Dhirajlal Ghusabhai Hirpara, RAJKOT-GUJARAT V. The Income Tax Officer, Wd-1(1), RAJKOT-GUJARAT

ITA 719/RJT/2014

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0782 (ITAT-RAJKOT)
• Duration Of Justice: 7 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 09-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Peak credit
• Section: 144; 142(1)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, राजकोट 瀈यायपीठ 瀈यायपीठ瀈यायपीठ 瀈यायपीठ, , , , राजकोट IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) ] ] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND T.R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No.719/RJT/2014 Asst. Year : 2010-2011 Dhirajlal Ghusabhai Hirpara C/o. Champion Agro Ltd. NH-8B, Veraval (Shapar) Rajkot. Vs ITO, Ward-1(1) Rajkot. अपीलाथ / (Appellant) यथ / (Respondent) Assessee by : None Revenue by : Shri B.D. Gupta, Sr.DR स ु नवाई क तार ख/Date of Hearing : 23/05/2022 घोषणा क तार ख /Date of Pronouncement: 30/05/2022 आदेश/O R D E R PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER: This appeal is filed by the assessee against order dated 26.9.2014 passed by the ld.CIT(A)-1, Rajkot arising out of order of the Assessing Officer passed under section 144 of Income Tax Act, 1961 ("the Act" for short) relating to the Asstt.Year 2010-11. 2. Brief facts of the case is that the assessee is an individual deriving income from salary, interest and agriculture income. For the Asst.Year 2010-11, the assessee filed its return of income declaring total income at Rs.10,04,400/- and agriculture income of Rs.9,25,400/- (for rate purpose) on 28.7.2011. The case was selected for scrutiny assessment and notice has been sent by RPAD post. Notice under section 142(1) was served on the assessee calling for various details. The AO noticed that the assessee made cash ITA No.719/RJT/2014 2 deposits aggregating to Rs.35,23,900/- and Rs.28,86,000/- in the bank accounts with ICICI Bank Ltd., and Axis Bank Ltd. respectively. The assessee was required to explain cash deposits totaling to Rs.64,09,900/- in the above bank account. In spite of various opportunities, the assessee has not participated in the hearing therefore, the AO completed assessment under section 144 of the Act on 25.3.2013. Aggrieved against this ex parte order the assessee filed an appeal before the ld.CIT(A). The assessee through his authorized representatives filed a written submission before the ld.CIT(A). After considering the submission of the assessee, the ld.CIT(A) partly allowed the claim of the assessee by observing as follows: “6.2 I have carefully considered the assessment order and the contention of the appellant. During the course of hearing on 19.9.2014, the appellant was asked to submit copies of area under each crop, the average yield per acre, details of the cash sales showing names of the parties, names and addresses of the persons to whom the cash expenses were paid, and supporting bills/vouchers. It is contended by the appellant that he could not submit the details before the A.O. as they were misplaced by the accountant and now also he is collecting the records which will take a long time. 1 do not find any merit in the contention of the appellant. He has not submitted any details before the A.O. which has resulted in the assessment being passed u/s.144. The appeal hearings were also fixed on 15/10/2013, 17/6/2014, 26/6/2014, 10/7/2014, 19/9/2014 & 25/9/2014. In spite of a span of 11 months, the appellant has not been able to produce any details before the undersigned. This clearly reflects the uncooperative attitude of the appellant. It is also indicative of there being no details available with the appellant. All the sales and purchases are in cash, name of any of the purchaser is not given, no details about the land under each crop and the average yield thereon has been given, no vouchers / bills of any kind have been produced. It is also interesting to note that as per the appellant's letter dt. April 1, 2012, submitted before the A.O., no P&L account has been prepared and all incomes have been credited to capital account. Now the appellant has come up with the P&L account ITA No.719/RJT/2014 3 when its books are missing. All this goes to show that the appellant has merely fabricated the profit and loss account to suit its story. However, the cash deposits, on the other hand, in the two bank accounts, is a reality for which no satisfactory explanation has been given by the appellant. The A.O's action of treating this as undisclosed income is perfectly justified in light of the above discussion and s.69 of the I. T. Act, 1961. However, on going through the bank statement submitted by the appellant, which was also submitted before the A.O., it is seen that there are several cash withdrawals during the year. Thus, the peak credit would have to be taxed giving set off of the withdrawals against the deposits. However, it would be reasonable to assume that the cash withdrawn by the appellant could have remained with him for a period of two weeks. Beyond that, there is every possibility that the withdrawn cash was utilised and thus there was no question of availability of the said withdrawal to be set off against the deposit. The peak credit was calculated using this particular principle. According to the appellant, the peak credit was only Rs.44,53,900/-. However, as per my calculations, the peak credit comes to Rs.55,73.250/-. This is because the appellant had taken credit of Rs.6,10,000/- of cash withdrawal on 14/10/2009. It was not a cash withdrawal but transfer entry. Also, the credit for all cash withdrawals beyond 15 days was denied to the appellant. The peak credit therefore comes to Rs.55,73,250/-. The addition to this extent is confirmed. This ground of appeal is partly allowed. 7.0 Ground No.5 is regarding addition of Rs.5,10,000/-. The A.O. found that the appellant has made investments in shares/securities/mutual funds to the tune of Rs.5,10,000/-. The appellant has contended that the said investment was made from out of known sources of income. However, I do not agree with this contention of the appellant. The appellant has not properly explained source of the said investment. The action of the A.O. is confirmed. This ground of appeal is dismissed. 3. Aggrieved against this, the assessee is further appeal before the Tribunal, raising the following grounds of appeal: “1.0 The grounds of appeal mentioned hereunder are without prejudice to one another. ITA No.719/RJT/2014 4 2.0 The learned Commissioner of Income-tax (Appeals)-l, Rajkot [hereinafter referred to as the CIT(A)] erred on facts as also in law in retaining addition of Rs.55,73,250/- out of the total addition of Rs. 64,09,000/- made by the AO on account of alleged unexplained cash deposits in the bank accounts with ICICI Bank Ltd and Axis Bank Ltd. The retention of addition is in total disregards to appellant's submission and is unjustified on facts as also in law and deserves to be deleted and may kindly be deleted. 3.0 The learned CIT(A) erred on facts as also in law in confirming the addition of Rs.5,10,000/- made by the AO on account of alleged unexplained investment in shares/securities/mutual funds. The addition confirmed is in total disregards of appellant's submission and totally unjustified on facts as also in law and may kindly be deleted. 4. Today is 13 th hearing before this Tribunal, however, none appeared on behalf of the assessee. Notice sent through RPAD post was duly served upon the assessee. The ld.counsel, Shri M.J.Ranpura informed the Bench that he has no instruction from the assessee, and they have withdrawn letter of authority in the above case. It is further seen that in the previous year also despite service of notice, the assessee has not chosen to represent his case. Hence, with the assistance of the ld.DR and considering the material available on record, we proceed to adjudicate the appeal, and dispose of the matter accordingly. 5. The ld.DR appearing for the Revenue submitted that the assessee has not produced any details before the AO, therefore, an ex parte order was passed by the ld.AO. However, the ld.CIT(A) after hearing the assessee, and after verification of cash deposits in both the bank accounts applied peak credit method which worked to Rs.55,73,250/- as against the addition made by the AO of Rs.64,09,000/-. Further, the ld.CIT(A) confirmed addition of Rs.5,10,000/- which represented investment made in shares & securities and mutual fund which claimed to be investment made ITA No.719/RJT/2014 5 from known source of income. However, the assessee could not prove source of income, and therefore the ld.CIT(A) confirmed the addition made by the AO. The ld.CIT(A) has given relief to the assessee wherein the assessee has proved with material evidence before the ld.CIT(A). Therefore, this order does not require any interference and pleaded that the appeal of the assessee may be dismissed. 6. We have gone through the record and the material available on the record. It was an ex parte passed by the AO because of non- cooperation of the assessee. However, the ld.CIT(A) has granted relief to the assessee by applying peak credit method on the cash deposits made by the assessee in two bank accounts, which in our considered opinion does not require any interference. Similarly, another addition of Rs.5,10,000/- towards investments made in shares & securities and mutual funds, which stated to be from the known sources of income by the assessee, but the same was not proved before the lower authorities. Therefore, this ground also does not require any interference. Therefore, we reject the grounds raised, and dismiss appeal of the assessee. 7. In the result, appeal of the assessee is dismissed. Order pronounced in the Court on 30 th May, 2022 at Ahmedabad. Sd/- Sd/- (WASEEM AHMED) ACCOUNTANT MEMBER (T.R. SENTHIL KUMAR) JUDICIAL MEMBER Ahmedabad, dated 30/05/2022 vk*