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Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: HON’BLE SHRI V. DURGA RAO, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2016-17 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 31-10-2022 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 28-12-2018. The grounds taken by the assessee read as under: - That the income fixed at Rs.1,89,57,830/- by the Honourable CIT - Appeals as 1. against income returned at Rs.55,60,110/- is against the facts and contrary to law.
2. That the Honourable CIT-Appeals is wrong in confirming the peak credits for Rs.1,33,97,720/- as per remand report dated 18.10.2019 of the Assessing Officer.
That neither the Assessing Officer nor the Honourable CIT Appeals has appreciated the facts and genuineness of the advances of Rs.76,82,280/- confirmed through individual sworn statements.
That the Learned Officer has committed gross mistake in arriving at the peak credit of Rs.10837720 on 13.09.2015 in HDFC account no: 241250000030.
That the Learned Officer has committed gross mistake in arriving at the peak credit of Rs.2165000 on 08.06.2015 in HDFC account no: 50100051948973.
6. That the Learned Officer has committed gross mistake in arriving at the peak credit of Rs.50000 on 27.07.2015 in HDFC account no: 242020000720 7. That the Learned Officer has committed gross mistake in arriving at the peak credit of Rs.190000 on 13.08.2015 in HDFC account no: 50200011883036.
That the Learned Officer has committed gross mistake in arriving at the peak credit of Rs.155000 on 29.07.2015 in HDFC account no: 5320.
That the Learned Officer has failed to consider the debits/withdrawals of same bank account while fixing the peak credit / total income as above.
That the Learned CIT- A ought to have considered that there were explainable sources for deposits made in all bank accounts.
That the Honourable CIT- A and the Learned Officer have failed to even consider the income and receipts declared in the return of income for Rs.95,86,903/-.
For these reasons and for the additional grounds that may be adduced at the time of hearing the appellant prays that the additions sustained for Rs.1,33,97,720 by the CIT appellate order may be deleted in full. As is evident, the assessee is aggrieved by confirmation of addition based on peak credit.
The Ld. AR advanced arguments and referred to remand report of Ld. AO to support the case of the assessee. The Ld. Sr. DR submitted that the adjudication by first appellate authority is on the basis of remand report of Ld. AO. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Proceedings before lower Authorities 3.1 The assessee being resident individual derived income from Salary, Business Income etc. The assessee admitted income of Rs.55.60 Lacs which was subjected to limited scrutiny through CASS in view of the fact that there was large cash deposit in various bank accounts. It transpired that the assessee deposited cash aggregating to Rs.525.07 Lacs in various bank accounts held with HDFC Bank. The same has been tabulated in para-4 of assessment order. In the absence of any explanation forthcoming from the assessee, Ld. AO added the same to the income of the assessee as unexplained cash credit u/s 68 which would be subject to tax u/s 115BBE. 3.2 During appellate proceedings, the assessee’s submissions were subjected to remand proceedings and Ld. AO was directed to make third-party enquiries to verify the claim of the assessee. The Ld. AO submitted remand report dated 17.10.2019, the substantive portion of which has been extracted in para 6 of impugned order. The Ld. AO reported peak credit in all bank accounts at Rs.133.97 Lacs as against Rs.76.95 Lacs worked out by the assessee. Accepting the same, Ld. CIT(A) restricted impugned additions to that extent. 3.3 The assessee had submitted that he had made trade advances for procuring marine products through various agents who failed to procure the products. The agents subsequently returned the advances in cash to the extent o Rs.76.82 Lacs. The same has also been tabulated in para-6 of the impugned order. The Ld. AO reported that in all case the advances were given though bearer cheques and none of the parties had proved their creditworthiness nor their version of advances tallied with the assessee’s case. Therefore, the plea that the assessee received back advances in cash was not acceptable. Therefore, the same could not be accepted to be the source of the bank deposits. Accordingly, the appeal was partly allowed against which the assessee is in further appeal before us.
Our findings and Adjudication 4. Upon perusal of page-11 of the paper-book, it could be seen that the assessee has paid trade advances to fishermen on various dates which aggregate to Rs.77.20 Lacs. The party-wise detail of the same along with cheque number and amount has been tabulated. Since the produce could not be procured by those fishermen, the trade advances were returned back by them to the assessee to the extent of Rs.76.82 Lacs which have also been tabulated on the same page. The bank statements of the assessee, as placed on record, support this working. The ledger extract of all these parties have also been placed on record. During the course of remand proceedings, summons was issued to these persons. Most of them have confirmed having repaid the advances to the assessee. However, Ld. AO has opined that all these persons lacked sources to repay he advances and these parties did not have creditworthiness to repay the advances. However, we are of the opinion that these are trade advances earlier advanced by the assessee for business purposes and subsequently repaid by these creditors. Therefore, it is not fair on the part of Ld. AO to question the creditworthiness of these parties particularly when all of them have confirmed having repaid the advances back to the assessee. Therefore, these advances as received back for Rs.76,82,280/- were to be considered as source of cash deposit for the assessee.
5. Another argument of Ld. AR is that peak credit, considering all the bank accounts put together, would be Rs.76.95 Lacs and not Rs.133.97 Lacs as worked out by Ld. AO since Ld. AO has worked out peak credit for each of the bank accounts separately. We are of the opinion that since there are cash deposits and withdrawals from all the bank accounts, the methodology of the assessee to work out peak credit was to be accepted as Ld. AO has not pointed out any default in the same and have not adduced any reason as to why the same is not acceptable. Therefore, cash deficit was to be accepted as Rs.76.95 Lacs. Since we have accepted the plea of Ld. AR qua advances received back to the extent of Rs.76.82 Lacs, there would remain no addition to be sustained in the hands of the assessee. Therefore, we delete the impugned addition in full.
The appeal stand allowed. Order pronounced on 9th October, 2023 Sd/- Sd/- (V. DURGA RAO) (MANOJ KUMAR AGGARWAL) �ाियक सद!/JUDICIAL MEMBER लेखासद! / ACCOUNTANT MEMBER चे6ई Chennai; िदनांक Dated : 09-10-2023 DS आदेशकीZितिलिपअ&ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. !"थ�/Respondent 3. आयकरआयु?/CIT 4. िवभागीय!ितिनिध/DR 5. गाडDफाईल/GF