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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI SHAILENDRA KUMAR YADAV, JM & SHRI RAJESH KUMAR, AM
अपीऱार्थी ओर से / Assessee by Shri Bhadres Doshi प्रत्यर्थी की ओर से/Revenue by Shri Shivaji B Ghode सुनवाई की तारीख / Date of Hearing : 3.8.2016 घोषणा की तारीख /Date of Pronouncement : 12.8.2016 आदेश / O R D E R PER RAJESH KUMAR, A. M: These are the cross-appeals filed by the respective parties against the order passed by the ld.CIT(A)-33, Mumbai dated 29.5.2012 for the 2 4557-4766/Mum/2012 assessment year2009-10. Since these appeals pertain to the same assessee, these appeals are being decided by this common order for the sake of convenience. 2. ITA No. 4766/Mum/2012. 3. We find from the orders of authorities below that the tax effect involved in the this case is below the monetary limit (Rs. 10,00,000/-) prescribed by the Central Board of Director Taxes(CBDT), vide its Circular No.21/2015(F.No.l42/2007-ITJ (Pt.) dated 10th December, 2015.
Shri Bhadres Doshi appeared on behalf of the assessee and brought to the notice of the bench the fact of tax effect being less than 10.00 lacs to which ld DR also agreed. Considering these facts, we dismiss the appeal of the revenue holding it as not maintainable u/s. 268A of the Act.
Now we shall take up the appeal in ITA 4557/Mum/2012
Only issue raised in the sole ground of appeal is against the 6. confirmation of addition of Rs.9,87,200/- by ld.CIT(A) on account of unexplained income added by the AO on account of cash deposit in the bank account of the assessee.
7. Brief facts of the case are that the assessee filed its return of income on 30.7.2009 declaring taxable income of Rs.2,64,720/-. Thereafter, scrutiny proceedings were initiated against the assessee and statutory notices under section 143(2) and 142(1) were issued and served upon the 3 4557-4766/Mum/2012 assessee. The assessee was dealing in automobile parts on retail basis under the name and style of M/s Star Auto Parts. The AO during the course of assessment proceedings found that the assessee has deposited huge cash into various banks accounts and accordingly added an amount of Rs.41,16,800/-. The assessee filed his return of income on presumptive basis under the provisions of section 44AF of the Income Tax Act, 1961 (hereinafter referred to as Act) by showing total sales of Rs.14,69,346/- and returning the profit at 20.53% which was more than the percentage specified under the provisions of section 44AF of the Act. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A). During the course of appellate proceedings, the assessee submitted that the AO has wrongly taken the figure of cash deposits as Rs.41,16,800/- whereas as a matter of fact the cash actually deposited was Rs.33,72,600/-. The assessee also submitted that frequent cash withdrawals and deposits were out of cash withdrawals from the various banks which was shown in order to obtain loan facilities from the banks. The copies of banks statements were also filed to corroborate the submissions of the ld.AR which have been provided by the respective banks. The ld. CIT(A) partly allowed the appeal of the assessee by sustaining the addition of Rs.9,87,200/- out of total addition of 4 4557-4766/Mum/2012 Rs.43,81,530/- and deleted the balance of Rs.33,94,330/- by observing and holding as under : “3.7 I have gone through the same and I find that appellant's submission to the extent that Rs.56,550/- is the highest positive balance appearing on 19.06.2008, on page no. 64 in the said chart is correct, at the same time it is noted that infact there is a negative peak of Rs.9,87,200/- appearing 07.01.2009 on page no. 68 in that very chart ( see annexure B). The appellant has stated that the peak credit of Rs.56,550/- is coming out of the opening balance and hence same should not be added, is not tenable any more for two reasons; firstly the peak working done by him is while not taking into account the opening balance of Rs.1,76,774/- as on 01.04.2008 and then the actual peak amount is negative peak of Rs.9,87,200/- as on 07.01.2009. Now the question is whether addition of Rs.56,550/- the positive peak or the amount of Rs.9,87,200/- showing the negative peak has to be taken in the hands of the appellant as his unexplained income u/s 69 of the Act. Since peak simply means peak, it is clear that peak has to be taken at the highest value whether it is positive or negative. It is for the simple reason that the positive cash peak shows the surplus amount available in the hands of appellant and thus need no interpretation, and hence has to be added so, at the same time negative peak is only imaginary and not possible because there cannot be a negative cash balance by any stretch of imagination. It is well accepted that the minimum cash at any given point of time can be zero; thus meaning thereby that if cash peak is coming to a negative figure it has to be brought to zero by making addition for the same amount. In this case addition for the amount of Rs.9,87,200/-has to be made to make the negative balance of Rs.9,87,200/- which is appearing on 07.01.2009 to make it zero and hence I am of the considered view that an amount of Rs.9,87,200/- has to be added as appellant's unexplained income on account of these unaccounted cash deposits and withdrawals made by him for A.Y.2009-l0. Accordingly addition for the amount of Rs.9,87,200/- is confirmed against the addition made by the A.O. at Rs.43,81,530/-. The ground no. 1 & 2 are partly allowed. The ground no. 3 does not need any adjudication and hence not dealt with.”
5 4557-4766/Mum/2012
The ld. AR vehemently submitted before us that the order passed by ld. CIT(A) was not correct as he has sustained the addition particularly on the basis of negative highest balance in the various bank statements/pass books of the assessee. The ld. AR drew our attention to pages 64 to 70 of the assessee’s paper book which is a statement of peak credit. The ld. AR specifically drew out attention to page 64 of the paper book which has highest peak credit of Rs.57,550/- and also page No.68 which has highest peak debit of Rs.9,33,200/-. The ld. AR submitted that the addition confirmed by the ld.CIT(A) on the presumption that the debit balance of Rs.9,87,200/- could only be made up by depositing cash of equal amount and which was the sole basis of sustenance of addition whereas if at all the addition was to be made that is to be based on the scientific and reasoned basis which is accumulated peak credit in all the banks. The ld. AR finally submitted that since aggregate of peak credit in all banks was Rs.55,550/- on 19.06.2008 and in no way the addition could be made more than the said amount. The ld. AR finally prayed that the addition be reduced to Rs.57550/- being the maximum peak credit in the accumulative statements prepared on the basis of all banks of the assessee and the remaining addition be deleted. On the contrary, the ld.DR relied heavily on the order of ld.CIT(A).
6 4557-4766/Mum/2012
We have carefully considered the submissions of the parties, perused the material placed before us including the orders of authorities below. We find from the statement of peak credit that the ld.CIT(A) sustained the addition to the extent of highest peak debit which was on 7.1.2009. We find that at page 64 that peak credit was Rs.57,550/- on 19.6.2008, whereas the highest peak debit was at Rs.9,87,200/- as on 7.1.2009. We find merit in the submissions of the ld. AR that the addition cannot be made on the basis of highest peak debit in the banks of the assessee and which, in our opinion, has to be based on reasoned and proper basis or formula which in the present case could only be highest peak credit in the banks of the assessee in which the assessee frequently deposited and withdrew the cash and that too was for obtaining loan facilities from the banks. In view of these facts, we are of the opinion, that the order of ld. CIT(A) cannot be sustained as the addition was made on the basis of highest peak debit shown in the bank statements/passbooks of the assessee and accordingly we set aside the order of the ld. CIT(A) and direct the AO to delete the addition of Rs.9,29,650/- and addition of Rs. 57,550/0- is sustained being highest peak credit in the banks of the assessee.
7 4557-4766/Mum/2012
In the result, the appeal of the revenue is dismissed and the appeal of the assessee is partly allowed. Order pronounced in the open court on 12.08.2016.