RATAN PAL SINGH,HOWRAH vs. I.T.O WD - 48(2),KOLKATA, KOLKATA

At the outset, it is observed that there is a delay of 36 days on the part of the assessee in filing his appeal before the Tribunal. In this regard, the assessee has filed an application seeking condonation of the said delay and keeping in view the reasons given therein, we are satisfied that there was a sufficient cause for the delay of 36 days on the part of the assesese in filing his appeal before the Tribunal. Even the ld. D.R. has not raised any serious objection in this regard. The said delay is, therefore, condoned and the appeal is being disposed of on merit.

The assessee in the present case is an individual, who is engaged in the business of trading of iron and steel under the name and style of his proprietary concern M/s. Ratan Trading Corporation. As per the AIR information received by the Assessing Officer, the assessee had deposited substantial amounts in the Bank account maintained with HSBC Bank, Howrah Maidan Branch. Since the said Bank account was not disclosed by the assessee, a notice under section 148 was issued by the Assessing Officer on 04.02.2009. In response to the said notice, the return of income for the year under consideration was filed by the assessee on 19.05.2009 declaring total income of Rs.3,98,756/-. During the course of assessment proceedings, the particulars of deposits and withdrawals made from the account maintained with HSBC Bank were furnished by the assessee. On the basis of the said particulars, the plea taken by the assessee before the Assessing Officer was that only the peak credit of the undisclosed Bank account maintained with HSBC Bank could be treated as his income. This plea of the assessee was not found acceptable by the Assessing Officer as he found that the entire credits appearing in the Bank account of the asseessee with HSBC Bank were added to the total

Against the order passed by the Assessing Officer under section 143(3) read with section 147, an appeal was preferred by the assessee before the ld. CIT(Appeals) disputing the addition of Rs.76,38,500/- made on account of the entire credits appearing in his undisclosed Bank account. During the course of appellate proceedings before the ld. CIT(Appeals), reliance was placed by the assessee on the order of the Tribunal dated 15.02.2013 passed in his own case for A.Y. 2006-07 in wherein the plea of the assessee for addition on peak credit basis in respect of transactions appearing in the undisclosed Bank accounts was accepted by the Tribunal and the Assessing Officer was directed to restrict the addition after verifying the peak credit. Keeping in view the said decision of the Tribunal in assessee’s own case for AY 2006-07 on the similar issue, the matter involved in the year under consideration was remanded by the ld. CIT(Appeals) to the Assessing Officer for his verification and comments. In the remand report dated 21.03.2013 submitted to the ld. CIT(Appeals), the Assessing Officer offered his comments as under:- “In the assessment year 2005-06 regarding working of peak credit of the assessee as under:

When the remand report submitted by the Assessing Officer was confronted to the assessee by the ld. CIT(Appeals), the assessee accepted the peak credit as worked out by the Assessing Officer at Rs.5,57,235/-. He, however, objected to the addition of Rs.8,85,000/- suggested by the Assessing Officer on account of payment of land by submitting that the payment to DRT-II alone did not denote there was purchase of land and the Draft in favour of DRT-III was drawn on behalf of others. This objection of the assessee was not found sustainable by the ld. CIT(Appeals) and overruling the same, he proceeded to sustain the addition on account of transactions appearing in the undisclosed Bank account of the assessee with HSBC Bank to the extent of Rs.14,42,235/- as worked out by the Assessing Officer in the remand report for the following reasons given in paragraph no. 3 of his impugned order:-

We have heard the arguments of both the sides and also perused the relevant material available on record. As agreed by the ld. representatives of both the sides, the issue involved in the appeal of the Revenue relating to the restriction by the ld. CIT(Appeals) of the addition on account of the relevant transactions reflected in the undisclosed Bank account of the assessee only to the extent of peak credit of Rs.5,57,235/- is squarely covered in favour of the assessee by the decision of the Tribunal in assessee’s own case for AY 2006-07 rendered vide its order dated 15.02.2013 (supra), which has been subsequently upheld by the Hon’ble Calcutta High Court vide its order dated 12.08.2013 in ITAT No. 128 of 2013, wherein the peak credit theory was accepted by the Tribunal and the Assessing Officer was directed to restrict the addition on account of the transactions reflected in the undisclosed Bank account of the assessee only to the extent of peak credit on verification. In the year under consideration, the matter was remanded by the ld. CIT(Appeals) to the Assessing Officer to verify such peak credit and since the Assessing Officer on verification had worked out the peak credit of Rs.5,57,235/-, we find no infirmity in the impugned order of the ld. CIT(Appeals) restricting the addition to such peak credit. The appeal of the Revenue thus has no merit and the same is dismissed accordingly.

As regards the issue involved in the appeal of the assessee relating to the addition of Rs.8,85,000/- on account of payment made by the assessee from his undisclosed bank account towards land, it is observed that the payment to that extent was made by the assessee separately by Draft from his undisclosed Bank account and this position has not been disputed by the assessee either before the ld. CIT(Appeals) or before us. The only contention raised on behalf of the assessee before the ld. CIT(Appeals) was that the said Draft was made on behalf of others and the same did not denote there was purchase of land. However, as rightly held by the ld. CIT(Appeals) in this regard, the amount of Rs.8,85,000/- had gone out of the undisclosed Bank account of the assessee and since the same was not available to the assessee for further investment, it was liable to be added separately to the total income of the assessee over and above the peak credit of Rs.5,57,235/- worked out by the Assessing Officer. At the time of hearing before us, the ld. counsel for the assessee also has not raised any contention to dispute this position. We, therefore, find no merit in the appeal of the assessee and dismiss the same.

In the result, the appeal of the assessee and that of the Revenue both are dismissed. Order pronounced in the open Court on June 3, 2016.