Shri Pravinbhai A. Patel L/h of late Amarshibhai Lavjibhai Patel, Ahmedabad V. The Income Tax Officer, Ward-2(2)(1), Ahmedabad

ITA 98/AHD/2023

AI Insights

The case involves an appeal by Shri Pravinbhai A. Patel, the legal heir of Late Amarshibhai Lavjibhai Patel, against the order of the CIT(A), National Faceless Appeal Centre, which upheld the addition of Rs. 98,28,462 as unaccounted deposits in various bank accounts under Section 68 of the Income Tax Act for the Assessment Year 2015-16. The primary contention was whether the amounts credited to the bank accounts were unexplained cash credits or legitimate transactions. The assessee argued that the cash deposits were from known sources and that only the peak credits should be considered for addition, not the total amounts. The Tribunal examined the evidences provided, including bank statements and the books of accounts, and decided to partly allow the appeal based on the peak credit method.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125023 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 15-08-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 14-02-2023
• Other Referred Cases: CIT vs. Bhaichand N. Gandhi, Hiteshkumar Babulal Ramani vs. ACIT, Sushil Modi vs. CIT, V.D. Vachhani (HUF) vs. ACIT, PCIT vs. Indrajeet Zandusing Tomar, Sudhirbhai Pravinkant Thaker vs. ITO, Mehul V. Vyas vs. Income Tax Officer, Smt. Madhu Raitani vs. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK NATHA BHALEKAR
• Keywords: Peak credit
• Section: 68; 69; 142(1); 133(6); 143(2); 69A; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER I .T .A . No .9 8/ A h d / 2 02 3 ( A s se ss m e nt Y e a r : 20 15- 1 6 ) Lat e A m ar s h ib ha i L a vj ib ha i P a te l , ( th r o ug h hi s l e g al h eir S h r i Pr a v i nb h a i A . P a te l ) , 8/ Su re s h w a r i S oc i et y, N a r a n p ur a , Ah me da bad-3 80 01 3 V s . I nc o me Ta x O f f ic er , War d - 2 ( 2) ( 1 ) , A h me da ba d [ P AN N o. A B EP P8 5 16 H ] (Appellant) .. (Respondent) Appellant by : Shri Hem Chhajed, A.R. Respondent by : Shri Ashok Natha Bhalekar, Sr. D.R. D a t e of H ea r i ng 16.08.2023 D a t e of P r o no u n ce me nt 13.09.2023 O R D E R PER SUCHITRA KAMBLE - JM: This appeal has been filed by the assessee is filed against the order passed by the Ld. CIT(A), National Faceless Appeal Centre (in short “NFAC”), Delhi on 13.01.2023 for Assessment Year 2015-16 2. The grounds of appeal raised by the assessee read as under:- “1. The order passed by the Ld. CIT(A) is against law, equity & justice. 2. The CIT(A) has erred in law and on facts in not considering that amount debited in cash books is not cash credit. 3. The Ld. CIT(A) has erred in law and facts in upholding addition of Rs. 98,28,462/- as unaccounted deposited in Bank. 4. The appellant Craves liberty to add, amend, alter or modify all or any grounds of appeal before final deposit.” ITA No. 98/Ahd/2023 Shri Pravinbhai A. Patel vs. ITO Asst.Year–2015-16 - 2 - 3. The assessee has also raised the additional ground of appeal which is reads as under:- “1. The Ld. CIT(A) has erred in law and on facts in making addition U/s 68 of the Act of unaccounted bank account.” 4. The assessee has filed return of income for A.Y. 2015-166 on 23.01.2016 declaring taxable income at Rs. 3,68,820/-. The case was selected for scrutiny under CASS with the reason cash deposits in savings bank accounts which are more than the turnover. On the basis of that notice under Section 143(2) of the Act was issued on 02.08.2016 and thereafter notice under Section 142(1) r.w.s. 129 of the Act was issued and duly served on 13.06.2017 calling for details. The assessee submitted reply on 31.07.2017 along with copy of return of income, books of accounts of his proprietary concerns, the statement of bank accounts. In the meanwhile, notice under Section 133(6) were issued to Kotak Mahindra Bank and Bank of Baroda to collect bank account statements of all the bank accounts held by Shri Amarshibhai Lavjibhai Patel i.e. the assessee (legal heir brought on this stage of appellate proceedings). The Assessing Officer observed that during the year under consideration cash was deposited in seven bank accounts in which assessee’s name was shown amounting in total of Rs. 1,49,68,212/-. The assessee submitted reply on 18.12.2017 and 19.12.2017 wherein it has been mentioned that three accounts are not held by him solely though he is a joint account holder. The Assessing Officer made addition of Rs. 98,28,462/- for unaccounted deposit in bank account. 5. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. ITA No. 98/Ahd/2023 Shri Pravinbhai A. Patel vs. ITO Asst.Year–2015-16 - 3 - 6. The Ld. A.R. submitted that as regards the affirming addition under Section 68 of the Act on unaccounted bank account, during the period the assessee has only one bank account recorded in the books of accounts held with the Bank of Baroda bearing Account No. 03410200000602. The Assessing Officer has made addition of following bank accounts which are as under:- Sr. No. Bank Name Account No. 1 Bank of India 202927110000078 2 Bank of Baroda 03410100009033 3 Bank of Baroda 03410200000602 4 Kotak Mahindra Bank Limited 6811521093 5 Kotak Mahindra Bank Limited 1211168145 6 Kotak Mahindra Bank Limited 6811125512 7 Kotak Mahindra Bank Limited 7311309044 6.1 The Ld. A.R. further submitted that except for bank account as mentioned in Sr. No. 3 i.e. Bank of Baroda, of the remaining bank accounts are not recorded in the books of accounts nor shown in return of income i.e. they are undisclosed bank accounts. The Ld. A.R. relied upon the decision of Hon’ble Bombay High Court in the case of CIT vs. Bhaichand N. Gandhi 141 ITR 67. The Ld. A.R. submitted that the bank statements are not the books of accounts of the assessee. The Ld. A.R. further submitted that addition for undisclosed bank accounts cannot be made under Section 68 of the Act i.e. “Cash Credit” but under Section 69 / 69A of the Act. The Ld. A.R. relied upon the decision of Hon’ble Gujarat High Court in the case of Hiteshkumar Babulal Ramani vs. ACIT (2021) 127 taxmann.com 261, decision of Hon’ble Calcutta High Court in the case of Sushil Modi vs. CIT (2015) 59 taxmann.com 63 and the order of ITAT, Ahmedabad in the case of V.D. Vachhani (HUF) vs. ACIT (2003) 86 ITD 652. As relates to ITA No. 98/Ahd/2023 Shri Pravinbhai A. Patel vs. ITO Asst.Year–2015-16 - 4 - affirming the addition of Rs. 98, 28,462/- as unaccounted deposit in bank account on merit the Ld. A.R. filed the detail of bank accounts held by the assessee as under:- Sr. No. Name of Bank Account No. Withdrawn Deposit 1 Bank of Baroda 03410200000602 12,15,000/- 17,15,000/- 2 Bank of Baroda 03410100009033 0 500/- 3 Bank of Baroda 03410100032478 2,02,000/- 0 4 Bank of India 202927110000078 13,50,000/- 15,63,212/- 5 Bank of India 202910110001634 3,36,000/- 0 6 Kotak Mahindra Bank 6811125512 24,53,000/- 33,80,000/- Total 55,56,000/- 66,58,712/- 6.2 The Ld. A.R. submitted that Bank Account No. 03410200000602 held with Bank of Baroda i.e. Sr. No. 1 is already disclosed in the books of the assessee and cash deposited is from the cash in hand and therefore, no addition could be made for the same. For bank accounts in Sr. No. 2 to 6, the Ld. A.R. submitted that it is well settled legal position on this issue only the peak amount added as income in the hands of the assessee and not aggregate of the total credit side of the account. The Ld. A.R. further submitted that the Assessing Officer could have verified the bank statement and noticed that there were credits and corresponding debits which would give an indication that some amount has been recycled and it is a settled principle that in such cases ordinary / peak credit is taken into consideration for the purpose of making an addition. The Ld. A.R. submitted that the assessee is a joint account holder in following accounts:- Sr. No. Bank name Account no. Account belongs to 1 Kotak Mahindra Bank 9044 Rajvi Pravinbhai Patel 2 Kotak Mahindra Bank 8145 Narmadaben Patel 3 Kotak Mahindra Bank 1093 Nevil Nalinbhai Patel ITA No. 98/Ahd/2023 Shri Pravinbhai A. Patel vs. ITO Asst.Year–2015-16 - 5 - 6.3 The assessee being merely a joint holder there cannot be any addition for the said accounts which are not totally owned by the assessee. The Ld. A.R. submitted the summary of all the accounts as under:- Sr. No. Name of Bank Account No. Addition Made Remarks 1 Bank of Baroda 03410200000602 1825000/- Already disclosed in books and cash in hand available 2 Bank of Baroda 03410100009033 500/- Addition can be made to the extent of Peak Credit 3 Bank of Baroda 03410100032478 - 4 Bank of India 202927110000078 15,63,212/- 5 Bank of India 202910110001634 - 6 Kotak Mahindra Bank 6811125512 13,00,000/- 7 Kotak Mahindra Bank 7311309044 6750/- Held by Rajvi Pravinbhai Patel 8 Kotak Mahindra Bank 1211168145 5095500/- Held by Narmadaben Patel 9 Kotak Mahindra Bank 68115210931093 37500/- Held By Nevil Nalinbhai Patel 6.4 The Ld. A.R. relied upon the decision of Hon’ble Gujarat High Court in the case of PCIT vs. Indrajeet Zandusing Tomar Tax Appeal No. 908 of 2015, decision of the Tribunal in the case of Sudhirbhai Pravinkant Thaker vs. ITO (2017) 88 taxmann.com 382 (Ahmedabad – Trib.), Mehul V. Vyas vs. Income Tax Officer (2017) 80 taxmann.com 311 (Mumbai –Trib.), third number decision in the case of Smt. Madhu Raitani vs. ACIT (2011) 45 SOT 231 (Gauhati). 7. The Ld. D.R. submitted that the assessee has not submitted the details during the assessment proceedings and cannot be take a plea that Section 68 will not be applicable in the present case. The Ld. D.R. further submitted ITA No. 98/Ahd/2023 Shri Pravinbhai A. Patel vs. ITO Asst.Year–2015-16 - 6 - that the Assessing Officer in case of joint account holders only 50% has added. As related to peak balance the Ld. D.R. submitted that the same is not justifiable. 8. We have heard both the parties and perused all the relevant material available on record. There was a cash deposit in various bank accounts of the assessee wherein same of the accounts are jointly held by the assessee. It is pertinent to note that as relates to bank A/c. No. 03410200000602 held with Bank of Baroda the assessee has given the evidences before the Assessing Officer as well as before the CIT(A) the books of accounts and the cash deposited alongwith the source of the said cash and the said cash was in hand. Thus, the deposit of 17,15,000/- was not justifiable for making an addition. As regards, the other bank accounts the two bank accounts namely Bank of India and Bank of Baroda (03410100009033) were not part of books of accounts but there was not deposits in Bank of India’s accounts and the amount mentioned of Bank of Baroda only 500/- cash deposit has been made. As relates to Kotak Mahindra Bank Limited the assessee is holding A/c. No. 6811125512 which was not part of account and there was cash deposits of 33,80,000/- which should have been taken as peak amount. As relates to other account the same are joint account. The contention of the Ld. A.R. that as regards to Bank of India Account (202927110000078) and Kotak Mahindra Bank A/c. No. 6811125512 for amount of Rs. 15,63,212/- and 13,00,000/- respectively as well as Bank of Baroda account 03410100009033 for Rs. 500/- addition cannot be made to the extent of peak credit appears to be genuine and therefore, the appeal of the assessee is partly allowed. As regards, the addition under Section 68 of the Act the ITA No. 98/Ahd/2023 Shri Pravinbhai A. Patel vs. ITO Asst.Year–2015-16 - 7 - contention of the assessee does not sustain and hence the appeal of the assessee is partly allowed. 9. In the result, the appeal of the assessee is partly allowed. This Order pronounced in Open Court on 13/09/2023 Sd/- Sd/- (WASEEM AHMED) ACCOUNTANT MEMBER (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 13/09/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 08.09.2023 2. Date on which the typed draft is placed before the Dictating Member 08.09.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S .09.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .09.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 13.09.2023 7. Date on which the file goes to the Bench Clerk 13.09.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................