DCIT,CENTRAL CIRCLE-2, TRICHY vs. SHRI.N.ANBALAGAN, PUDUKOTTAI
Facts
The assessee's case was selected for scrutiny due to cash deposits of ₹.3,68,43,220/- in bank accounts. The Assessing Officer made an addition of ₹.5,82,38,126/- as unexplained money under section 69A of the Act.
Held
The CIT(A) restricted the addition to ₹.16,08,071/- by adopting the peak credit method. The tribunal, relying on High Court and ITAT decisions in similar cases, found no infirmity in the CIT(A)'s order and followed the peak credit method.
Key Issues
Whether the CIT(A) was justified in sustaining the addition of ₹.16,08,071/- out of the total addition of ₹.5,82,38,126/- by adopting the peak credit method.
Sections Cited
69A
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Before: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunatha
आयकर अपीलीय अिधकरण, ’बी’ �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI �ी एसएस िव�ने� रिव, �ाियक सद� एवं �ी एस.आर. रगुनाथॎ, लेखा सद� के सम� Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri S.R. Raghunatha, Accountant Member आयकर अपील सं./I.T.A. No.344/Chny/2022 िनधा�रण वष�/Assessment Year: 2011-12 The Deputy Commissioner of Vs. Shri N. Anbalagan, Income Tax, Central Circle -2, 115, Pudukkottai Road, No. 44, Williams Road, Cantonment, Aranthangi, Pudukkottai 614 624. Trichy 620 001. [PAN: AIXPA4585F] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri V. Nandakumar, CIT ��थ� की ओर से/Respondent by : None सुनवाई की तारीख/ Date of hearing : 26.08.2024 घोषणा की तारीख /Date of Pronouncement : 28.08.2024 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the Revenue is directed against the order dated 28.02.2022 passed by the ld. Commissioner of Income Tax (Appeals) 19, Chennai for the assessment year 2011-12.
We find no representation on behalf of the assessee nor any application filed seeking adjournment. Thus, the assessee called absent and set exparte. We proceed to decide the appeal on merits after hearing the ld. DR basing on the material available on record.
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The Appellant Revenue raised 8 grounds of appeal amongst which the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in sustaining the addition of ₹.16,08,071/- out of the total addition of ₹.5,82,38,126/- in the facts and circumstances of the case.
The case of the assessee was selected for scrutiny for examination of source for the cash deposit of ₹.3,68,43,220/- in assessee’s savings bank accounts with ICICI Bank Ltd. and Axis Bank Ltd. As there was no information regarding money lending commission, names and addresses of persons from whom such commission was received, etc., the Assessing Officer issued letter to Vijaya Bank to furnish the sources. The Assessing Officer, on an examination of the statement filed by Vijaya Bank found difference between cash deposit and cash book. The assessee also filed representation before the Joint Commissioner of Income Tax under section 144A of the Income Tax Act, 1961 [“Act” in short]. The Assessing Officer, in terms of the directions of the JCIT, completed the assessment by making addition on account of cash deposits treating the same as unexplained money under section 69A of the Act. The ld. CIT(A), based on the detailed working of peak credit, restricted the addition to an extent of ₹.16,08,071/-, against which, the
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Revenue is in appeal before us in challenging the action of the ld. CIT(A) in giving relief by adopting peak credit method.
The ld. DR Shri V. Nandakumar, CIT relied on the order of the Assessing Officer and argued that the ld. CIT(A) without considering the facts and circumstances of the case in proper perspective adopted peak credit method. He drew out attention to page 3 of the impugned order and argued that there was no occasion to the Assessing Officer for examination of the said working of peak credit method and argued vehemently that the details as given in page 3 of the impugned order are incomplete and cannot be made basis for adopting peak credit method. The ld. DR prayed to restore the order of the Assessing Officer and set aside the order of the ld. CIT(A).
Having no representation before us, we deem it proper to refer to the statement of facts forming part of Form 35, wherein, we find the assessee offered explanation in respect of his books of account. The assessee is maintaining regular books of account on day-to-day basis and all the bank accounts are duly reflected in the said books of account. He submitted before the ld. CIT(A) that all the bank account including the cash deposit of ₹.5,82,38,126/- were duly reflected in the said books of account. Further, the assessee stated that he advanced money for a
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short period only for a period upto 7 to 10 days only and does not make a second advance to the same person when an earlier advance is pending. All the transactions are completed within a maximum period of 7 to 10 days. Further it was stated that the assessee does not permit any back log in connection of interest/balance outstanding and it is not necessary to maintain the individual balance of each and every person on any given date as the transaction are completed then and there.
We note that having considering the nature of business and submissions made before the ld. CIT(A), it establishes that the ld. CIT(A) satisfied with the business activities of the assessee and collection of cash, deposit in the bank accounts. Further, we note that the ld. CIT(A) reproduced the details of peak credit in page 3 of the impugned order, wherein, he considered opening balance in bank account, opening cash balance, opening balance of advance as on 01.04.2010 and income from money lending business less drawings other than family members. According to the ld. CIT(A), the peak credit is at ₹.44,00,557/- and net fund available for explaining the peak credit at ₹.27,92,482/-, determined the balance unexplained amount of ₹.16,08,071/-. Further, we find in order to come to such conclusion, the ld. CIT(A) placed reliance in the case of S. Kulanthaian, who is relative of the assessee, wherein, the ITAT
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affirmed the order of the ld. CIT(A) in working the peak credit method. Further, the ld. CIT(A) relied on the decision of the Hon’ble Jurisdictional High Court in the case of PCIT v. S. Anbukannan, who is relative of the assessee, in TCA No. 216 & 217 of 2019 dated 04.03.2019, which held the method of peak credit was rightly adopted for addition of the alleged undisclosed income of the assessee and is a well settled common principle. The relevant part at para 9 to 9.6 are reproduced herein below for ready reference: 9. I have pursued the assessment order, grounds of appeal and submissions made by the appellant during the course of appellate proceedings. 9.1 While going through the assessment order dated 26.03.2014, it can be seen that the Assessing Officer has made the addition amounting to Rs. 5.82,38,126/- which is being the cash deposit made by the appellant, as unexplained money as per the provisions of Sec. 69A of the Act. 9.2 While completing the assessment, the AO has not considered the withdrawals from the bunk accounts. The appellant has contended that the amount of Rs.5,82,38,126/- is the deposits held by the appellant in various accounts on various dates. The relevant bank accounts submitted by the appellant pursued. The best way to arrive the unexplained money is only by arriving a peak credit. As per the order passed by this office in the appellant's relative case upon the same issue and by the same Assessing Officer in the case of Shri S. Kulanthaian relevant AY 2013-14 in ITA No.285/2015-16 dated 31.01.2017, A.Y.2014-15 in ITA No. 250/16-17 dated 16.10.2017 and A.Y.2015-16 in ITA No.402/2017-18 dated 27.10.2020, it has been held that by working the peak credit method and the deficit amount can alone be added as unexplained money. In respect of the appeal filed by the Department against the above order relevant to the A.Y. 2014-15 the ITAT, vide its order in ITA No.35/Chny/2018 has dismissed the Revenue appeal. 9.3 In this background, considering the earlier decision taken by this office in the appellant's relative case upon the same issue and facts and as per the decision taken by the ITAT in the same case in a similar issue, I am of the opinion that in the interest of justice, the AO must have taken into
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account the relevant withdrawals while working out the cash deposits. While working out the withdrawals, naturally the peak credit method should be considered to determine any deficit in determining unexplained cash balance to consider the addition. 9.4 The AR, during the course of appellate proceedings, has produced copy of the order of the jurisdictional High Court dated 4.3.2019 in Tax Case (Appeals) Nos. 216 & 217 of 2019 and C.M.P. No.5601 of 2019 in the case of PCIT Central-1, Chennai v. Sri A. Anbukannan. In this case the respondent is relative of the appellant, where facts and circumstances of the case are similar. In this case, the observation made by the Hon'ble Court is reproduced as under: “The assessee had both cash deposits and cash withdrawals in his bank account with the same bunk. Therefore, the method of Peak Credit was rightly adopted for addition of the alleged undisclosed income of the assessee and this is a well-settled and common principles so adopted. The finding of facts of the Authorities below cannot be said to be perverse or illegal in any manner. .......... .......... Therefore, we are of the opinion that the Appeals filed by Revenue are devoid of merit and they are liable to be dismissed and accordingly, they are dismissed.” 9.5 The observation of the Hon’ble High Court is respectfully followed in this appeal. 9.6 In the present appeal, the appellant has worked out the peak credit and the deficit balance and the same is computed as Rs.16,08,071/-. This balance is only unexplained money and it requires to be substituted instead of Rs 5,82,38,126/- as determined in the assessment order. Thus, out of the addition of Rs.5,82,38,126/-, a sum of Rs.16,08,071/- is sustained. In this background, the ground raised by the appellant is partly allowed.” 8. On an examination of the above and in view of our discussion made in the afore mentioned paragraphs, we find no infirmity in the order of the ld. CIT(A) in adopting peak credit method placing reliance of decision of the Hon’ble Jurisdictional High Court vide order dated 04.03.2019 in TCA No. 216 & 217 of 2019 in the case of PCIT v. A.
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Anbukannan and the case of assessee’s relative in S. Kulanthaian by ITAT in ITA No. 35/Chny/2018. Thus, the ground raised by the Revenue fails and the appeal is dismissed.
In the result, the appeal filed by the Revenue is dismissed. Order pronounced on 28th August, 2024 at Chennai.
Sd/- Sd/- (S.R. RAGHUNATHA) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, 28.08.2024 Vm/- आदेश की �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant, 2.��थ�/ Respondent, 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR & 5. गाड� फाईल/GF.
