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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC-1” MUMBAI
Before: SHRI KULDIP SINGH & SHRI OM PRAKASH KANT
PER OM PRAKASH KANT, AM
This appeal has been preferred by the assessee against the order dated 26.02.2019 passed by the Ld. Commissioner of Income- tax (Appeals)-3, Thane, [in short ‘the Ld. CIT(A)’] for assessment year 2008-09, raising following grounds:
Mrs. Pranita P. Thakur 2 ITA No. 1260/M/2021
1. The Ld. CIT(A)-3, Thane has erred in law and in facts in confirming an addition of Rs.8,20,000/- as unexplained Cash. Credit u/s. 68 of the I.T. Act in complete disregard of the facts and the law. The Ld. CIT(A) ought to have directed the deletion of the addition made and the same is prayed to be directed.
The Ld. CIT(A)-3, Thane, alternatively ought to have restricted the addition of the peak credit amounting to Rs.3,20,000/-. The appellant prays that the alternate plea may please be accepted. 2. The facts in brief are that the assessee filed return of income on 17.02.2009 declaring total income of ₹4,50,250/-. The case was reopened by way of issue of notice u/s 148 of the Income Tax Act, 1961 (in short ‘the Act’) on the basis of information received from Investigation Wing of Income Tax Department, Thane. According to the information, during the search proceedings in the case of M/s Swastik Group, it was noticed that the assessee introduced cash of ₹8,20,000/- i.e. ₹3,20,000/- on 15.05.2007 and ₹5,00,000/- on 12.09.2007. In absence of any explanation of the cash by the assessee, the Assessing Officer added back amount of ₹8,20,000/- u/s 68 of the Act as unexplained cash credit. On further appeal, the assessee explained before the Ld. CIT(A), the amounts recorded in Mrs. Pranita P. Thakur 3 ITA No. 1260/M/2021 the seized paper in the form of a table having details of payment and receipt. The said table for ready reference is reproduced as under:
Page No. Date Payment Receipt Balance A.Y. 2008-09 73 15.05.2007 3,20,000 - -3,20,000 73 13.07.2007 - 30,000 -2,90,000 73 14.08.2007 10,00,000 7,10,000 73 12.09.2007 5,00,000 - 2,10,000 73 13.09.2007 5,00,000 7,10,000 2.1 The assessee submitted that details contains in seized paper include cash deposited as well as cash withdrawal and therefore, re- deposit should be considered as being made out of such withdrawal and only peak credit should be considered as unexplained. The Ld. CIT(A) however rejected the contention of the assessee observing as under:
“6.1 I have carefully considered the submission of the appellant, the observations of the AO in the assessment order and the facts of the case. In this case, the AO has made addition of Rs8,20,000/- on the basis of seized documents, indicating the introduction of cash by the appellant to the tune of Rs.8,20,000/- and the breakup of the same is Rs.3,20,000/- on 15.05.2007 and Rs.5,00,000/- on 12.09.2007, totaling to Rs.8,20,000/-. During the appellate proceedings, the AR of the appellant has argued that, the addition made by the AO of Mrs. Pranita P. Thakur 4 ITA No. 1260/M/2021 Rs.8,20,000/- is not justified and only the peak credit to the extent of Rs.3,20,000/- should have been adopted for addition. In this regard, the AR of the appellant has relied on the judgments in the case of CIT Vs. Manoj Indravadan Chokshi 50 Taxmann.com 419 (Guj), ITO Vs. Shri Jiteshkumar G. Bhadiyadra in dated 10.07.2013, ITO Vs. Shri Kaushik Kantilal Soni in IT(SS)A No. 160/Ahd/2006 dated 28.08.2009 and ITO Vs. Shri Dinesh Ajitbhai Jain in ITA No. 2740/Ahd/2012 dated 31.01.2013. On perusal of the above stated facts and submission of the appellant, it is seen that, the appellant has failed to explain the source of Rs.8,20,000/-and also, the peak credit method cannot be applied as there is no continuous deposits and withdrawals and vice versa. Therefore, the A has rightly added the entire unexplained cash credit u/s 68 of Rs.8,20,000/- and the explanation of the appellant to take the peak credit is not acceptable bécause the seized document is totally unaccounted i.e. not reflected in the books of accounts and also the entries reflected in the seized document does not justify to adopt the peak credit. Therefore, the addition made by the AO is sustained and accordingly appeal of the appellant on this ground is dismissed.”
Before us, the Ld. counsel of the assessee in support of Ground No. 1 of the appeal submitted that all the information of payment and receipt is on the same page and therefore, the Ld. CIT(A) is not justified in observing that no continuous deposits and withdrawal.
Mrs. Pranita P. Thakur 5 ITA No. 1260/M/2021 According to him, following the peak credit only, addition to the extent of ₹3,20,000/- could be sustained.
On the other hand, the Ld. Departmental Representative (DR) relied on the order of lower authorities.
We have heard the rival submissions of the parties on the issue-in-dispute and perused the relevant material on record. In the seized paper, the first payment of ₹3,20,000/- has been shown and thereafter there is a receipt of ₹30,000/- on 30.07.2007 and receipt of ₹10,00,000/- on 14.08.2007. Further on 12.09.2007 ₹5,00,000/- has been shown to be paid and on 30.09.2007 again ₹5,00,000/- has been shown as receipt. The details of payments and receipts are recorded on one page and in chronological order. In such circumstances, the peak credit amount of ₹3,20,000/- as worked out in table reproduced in earlier paragraph only remains as unexplained in the hands of the assessee. The finding of the Ld. CIT(A) that there is no continuous deposit is without appreciation of Mrs. Pranita P. Thakur 6 ITA No. 1260/M/2021 the facts properly. The contention of the Ld. counsel of the assessee of adopting peak credit is justified. Accordingly, we restrict the addition in the case to ₹3,20,000/-. The ground No. 2 of the appeal was not pressed by the Ld. counsel of the assessee. Accordingly, the Ground No. 2 is dismissed, whereas ground No. 1 is partly allowed.
In the result, the appeal of the assessee is partly allowed.