MD. Abdul Hannan, Malda V. ITO, Ward - 1, Malda, Malda

ITA 699/KOL/2011

• Counselvise Citation: [2013] 119 COUNSELVISE.COM (IT) 2951 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2013
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 09-05-2011
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Assessee Lawyers: V N PUROHIT
• Keywords: Peak credit
• Section: 147

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . . . . . . . , /AND ! '! , ) [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM] # # # # / I.T.A NO. 699/KOL/2011 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR: 2004-05 MD. ABDUL HANNAN, VS. INCOME-TAX OFFICER, WD-1, MALDA. (PAN: AAZPH9021P) ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 21.03.2013 DATE OF PRONOUNCEMENT: 21.03.2013 FOR THE APPELLANT: SHRI V. N. PUROHIT, FCA FOR THE RESPONDENT: SHRI H. N. SINGH, SR. DR - / ORDER PER BENCH: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A), JALPAIGURI IN APPEAL NO. 40/MLD/CIT(A)/JAL/09-10 DATED 19.01.2011. ASSESSMEN T WAS FRAMED BY ITO, WD-1, MALDA U/S. 147 R.W.S. 144 OF THE INCOME-TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2004-05 VIDE HIS ORDER DATED 18.12. 2009. 2. AT THE OUTSET, IT IS TO BE MENTIONED THAT THE TH E ASSESSEE HAS FILED PETITION UNDER RULE 11 OF ITAT RULES, 1963 REVISING THE GROUNDS FILED ORIG INALLY WITH THE APPEAL. ORIGINALLY ASSESSEE HAD TAKEN 8 GROUNDS OF APPEAL AND NOW HE IS PRESSIN G ONLY GROUND NOS. 5 AND 6. THE PETITION NARRATES THE FACTS AS UNDER: 1. THE APPEAL WAS FILED TAKING 8 GROUNDS. 2. A PETITION UNDER RULE-11 OF IT(AT) RULE 1963 WA S FILED REVISING THE GROUND WHICH HAS BEEN REQUESTED TO BE TREATED AS WITHDRAWN AND NOT P RESSED. 3. NOW OUT OF 8 GROUNDS ORIGINALLY TAKE MAIN GROUND S ARE GROUND NO. 5 & 6 AS REPRODUCED BELOW :- 5. FOR THAT, ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF LNCOME TAX (APPEAL) FAILED TO APPRECIATE THE FACT & REASON WHLLE CONFIRMING THE ADDITION OF RS. 19,28,361/- EVEN AFTER SUBMISSION AND VERIFI CATION OF THE BANK ACCOUNT AND CALCULATION OF PEAK CREDIT. THEREFORE, THE CONFIRMA TION OF ADDITION IS ARBITRARY, ILLEGAL AND UNJUSTIFIED. HENCE, SUCH ADDITION IS FIT TO BE DELETED. 2 ITA NO.699/K/2011 MD. ABDUL HANNAN 2004-05 6. FOR THAT, ON THE FACT AND CIRCUMSTANCES OF THE C ASE, THE CONFIRMATION OF ARBITRARY ESTIMATE OF PROFIT OF RS. 2,31,223/- ON THE TOTAL D EPOSIT IN THE SAID UNDISCLOSED BANK ACCOUNT NO. 1229 AFTER MAKING ADDITION OF BALANCE A S PICK CREDIT AND AFTER VERIFYING THE SOURCE OF DEPOSIT IS TOTALLY ARBITRARY, NOT LEGAL A ND TOTALLY UNJUSTIFIED. HENCE SUCH CONFIRMATION IS WRONG AND AS SUCH THE ADDITION OF R S. 2,31,223/- IS LIABLE TO BE DELETED. 4. THE ADDITIONS VIDE GROUND NO. 5 ABOVE HAS BEEN M ADE WITH REFERENCE TO UNDISCLOSED IN LNDIAN OVERSEAS BANK LTD. BY ADDING BALANCE AS ON 3 1-04-04 RS.19,28,361/- WHICH IS NOT CORRECT. 4.1. THE ADDITION VIDE GROUND NO. 6 ABOVE RS. 2,31, 223/- HAS BEEN MADE AS DEEMED PROFIT ON TOTAL DEPOSIT RS. 57,16,031/- LESS CHEQUES/OTHER DEPOSIT RS. 11,37,350/- = RS. 45,78,681/- @ 5.05%. 9. IN RESPECT OF THE DISALLOWANCE OF RS. 1,40,026/ - MADE OUT OF INTEREST EXPENSES RELATED TO DIVIDEND INCOME THE ASSESSEE HAS CLAIMED THAT THE DISALLOWANCE HAD NOT BEEN MADE BY THE A.O. ON LOGICAL GROUNDS. IN THIS REGARD I FIND THAT THE A.O. HAS CALCULATED THE AMOUNT TO BE DISALLOWED IN PROPORTION TO THE INVESTMENT MADE IN SHARES FOR DIV IDEND AND TOTAL INVESTMENTS IN SHARES. I FEEL THAT THIS IS THE MOST LOGICAL BASIS FOR DETERMINING THE PROPORTION OF INTEREST AND OTHER EXPENSES WHICH CAN BE CONSIDERED AS RELAT ED TO DIVIDEND INCOME. THEREFORE, I FEEL THAT THIS DISALLOWANCE HAS BEEN COMPUTED BY TH E A.O. QUITE LOGICALLY. HENCE I CONFIRM THIS DISALLLOWANCE OF RS.1,40,026/-. 3. NOW, FROM THE ABOVE, IT IS CLEAR THAT ONLY GROUN D NOS. 5 AND 6 ORIGINALLY RASIDED ARE TO BE ADJUDICATED. LD. COUNSEL FOR THE ASSESSEE SHRI V. N. PUROHIT STATED THAT THE AO AS WELL AS CIT(A) HAS NOT LOOKED INTO THE PEAK CREDIT SUBMITTE D BY ASSESSEE AND MADE ADDITION OF ENTIRE DEPOSIT ON BANK ACCOUNT AT RS.19,28,361/-. FURTHER , HE STATED THAT THE AUTHORITIES BELOW HAVE FURTHER ESTIMATED THE PROFIT ON THE TOTAL DEPOSIT I N THE UNDISCLOSED BANK ACCOUNT I.E. SAVINGS BANK ACCOUNT NO.1229 MAINTAINED WITH INDIAN OVERSEA S BANK AT RS.2,31,223/-. LD. COUNSEL FOR THE ASSESSEE STATED THAT NEITHER THE AO NOR THE CIT(A) HAS GONE INTO THE PEAK CREDIT ENTRIES AND WITHOUT ANY BASIS CONFIRMED THE ADDITIONS ON WH OLE OF THE DEPOSITS. ON THIS, LD. SR. DR SHRI H. N. SINGH RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 4. WE FIND THAT THE ASSESSMENT WAS FRAMED U/S. 147 R.W.S. 144 OF THE ACT. WE FURTHER FIND THAT THE ASSESSEE HAS SUBMITTED PEAK CREDIT CALCUL ATIONS AND THIS PLEAS WAS TAKEN BEFORE CIT(A) AND THE RELEVANT SUBMISSIONS READ AS UNDER: UNDER THE CIRCUMSTANCES, IT IS HUMBLY PRAYED THAT ( I) AO BE DIRECTED TO ARRIVE AT CORRECT PEAK OF ASST. YEAR 2004-05 AND 2005-06 OF T HOSE DEPOSITS OUT OF AGRICULTURAL INCOME AND DEPOSITS WHICH STANDS UN-EXPLAINED IN HI S CONSIDERED VIEW AND ASSES PEAK CREDIT OF ASST. YEAR 2004-05 (EXCLUDING OPENING BAL ANCE ON 01.04.03 AS SAME RELATE TO ASST. YEAR 2003-04). LIKE WISE AO TO CALCULATE PEA K CREDIT FOR ASST. YEAR 2005-06 AND EXCESS OF PEAK CREDIT, IF ANY, IN ASST. YEAR 2005-0 6 OVER PEAK AMOUNT OF ASST. YEAR 2004- 05 ONLY IS TO BE ADDED IN ASST. YEAR 2005-06. 3 ITA NO.699/K/2011 MD. ABDUL HANNAN 2004-05 AS TO AGRICULTURAL INCOME, AO BE DIRECTED TO ADD IT FOR TAX PURPOSE AS PER PROVISIONS OF ACT AS AGRICULTURAL INCOME IS OTHERWISE NOT TAXABLE . INTEREST INCOME OF SAID A/C IS, HOWEVER, TO BE TAXED. WITHOUT COMMENTING ON THE MERITS OF THE PEAK CALCUL ATION, WE ARE OF THE CONSIDERED VIEW THAT THE AO SHOULD ASSESS THE PEAL CREDIT OF THE BANK DE POSITS. IN CASE, HE FINDS THAT THERE IS AN ELEMENT OF BUSINESS TRANSACTION, ONLY THEN HE CAN A SSESS THE PROFIT ON THESE PEAK CREDIT AND NOT OTHERWISE. IN SUCH CIRCUMSTANCES, WE DIRECT THE AO TO REFRAME THE ASSESSMENT QUA THESE TWO GROUNDS AFTER ALLOWING REASONABLE OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE. APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- . . . . . . . . ! ! ! ! '! '! '! '! , (P. K. BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( . . . .) )) ) DATED : 21ST MARCH, 2013 /0 '$12 '3 JD.(SR.P.S.) 4 ITA NO.699/K/2011 MD. ABDUL HANNAN 2004-05 - 4 +''5 65&7- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT MD. ABDUL HANNAN, BAKHARPUR, P.S. KALIA CHAK, DIST. MALDA. 2 +,)* / RESPONDENT ITO, WARD-1, MALDA . 3 . '-$ ( )/ THE CIT(A), JALPAIGURI 4. 5. '-$ / CIT JALPAIGURI 5 <'= +'$ / DR, KOLKATA BENCHES, KOLKATA ,5 +'/ TRUE COPY, -$>/ BY ORDER, ! 2 /ASSTT. REGISTRAR .