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, THE SAME MAY BE UPHELD AND ACCORDINGLY, THE APPEAL OF THE REVENUE MAY BE DI SMISSED. ITA NO.6695/DEL/2015 4 IN SUPPORT OF HIS CONTENTION, HE STATED THAT THE SIMILAR ISSUE HAS BEEN DEALT BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF BALADIN RAM VS. CIT (1969) 71 ITR 427 (SC) AND THE ITAT, LUCKNOW B BENCH IN THE CASE OF ITO, BARABAN KI VS. KAMAL KUMAR MISHRA REPORTED IN (2013) 33 TAXMANN.COM 610 (LUCKNOW TRIB.) AND DECIDED THE SAME IN FAVOUR OF THE ASSESSEE. IN THIS REGARD, HE FILED THE COPIES OF THE AFORESAID DECISIONS OF THE HONBLE SUPREME COURT AND ITAT, L UCKNOW BENCH AND REQUESTED TO FOLLOW THE AFORESAID DECISION S AND APPEAL OF THE REVENUE MAY BE DISMISSED ACCORDINGLY. 7. I HAVE BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) AND THE CASE LAWS CITED BY THE LD. COUNSEL OF THE ASSESE E, AS MENTIONED IN PARA NO. 6 ABOVE, I FIND THAT LD. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED THE ISSUE IN DIS PUTE BY CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND A DJUDICATED THE ISSUE AT PAGE NO. 7 OF THE IMPUGNED ORDER. THE R ELEVANT PARA IS REPRODUCED AS UNDER:- I HAVE CONSIDERED THE SUBMISSION OF THE LD. AR AND FINDING OF THE LD. AO ON PERUSAL OF THE DETAILS FILED BY THE LD. AR I INCLINE TO AGREE WITH THE CONTENTION OF THE APPELLANT THAT ONCE IT IS A CASE OF THE LD. AO THAT THE DEPOSITS BELONG TO THE ASSESSEE, THEN THE BENEFIT OF ITA NO.6695/DEL/2015 5 PEAK CREDIT NEEDS TO BE ALLOWED. PEAK CREDIT PRINCIPLE IS APPLICABLE IN A CASE WHERE THERE IS SEVERAL CREDIT AND ENTRIES ARE FOUND IN ONE ACCOUNT. THE FUNDS OPERATED FROM SUCH ACCOUNT SHOULD BE TAKEN TO BE ONE AND HENCE, TO AVOID MULTIPLE COUNTING OF THE SAME SUMS, ONLY HIGHEST OR PEAK OF THE AMOUNTS IN THAT ACCOUNT SHOULD BE TAKEN AS UNEXPLAINED INVESTMENT. IN THE INTEREST OF NATURAL JUSTICE I CONSIDERED IT REASONABLE AND JUSTIFIED TO TAKE THE PEAK CREDIT WHICH AS PER THE DETAILS FILED BY THE LD. AR FOR THE APPELLANT WORKS OUT TO RS. 2,00,000/- BE TREATED AS INCOME FROM UNDISCLOSED SOURCES. SO I ORDER ACCORDINGLY AND THE ADDITION OF RS. 2,00,000/-- IS CONFIRMED & BALANCE OF RS. 39,12,860/- IS DELETED. 7.1 AFTER GOING THROUGH THE FINDINGS OF THE LD.CIT(A ), AS AFORESAID, I FIND THAT LD. CIT(A) WAS OF THE VIEW THA T ONCE IT IS A CASE OF THE AO THAT THE DEPOSITS BELONG TO THE ASSESSE E, THEN THE BENEFIT OF PEAK CREDIT NEEDS TO BE ALLOWED. I N MY OPINION ALSO PEAK CREDIT PRINCIPLE IS APPLICABLE IN A CASE WHERE THERE IS SEVERAL CREDIT AND ENTRIES ARE FOUND IN ONE ACCOUNT. THE FUNDS OPERATED FROM SUCH ACCOUNT SHOULD BE TAKE N TO BE ONE AND HENCE, TO AVOID MULTIPLE COUNTING OF THE SAM E SUMS, ONLY HIGHEST OR PEAK OF THE AMOUNTS IN THAT ACCOUNT SH OULD BE TAKEN AS UNEXPLAINED INVESTMENT. THEREFORE, IN MY CON SIDERED ITA NO.6695/DEL/2015 6 OPINION, LD. CIT(A) IN THE INTEREST OF NATURAL JUSTICE TAKEN THE PEAK CREDIT WHICH AS PER THE DETAILS FILED BY THE LD . AR FOR THE ASSESSEE WHICH WORKS OUT TO RS. 2,00,000/- AND RIGHT LY TREATED AS INCOME FROM UNDISCLOSED SOURCES. ACCORDING LY, LD. CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION OF RS. 2, 00,000/- AND THE BALANCE ADDITION OF RS. 39,12,860/- WAS DELE TED, WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HEN CE, I UPHOLD THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DI SPUTE AND REJECT THE GROUND RAISED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/09/2016. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 02/09/2016 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR