IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH `B', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA Nos.1814 to1816/Hyd/11
Asst. Years 2003-04,2008-09 & 2009-10
Sri S.L. Shiv Raj, V/s. ACIT, Central Cir-6,
Nizamabad. Hyderabad.
PAN:ALLPS3268 L
(Appellant) (Respondent)
Appellant by : Sri K. Sai Prasad
Respondent by : Smt. Amisha S. Gupth
Date of Hearing 08-04-2013
Date of Pronouncement 08-04-2013.
ORDER
Per Saktijit Dey, Judicial Member:
These three appeals filed by the assessee are directed against
separate orders of CIT (A)-I, Hyderabad pertaining to the assessment
years 2003-04, 2008-09 and 2009-10 respectively. Since the assessee
is common and the points involved in all these appeals are also
identical, these are clubbed together and disposed of by this combined
order for the sake of convenience.
2. At the outset, the learned AR submitted that on the instructions
of his client, he wants to withdraw the appeals filed by the assessee in
2 ITA Nos.1814 to1816 of 2011
S.L. Shiv Raj, Nizamabad.
ITA Nos.1815 and 1816/Hyd/2011 pertaining to the assessment years
2008-09 and 2009-10. In view of the aforesaid submissions of the
learned AR, ITA Nos. 1815 and 1816/Hyd/2011 are dismissed as
withdrawn. Thus, we are only left with ITA No.1814/Hyd/2011.
3. The only issue arising in this appeal is with regard to addition of
an amount of Rs.2,45,641/- on account of peak credit balance. Briefly
the facts relating to this issue in dispute are, the assessee is an
individual. For the assessment year under dispute, the assessee filed its
return of income on 4-2-2004 declaring a total income of Rs.2,64,340/-
The assessee was subjected to a search and seizure operation u/s 132
of the Act at the Rajiv Gandhi International Airport on 16-6-2008.
Consequent upon the search and seizure operation, a notice u/s 153A
was issued to the assessee and in response to the said notice, the
assessee filed return of income declaring income of Rs.2,64,342/-. As
a result of search and seizure operation, the department detected 27
banks accounts maintained by the assessee. On verification of the
bank accounts, it was noticed, there were deposits and withdrawals
made in regular intervals including cash deposits and withdrawals.
When the assessee was asked to explain sources for deposits on the
date of search, the assessee in his statement recorded u/s 132(4)
admitted that he made the deposits out of unaccounted sources of
income and disclosed additional income of Rs.80 lakhs for the
assessment year 2008-09. After obtaining the abstract of the bank
account, the Assessing Officer directed the assessee to furnish cash
flow statement. When the Assessing Officer verified the cash flow
statement submitted by the assessee vis-à-vis the statements obtained
from the banks , it was found that there was excess of application of
fund over explainable sources to the tune of Rs90,47,560 as on 31-3-
3 ITA Nos.1814 to1816 of 2011
S.L. Shiv Raj, Nizamabad.
2008. When the Assessing Officer confronted this fact to the assessee,
he stated before the Assessing Officer that there were unaccounted
deposits into his bank accounts to the tune of Rs.90,47,561/-.
4. The Assessing Officer not being convinced with the explanation
of the assessee asked the assessee to prepare cumulative cash flow
statement. The cumulative cash flow statement submitted by the
assessee showed peak negative cash balance of Rs.95,90,557/-. The
Assessing Officer on examining the cash flow statement found that
while working out the negative credit, the assessee has considered only
the cash component of 27 bank accounts not disclosed by the
assessee and found during the course of search. The Assessing Officer
was of the view that the peak credit has to be arrived by taking all bank
transactions and not just cash transaction. Considering the fact that
all the bank accounts are not disclosed to the department as also the
overall transactions reflected in the bank account the total credits
appearing in the bank accounts have to be considered and the peak
credits accordingly were to be arrived at. The Assessing Officer on the
basis of the statement of different bank accounts obtained by him
found that for the impugned assessment year the peak credit should be
Rs.5,09,983/- as against which the assessee has admitted income of
Rs.2,64,342/-. Accordingly, the Assessing Officer treated the
differential amount of Rs.2,45,641/- as assessee's income for the
impugned assessment year and added it to the total income of the
assessee. The assessee being aggrieved of the addition preferred an
appeal before the CIT (A).
5. On appeal, the CIT (A) after considering the submissions of the
assessee was of the view that peak credit is one of the alternatives for
4 ITA Nos.1814 to1816 of 2011
S.L. Shiv Raj, Nizamabad.
estimation of income. When bank account is not at all disclosed to the
department, obviously all the deposits in the said account whether cash
or cheque are unexplained and undisclosed deposits. Hence, for
working out for estimated income by this method, it is necessary to
consider all the deposits including the deposits made by cheque. The
CIT (A) thus rejected the assessee's contention that the Assessing
Officer should not have considered the deposits made by way of
cheques. With regard to the assessee's contention that three out of 27
bank accounts have already been disclosed to the department and
hence should not been considered while working out the peak credit,
the CIT (A) did not accept it by observing that the assessee himself had
considered all 27 accounts for working peak negative cash balance.
The CIT (A) further held that since the Assessing Officer after arriving
at the peak credit has reduced the income already disclosed by the
assessee, it cannot be said that the income already computed
considering the three bank accounts is taxed again. On the aforesaid
conclusion, the CIT (A) sustained the addition made by the Assessing
Officer.
6. We have heard the submissions of the parties and perused the
material on record. It is the contention of the learned AR that three of
the bank accounts already disclosed to the department have again
been considered for working out the peak credit. It is further
contention of the learned AR that the transactions made in those three
accounts having already been considered by the assessee while
computing his income, the consideration of the same transaction over
again while working out the peak credit would amount to double
addition of the same amount. The learned Departmental
Representative on the other hand drawing our attention to observation
5 ITA Nos.1814 to1816 of 2011
S.L. Shiv Raj, Nizamabad.
made by the Assessing Officer in the assessment order submitted that
in respect of those three bank accounts stated to have been declared to
the department by the assessee, the Assessing Officer has only
considered the transactions to the extent not shown to the department
for working out the peak credit. From the above contentions of the
parties, it appears that the dispute is with regard to three bank
accounts, the transactions of which, according to the assessee, have
been declared to the department, whereas it is the stand of the
department that only those transactions which have not been disclosed
by the assessee, have been considered for the purpose of working out
the peak credit. Considering the nature of dispute, we are inclined to
remit the matter back to the file of the Assessing Officer for doing the
assessment de novo after verifying the transactions in all the bank
accounts maintained by the assessee. If upon verification it is found
that any transaction in any of the bank accounts has already been
disclosed to the department by the assessee while computing his
income, then the same has to be excluded while working out the peak
credit for the impugned assessment year. The Assessing Officer shall
afford a reasonable opportunity of being heard to the assessee before
finalizing the proceedings.
7. In the result, the appeals filed by the assessee being ITA
No.1814/Hyd/2011 is treated as allowed for statistical purposes.
Order pronounced in the court on 8th April, 2013.
Sd/- Sd/-
(Chandra Poojari) (Saktijit Dey)
Accountant Member Judicial Member
Dt/- 8th April, 2013.
6 ITA Nos.1814 to1816 of 2011
S.L. Shiv Raj, Nizamabad.
Copy forwarded to:
1. Sri B. Narasingh Rao & Co., CA, Plot No.554, Road No.92,
Jubilee Hills, Hyderabad.
2. ACIT, CC-6, Hyderabad.
3. CIT (A)-I, Hyderabad.
4. CIT concerned
5 Departmental Representative, ITAT, Hyderabad.
Jmr*
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