Shri Nitin Parekh, HUF, Vadodara V. The Income Tax Officer, Ward-1(2)(4), Vadodara

ITA 923/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8565 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 17-04-2017
• Court: TRIBUNAL

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER &SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./I.T.A. NO.923/AHD/2017 ( / ASSESSMENT YEAR:2012-13) NITIN PAREKH-HUF 7, SHREEPALLI MADHUVANVATIKA, NEAR VAIKUNTH SOCIETY, GOTRI ROAD, VADODARA-390021 / VS. ITO WARD-1(2)(4), VADODARA ./ ./PAN/GIR NO. : AAF HN2 369 N ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI B. J. THAKKAR, AR / RESPONDENTBY: SHRI L. P. JAIN, SR.DR !' /DATE OFHEARING 08/07/2019 #$!' / DATE OF PRONOUNCEMENT 15/07/2019 %& /O R D E R PER AMARJIT SINGH - AM: THE APPEAL FILED BY THE ASSESSEE FOR A.Y. 2012-13, ARISE FROM ORDER OF THE CIT(A)-5, VADODARA DATED 23.01.2017, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE RETURN OF INCOME DECLARING INCOME OF RS. 3,52 ,690/- WAS FILED ON 30.03.2013. SUBSEQUENTLY, THE CASE WAS SELECTED FO R SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 23.09.2013. DURING THE C OURSE OF ASSESSMENT THE AO HAS NOTICED THAT ASSESSEE HAS DEPOSITED CASH AGGREGATIN G TO THE AMOUNT OF RS. 49,00,000/- IN THE BANK ACCOUNT MAINTAINED WITH STA TE BANK OF INDIA, BARODA BRANCH. ITA NO. 923/AHD/2017 A.Y. 2012-13 2 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO EXPLAIN THE CASH DEPOSIT TO THE AMOUNT OF RS. 49,00,000/- I N HIS BANK ACCOUNT WITH STATE BANK OF INDIA, THEREFORE, THE AO HAS ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME. 4. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A ) AGAINST THE DECISION OF AO. LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND RESTRICTED THE ADDITION TO THE EXTENT OF PEAK CREDIT OF RS. 25,00, 000/-. THE RELEVANT PART OF THE DECISION OF CIT(A) IS REPRODUCE AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS AND CIRCUMSTA NCES OF THE CASE, THE OBSERVATIONS OF THE ASSESSING OFFICER, THE SUBMISSIONS OF THE AS SESSEE, MATERIAL AVAILABLE ON RECORD AND THE JUDICIAL PRONOUNCEMENTS ON THE SUBJECT. THE ASSESSEE HAD DEPOSITED RS. 49,00,000/- IN CASH IN ITS BANK ACCOUNT. THE ASSESS EE HAD CLAIMED THAT IT HAD OPENING CASH BALANCE OF RS. 17,77,683/- AS ON 01.04.2011, W HICH WAS UTILIZED TO DEPOSIT CASH IN ITS BANK ACCOUNT. HOWEVER, THE ASSESSEE HAS FAIL ED TO ESTABLISH THIS FACT BY ADDUCING RELEVANT EVIDENCE, AS ALSO NOTED BY THE AS SESSING OFFICER IN PARA (B.1), PAGE 4 OF THE ASSESSMENT ORDER. THEREFORE, ASSESSEE'S PL EA REGARDING EXISTENCE OF OPENING CASH BALANCE OF RS. 17,77,683/- IS NOT ACCEPTED. FU RTHER, THE ASSESSEE HAD UTILIZED THE WITHDRAWAL OF RS. 5,00,000/- ON 05.11.2011 FOR PERS ONAL EXPENSES AND THE SAME WAS NOT AVAILABLE TO THE ASSESSEE FOR REDEPOSIT IN CASH IN BANK ACCOUNT. THE ASSESSEE HAS ARGUED THAT THE ASSESSING OFFICER HASIGNORED THE WI THDRAWALS MADE BY THE IT AND HAS MADE ADDITIONS ON ACCOUNT OF ALL THE CREDIT ENTRIES , WHICH IS NOT AS PER LAW. I TEND TO AGREE WITH ASSESSEE'S THIS PLEA. ONCE THE ASSESSING OFFICER HAS DECIDED TO CONSIDER THE CREDIT ENTRIES IN A BANK ACCOUNT, HE IS BOUND T O CONSIDER AND ACCOUNT FOR ALL THE WITHDRAWALS ALSO. AVAILABILITY OF CASH ON ACCOUNT O F WITHDRAWALS BY THE ASSESSEE CANNOT BE DISPUTED, AS THE SAME ARE WITHDRAWN FROM THE BANK. HON'BLE ITAT, AHMEDABAD IN SORINANDAKUMAR SODHAN VS. JTO IN 1TA NO. 2075/AHD/2012, HELD THAT THE ENTRIES IN THE BANK SHOULD NOT BE DOUBTED. THOSE ENTRIES IN THE BANKS WERE IN THE NATURE OF DEPOSITS AND WITHDRAWALS, WHICH WERE INCORPORATED IN THE CASH FLOW STATEMENTS. THE TRIBUNAL HELD THAT IF THE REVENUE D EPARTMENT HAS NOT ESTABLISHED THAT THE CASH AVAILABLE WITH THE ASSESSEE WAS NOT UTILIZ ED ELSEWHERE, THEN ON THE BASIS OF PREPONDERANCE OF PROBABILITIES, IT CAN BE ASSUMED T HAT THE VERY CASH AVAILABLE WITH THE ASSESSEE WAS RE-DEPOSITED IN THE BANK. HON'BLE ITAT, AHMEDABAD, IN THE CASE OF ITO VSMURLIDHAR ICE-CREAM &SWEETPARLOUR, ITA NO. 53 1/AHD/2012, HAS HELD THAT WHERE THERE ARE DEPOSIT AND WITHDRAWAL ENTRIES INT O THE BANK ACCOUNT, IT WOULD BE PRESUMED THAT THE AMOUNT WITHDRAWN WAS AVAILABLE WI TH THE ASSESSEE FOR DEPOSITING THE SAME. THEREFORE, IT CANNOT BE CONCLUDED THAT TH E ENTIRE DEPOSITS WERE FROMUNEXPLAINED SOURCE.IN VIEW OF THIS, IT IS CLEA R THAT THE CASH WITHDRAWALS FROM THE BANK ACCOUNT CANNOT BE IGNORED, WHILE ASSESSING UNE XPLAINED CASH DEPOSITS IN THE BANK ACCOUNT. THE EVIDENCE OF WITHDRAWAL FROM THE B ANK ACCOUNT HAS TO ACCEPTED AS GENUINE AND ONCE THE' WITHDRAWAL IS ACCEPTED, IN VI EW OF THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VSSHAILESHRASIKLAL MEHTA [2009] 176 TAXMAN 270 (GUJ), THERE WAS NO QUESTION OF DEPOSIT TO THE EXTENT OF W ITHDRAWAL OF CASH, AS UNEXPLAINED. HON'BLE ITAT, AHMEDABAD HAS, IN THE CASE OF SHIVJIMANJI AMBAVS DCIT [1995] 51 TTJ 61 (AHD.), HELD THAT WHILE CONSIDERING ITA NO. 923/AHD/2017 A.Y. 2012-13 3 UNEXPLAINED INVESTMENT, AVAILABILITY OF MONEY FROM BANK WITHDRAWALS CANNOT AND SHOULD NOT BE IGNORED. AFTER CONSIDERING THE WITHDRAWALS AND THE DEPOSITS IN ALL THE ACCOUNTS, THE PEAK NEGATIVE CASH BALANCE IN THIS CA SE COMES TO RS.5,62,000/-. HON'BLE AHMEDABAD BENCH OF ITAT IN SORINANDAKUMARSODHAN VS. ITO IN IT A NO. 2075/AHD/2012, HASHELD THAT THE ENTRIES IN THE BANK SHOULD NOT BE DOUBTED. THE COURT HELD THAT IF THE REVENUE DEPARTMENT HAS NOT ESTABLI SHED THAT THE CASH AVAILABLE WITH THE ASSESSEE WAS NOT UTILIZED ELSEWHERE, THEN ON TH E BASIS OF PREPONDERANCE OF PROBABILITIES, IT CAN BE ASSUMED THAT THE VERY CASH AVAILABLE WITH THE ASSESSEE WAS RE- DEPOSITED IN THE BANK. HON'BLE AHMEDABAD BENCH OF I TAT IN ACIT VSJAYESH FINANCE [2014] 41 TAXMANN.COM 323 (AHMEDABAD-TRIB.) HAS HEL D THAT IN CASE OF RECYCLING OF CASH IN BUSINESS, ADDITION SHOULD BE MADE ON BASIS OF PEAK CREDIT AS APPEARING IN CASH FLOW STATEMENT. HON'BLE RAJKOT BENCH OF ITAT H AS, IN ITO VSMAHESHKUMARJAYANTILAIVORA [2004] 3 SOT 96 (RAJKOT ) HELD THAT FOR MAKING ADDITIONS ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS, ONLY PEAK CREDIT SHOULD BE TAKEN, AS BY AGGREGATING DEPOSITS, THEY TEND TO BE TAXED T WICE. HON'BLE RAJKOT BENCH OF ITAT HAS, IN ITO VS.MAHESHKUMARJAYANTILAIVORA [2004] 3 S OT 96 (RAJKOT) HELD THAT FOR MAKING ADDITIONS ON ACCOUNT OF UNEXPLAINED CASH DEP OSITS, ONLY PEAK CREDIT SHOULD BE TAKEN, AS BY AGGREGATING DEPOSITS, THEY TEND TO BE TAXED TWICE. IT IS NOTED THAT THE ASSESSEE HAS WORKED OUT THE PEAK CREDIT OF RS. 20,0 0,000/-, AFTER IGNORING THE OPENING CASH BALANCE OF THE ASSESSEE AS ON 01.04.2011. HOWE VER, IT IS NOTED THAT THE ASSESSEE HAD TAKEN IN TO ACCOUNT THE WITHDRAWAL OF RS. 5,00, 000/- ON 05.11.2011, WHICH WAS ACCEPTED AS HAVING BEEN UTILIZED FOR PERSONAL PURPO SES BY THE ASSESSEE AND AS SUCH NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT OR DER. THEREFORE, THIS AMOUNT WAS NOT AVAILABLE TO THE ASSESSEE FOR REDEPOSIT IN ITS BANK ACCOUNT AND AFTER TAKING THIS IN TO ACCOUNT THE PEAK CREDIT WORKS OUT TO RS. 25,00,0 00/-. IN VIEW OF THE ABOVE, ADDITION OF RS. 25,00,000/-, ON ACCOUNT OF PEAK CREDIT, IS U PHELD AND THE BALANCE ADDITION OF RS. 24,00,000/- IS DELETED. THE ASSESSEE PARTLY SUC CEEDS ON THIS GROUND OF APPEAL. 5. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE MATERIAL ON RECORD. THE AO HAS MADE ADDITION OF RS. 49,00,000/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT FOUND IN THE BANK ACCOUNT OF THE ASSESSEE. THE ASSE SSEE HAD CLAIMED THAT IT HAD OPENING CASH BALANCE OF RS. 17,77,683/- AS ON 01.04 .2011 WHICH WAS UTILISED TO DEPOSIT IN ITS BANK ACCOUNT. HOWEVER, AFTER PERUSA L OF THE MATERIAL ON RECORD AND FINDING OF THE CIT(A) IT IS CLEAR THAT ASSESSEE HAS FAILED TO SUBSTANTIATE THE EXISTENCE OF OPENING CASH BALANCE OF RS. 17,77,683/ - WITH RELEVANT SUPPORTING EVIDENCES. THE LD. CIT(A) HAS PROVIDED RELIEF TO THE ASSESSEE B Y TAKING IN TO CONSIDERATION THE AMOUNT REFLECTED IN THE WITHDRAWA L MADE FROM HIS BANK ACCOUNT. HOWEVER, THE ASSESSEE HAS FAILED TO PROOF THE EXIST ENCE OF OPENING BALANCE CLAIMED BY THE ASSESSEE IN HIS CASH BOOK TO THE AMOUNT OF R S. 17,77,683/- AS REPORTED IN THE FINDING OF CIT(A). ASSESSEE HAS WORKED OUT THE PEAK CREDIT OF RS. 20,00,000/- ITA NO. 923/AHD/2017 A.Y. 2012-13 4 AFTER EXCLUDING THE OPENING CASH BALANCE AS ON 01.0 4.2011. IN VIEW OF THE DETAILED FACTS AND FINDINGS AS ELABORATED IN THE ORDER OF LD . CIT(A) WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THEREFORE, DE CISION OF THE LD. CIT(A) IN RESTRICTING THE ADDITION TO THE EXTENT OF RS. 25,00 ,000/- AFTER ACCOUNTING PEAK CREDIT WORKED OUT BY THE ASSESSEE IS JUSTIFIED. ACCORDING LY, APPEAL OF THE ASSESSEE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. SD/- SD/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 15/07/2019 TANMAY TRUE COPY / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. % / ASSESSEE 3. '( ! )! / CONCERNED CIT 4. )! - / CIT (A) 5. *+, ! ( , ' ( , -.%'% / DR, ITAT, AHMEDABAD 6. ,/ 0 / GUARD FILE. BY ORDER / %& , 1 / - ' ( , -.%'% 2 1.DATE OF DICTATION ON 10.07.2019 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 12.07.2019 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 12.07.2019 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 12.07.2019 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 15.07.2019 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16 .07.2019 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER THIS ORDER PRONOUNCED IN OPEN COURT ON 15/07/2 019