Shri Vikas Kumar Thakur, V. The Income Tax Officer, Ward-6(4), Ahmedabad

ITA 868/AHD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1347 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-03-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 10-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained investment; Salary income; Peak credit; Source of fund
• Section: 22; 69

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC [CONDUCTED THROUGH VIRTUAL COURT] BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT ./ ITA NO. 868/AHD/2017 / ASSESSMENT YEAR: 2010-11 VIKASH KUMAR THAKUR AT POST LOMA, DIST. VAISHALI BIHAR 844 505 PAN : AQEPM 9970 D VS ITO, WARD-6(4) AMBAWADI AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETIA, AR REVENUE BY : SHRI VINOD TANWANI, SR.DR / DATE OF HEARING : 19/05/2020 /DATE OF PRONOUNCEMENT : 22/05/2020 O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-3, AHMEDABAD DATED 16.4.2015 PASSED FOR T HE ASSTT.YEAR 2010- 11. 2. THOUGH THE ASSESSEE HAS TAKEN FOUR GROUNDS OF AP PEAL WHICH CONTAIN SUB-GROUNDS ALSO, BUT HIS GRIEVANCE REVOLVE S AROUND A SINGLE ISSUE VIZ. THE LD.CIT(A) HAS ERRED IN CONFIRMING AD DITION OF RS.23,87,399/- WHICH WAS ADDED BY THE AO WITH AID O F SECTION 69 OF INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND WAS DOING TRADING IN COMMODITY MARKET AT THE RELEVANT T IME. HE FILED HIS RETURN OF INCOME ON 27.7.2010 DECLARING TOTAL INCOM E AT RS.4,18,060/-. ITA NO.868/AHD/2017 - 2 - THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT. ON THE BASIS OF AIR INFORMATION, THE AO GOT INFORMATION THAT THE ASSESS EE HAS TWO BANK ACCOUNTS WITH ICICI BANK BEARING NO.029401512701 AN D 625901505193. IN THE FIRST ACCOUNT, A SUM OF RS.22,38,220/- WAS F OUND TO BE DEPOSITED IN CASH ON VARIOUS DATES. SIMILARLY, IN THE SECOND AC COUNT AN AMOUNT OF RS.1,49,179/- WAS FOUND TO BE DEPOSITED IN CASH. T HE LD.AO HAS DIRECTED THE ASSESSEE TO EXPLAIN SOURCE OF SUCH INVESTMENT I N THE BANKS. THE ASSESSEE HAS PREPARED A CASH FLOW STATEMENT AND SUB MITTED THAT THERE WAS AN OPENING CASH BALANCE OF RS.4,27,000/-. HE H AS WITHDRAWN VARIOUS AMOUNTS FROM THE BANK AND RE-DEPOSITED THEM . IN OTHER WORDS, THE STAND OF THE ASSESSEE WAS THAT THESE AMOUNTS WE RE USED BY THE ASSESSEE FOR THE PURPOSE OF COMMODITY TRADING. THE RE WERE WITHDRAWALS AND DEPOSITS FROM THE ACCOUNTS, AND IF BOTH ARE TOTALED UP THERE IS NO UNEXPLAINED DEPOSIT. THE LD.AO HAS CAL LED FOR DETAILS FROM ICICI BANK WITH REGARD TO THE ACCOUNT NO.0294015127 01. THE BANK HAS GIVEN A LIST OF 18 TRANSACTIONS AND DISCLOSED THAT THESE WERE CROSS-BEARER CHEQUES WHICH WERE CLEARED BY THE BANK, AND THE AMO UNTS HAVE NOT BEEN WITHDRAWN IN CASH. THE AO HAS INCORPORATED TH IS INFORMATION AS ANNEXURE-A WITH THE ASSESSMENT ORDER. ON THE BASIS OF THE ABOVE INFORMATION, THE AO HARBOURED A BELIEF THAT ALLEGED CASH WITHDRAWN SHOWN IN THE CASH BOOK WAS NEVER WITHDRAWN BY THE A SSESSEE, AND IT WAS NEVER COME BACK TO THE ASSESSEE SO THAT THIS CA SH WAS AVAILABLE WITH THE ASSESSEE FOR RE-DEPOSITING. HENCE, HE MADE AN ADDITION OF RS.23,87,399/-. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. ITA NO.868/AHD/2017 - 3 - 4. WHILE IMPUGNING THE ORDERS OF THE REVENUE AUTHOR ITIES, SHRI DIVETIA, THE LD.COUNSEL FOR THE ASSESSEE TOOK US TH ROUGH PAGE NO.22 OF THE PAPER BOOK WHERE SUMMARY OF CASH FLOW STATEMENT IS BEING PLACED. HE THEREAFTER DREW OUR ATTENTION TOWARDS PAGES 17 TO 2 1 WHEREIN THE BANK STATEMENT HAS BEEN PLACED ON RECORD. HE SUBMITTED THAT ON THE BASIS OF THESE DETAILS, THE ASSESSEE HAS PREPARED A CASH FLO W WHICH IS AVAILABLE ON PAGE NO.23 AND 24 OF THE PAPER BOOK. HE POINTED OU T THAT THERE IS NEGATIVE CASH BALANCE ON THE BANK ACCOUNT AS ON 5.9 .2009 WHICH WAS RS.3,51,801/-. AT THE MOST, IF PEAK CREDIT THEORY I S BEING APPLIED, THEN THIS ADDITION CAN BE RETAINED. HIS LINE OF THE ARG UMENT IS THAT THESE AMOUNTS WERE BEING USED BY THE ASSESSEE FOR COMMODI TY TRADING. SOME OF THE CHEQUES CAME FROM M/S.SMC COMTRADE WERE DEPO SITED IN THIS VERY ACCOUNT, AND SOME CHEQUES WERE ISSUED FROM THI S VERY ACCOUNT. HE DREW OUR ATTENTION TOWARDS A CHEQUE BEARING NO.4326 03 DATED 4 TH JUNE OF SMC TRADING OF RS.50,000/-. IT HAS BEEN CREDITED IN THIS ACCOUNT. THEREFORE, SHRI DIVETIAS EMPHASIS IS THAT THERE WE RE NO OTHER SOURCES OF INCOME WITH THE ASSESSEE, FROM WHERE HE COULD DEPOS IT THIS CASH. IT IS A CIRCULATION OF MONEY FROM THIS VERY ACCOUNT. 5. THE LD.DR, ON THE OTHER HAND, CONTENDED THAT BOT H THE REVENUE AUTHORITIES CONCURRENTLY RECORDED A FINDING THAT AM OUNTS, WHICH HAVE BEEN DEPOSITED BY THE ASSESSEE WITHDRAWN FROM THIS ACCOUNT IN CASH, WAS NEVER TRAVELLED BACK TO HIM. HE HAS ISSUED CRO SS BEARER CHEQUES, AND THOSE CHEQUES HAVE BEEN ENCASHED BY THE PERSON IN WHOSE FAVOUR SUCH CHEQUES WERE ISSUED. THEREFORE, THERE IS NO S OURCE OF FUNDS WITH THE ASSESSEE, ON THE BASIS OF WHICH IT CAN BE ALLEG ED THAT THESE VERY AMOUNTS HAVE BEEN CIRCULATED IN THIS ACCOUNT. ITA NO.868/AHD/2017 - 4 - 6. I HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND GON E THROUGH THE RECORD CAREFULLY. THEORY OF PEAKING CREDIT FOR ASC ERTAINING UNEXPLAINED INVESTMENT CAN ONLY BE APPLIED IF IT IS ESTABLISHED ON THE RECORD THAT THE BANK ACCOUNT IS BEING USED FOR THE PURPOSE OF THE B USINESS IN WHICH SALE PROCEEDS HAVE BEEN DEPOSITED AND PURCHASES WERE MAD E BY USING THAT ACCOUNT. THE ASSESSEE WITH THE HELP OF OTHER CORRO BORATIVE EVIDENCE WAS NOT ABLE TO DEMONSTRATE THE EXACT NATURE OF TRANSAC TION. IN THAT EXERCISE IN ORDER TO ASCERTAIN THE FACTS, ONE CAN HARBOR A B ELIEF THAT IN THE ABSENCE OF SPECIFIC DETAILS, IN ACCORDANCE WITH THE MATHEMA TICAL FORMULA, INCOME IS TO BE DETERMINED ON THE BASIS OF PEAK CREDIT THE ORY. A PERUSAL OF BOTH THESE ACCOUNTS COUPLED WITH THE SUBMISSION OF THE A SSESSEE FILED BEFORE THE AO WOULD REVEAL THAT THE STAND OF THE ASSESSEE FROM THE VERY BEGINNING WAS THAT HE HAS DISCOUNTED THE CHEQUES, I N A WAY, HE HAS ISSUED A CHEQUE TO A PERSON AND IN DISCOUNTING, HE TOOK BACK THE AMOUNT. THIS WAS ALLEGED BY HIM IN HIS SUBMISSIONS , WHICH HAS NOT BEEN SPECIFICALLY DEALT WITH. IT IS ALSO DISCERNAB LE FROM THE BANK STATEMENT THAT THESE BANK ACCOUNTS HAVE BEEN USED B Y THE ASSESSEE FOR TRADING ACTIVITY; A WITHDRAWAL IN SYSTEMATICAL MANN ER AT RS.49,000/- PER TRANSACTION IS BEING MADE. IF AN ASSESSEE HAS TO M AKE PAYMENT ON ACCOUNT OF OTHER REASONS, THEN HE WOULD NOT HAVE MA DE PAYMENT EVERY TIME AT A FIXED AMOUNT OF RS.49,000/-. THE AO IN T HE ASSESSMENT ORDER, THOUGH NOTICED THE DETAILS OF ALLEGED CHEQUE PAYMEN TS, AND IN SOME OF PAYMENTS, AMOUNTS WERE SHOWN AT RS.90,000/-, RS.1, 00,000/-, BUT PERUSAL OF THE BANK STATEMENT AT PAGE NO.17 AND 18 WOULD REVEAL THAT CERTAIN DEBIT ENTRIES ARE WITH REGARD TO CONTRACT W ITH SMC COMTRADE, THROUGH WHICH THE ASSESSEE HAS DONE COMMODITY TRADI NG. THESE WERE PAYMENTS MADE TO THIS CONCERN ALSO. AT THIS STAGE I DEEM IT APPROPRIATE ITA NO.868/AHD/2017 - 5 - TO TAKE NOTE OF THE SUMMARY OF CASH FLOW PREPARED B Y THE ASSESSEE, WHICH IS AVAILABLE ON PAGE NO.22 OF PAPER BOOK, AND IT READS AS UNDER: VIKAS THAKUR SUMMARY CASH FLOW PARTICULARS AMOUNT (RS.) AMOUNT (RS.) A CASH AVAILABLE AS ON 1-4-2009 OUT PAST SAVINGS 427000 TOTAL OF SOURCES FOR CASH SALARY INCOME RECEIVED 600,000 B CASH WITHDRAWAL FROM BANK ACCOUNT 294,999 CASH RECEIVED FROM CONVERSION OF CHEQUE. 1,379,999 2,274,998 TOTAL OF APPLICATION OF CASH PAYMENTS C CASH DEPOSITED IN BANK ACCOUNTS 2,387,399 LOSS FROM COMMODITY IRAN. 137,257 2,524,656 D BALANCE 177,342 7. ON AN ANALYSIS OF THESE DETAILS, I AM OF THE VIE W THAT THERE ARE CERTAIN AMBIGUITIES IN THE DETAILS FILED BY THE ASS ESSEE VIS--VIS CONSIDERED BY THE AO. THE AMOUNTS HAVE BEEN USED F OR THE PURPOSE OF COMMODITY TRADING, AND THE AMOUNTS HAVE BEEN WITHDR AWN PERIODICALLY. SIMILAR AMOUNTS HAVE BEEN DEPOSITED AT ROUGHLY RS.49,000/- PER TRANSACTION. IT APPEARS THAT THESE AMOUNTS MUST HAVE BEEN USED BY THE ASSESSEE FOR TRADING ACTIVITIES, A ND THEREFORE, ONLY THE PEAK POSITIVE OR NEGATIVE BALANCE OCCURRED IN THESE ACCOUNTS DESERVES TO BE CONSIDERED AS UNEXPLAINED INCOME OF THE ASSESSEE , BECAUSE DEPOSITS AND WITHDRAWALS FROM THE SAME ACCOUNT, THOUGH THROU GH CROSS-BEARER CHEQUES ALSO. BUT ACCORDING TO THE ASSESSEE, HE HAS AVAILED BENEFIT OF CHEQUE DISCOUNTING AND RE-CIRCULATED THIS MONEY FOR COMMODITY TRADING. POSSIBILITY OF TRUTH IN THIS ALLEGATION C ANNOT BE RULED OUT. IT CAN ITA NO.868/AHD/2017 - 6 - ONLY BE RULED OUT, HAD THE AO CALLED ONE OF THE PER SONS TO WHOM CHEQUES WAS ISSUED, AND INQUIRED WHO HAS COLLECTED CASH FROM THE BANK. HAD THIS EXERCISE WAS DONE, WITH REGARD TO ONE SHRI JANARDHAN WHO HAS WITHDRAWN RS.2.50 LAKHS ON 12 TH JUNE, THEN THE STAND OF THE ASSESSEE COULD BE FALSIFIED. BUT NO SUCH EXERCISE WAS DONE BY THE AO. THEREFORE, IN THE GIVEN CIRCUMSTANCES, I AM OF THE VIEW THAT A LTERNATIVE SUBMISSION OF THE ASSESSEE IS ACCEPTED FOR ASSESSING HIS INCOM E AT PEAK OF CREDIT/NEGATIVE BALANCE IN THIS ACCOUNT. THUS, TAK ING INTO CONSIDERATION THE DETAILS OF ACCOUNTS, I CONFIRM ADDITION OF RS.3 ,51,801/- WHICH IS A NEGATIVE BALANCE AS ON 5.9.2009 IN PLACE OF RS.23,8 7,399/- MADE BY THE AO AND CONFIRMED BY THE LD.CIT(A). IN OTHER WORDS, INSTEAD OF ADDITION OF RS.23,87,399/-, ADDITION OF RS.3,51,801/- HAS BE EN CONFIRMED, AND THE REST IS DELETED. THE AO HAS TO COMPUTE THE INCOME OF THE ASSESSEE ACCORDINGLY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 22 ND MAY, 2020. SD/- (RAJPAL YADAV) VICE-PRESIDENT