ITO 18(3)(3), MUMBAI vs. MAQSOOD AHMED KADRI, MUMBAI

The only issue in this appeal of revenue is against the order of CIT(A) restricting the addition made by the AO u/s 68 of the Act at Rs.2,21,165/- as 2 6820/M/14 against the addition made by the AO of Rs.56,48,880/- by taking the peak credit from the withdrawal and deposits of the saving bank account.

Brief facts of the case are that the assessee is an individual doing the business the business of plastic scrap. The assessee has filed his return of income declaring the income of Rs.2,70,670/-. Subsequently, AIR information was received that the assessee has maintained bank account with ICICI Bank having saving bank account number 032001508494 and in his bank account there are total seven deposits during the year and cash was deposited amounting to Rs.56,48,880/-. The AO required the assessee to explain the cash deposits in terms of section 68 of the Act. As the assessee could not explain, the AO treated the entire cash deposited in the bank account as unexplained income of the assessee amounting to Rs.56,48,880/-. Aggrieved, the assessee preferred the appeal before the CIT(A). The CIT(A) after considering the submissions of the assessee restricted the addition to the extent of peak amount of cash deposits in the bank amounting to Rs.2,21,165/- by observing as under: “15. The facts of the present case are similar to the facts discussed in the above decisions. The facts stated above brings out the clearly the circumstances that though there is a unusual trend of cash withdrawals and followed by cash deposits in the bank account, yet there is no denying the fact that the AO has not brought on record any evidence to prove that the cash withdrawn by the appellant was used for any other purposes except for making cash deposits and the cash amount was not available in the hands of the appellant as a source for depositing the same into the bank account. In the absence of any such evidence, the appellant cannot be denied the benefit of cash amounts withdrawn from the same bank account. The cash withdrawals are at Rs.57,20,900/- as against the cash 3 6820/M/14 deposits amounting to Rs.56,48,880/- in the bank account of the appellant so there appears to be a prima facie case of the same money being rotated time and again.

In the circumstances explained above in my considered opinion it would be appropriate if the addition on account of cash deposits is restricted to peak credit in the bank account, which is Rs.2,21,165/- as on 12/12/2009 during the year under consideration. Thus the addition amounting to Rs.2,21,165/- is sustained and the balance addition made by the AO is deleted. The AO has not brought on records which reveal that the cash withdrawn from time to time from the same savings bank account aggregating to Rs.57,20,900/- have been utilized by the appellant for some other purposes and therefore were not available in the hands of the appellant as a source for depositing the same into the bank account. Therefore, I am of the opinion that addition should be restricted to Rs.2,21,165/- being the peak credit in the impugned savings bank account of the appellant as on 12.12.2009.”

We have considered the rival contentions and perused the record placed before us. We find that the assessee has filed the details of cash deposits and cash withdrawals in the bank account before the CIT(A) for the first time. The assessee has given the peak credit calculation for the first time in which it was admitted the peak credit can be added as unexplained deposits in the bank account to the extent of Rs.2,21,165/-. The assessee also claimed that these amounts are cash withdrawals from time to time from his saving bank accounts for the purpose of business and unutilized cash was deposited in the same bank account. We find from the bank account statement produced before CIT(A) that 4 6820/M/14 there as cash withdrawals and cash deposits. Further, there is no denial that the AO has brought on record any evidence or any finding recorded by him that the cash withdrawn by the assessee was utilized for the purpose of making investment or for incurring any expenditure. In view of these facts, we are of the view that the CIT(A) has rightly held that the assessment on the assesses should be based on peak credit with respect to the bank deposits. Neither the AO nor the CIT(A) has gone into the details of peak credit submitted by the assessee. In the eventuality of the facts, we are of the view that let this issue be examined by the AO. The AO will go into peak credit of the assessee and on the basis of correct peak credit of the assessee on cash deposits and withdrawals in the bank account and determined the correct figure. We direct the AO accordingly.

In the result, all the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 2nd June, 2016 sd (RAJESH KUMAR) (MAHAVIR SINGH ) रेखा सदस्म / Accountant Member न्मायमक सदस्म / Judicial Member भुंफई Mumbai; ददनांक Dated :02.06.2016 Sr.PS:SRL: