ITO, JEYPORE WARD, JEYPORE vs. SRI NIRANJAN SWAIN, NABARANGPUR

1 ITA Nos. 406 & 407/ CTK/ 2017 Asse ssment Years : 2 012 -13 & 20 13- 14

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA Nos. 406 & 407/CTK/2017 Assessment Years : 2012-13 & 2013-14

Income Tax Officer, Jeypore Vs. Niranjan Swain, At: Ward, Jeypore Gullipatna, PO: Umerkote, Dist: Nabarangpur PAN/GIR No.AXNPS 3774 P (Appellant) .. ( Respondent)

Assessee by : Shri P.K.Mishra, AR Revenue by : Shri D.K.Pradhan, DR

Date of Hearing : 10/05/ 2018 Date of Pronouncement : 15 /05/ 2018

O R D E R Per N.S.Saini, AM These are appeals filed by the revenue against the separate orders

of the CIT(A)- 1, Bhubaneswar both dated 13.7.2017 for the

assessment years 2012-13 & 2013-14, respectively.

erred in deleting the addition of Rs.50,00,000/- for the assessment year

201-2013 and Rs.44,66,000/- for the assessment year 2013-14 made by

the Assessing Officer towards income from undisclosed sources.

that the assessee has maintained three bank accounts in his name. The

2 ITA Nos. 406 & 407/ CTK/ 2017 Asse ssment Years : 2 012 -13 & 20 13- 14

details of credits in the account for the assessment year 2012-13 are as

under:

Bank Name/ Cash Cheque Transfers Interest 4/c No. deposit in Rs. deposit in in Rs. credited in Rs. Rs. SBI, Umerkote 2,00,000/- 2,51,951/- 68,500/- 588/- 11258615760 ICICI Bank Ltd. 1,76,88,034/- 17,34,000/- 1,51,084/- 31,146/- 099501500002 ICICI Bank Ltd. 98,31,000/- 4000/- 9,66,160/- 26,028/- 099501501002

are as under:

Bank Name/ Cash deposit Cheque Transfer in Interest A/c No. in Rs. deposit in Rs. Rs. ' credited in Rs. SBI, 3,00,000/- 2,22,500/- 7,37,295/- 2,066/- Umerkote 11258615760 ICICI Bank 2,82,23,100/ 69,48,695/- 35,800/- 29,995/- Ltd. - 09950150000 2 ICICI Bank 95,38,000/- 40,500/- 17,38,515/ 4,748/- Ltd. 09950150100 2

nature of such huge credits in bank accounts with evidence. In reply, the

assessee stated that the deposits were out of withdrawals. The assessee

filed written submission explaining the credits in the three bank accounts.

3 ITA Nos. 406 & 407/ CTK/ 2017 Asse ssment Years : 2 012 -13 & 20 13- 14

The explanation of the assessee was not acceptable to the Assessing

Officer. The Assessing Officer was of the opinion that the assessee has

withdrawn more than the deposits. He observed that due to large

number of debit and credit entries appearing in the bank statements, the

real/genuine income is camouflaged. The assessee was not able to give

satisfactory explanation to each credit and debit entries. The Assessing

Officer relied various case laws, wherein, it has been emphasized the

point that peak credit method was the correct method of determining the

income in case of unexplained cash credits. Therefore, the Assessing

Officer after taking into consideration the peak credit in all the bank

accounts together, has determined the unexplained cash deposit with

ICICI Bank A/c No.099501500002 at Rs.50,00,000/- for the assessment

year 2012-13 and Rs.44,60,000/- for the assessment year 2013-14 and

added to the income of the assessee from undisclosed sources and added

to the income of the assessee.

“ All the deposits have come out of the earlier withdrawals. It is explained that the cash deposits in SBI account were made out of earlier occasions. This account was a cash credit account having over-drawal power up to Rs.80,00,000/- and the assesee had withdrawn sufficient amounts on earlier occasions to explain the subsequent cash deposits. The total cash deposits in SBI account amounted to Rs. 12,61,861/- as against total cash withdrawals of Rs.62,53,900/-. In one account with ICICI Bank bearing No.099501500002 the total cash deposits amounted to Rs.3,52,37,590/- whereas the total cash withdrawal amounted to Rs.3,94,02,000/-. Similarly, in another ICICI Bank account bearing No.099501501002, the total cash deposits amounted to Rs.1,13,21,764/- as against total cash withdrawals of

4 ITA Nos. 406 & 407/ CTK/ 2017 Asse ssment Years : 2 012 -13 & 20 13- 14

Rs.1,15,91,000/-. It is argued by the assessee that the business, the assessee is carrying on, i.e. "transport business', is a cash intensive business and frequent cash withdrawals are made which are deposited back if there is no requirement for payment. It is contended that the so-called peak credit method adopted by the AO is totally misleading and the addition based on the same should be deleted.

year 2013-14 except change in amounts.

deleted the addition for the assessment year 2012-13, by observing as

under:

“ 5. I have considered the facts of the case. The assessee has also submitted copies of all the bank accounts and consolidated cash withdrawal and deposit statement. The assessee has also produced a cash-flow statement (cash book) which shows that the cash deposits were made out of the cash withdrawals of the same or earlier dates from the same or another bank account. For instance, the total cash deposits on 7.12.2012 in all the accounts amounted to Rs.44,60,000/-. The total cash withdrawals before that date available with the assessee are found to be much more than the deposit amount. Similar is the situation in case of all the cash deposits. This is evident from the consolidated cash-flow statement and the copies of bank accounts lying on records. In the nature of business of the assessee, cash transactions are rampant and this is evident from the cash transactions in the bank accounts. Moreover, the so-called peak method adopted by the AO to quantify the unexplained deposits is neither logical nor intelligible. There is no justification for such a peculiar method adopted by the AO. In fact, the AO has not understood the peak credit concept at all. He has taken the highest deposit during the relevant previous year in a particular bank account and calculated the sum total of these deposits in all the bank accounts to arrive at the peak credit. In my opinion, this is not the way in which the peak is to be calculated. Moreover, when adequate cash withdrawals are there to explain the subsequent cash deposits, the AO should have accepted the explanation of the assessee and not proceed to make a huge addition in the assessment in the name of peak credit. Going by the actual facts of the case, I do not see any justification to make an addition in the name of peak credit especially when the deposits

5 ITA Nos. 406 & 407/ CTK/ 2017 Asse ssment Years : 2 012 -13 & 20 13- 14

are apparently explainable from out of withdrawals. In this view of the matter, the addition of Rs.44,60,000/- made by the AO on account of unexplained cash deposits is deleted.”

2013-14, observing as under:

“5. I have considered the facts of the case. The assessee has also submitted copies of all the bank accounts and consolidated cash withdrawal and deposit statement. The assessee has also produced a cash-flow statement (cash book) which shows that the cash deposits were made out of the cash withdrawals of the same or earlier dates from the same or another bank account. For instance, the total cash deposits on 7.12.2012 in all the accounts amounted to Rs.44,60,000/-. The total cash withdrawals before that date available with the assessee are found to be much more than the deposit amount. Similar is the situation in case of all the cash deposits. This is evident from the consolidated cash-flow statement and the copies of bank accounts lying on records. In the nature of business of the assessee, cash transactions are rampant and this is evident from the cash transactions in the bank accounts. Moreover, the so-called peak method adopted by the AO to quantify the unexplained deposits is neither logical nor intelligible. There is no justification for such a peculiar method adopted by the AO. In fact, the AO has not understood the peak credit concept at all. He has taken the highest deposit during the relevant previous year in a particular bank account and calculated the sum total of these deposits in all the bank accounts to arrive at the peak credit. In my opinion, this is not the way in which the peak is to be calculated. Moreover, when adequate cash withdrawals are there to explain the subsequent cash deposits, the AO should have accepted the explanation of the assessee and not proceeded to make a huge addition in the assessment in the name of peak credit. Going by the actual facts of the case, I do not see any justification to make an addition in the name of peak credit especially when the deposits are apparently explainable from out of withdrawals. In this view of the matter, the addition of Rs.44,60,000/- made by the AO on account of unexplained cash deposits is deleted.”

whereas ld A.R. supported the orders of the CIT(A).

6 ITA Nos. 406 & 407/ CTK/ 2017 Asse ssment Years : 2 012 -13 & 20 13- 14

the order of the CIT(A). The ld D.R could not bring any cogent and

positive material on record to controvert the findings of the CIT(A) that

there were adequate cash withdrawals to explain the subsequent deposits

in the bank. Therefore, we find no good reason to interfere with the

orders of the CIT(A). Hence, the grounds of appeal the revenue for both

the assessment years are dismissed.

Order pronounced on 15 /05/2018. Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 15 /05/2018 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Income Tax Officer, Jeypore Ward, Jeypore 2. The respondent: Niranjan Swain, At: Gullipatna, PO: Umerkote, Dist: Nabarangpur 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT-1, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. BY ORDER, //True Copy//

SR.PRIVATE SECRETARY ITAT, Cuttack