ITO 25(1)(1), MUMBAI V. DHIREN AJIT VYAS, MUMBAI

ITA 823/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75820 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 06-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 07-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: HITESH M SHAH
• Keywords: Peak credit

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES D, MUMBAI .. , , . , !' ! # BEFORE SHRI I P BANSAL, JM, & SHRI D KARUNKARA RAO, AM ./ITA NO.823/MUM/2012 ( $ % / ASSESSMENT YEAR :2008-09) THE ITO 25(1)(1) MUMBAI VS. SHRI DHIREN AJIT VYAS, A-204 PARICHAY, HARISHANKAR JOSHI MARG, DAHISAR (E), MUMBAI 400068 PAN ADXPV4902A ( &' /APPELLANT) ( ()&' / RESPONDENT) APPELLANT BY : SHRI SANJEEV JAIN RESPONDENT BY : SHRI HITESH M SHAH DATE OF HEARING : 20.03.2014 DATE OF PRONOUNCEMENT : 20.03.2014 !* / O R D E R PER I P BANSAL, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE REVENUE. IT IS DIRECTE D AGAINST THE ORDER PASSED BY THE CIT(A) DATED 22.11.2011 FOR A.Y. 2008-09. THE GROUNDS OF APPEAL READ AS UNDER: (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION OF RS.18,39,200/- TO RS.1,65,100/- BEING PEAK CREDIT WITHOUT APPRECIA TING THE FACT THAT THIS ACCOUNT IN IDBI BANK IS THE ASSESSEES PE RSONAL SAVINGS A/C. AND NOT DISCLOSED TO THE DEPARTMENT AND PEAK C REDIT CAN BE WORKED OUT ONLY IN THE CASE OF CASH DEPOSITS AND WI THDRAWALS MADE FOR BUSINESS PURPOSES. 2 ITA NO.823/MUM/2012 AY:2008-09 (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION MA DE TO RS.1,65,100/- AS ITS PEAK CREDIT WITHOUT APPRECIATI NG THE FACT THAT THE CASH DEPOSITS WERE MADE AT VARIOUS PLACES LIKE KERALA, NAGPUR & SURAT, WHEREAS THE WITHDRAWALS WERE AT MUM BAI AND HENCE, IT IS NOT POSSIBLE THAT THE CASH WITHDRAWN H AS BEEN DEPOSITED AGAIN. 2. THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF DEALER OF ENGINEERING TOOLS AND HARDWARE AND GENERAL SUPPLIES IN THE NAME OF M/S. AMBIKA ENTERPRISES FOR WHICH THE ASSESSEE IS MAINTAINING BOOKS OF ACCOUNT AND INCOME WAS RETURNED FROM THE SAID BUSINESS ON A SUM OF RS.1,54 ,398/-. APART FROM THE BANK ACCOUNTS BEING OPERATED FOR THE SAID BUSINESS, THER E WAS ONE MORE BANK ACCOUNT IN IDBI BANK AT BORIVILI BRANCH IN WHICH A SUM OF RS.1 8,39,200/- WAS DEPOSITED ON VARIOUS DATES. THE ASSESSEE WAS REQUIRED TO EXPLAI N THE SAME. BEFORE THE AO IT WAS SUBMITTED THAT THE SAID BANK ACCOUNT WAS OPENED TO OBLIGE A FRIEND WHO HAD DEPOSITED CASH AMOUNT IN DIFFERENT BRANCHES IN INDI A I.E. KERALA, NAGPUR AND SURAT AND THE SAID AMOUNT WAS WITHDRAWN BY THE ASSESSEE A ND HANDED OVER TO HIS FRIEND. THUS, IT WAS PLEADED THAT THIS AMOUNT DID NOT BELON G TO THE ASSESSEE. THE AO DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND ADDED THE ENTIRE AMOUNT TO THE INCOME OF THE ASSESSEE. THE ISSUE WAS TAKEN BEFORE THE CIT(A ) AND AN ALTERNATIVE PLEA WAS RAISED THAT PEAK CREDIT SHOULD BE ADDED TO THE INCO ME OF THE ASSESSEE. THE PEAK WAS CALCULATED AT RS.1,65,100/-. THE CIT(A) ACCEPT ED THE CLAIM OF THE ASSESSEE AND THE PEAK AMOUNT WAS CONSIDERED AS INCOME AND BALANC E ADDITION OF RS.16,74,100/- WAS DELETED. THE REVENUE IS AGGRIEVED AND, HENCE, HAS FILED THIS APPEAL. 3. AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY T HE LEARNED DR THAT THE CIT(A) HAS COMMITTED AN ERROR IN DELETING THE PART OF THE ADDITION. IT WAS SUBMITTED THAT THE AMOUNT REMAINED UNEXPLAINED AND AS THE BANK ACC OUNT RELATED TO THE ASSESSEE, THE ENTIRE ADDITION SHOULD HAVE BEEN SUSTAINED. 4. ON THE OTHER HAND, IT WAS SUBMITTED BY THE LEARN ED AR THAT THE LEARNED CIT(A) HAS RIGHTLY ADDED ONLY THE PEAK AMOUNT AND H IS ORDER SHOULD BE UPHELD. 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. INITIALLY IT WAS THE CLAIM OF THE ASSE SSEE THAT THE SAID ACCOUNT DOES NOT BELONG TO HIM BUT WAS BEING OPERATED BY HIS FRIEND. BUT IT WAS FOUND THAT THE 3 ITA NO.823/MUM/2012 AY:2008-09 ASSESSEE HAS NEVER GIVEN THE NAME OF HIS FRIEND. T HEREFORE, THERE IS A PRESUMPTION THAT THE ENTRIES IN THE BANK ACCOUNT BELONGS TO THE ASSESSEE ONLY. IN VIEW OF THE FREQUENCY OF DEPOSITS AND WITHDRAWAL, IT CAN ALSO B E PRESUMED THAT THE ASSESSEE IS RUNNING PARALLEL BUSINESS, WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNT. THEREFORE, MERE ADDITION OF PEAK AMOUNT IS NOT SUFFICIENT AS T HE ASSESSEE MIGHT HAVE EARNED PROFITS IN THE BUSINESS DONE BY HIM OUTSIDE THE BOO KS OF ACCOUNT. THEREFORE, THE DEPOSITS IN THE BANK ACCOUNT OF RS.18,39,200/- IS T AKEN AS TURNOVER OF THE UNRECORDED BUSINESS OF THE ASSESSEE AND APPLYING 15 % NET PROFIT THEREON, THE PROFITS ASSESSABLE WILL BE RS.2,75,880/-, WHICH IS ALSO REQUIRED TO BE ASSESSED ALONG WITH THE PEAK AMOUNT. THEREFORE, WE DIRECT THAT TH E ADDITION OF RS.4,40,980/- TO BE SUSTAINED OUT OF THE TOTAL ADDITION OF RS.18,39,200 /- AND BALANCE ADDITION OF RS.13,98,220/- IS DELETED. WE ORDER ACCORDINGLY. 6. THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWE D IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF MARCH, 2014. SD/- SD/- (D KARUNAKARA RAO) (I P BANSAL) ACCOUNTANT MEMBER JUDICIAL ME MBER MUMBAI, DT : 20 TH MARCH, 2014 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T, CONCERNED 4. THE CIT (A)-CONCERNED 5. THE DR, D BENCH, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI