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Income Tax Appellate Tribunal, DELHI BENCHES : A : NEW DELHI
Before: SHRI R.S. SYAL, AM & MS SUCHITRA KAMBLE, JM
ORDER PER R.S. SYAL, AM: These two appeals by the Revenue arise out of the separate orders passed by the CIT(A) on 25.11.2013 in relation to the assessment year 2009-10.
The only issue raised in the first appeal is against reducing the addition from Rs.49,05,352/- to Rs.2,44,769/-.
Briefly stated, the facts of the case are that the AO received an AIR information that the assessee deposited cash of Rs.49,05,352/- during the financial year relevant to the assessment year under consideration in ICICI Bank, Preet Vihar, New Delhi. In the absence of any explanation and documentary evidence tendered by the assessee for the cash deposit, the AO made addition of Rs.49.05 lac. Such an addition was made by means of order passed u/s 144 of the Act. The ld. CIT(A) restricted the addition to Rs.2,44,769/- by considering the peak credit at this level on 30.1.2009. The Revenue is aggrieved against reducing the addition to this level.
We have heard the ld. DR and perused the relevant material on record. There is no appearance from the side of the assessee despite notice. As such, we are proceeding to dispose of the appeal of the Revenue ex parte qua the assessee.
It is amply borne out from record that the AO made addition of Rs.49.05 lac by considering all the deposit entries in the ICICI Bank, Preet Vihar Branch, for which the AIR information was received by him. On the contrary, the ld. CIT(A) noticed that there was substantial withdrawal of cash which was re- deposited in the same bank account and the peak amount was calculated at Rs.2,44,769/- which was subjected to taxation.
In principle, we approve the view that only peak credit can be subjected to tax by considering the cash deposit and cash withdrawal entries. It is, but, natural that if amount of cash is withdrawn from bank and then re-deposited, then the entries of all the deposits cannot be subjected to taxation. It is only the peak amount which can be charged to tax. However, non-cash entries cannot be taken into consideration for calculating the peak amount of credit which are to be dealt with separately. It is borne out from the record that the assessee did not submit any detail to the AO and the ld. CIT(A) has accepted the assessee’s contention without confronting the AO with a copy of the bank account before him for the first time in violation of 3 rule 46A of the IT Rules, 1962. As such, we set aside the impugned order and restore the matter to the file of the AO for examining the issue of peak credit for addition in line with our above observations. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in such fresh proceedings.
The other appeal filed by the Revenue is against restricting the penalty imposed by the AO u/s 271(1)(c) of the Act on account of the addition towards unexplained bank deposits reduced in the first appeal in quantum proceedings.
Having heard the ld. DR and perused the relevant material on record, it is observed that the ld. CIT(A) has directed the AO to restrict the penalty on the basis of the amount of peak credit of Rs.2,44,769/- as against the addition of Rs.49.05 lac made by him. We have set aside such a view and restored the matter to the file of the AO for a fresh decision in the quantum proceedings. Consequently, the impugned order is also set aside and matter is restored to the file of the AO to consider the question of imposition or otherwise of penalty after passing the assessment order afresh as directed above.
In the result, both the appeals of the Revenue are allowed for statistical purposes.
Order pronounced in the open Court on 07.01.2016.