D.Srinivasan, Coimbatore V. DCIT, Coimbatore

ITA 822/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8208 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-01-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 13-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T BANUSEKAR
• Keywords: Peak credit; Deemed to accrue or arise in india
• Section: 143(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . . . , . , % BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.822/MDS/2015 ( / ASSESSMENT YEAR: 2011-12) MR. D.SRINIVASAN 116-A, BASHYAKARALU ROAD, (WEST) R.S.PURAM, COIMBATORE- 641 002. VS DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1, COIMBATORE. PAN:ABTPS 5776P ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : MR. T.BANUSEKAR, C.A. /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 13 TH JANUARY, 2016 /DATE OF PRONOUNCEMENT : 20 TH JANUARY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LD.CIT(A)-I, COIMBATORE DATED 06.03.2 015 IN ITA NO.152/14-15 PASSED UNDER SECTION 143(3) OF THE AC T. 2. THE ONLY ISSUE RAISED IN THE APPEAL BY THE ASSE SSEE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN CONFIRMING THE ADDITION OF RS` 35,12,500/- TOWARDS UNEXPLAINED CASH DEPOSIT UNDER SECTION 68 OF THE AC T. 2 ITA NO.822/MDS/2015 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS THE MANAGING DIRECTOR OF M/S. SREE ANNAPOORNA DEPARTMEN TAL STORES PVT. LTD., FILED HIS RETURN OF INCOME ON 15. 09.2011 DECLARING HIS INCOME AS ` 14,78,288/- . SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT WHEREIN IN THE LEAR NED ASSESSING OFFICER MADE AN ADDITION OF ` 41,00,000/- AS DEEMED INCOME UNDER SECTION 68 OF THE ACT. ON APPE AL, THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION OF ` 35,12,500/- IN RESPECT OF CASH DEPOSITS MADE BY THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY LEARNED ASSESSING OFFICER THAT ASSESSEE HAS MADE CASH DEPOSITS AGGREGATING TO RS.41,00,000/- IN HIS HDFC BANK ACCOUNT. THEREFORE THE LEARNED ASSESSING OFFICER MADE ADDITION OF RS. 41,00,000/- INVOKING PROVISION S OF SECTION 68 OF THE ACT. ON APPEAL, THE LEARNED CIT(A |) HAS GIVEN PARTIAL RELIEF TO THE ASSESSEE BY CONFIRMING THE ADDITION OF RS. 35,12,500/- BY OBSERVING AS FOLLOWS:- 3 ITA NO.822/MDS/2015 8. I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT ALONG WITH THE DETAILS OF BANK ACCOUNT SUBMITTED. ACCORDING TO THE LEARNED AUTHORIZED REPRESENTATIVE, THE TOTAL CASH DEPOSITS INTO DHANALAKSHMI BANK AND HDFC BANK LTD. DURING THE FINANCIAL YEAR 2010-11 WERE ONLY RS.35,12,500/-. THE APPELLANT FURTHER STATED THAT THE ASSESSING OFFICER IN HIS ORDER HAS DISCUSSED ABOUT THE CASH DEPOSITS IN HDFC BANK TO THE EXTENT OF RS.27 LAKHS BUT IN THE ADDITION MADE IN THE ORDER, HE HAS ADDED THE AMOUNT OF RS.41 LAKHS WITHOUT GIVING ANY DETAILS. AS SEEN FROM THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS CONSIDERED THE HDFC BANK CASH DEPOSITS MADE ON 17.09.2010, 25.10.2010, 31.07.2010, 31.05.2010 AND 18.09.2010. THESE AMOUNTS TOTAL TO RS.27 LAKHS. HOWEVER, IN THE ASSESSMENT ORDER THE ASSESSING OFFICER STATED THAT 'THE ASSESSEE'S REPLY IS NOT SATISFACTORY BEING WITHOUT ANY PROOF AND ALSO THE TIME GAP BETWEEN THE CASH WITHDRAWAL AND THE CASH RE- DEPOSITED IS ALSO OF LONG GAP. SO IT IS NOT VERIFIABLE BEING NO VERIFIABLE DETAILS HAVE BEEN FURNISHED BY THE ASSESSEE. SO THE AMOUNT OF RS:41 LAKHS CREDITED IN HIS VARIOUS SAVINGS BANK ACCOUNTS IS ADDED AS DEEMED INCOME U/S 68 OF THE INCOME TAX ACT, 1961 AND' TAXED ACCORDINGLY'. SURPRISINGLY, THE ASSESSING OFFICER IN HIS ORDER HAS ONLY DISCUSSED ABOUT THE CASH DEPOSITS IN HDFC BANK AMOUNTING TO RS.27 LAKHS, AS STATED ABOVE. THERE IS NO MENTION OF CASH DEPOSITS IN ANY BANK ACCOUNT OF THE ASSESSEE IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER ONLY CONCLUDED THAT THE AMOUNT OF RS.41 LAKHS WAS WITHOUT ANY DETAILS. 9. ON GOING THROUGH THE BANK ACCOUNT DETAILS OF HDFC AND DHANALAKSHMI BANK PRODUCED BY THE AUTHORIZED REPRESENTATIVE, IT COULD BE SEEN THAT 4 ITA NO.822/MDS/2015 THERE WERE CASH DEPOSITS IN HDFC BANK ON 01.02.2011 AMOUNTING TO RS.5 LAKHS, ON 04.02.2011 AMOUNTING TO RS.1,95,000/-. SIMILARLY, ON 26.10.2010, THERE WAS A CASH DEPOSIT OF RS.1,17,500/- IN DHANALAKSHMI BANK. THE TOTAL OF CASH DEPOSITS MADE BY THE ASSESSE COMES TO RS.35,12,500/-. 10. REGARDING THE CASH DEPOSIT OF RS.9 LAKHS MADE IN HDFC BANK, THE AUTHORIZED REPRESENTATIVE EXPLAINED THAT THERE WAS A CASH WITHDRAWAL OF RS.9,75,000/- FROM DHANALAKSHMI BANK ON 21.08.2010 AND THE SAME WAS USED FOR CASH DEPOSIT. THE APPELLANT DID NOT FILE ANY CASH BOOK NOR STATEMENT OF AFFAIRS TO PROVE HIS CASE. AS SEEN FROM THE ACCOUNT OF DHANALAKSHMI BANK ON 21.08.2010, THE AMOUNT OF RS.9,75,000/- WAS SHOWN AS WITHDRAWAL AGAINST THE NAME OF SHRI THAMILABAN.D. DURING THE COURSE OF APPELLANT PROCEEDINGS, THE AUTHORIZED REPRESENTATIVE WAS POINTED OUT ABOUT THE MONEY BEING PAID TO SHRI TAMIIABAN.D. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THIS WAS THE CASH WITHDRAWAL MADE BY THE ASSESSEE BUT CHEQUE WAS GIVEN TO SHRI TAMILABAN. D. HOWEVER, NO EVIDENCE TO THE EXTENT THAT SHRI TAMILABAN. D IS AN EMPLOYEE WORKING WITH SHRI D. SRINIVASAN COULD BE FILED. DUE TO LACK OF ANY EVIDENCE, IT COULD NOT BE CONCLUDED THAT THE CASH WITHDRAWAL WAS MADE BY THE APPELLANT FROM DHANALAKSHMI BANK ON 21.08.2010 AND THE SAME WAS USED FOR CASH DEPOSITS INTO HDFC BANK ON 17.09.2010. THIS CASH DEPOSIT OF RS.9 LAKHS HAS TO BE CONCLUDED AS UNEXPLAINED CASH DEPOSIT. 11. ON 25.10.2010, THERE WAS A CASH DEPOSIT OF RS.9 LAKHS MADE IN HDFC BANK. THE APPELLANT SUBMITTED THAT HE HAS WITHDRAWN CASH ON 07.10.2009 AND 16.12.2009 FROM HDFC 5 ITA NO.822/MDS/2015 BANK CURRENT A/C OF SMT. S. JAYANTHI. HOWEVER NO DETAILS OF BANK ACCOUNT WERE FILED TO SUBSTANTIATE THE EXPLANATION. HENCE THIS CASH DEPOSIT IS ALSO TO BE TREATED AS UNEXPLAINED CASH DEPOSIT. 12. ON 31.07.2010 THERE WAS A CASH DEPOSIT OF RS.5 LAKHS IN HDFC BANK. THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT DRAWINGS WERE MADE ON 05.07.2010 AND RS.5 LAKHS FROM HDFC BANK, AND THE SAME WAS EXPLAINED AS THE SOURCE FOR CASH DEPOSIT. HOWEVER FROM THE BANK ACCOUNT, IT WAS IN THE NAME OF SHRI N.P. MANI, CHEQUE' PAID FOR A SUM OF RS.5 LAKHS. THE APPELLANT'S AUTHORIZED REPRESENTATIVE DID NOT FILE ANY DETAILS OF IDENTITY OF SHRI N.P. MANI, HENCE IT CANNOT BE DEEMED THAT THE APPELLANT HAS WITHDRAWN RS.5 LAKHS CASH ON 05.07.2010 IN THE ABSENCE OF ANY EVIDENCE. THIS HAS TO BE CONFIRMED AS UNEXPLAINED CASH DEPOSIT. 13. ON 31.05.2010 THERE WAS A CASH DEPOSIT OF RS.3 LAKHS IN HDFC BANK. THE AUTHORIZED REPRESENTATIVE EXPLAINED THAT A WITHDRAWAL WAS MADE ON 06.07.2009 FROM HDFC BANK CURRENT ACCOUNT OF SMT. S. JAYANTHI. HOWEVER, NO DETAILS OF BANK ACCOUNT COULD BE FURNISHED. FURTHER, IT CANNOT BE ACCEPTED THAT WITHDRAWAL MADE BY SMT. S. JAYANTHI ON 06.07.2009 CAN BE SOURCED FOR CASH DEPOSIT MADE ON 31.05.2010. HENCE, THIS IS CONFIRMED AS UNEXPLAINED CASH DEPOSIT. ON 18.09.2010, THERE WAS A CASH DEPOSIT OF RS.1 LAKH MADE WAS A CASH WITHDRAWAL FROM DHANALAKSHMI BANK ON 24.08.2010. HOWEVER, THE DETAILS FURNISHED WITH DHANALAKSHMI BANK SHOW THAT AN AMOUNT OF RS.1 LAKH WAS PAID TO SHRI AUSTIN FERNANDEZ AND IT CANNOT BE CONCLUDED AS CASH WITHDRAWAL MADE BY THE ASSESSEE. THE EXPLANATION CANNOT BE ACCEPTED AND IT IS CONFIRMED AS UNEXPLAINED 6 ITA NO.822/MDS/2015 CASH DEPOSIT. 14. ON 01.02.2011 THERE WAS A CASH DEPOSIT OF RS.5 LAKHS MADE IN HDFC BANK. THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT IT WAS AN ADVANCE FOR LAND PURCHASE DURING 14.05.2008 RECEIVED BACK DEPOSITED. HOWEVER, NO EVIDENCE IS FILED IN SUPPORT OF THIS EXPLANATION. HENCE THIS CASH DEPOSIT IS CONFIRMED AS UNEXPLAINED CASH DEPOSIT. ON 04.02.2011 THERE WAS A CASH DEPOSIT OF RS.1,95,000/- IN HDFC BANK. THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT RS.1,50,000/- ADVANCE PAID FOR LAND PURCHASE DURING 14.05.2008 RECEIVED BACK AND DEPOSITED ALONG WITH RS.45,000/- RECEIVED FROM SMT. S. JAYANTHI. HOWEVER, NO EVIDENCE COULD BE PRODUCED FOR THE SAME. THIS AMOUNT IS CONFIRMED AS UNEXPLAINED CASH DEPOSIT. 15. ON 26.10.2010 THERE WAS A CASH DEPOSIT OF RS.1,17,500/- MADE WITH DHANALAKSHMI BANK. THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT RS.75,000/- WAS WITHDRAWN FROM DHANALAKSHMI BANK ON 21.08.2010 AND RS.44,000/- WAS WITHDRAWN ON 16.12.2009 FROM HDFC SAVINGS BANK ACCOUNT. HOWEVER, NO EVIDENCE WAS FILED REGARDING THIS WITHDRAWAL. HENCE THIS AMOUNT IS CONFIRMED AS UNEXPLAINED CASH DEPOSIT. 16. CONSIDERING ALL THE ABOVE CASH DEPOSITS, THE TOTAL AMOUNT OF RS.35,12,500- IS CONFIRMED AS UNEXPLAINED CASH DEPOSIT U/S 68 OF THE INCOME TAX ACT, 1961. THE GROUNDS OF APPEAL ARE DISMISSED. 7 ITA NO.822/MDS/2015 5. THE LEARNED AR SUBMITTED BEFORE US THAT THE ASSE SSEE HAD BEEN CONSISTENTLY WITHDRAWING CASH FROM HIS BAN K ACCOUNT AND RE-DEPOSITING THE SAME. HE THEREFORE AR GUED THAT ADDITION CANNOT BE MADE ON THE ENTIRE DEPOSITS MADE BY THE ASSESSEE. THE LEARNED A.R FURTHER AGREED FOR AD DITION TO BE MADE ON PEAK CREDIT BASIS. THE LEARNED DR VEHEME NTLY OPPOSED TO THE SUBMISSION OF THE LEARNED AR AND ARG UED IN SUPPORT OF THE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIALS AVAILABLE ON RECORD. WE FIND MERIT IN THE CONTENTION OF THE LEARNED A.R. THE ASSESSEE IS IN T HE BUSINESS OF RUNNING A DEPARTMENTAL STORE IN THE NAM E OF THE PRIVATE LIMITED COMPANY PROMOTED BY HIM. IT IS APPA RENT FROM THE FACTS OF THE CASE THAT ASSESSEE HAS BEEN CONTIN UOUSLY DEPOSITING CASH IN HIS BANK ACCOUNT AND WITHDRAWING THE SAME. IN SUCH CIRCUMSTANCES WHEN THESE DEPOSITS ARE NOT REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IT WOULD BE APPROPRIATE TO MAKE ADDITION ON THE BASIS OF PEAK C REDIT METHOD. THEREFORE, WE HEREBY DIRECT THE LEARNED ASS ESSING OFFICER TO MAKE ADDITION IN THE HANDS OF THE ASSESS EE 8 ITA NO.822/MDS/2015 INVOKING SECTION 68 OF THE ACT BY ADOPTING PEAK CRE DIT METHOD. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 20 TH JANUARY, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF.