V.SRINIVASAN (HUF),VILLUPURAM vs. ITO, VILLUPURAM

This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)- Puducherry, dated 27.12.2016 in for the assessment year 2011-12 passed U/s.250(6) r.w.s.143(3) of the Act.

The assessee has filed the appeal with a delay of 42 days. The assessee has filed a condonation petition stating that by oversight they have failed to file the appeal within the due date. The Ld.AR pleaded before us that the delay may be condoned in the interest of justice, because the assessee has a fair case to succeed. The Ld. DR strongly objected to the submission of the Ld. AR. After hearing both sides, though I do not appreciate the lethargic attitude of the assessee, in the interest of justice, I’m of the considered view that the delay of 42 days in filing the appeal requires to be condoned.

The assessee has raised several grounds in its appeal, however the crux of the issue is that the assessee is aggrieved by the order of the Ld.AO who had made addition for Rs.23,14,320/- on peak credit basis, which was further enhanced by the Ld.CIT(A) to Rs.38,22,700/-. earning income from tanker lorry operations and also trading in provisions & general goods, filed its return of income for the assessment year 2011-12 on 28.09.2011 electronically, admitting total income of Rs.2,51,756/-. Initially the return was processed U/s. 143(1) of the Act and subsequently the case was selected for scrutiny and finally assessment order was passed U/s.143(3) of the Act on 28.02.2014, wherein the Ld.AO made addition of Rs.23,14,320/- which was subsequently enhanced by the Ld.CIT(A) to Rs.38,22,700/-.

During the course of assessment proceedings, it was noticed by the Ld.AO that the assessee had made cash deposits during the relevant assessment year aggregating to Rs.41,89,000/- in his savings bank account with Lakshmi Vilas Bank, Sankarapuram. The assessee had not revealed the above mentioned savings bank account in the return of income. Further it was observed that the assessee had not taken into consideration of these cash deposits while preparing its final accounts. The explanation tendered by the assessee was that the cash deposit in the savings bank account was receipts from its tanker lorry operation. However, it was further observed that the assessee had operated the tanker lorry only for two months in the relevant previous year. Therefore, the Ld.AO computed the peak cash credit of the assessee as its unaccounted income which worked to Rs.23,14,320/-.

Before us the Ld.AR argued stating that the cash deposits in the bank account was out of the jewel loan availed from the bank and also out of the cash withdrawn from the cash credit account maintained with the bank. He further submitted that the peak credit computation made by the Ld.CIT(A) is erroneous because he had adopted the cumulative cash deposit as the peak credit. The Ld.AR therefore pleaded that the orders of the Ld.AO and the Ld.CIT(A) may be set aside. The Ld.DR on the other hand vehemently argued in support of the order of the Ld.CIT(A).

I have heard the rival submissions and carefully perused the materials available on record. At the outset I find the cash credit computed by the Ld.CIT(A) is not appropriate because he has adopted the cumulative cash deposited in the bank account as the peak credit. The computation of peak credit by the Ld.AO is appropriate because he has computed the peak credit based on the 5 peak credit of the assessee on any given point of time in the bank account during the relevant assessment year. Further, the assessee has not produced any evidence before us to establish that the cash credit made in the bank account of the assessee was from the jewel loan and cash withdrawal from the cash credit account maintained with the bank. Therefore I do not find any merit in the argument advanced by the assessee on that regard. However, considering the status of the assessee which is a HUF wherein there are other co-parceners whose financial position should also be considered while making such additions in the hands of the assessee HUF, I hereby remit the matter back to the file of Ld.AO for fresh consideration.

In the result appeal of the assessee is allowed for statistical purposes as indicated herein above.