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Income Tax Appellate Tribunal, MUMBAI ‘C’ BENCH, MUMBAI.
Before: Shri B.R. Baskaran (AM) & Shri Pavan Kumar Gadale (JM)
The assessee has filed this appeal challenging the revision order dated 29.3.2022 passed by learned PCIT-20, Mumbai under section 263 of the I.T. Act for A.Y. 2017-18. The assessee is challenging the validity of reopening of the assessment order.
The facts relating to the case are stated in brief. The assessee is a HUF and it is deriving ‘income from rent’ and ‘income from other sources’. The assessee filed its return of income on 29.6.2017 declaring a total income of Rs. 5,86,000/- and the same was selected for limited scrutiny. In the assessment proceedings, it was noticed that the assessee has deposited a sum of Rs. 15,00,000/- during the demonetisation period. Accordingly the Assessing Officer asked the assessee to explain the sources for the deposits so made. The assessee submitted that it was having opening cash balance of Rs. 27,07,500/- as on 1.4.2016 and part of the same was deposited into the bank account. The Assessing Officer took the view that there was no reason
2 Chandrahas Shetty HUF for the assessee to keep huge cash balance of around Rs. 27 lakhs in cash, when the assessee is having a bank account. Accordingly he did not accept the claim of availability of opening cash balance of Rs. 27 lakhs. He took the view that the assessee could be considered as having opening cash balance of Rs.5.50 lakhs only. Having held so, the AO further held that the peak credit balance should be assessed as income of the assessee. The Assessing Officer computed the peak credit at Rs. 2,34,000/- and assessed the same as ‘income of the assessee’ under section 68 of the Act.
On examination of the assessment record, learned PCIT took the view that the assessment order is erroneous and prejudicial to the interest of Revenue, since the AO has not assessed entire cash of Rs.15 lakhs as income of the assessee. Accordingly he initiated revision proceedings under section 263 of the Act. After hearing the explanations of the assessee, learned PCIT set aside the assessment order passed by the Assessing Officer and directed him to take into account entire cash deposit of Rs. 15 lakhs made during the demonetisation period and determine the income of the assessee after examining the source of cash deposits. The assessee is aggrieved.
The Ld A.R submitted that the assessee has been filing return of income regularly and hence the availability of cash with the assessee should not be doubted with. He submitted that the AO has made necessary inquiries during the course of assessment proceedings with regard to the deposit of above said Rs.15.00 lakhs and finally decided to assess the peak credit amount of Rs.2.34 lakhs as income of the assessee. He submitted that the assessee has challenged the addition of Rs.2.34 lakhs before ld CIT(A) and the appeal is pending to be decided. With regard to the impugned revision proceedings, the Ld A.R submitted that the AO has applied his mind on the issue and has taken a plausible view of the matter. Accordingly he submitted that the impugned revision order passed by Ld PCIT is not sustainable in law. In support of these contentions, the Ld A.R placed his
3 Chandrahas Shetty HUF reliance on the decision rendered by Pune bench of ITAT in the case of Shergil Harjit vs. PCIT (2022)(136 taxmann.com 413)(Pune) and by Delhi bench of ITAT in the case of Om Prakash Nahar (ITA No.960/Del/2021 dated 27-01-2022)(Delhi).
The Ld D.R, on the contrary, submitted that the assessee has not maintained books of accounts and hence the claim of availability of opening cash balance is not substantiated. He further submitted that the assessee has failed to prove the sources for making deposit of Rs.15.00 lakhs and hence the AO should not have resorted to peak credit theory to assess the amount of Rs.2.34 lakhs. Accordingly, he contended that the Ld PCIT was justified in passing the impugned revision order.
We heard rival contentions and perused the record. It is a well settled principle of law, which is enunciated by Hon’ble Supreme Court in the case of Malabar Industrial Company (243 ITR 83), is that the assessment order cannot be termed as erroneous and prejudicial to the interests of revenue if the AO has taken one of the possible views of the matter. In the instant case, the fact remains that the assessee has been filing return of income every year. There is no dispute with regard to the fact that the AO has made enquiries about the deposit of Rs.15.00 lakhs made into the bank account during demonitisation period. Though the assessee has claimed to have made deposits out of opening cash balance available with it, yet the AO rejected the same and chose to assess the peak credit balance. In our view, the decision so taken by the AO forms within the ambit of one of the possible views. Merely because, the Ld CIT(A) was having different view in this matter, the same would not render the assessment order erroneous and prejudicial to the interests of revenue. Accordingly, we find no reason to sustain the impugned revision order passed by Ld PCIT. Accordingly we set aside the same.
4 Chandrahas Shetty HUF
In the result, the appeal filed by the assessee is allowed.
Pronounced in the open court on 14.2.2023.