Income Tax Appellate Tribunal - Ahmedabad
Krupashankar Gundanram Jaiswal, ... vs Department Of Income Tax on 27 October, 2004
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD
AHMEDABAD "C" BENCH
(BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND
T.K. SHARMA, JUDICIAL MEMBER)
ITA.No.3753/Ahd/2004
Asstt.Year : 2001-2002
Mr.Krupashankar Gundanram Jaishwal Vs. ITO, Ward-2
(Prp.of M/s.Krupashankar Gundanram) Navsari.
Anand Bazar, Station Road
Bilimora.
ITA.No.723/Ahd/2007
Asstt.Year : 2001-2002
ITO, Ward-2 Vs. Mr.Krupashankar Gundanram Jaishwal
Navsari. (Prp.of M/s.Krupashankar Gundanram)
Anand Bazar, Station Road
Bilimora.
(Appellant) (Respondent)
Assessee by : Shri Tushar Hemani
Revenue by : Shri C.K.Mishra
ORDER
PER G.D. AGARWAL, VICE-PRESIDENT: These are cross appeals by the assessee and the Revenue against common order of the CIT(A)-VI, Surat dated 27-10-2004 for the abovementioned assessment years. Since issues raised in these cross appeals are common, for the sake of convenience we dispose of both the appeals by this consolidated order.
2. First we shall take up the appeal of the assessee, in which the following grounds are raised:
i) The Learned Commissioner of Income Tax (Appeals-VI) Surat has erred in law and on facts, in confirming the income assessed by the ITO/Ward-2/Navsari at Rs.14,00,230/- as against returned income of Rs.2,00,4O0/-.
ii) The Learned Commissioner of income Tax (Appeals-VI) Surat has erred in law and on facts, in confirming the addition made by ITA.No.3753/Ahd/2004 & 723/Ahd/2007 ITO/Ward-2/Navsari and taxing U/s.68 of the income Tax act, 1961, Rs.4,99,828/- in isolation as unexplained cash credit introduced on 17/03/2001 and without giving set off for the corresponding debit entry of Rs.2,00,000/- on the same day.
iii) The Learned Commissioner of income Tax (Appeals-Vi) Surat has erred in law and on facts, in confirming the addition made by ITO/Ward-2/Navsari and taxing U/s. 68 of the Income Tax Act, 1961, Rs.7,00,000/- in aggregate in isolation as unexplained cash credit introduced on 04/04/2000, 13/04/2000, 17/04/2000 and 02/11/2000 without giving set off for the corresponding debit entries in the cash book aggregating to Rs.7,00,000/- passed on several days failing in the current financial year.
iv) The Learned Commissioner of Income Tax (Appeals-VI) Surat has erred in law and on facts, in confirming the action of the ITO/Ward-2/Navsari in taxing the amount of Rs.4,99,828/- and Rs.7,00,000/- as detailed above instead of the amount of only the peak credit balance" of Rs.2,99,828/- as on 17/03/2001 in the hands of the Appellant.
v) Without prejudice to the above, the Learned Commissioner of Income Tax (Appeals-VI) Surat has erred in law and on facts, in confirming the action of the IT0/Ward-2/Navsari in taxing the amount of Rs.4,99,828/- and Rs.7,00,000/- as detailed above instead of working out and taxing the amount of "Peak Cash Deficit" ignoring (without considering) the Credit and Debit entries passed in the Cash book.
vi) Without prejudice to the above, the addition of Rs.4,99,828/-
and Rs.7,00,000/- on account of unexplained credit entries in the Day Book is excessive, unreasonable and uncalled for; and the Learned Commissioner of Income Tax (Appeals)-VI has also erred in confirming the order.
vii) The above Grounds of Appeal are without prejudice to and are independent of each other.
For various reasons and on different grounds, the order cannot be sustained.
3. In this appeal by the assessee, several grounds are raised. However, they are all against the total addition of Rs.11,99,828/- (Rs.4,99,828/- plus -2- ITA.No.3753/Ahd/2004 & 723/Ahd/2007 Rs.7,00,000) made by the Assessing Officer ("the AO") for unexplained cash credit. At the time of hearing before us, the learned counsel for the assessee did not seriously contend against the addition for cash credit in principle. But he requested that the only peak credit should be added. He further submitted that the CIT(A) while considering the penalty appeal of the assessee has worked the peak credit of Rs.4,99,828/- for which he has given the detailed working at page no.3 of his order. He, therefore submitted that the addition should also be limited to the extent of peak credit amounting to Rs.4,99,828/-. The learned DR on the other hand stated that the assessee has shown the cash credit of Rs.4,99,828/- in the name of the bank which was found to be false. Similarly, the assessee made certain deposits in the bank which was not debited in the books of accounts. Thus, there were total credit entries amounting to Rs.11,99,828/- and the addition for the entire amount should be made and not for the only sum of Rs.4,99,828/-. He also submitted that even if the arguments of the assessee for making the addition of peak credit is accepted, the CIT(A) has wrongly worked the peak credit at Rs.4,99,828/-. The actual peak credit would be much more.
4. We have carefully considered the arguments of both the sides and perused material placed before us. The CIT(A) at page no.4, para-4 of his order has given the date wise details of debit entries and the credit entries and the peak worked out by the assessee. The same is reproduced below:
Date Credit Entry Debit Entry Peak Credit
04.04.2000 200,000 - 200,000
13.04.2000 200,000 - 200,000
17.04.2000 200,000 - 200,000
02.11.2000 100,000 - 100,000
23.02.2001 - 100,000 NIL
15.03.2001 - 200,000 NIL
17.03.2001 499,828 200,000 299,828
19.03.2001 - 200,000 NIL
-3-
ITA.No.3753/Ahd/2004 &
723/Ahd/2007
5. There is no dispute with regard to the date wise credit and debit entries. The dispute is with regard to the working of the peak credit. The assessee had worked out the peak credit of Rs.2,99,828/- which was not accepted by the CIT(A) in the appeal against the assessment order. But in the appeal against the penalty order, he accepted the peak credit at Rs.4,99,828/-. However, on the basis of the above chart in our opinion, the correct peak credit would be worked out at Rs.7,00,000/- as under:
Date Credit Entry Debit Entry Peak Credit
04.04.2000 200,000 - 200,000
13.04.2000 200,000 - 400,000
17.04.2000 200,000 - 600,000
02.11.2000 100,000 - 700,000
23.02.2001 - 100,000 600,000
15.03.2001 - 200,000 400,000
17.03.2001 499,828 200,000 699,828
19.03.2001 - 200,000 499828
Thus, the correct peak credit works out to Rs.7,00,000/-. In our opinion, when the entire credit and debit is treated as bogus and belonging to the assessee himself, the addition for peak credit only can be made and not in respect of each debit and credit entry. Accordingly, we sustain the addition for the peak cash credit amounting to Rs.7,00,000/- during the year under consideration.
ITA No.723/Ahd/20076. Grounds raised in the appeal is as under:
"1. Whether on the facts and in the circumstances of the case, the ld.CIT(A) was justified in law in holding that the benefit of peak cash credit theory would be given to the assessee, when in fact, the ld.CIT(A) ignore the fact that the assessee failed to establish that cash was introduced from the cash generated out of the previous entry ?
2. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) was justified in law to direct the AO work out penalty of peak credits of Rs.4,99,898/-.-4-
ITA.No.3753/Ahd/2004 & 723/Ahd/2007
7. We have heard both the parties and perused the material placed before us. Short facts of the case is that the AO has levied penalty under Section 271(1)(c) of the Act on account of addition of Rs.11,99,828/- made by him for unexplained cash credit. The CIT(A) in principle upheld the penalty. He held that the penalty should be levied only on the peak credit of Rs.4,99,898/-. We have already considered the issue of the peak credit while deciding the assessee's appeal in ITA 3753/Ahd/2004 above. For the detailed discussion in para-4 and 5, we have sustained the addition of Rs.7,00,000/-. Against the order of the CIT(A) sustaining the penalty on peak credit, the assessee is not in appeal. Therefore, penalty is to be levied on peak credit determined by us, while deciding quantum appeal. In view of the above, we direct that the penalty under Section 271(1)(c) would be levied on the addition of Rs.7,00,000/- sustained by us on account of peak credit. The AO is directed to work out the penalty at hundred per cent of the tax sought to be evaded on the sum of Rs.7,00,000/-.
8. In the result, both appeals of the assessee and the Revenue are partly allowed.
Order pronounced in Open Court on 9th April, 2010.
Sd/- Sd/- (T.K. SHARMA) (G.D. AGARWAL) JUDICIAL MEMBER VICE-PRESIDENT Place : Ahmedabad Date : 09-04-2010 Vk* Copy of the order forwarded to: 1) : Appellant 2) : Respondent 3) : CIT(A) -5- ITA.No.3753/Ahd/2004 & 723/Ahd/2007 4) : CIT concerned 5) : DR, ITAT. BY ORDER AR, ITAT, AHMEDABAD -6-