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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM vk;dj vihy la-@ITA No. 227/JP/2015
PER SHRI KUL BHARAT, JM.
This set of three appeals i.e. Appeal of the Revenue in ITA No.
227/JP/2015 and Appeal & Cross Objection which is filed by the Assessee
i.e. ITA No. 484/JP/2015 & C.O. No. 36/JP/2015 pertaining to Assessment
Year 2008-09 are directed against the order of Ld. CIT (A)-3, Jaipur dated
24/12/2014 and 20/3/2015 respectively.
First, we take up Revenue’s appeal in ITA No. 227/JP/2015 pertaining
to the Assessment Year 2008-09.
The Revenue has raised the followings grounds of appeal:-
“1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 29,59,375/- out of total addition of Rs. 32,71,850/- confirming the peak of case of Rs. 3,12,476/- on account of the cash deposited by the assessee in his bank account of Kotak Mahindra Bank, Jaipur on regular intervals. The Ld. CIT(A) has allowed relief of Rs. 29,59,375/- to the assessee without considering the details facts mentioned in the assessment order.
Further additional evidence furnished by the assessee during the appellant proceedings were neither furnished by the assessee before the AO nor by the Ld. CIT(A) under rule 46A(1) of the IT Rules and letter send to the AO was only for clarification on the issue of valid service of notice to the assessee in the proceedings u/s 147 of the IT Act.”
Only effective ground is against deleting the addition of Rs. 29,59,375/- out of
total addition of Rs. 32,71,850/- confirming the peak deposit on account of cash
deposited in the bank account of the assessee.
3 ITA Nos. 227 & 484/JP/2015 & C.O. No. 36/JP/2015. Shri Abdul Sami, Jaipur.
Briefly, stated the facts are that, the case was reopened for assessment and
the assessment u/s 147 read with section 144 of the Income Tax Act, 1961
(hereinafter referred to as the Act) was framed vide order dated 22/07/2013. While
framing the assessment, the Assessing Officer noticed that the assessee had cash
deposits of Rs. 20,52,500/- in saving bank account of Kotak Mahindra Bank Ltd. and
used credit card for making payments of bills totaling to Rs. 4,58,068/-. The
Assessing Officer recorded that in response to notice no one appeared. Therefore,
the Assessing officer made addition on both cash deposited and the payment made.
Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A), who after
considering the submissions, reduced the addition by applying the peak credit.
Now, both the assessee and the revenue have come into appeal, before this
Tribunal.
Ld. D/R submitted that Ld. CIT(A) was not justified in admitting the additional
evidences and reducing the addition made by the Assessing Officer by applying peak
theory, he supported the order of the Assessing Officer.
On the contrary, Ld. Counsel for the assessee submitted that peak theory is
rightly applied and the Ld. CIT(A) failed to give set of expenditure made by the
assessee, to this extent order of the Ld. CIT(A) needs modification.
We have heard the rival contentions, perused the material available on
record. Ld. CIT(A) has decided this issue by giving finding on fact by observing as
under:-
“Accordingly the addition to be made in the appellant case is to be determined keeping in view the observations of the Hon’ble ITAT. In this
4 ITA Nos. 227 & 484/JP/2015 & C.O. No. 36/JP/2015. Shri Abdul Sami, Jaipur.
connection it may be noted that in bank account the assessee has deposited cash on regular intervals and also withdrawn the amounts broadly in the same period without any substantial gap. It is also noted that at the beginning of the AY the assessee was having credit balance of Rs. 35452/- and the highest balance in the account was on 30.09.2011 for Rs. 347928/-. Therefore, as per the peak theory the highest amount to be taxed remains at Rs. 312476/- (347928 – 35452). Accordingly, out of total addition of Rs. 3271851/-, addition to the extent of Rs. 312476/- is confirmed. The appellant gets relief of Rs. 2959375/-. As regards the contention of the assessee that even such peak credit should be set off against the expenditure of Rs. 458068/-, it may be stated that such contentions cannot be accepted as the expenditure has been incurred on different dated and it is not the case that when the expenditure was incurred income to such extent has already been earned.”
8.1 The above finding on fact is not controverted by the Revenue. Moreover, the
Ld. CIT(A) has rightly applied the peak theory as there is a deposit and cash
withdrawal. Thus, the ground raised in this appeal is dismissed.
In the result, Appeal of the Revenue is dismissed.
Now, we take up Cross Objection of the assessee i.e. C.O. No.
36/JP/2015 arising out of ITA No. 227/JP/2015 pertaining to the A.Y. 2008-09.
The assessee has raised the following grounds of Cross Objection:-
“1.1 The impugned order u/s 144/148 dated 22.07.2013 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same may kindly be quashed.
1.2 The action taken u/s 147 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same may be kindly be quashed.
5 ITA Nos. 227 & 484/JP/2015 & C.O. No. 36/JP/2015. Shri Abdul Sami, Jaipur.
1.3 The Ld. AO further erred in law as well as on the facts of the case in passing the exparty order u/s 144 without affording adequate and reasonable opportunity the opportunity of being heard to the assessee. The impugned order having been framed in gross breach of natural justice, which was totally contrary to the provisions of law and facts of the case, hence, the order of the AO may kindly be quashed.
Rs. 4,58,068/- : The Ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs. 4,58,068/- on account of payment against the credit card bill ( through HDFC Bank Ltd.) . Hence, the addition so made by the AO and confirmed by the Ld. CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the addition may kindly be deleted in full.
Rs. 3,12,476/-: The Ld. CIT(A) has grossly erred in law as well as on the facts of the case in sustaining the addition of Rs. 3,12,476/- out of Rs. 32,71,851/- made by the AO on account of total deposits in the bank account (including the cash deposit of Rs. 20,52,500/-), without going through the nature of deposit, withdrawals and without providing the opportunity of being heard to the assessee. Hence the addition so made by the AO and partly confirmed by the Ld. CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the addition may kindly be deleted in full.
The Ld. AO as well as the Ld. CIT(A) both further has grossly erred in law as well as on the facts of the case in making the addition to the extent of Rs. 4,58,068/- through credit cards has been made from the same bank account, where the AO has already made the addition of Rs. 32,71,851/- on account of deposit in that bank account. Hence the addition to the extent of Rs. 4,58,068/- so made by the AO and confirmed by the Ld. CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the addition may kindly be deleted in full. 5. Further alternatively and without prejudice to the above grounds of appeal it is also prayed that if addition of GOA2 is sustained then the setoff of the addition of GOA 3 if any sustained may kindly allowed.
The Ld. AO erred in law as well as on the facts on the case in charging of interest u/s 234B, 234C, 234D as consequential in nature. The appellant totally denies it liability of charging of any such interest. Hence the interest so charged, being contrary to the provisions of law and facts, may kindly be deleted in full.
The appellant prays your honors indulgence to add, amend or alter all or any of the grounds of the appeal on or before the date of hearing.”
6 ITA Nos. 227 & 484/JP/2015 & C.O. No. 36/JP/2015. Shri Abdul Sami, Jaipur.
Apropos to Grounds no. 1.1 to 1.3 are against reopening of the
assessment.
11.1 Ld. Counsel for the assessee submitted that the reopening is not justified as
the assessee was not provided the reasons.
11.2 On the contrary, Ld. D/R submitted that the assessee failed to appear before
the Assessing Officer despite having given various opportunities.
11.3 We have heard the rival contentions; we find that the Assessing Officer has
recorded that despite various opportunities no one appeared. Under these facts
grounds raised against reopening of the Assessing Officer are devoid of any merit.
Therefore, grounds nos. 1.1 to 1.3 of the Cross Objection are dismissed.
Ground no. 2 and 4 of the Cross Objection are inter-connected and against
confirming the addition of Rs. 4,58,068/-.
12.1 Ld. Counsel for the assessee, at the outset, submitted that by making such
addition in respect of the expenditure made for payments of bills has resulted into
double addition. It is not permissible under the law.
12.2 On the contrary, Ld. D/R supported the order of the authorities below.
12.3 We have heard the rival contentions. After considering the totality of the fact
and the material available on record, we are of the view that claim of the assessee
that the expenditure is made out of the same amount which has been taxed by the
assessing authorities, needs verification at the end of AO. Accordingly, we set aside
this issue to the file of Assessing Officer for verification and decision afresh.
7 ITA Nos. 227 & 484/JP/2015 & C.O. No. 36/JP/2015. Shri Abdul Sami, Jaipur.
Therefore, Ground no. 2 and 4 of the Cross Objection are restored to the
Assessing Officer for fresh decision.
Ground No. 3 is against sustaining the addition of Rs. 3,12,476/- by applying
the peak credit.
13.1 Ld. Counsel for the assessee submitted that Ld. CIT(A) was not justified.
13.2 On the contrary, Ld. D/R supported the order of the Assessing Officer.
13.3 We have heard the rival contentions. In Revenue’s appeal, we have affirmed
the action of the Ld. CIT(A) for applying the peak theory. Therefore, for the same
reasoning this ground of Cross Objection is dismissed.
Ground No. 5 is an alternative prayer in respect of Ground no. 2 to 4. Since
we have already remitted this issue to the file of the Assessing Officer for fresh
decision. This ground has became infructuous, and same is dismissed being
infructuous.
Ground No. 6 is in respect of charging of interest u/s 234B, 234C, & 234D
since the charging of interest is in consequential in nature. This ground is
accordingly dismissed.
Ground No. 7, is general in nature and needs no separate adjudication.
In the result, Cross Objection of the assessee is partly allowed for statistical
purposes.
Now, we take up Assessee’s appeal in ITA No. 484/JP/2015 pertaining
to the A.Y. 2008-09.
The assessee has raised the following grounds of appeal:-
8 ITA Nos. 227 & 484/JP/2015 & C.O. No. 36/JP/2015. Shri Abdul Sami, Jaipur.
“1.1 The impugned penalty order u/s 271(1)(c) dated 21.01.2014 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same may kindly be quashed.
1.2 The Ld. AO further erred in law as well as on the facts of the case in passing the exparty order u/s 271(1)(c) without affording adequate and reasonable opportunity the opportunity of being heard to the assessee. The impugned order having been framed in gross breach of natural justice, which was totally contrary to the provision of law and facts of the case, hence, the order of the AO may kindly be quashed.
Rs. 2,49,970/- : the Ld. CIT(A) has grossly erred in law as well as on the facts of the case in sustaining the penalty of Rs. 2,49,970/- out of Rs. 12,10,017 imposed u/s 271(1)(c) by the Ld. AO. Hence the penalty so imposed by the Ld. AO and confirmed by the Ld. CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the addition may kindly be deleted in full.
The appellant prays your honors indulgence to add, amend or alter all or any of the grounds of the appeal on or before the date of hearing.”
Briefly, stated the facts are that, the Assessing Officer while making the
assessment in CIT’s penalty proceedings u/s 271(1)(c) and subsequently the penalty
order u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as the Act)
was passed vide order dated 21/01/2014, while imposing the penalty of Rs.
12,10,017. On appeal, Ld. CIT(A) reduced the penalty.
Now, the assessee is in further appeal.
Ld. Counsel for the assessee submitted that Ld. CIT(A) was not justified in
sustaining the penalty.
21.1 On the contrary, Ld. D/R supported the order of the Assessing Officer.
21.2 We have heard the rival contentions, perused the material available on
record. We find that Ld. CIT(A) decided this issued by observing as under:-
9 ITA Nos. 227 & 484/JP/2015 & C.O. No. 36/JP/2015. Shri Abdul Sami, Jaipur.
“4.3 I have carefully considered the findings of the AO as also submission of the appellant. It may be noted that the AO has made addition of Rs. 458068/- on account of expenditure incurred/payment made through credit card and another addition of Rs. 3271851/- was made on account of deposits made in the bank account. It may further be noted that against the assessment order the appellant has filed appeal before the CIT(A)-3 Jaipur which was decided vide appeal no. 472/JP/2013-14, order dated 24.12.2014 and the addition of Rs. 458068/- was confirmed, where as another addition of Rs. 3271851/- was restricted to Rs. 312476/- and remaining addition of Rs. 2959375/- was deleted. Accordingly, as against the total addition of Rs. 3729920/- the addition to the extent of Rs. 770544/- (458068 + 312476) was only confirmed. The appellant cased is that the deposits made in the bank account were from the stock business of his father and that such explanation should have been accepted. It was also stated that the amount of Rs. 458068/- was also part of the bank account and that taxing of such amount tentamounted to double taxation. Alternatively it was also claimed that in any case when the part of the addition has been deleted by the first appellant authority then penalty should have been imposed only to the amount of Rs. 770544/- and not on the full amount of addition of Rs. 3729920/-. The appellant has also relied on various case laws contending that findings given in the assessment proceedings cannot be the sole basis for imposition of penalty and that for imposition of penalty there should be conscious concealment of income. On careful consideration of all relevant facts it maybe noted that penalty u/s 271(1)(c) of IT Act can be imposed either when there was any concealment of income or when there was any furnishing of inaccurate particulars of income. In the appellant case it may be noted that the assessee has incurred in unaccounted manner without any proper sources. Accordingly, such undisclosed expenditure definitely represented concealment of income. As regards the other addition of Rs. 3271850/-. The assessee had deposited such amount in the bank account. In the bank
10 ITA Nos. 227 & 484/JP/2015 & C.O. No. 36/JP/2015. Shri Abdul Sami, Jaipur.
account there were deposits as well as withdrawals from time to time and accordingly the first appellate authority applying the concept of peak theory, held that the amount to the extent of Rs. 312476/- was to be treated as unexplained deposits. In this manner the amount of Rs. 312476/- also represented concealed income in as much s no proper source of such amount was available with the appellant. In this background it may be noted that through the AO has imposed the penalty on the total amount of addition of Rs. 3729920/- but with the decision of the first appellant authority the concealed income remained to the extent of Rs. 770544/-. Therefore, the contention of the assessee that in any case penalty u/s 271(1)(c) is to be levied only on the amount of Rs. 770544/- can be accepted. Keeping in view the facts and circumstances discussed above it is held that the assessee has concealed its income for Rs. 770544/- and on such amount penalty u/s 271(1)(c) of IT Act was leviable. Accordingly, penalty to the extent of Rs. 2,49,970/- (1210017/ 3729920 x 770544) is confirmed. The appellant get relied of Rs. 9,60,047/-. (1210017-249970). The ground of appeal is partly allowed.”
21.3 After considering the totality of the fact and the finding of the Ld. CIT(A).
The penalty in respect of peak deposits have been rightly made by the Ld. CIT(A)
same is hereby sustained. In the quantum appeal, we have affirmed the view of Ld.
CIT(A) in respect of the addition related to payment through credit cards, the issue
is restored to the file of the Assessing Officer for fresh decision. Therefore, on that
amount penalty cannot be sustained. Accordingly, the Assessing Officer is directed
to delete the penalty levied on Rs. 4,58,068/-. Thus, grounds of the assessee’s
appeal are partly allowed.
11 ITA Nos. 227 & 484/JP/2015 & C.O. No. 36/JP/2015. Shri Abdul Sami, Jaipur.
In the combined result, appeal of the Revenue in ITA No. 227/JP/2015 is
dismissed and appeal of the Assessee in ITA No. 484/JP/2015 is partly allowed
whereas Cross Objection No. 36/JP/2015 of the Assessee is partly allowed for
statistical purposes, in the terms indicated herein above. Order is pronounced in the open court on Thursday, the 28th day of September
2017.
Sd/- Sd/- ( HkkxpUn ½ ( dqy Hkkjr) ( BHAGCHAND) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated: 28/09/2017 Pooja/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
The Appellant- Income Tax Officer, Ward-7(4), Jaipur. 2. The Respondent – Shri Abdul Sami, Jaipur. 3. The CIT(A). 4. The CIT, 5. The DR, ITAT, Jaipur 6. Guard File (ITA Nos. 227 & 484/JP/2015 & C.O. No. 36/JP/2015)
vkns'kkuqlkj@ By order,
सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत