ACIT, CC-2, TRICHY V. SHRI AJ SURESH KUMAR, PUDHUKOTTAI

ITA 918/CHNY/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6242 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 08-11-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Peak credit; Set aside

Judgement Text

आयकर अपीलीय अिधकरण ‘ए’ ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI माननीय +ी महावीर िसंह, उपा12 एवं माननीय +ी मनोज कु मार अ6वाल ,लेखा सद9 के सम2। BEFORE HON’BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No.918/Chny/2020 (िनधाBरण वषB / Assessment Year: 2011-12) ACIT, Central Circle-2, Trichy. बनाम / V s. Shri A.J. Suresh Kumar No.15, Poovaima Nagar, Avanthan Kottai, Aranthangi, Pudukottai – 614 624. थायी लेखा सं./जीआइ आर सं./P AN /GI R No . AV AP S -1 0 5 2 -K (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ की ओरसे/ Assessee by : Shri S. Sridhar (Advocate) – Ld. AR थ की ओरसे/Revenue by : Shri ARV Sreeenivasan (Addl. CIT) –Ld. DR सुनवाई की तारीख/Date of Hearing : 02-08-2022 घोषणा की तारीख /Date of Pronouncement : 17-08-2022 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by Revenue for Assessment Year (AY) 2011-12 arises out of the order of Learned Commissioner of Income Tax (Appeals)-19, Chennai [CIT(A)] dated 28-08-2020 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s.143(3) of the Act on 26-03-2014. The grounds taken by the Revenue are as under: 1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2. The Ld CIT(A) has made the decision on the basis of Orders of ITAT and hon'ble High Court. Issue of Unexplained cash credit is a question of facts and can’t be decided on the basis of the judicial precedences. ITA No.918/Chny/2020 - 2 - 3. The CIT(A) has erred in accepting the Peak Balance Theory put forth by the assessee. 4. The CIT(A) has directed the AO to delete the additions and give an opportunity to the assessee. This amounts to the setting aside of the Assessment Order. The CIT(A) doesn't have power to set aside the order. 5. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored. As evident, the Revenue is aggrieved by relief granted by Ld. CIT(A) with respect to unexplained cash credit in the impugned order. The Ld. CIT(A) has partly allowed the appeal of the assessee, which has been accepted by the assessee. However, the revenue is in further appeal before us. 2. This appeal was heard along with appeal of another assessee belonging to the same group i.e. Shri Thiruvambalam Subramaniyan, ITA No.917/Chny/2020. It was admitted position that facts as well as issues are substantially the same and adjudication in any one appeal shall have equal application to the other appeal. Since we have adjudicated the appeal of that assessee, the ratio of the same shall apply to the case of the present assessee also. In the above background, the appeal is disposed-off as under. 3. During assessment proceedings, it transpired that the assessee made cash deposits of Rs.135.09 Lacs in savings account maintained with City Union Bank Ltd., HDFC Bank Ltd. And Axis Bank Ltd. Accordingly, the assessee was required to explain the source of the same. The assessee pleaded that it was engaged in money lending business which was rejected by revenue. Since the assessee could not furnish satisfactory evidence, the amount was added as unexplained money u/s 69A. ITA No.918/Chny/2020 - 3 - 4. Upon further appeal, Ld. CIT(A) noted the appellate order in the case of group concern e.g. Anbukannan vide order ITA No.238/16-17 dated 16.10.2017 wherein the first appellate authority had considered this issue and held that taxation of gross depots was incorrect. This decision was upheld by Tribunal and finally, the revenue’s appeal against the same was not admitted by Hon’ble High Court of Madras in TCA No.216 & 217 of 2019 dated 04.03.2019. The Hon’ble Court held that if the assessee has failed to explain the entries in the bank accounts, then the addition could be made on the basis of peak credit to remove the cascading effect of the unexplained credit entries in the bank account. The assessee had both cash deposits and cash withdrawals in his bank account with the same bank. Therefore, the method of peak credit was rightly adopted for addition of the alleged undisclosed income of the assessee. 5. The assessee furnished the working of peak credit in the bank account as on 24.02.2011 and arrived at peak credit of Rs.9.42 Lacs (para 7.5 of the impugned order). Considering the same, Ld. CIT(A) held as under: - 7.6 I have given thoughtful consideration to the facts of the case of the appellant and have noticed that the Hon’ble ITAT and the jurisdictional High Court in the case as highlighted supra have held that there is no case for assessing gross deposits and that only peak credit only is liable to be assessed. In the present appeal as well, identical facts exists and in view of the cannon of judicial discipline and doctrine of judicial precedence, I hold that the action of AO in treating the gross deposit is untenable. The peak credit only is liable to be assessed. The AO is therefore directed to just verify the correctness of the peak cash balance available and to delete the addition if the funds available is more than the peak credit after affording opportunity to the appellant. Accordingly, the appellant’s ground on this score is disposed. Aggrieved as aforesaid the revenue is in further appeal before us. ITA No.918/Chny/2020 - 4 - 6. We find that this issue has been adjudicated by us in the case of Shri Thiruvambalam Subramaniyan, ITA No.917/Chny/2020 as under: - Our findings and Adjudication 7. Upon careful consideration of factual matrix, we find that this similar issue has already been decided by Tribunal in assessee’s group case i.e. Shri A. Anbukannan (ITA N0.1871/Mds/2014 and 1731/Mds.2014 dated 05.04.2017). The bench upheld the application of theory of peak credit on cash receipts and cash withdrawals. Subsequently, the revenue’s appeal against this decision has not been admitted by Hon’ble High Court of Madras. We find that similar facts exist in the present case and Ld. CIT(A) has rightly applied this case law to adjudicate the issue. Therefore, no infirmity could be found in the impugned order to that extent. 8. Having said so, we are of the considered opinion that the peak credit has to be worked out properly by considering only cash receipts and cash withdrawals and the same is required to be verified by Ld. AO. The same is the plea of Ld. Sr. DR who has submitted that peak credit was not made available to Ld. AO and therefore, modification in directions is required. We find that the assessee has made deposited cash and withdrawn the same throughout the year. Accepting the plea of Ld. Sr. DR, the working of the peak credit shall be furnished by the assessee to Ld. AO who is directed to consider the same and restrict the addition to the extent of peak credit of cash receipts and cash withdrawals. The cheque entries shall be separately examined and re-adjudicated. The directions given in the impugned order stand modified to that extent. 9. The appeal stands partly allowed in terms of our above order. Facts being pari-materia the same, similar directions are issued to Ld. AO. 7. The appeal stands partly allowed in terms of our above order. Order pronounced on 17 th August, 2022. Sd/- (MAHAVIR SINGH) उपा12 /VICE PRESIDENT Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद9 / ACCOUNTANT MEMBER चे+ई / Chennai; िदनांक / Dated : 17-08-2022 EDN/- आदेश की Xितिलिप अ 6ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आयु (अपील)/CIT(A) 4. आयकर आयु /CIT 5. िवभागीय ितिनिध/DR 6. गाड फाईल/GF