K. Prasanna Babu, Hyd, Hyderabad V. ITO, Ward-3(1), Hyderabad, Hyderabad

ITA 959/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2423 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 27-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Unexplained cash credit; Peak credit
• Section: 143(3); 68

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 959/HYD/2016 ASSESSMENT YEAR: 2009-10 SHRI K. PRASANNA BABU, HYDERABAD. PAN AHHPK6531G VS. ITO, WARD 3(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T. CHAITANYA KUMAR REVENUE BY : SMT N. SWAPNA DATE OF HEARING : 01-11-2017 DATE OF PRONOUNCEMENT : 15-11-2017 ORDER PER P. MADHAVI DEVI, J.M.: THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF CIT (A)-3, HYDERABAD DATED 18-02-2016 IN CONFIRMING THE PENALTY OF RS. 7,50,000/- LEVIED U/S 271(1)(C) OF THE IT ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y 2009-10 ON 30-06-2010, ADMITTING A TOTAL INCOME OF RS. 2,44,963/- AND AGRICULTURAL INCOME OF RS. 90,000/-. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE IT ACT, ASSESSEES BANK ACCOUNT WAS VERIFIED AND IT WAS FOUND THAT ASSESSEE HAS MADE CASH DEPOSITS AMOUNTING TO RS. 35,65,900/- ON VARIOUS DATES. WHEN ASKED TO EXPLAIN THE SOURCES OF CASH DEPOSITS, THE ASSESSEE EXPLAINED THAT, HE COLLECTED CASH FROM FRIENDS AND RELATIVES DURING THE RELEVANT FINANCIAL 2 ITA NO. 959/HYD/2016 SHRI K. PRASANNA BABU, HYDERABAD. YEAR FOR INVESTING IN REAL-ESTATE BUSINESS AND THE SAME WAS DEPOSITED INTO ASSESSEES BANK ACCOUNT, BUT, DUE TO SLUMP IN THE MARKET, THE PROJECT WAS NOT TAKEN UP AND, HENCE, THE MONEY WAS RETURNED AFTER WITHDRAWAL FROM THE BANK. HOWEVER, THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO SUPPORT HIS ABOVE CONTENTION AND, THEREFORE, THE ASSESSEE CAME FORWARD TO ADMIT THE PEAK CREDIT BALANCE OF RS. 22,50,786/- IN THE BANK ACCOUNT AS HIS INCOME FOR THE A.Y 2009-10. A LETTER DATED 13-11-2011 TO THIS EFFECT WAS ALSO FILED. THE A.O, THEREFORE TREATED THE SUM OF RS. 22,50,786/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT AND BROUGHT IT TO TAX. 2.1 THEREAFTER, THE A.O INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT AND LEVIED THE PENALTY OF RS. 7,50,000/-, AFTER CONSIDERING THE ASSESSEES EXPLANATION FILED ON 14-05-2012. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE ORDER OF THE A.O AND ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ACCEPTED THE ADDITION OF THE PEAK CREDIT ONLY BECAUSE HE COULD NOT FILE CONFIRMATIONS FROM THE FRIENDS AND RELATIVES WHO HAVE ADVANCED THE MONEY TO HIM BUT NOT BECAUSE THEY ARE NOT GENUINE. HE SUBMITTED THAT A.O HAS ALSO NOT GIVEN ANY ADVERSE FINDING ABOUT THE GENUINENESS OF THE TRANSACTIONS. HE SUBMITTED THAT EVERY ADDITION CANNOT AUTOMATICALLY LEAD TO PENALTY PARTICULARLY WHEN THE A.O HAS NOT FOUND THE EXPLANATION OF THE ASSESSEE TO BE NOT 3 ITA NO. 959/HYD/2016 SHRI K. PRASANNA BABU, HYDERABAD. CORRECT. THEREFORE, ACCORDING TO HIM, THE PENALTY U/S 271(1)(C) OF THE IT ACT IS NOT LEVIABLE IN THIS CASE. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE ALSO PLACED RELIANCE UPON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL, ITAT, AHMEDABAD IN THE CASE OF SHRI JASMINDERSINH GREWAL VS DCIT IN ITA NO. 2536/AHD/2011 DATED 23-11-2015. 4. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS I.E THESE ARE THE AMOUNTS RECEIVED BY THE ASSESSEE FROM HIS FRIENDS AND RELATIVES AND ALSO FAILED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND THEREFORE, ACCORDING TO HER THE PENALTY HAS TO BE SUSTAINED. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAD DISCLOSED HIS BANK ACCOUNT WITH ICICI BANK AT KORAMANGALA AND WHEN THE A.O ASKED THE ASSESSEE TO EXPLAIN THE SOURCES FOR THE DEPOSITS, THE ASSESSEE HAD PLEADED THAT THERE ARE THE BORROWINGS FROM THE FRIENDS AND RELATIVES. SINCE ASSESSEE COULD NOT PRODUCE THE RELEVANT EVIDENCE, HE HAD ADMITTED THE PEAK CREDIT AS HIS INCOME AND THE A.O HAS ACCEPTED THE SAME. BY ACCEPTING THE PRINCIPLE OF PEAK CREDIT, THE A.O ACCEPTED THAT IT IS THE INCOME OF THE ASSESSEE AND NOT UNEXPLAINED CASH CREDITS. IT IS SETTLED LAW THAT EVERY ADDITION WILL NOT AUTOMATICALLY ATTRACT PENALTY U/S 271(1) OF THE IT ACT. IN VIEW OF THE SAME, WE ARE OF THE OPINION 4 ITA NO. 959/HYD/2016 SHRI K. PRASANNA BABU, HYDERABAD. THAT THE PENALTY U/S 271(1)(C) OF THE I.T. ACT IS NOT LEVIABLE IN THIS CASE. ACCORDINGLY APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 15 TH NOVEMBER, 2017. SD/- SD/- (B. RAMAKOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 15 TH NOVEMBER, 2017 KRK 1) T. CHAITANYAKUMAR, ADV, FLAT NO. 102, GOURI APARTMENT, URDULANE, HIMAYATHNAGAR, HYD 2) ITO, WARD 3(1), HYDERABAD 3) CIT(A) -3, HYDERABAD 4) PCIT, CENTRAL RANGE-3, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE