Gajraj Kaushik, Rohtak vs Assessee

Assessee By : Shri Suresh Kumar Gupta, CA Department By : Shri T. Vasanthan, Sr. DR ITA Nos.804 & 986/Del/2011.

Date of Hearing : 19.03.2015 Date of Pronouncement : 20 .03.2015

ORDER PER R.S. SYAL, AM:

These two cross appeals - one by the assessee and the other by the

Revenue - arise out of the order passed by the CIT(A) on 7.12.2010 in

relation to the assessment year 2007-08.

2. The only issue raised in this appeal through various grounds of the

Revenue is against the reduction in the addition from Rs.32,03,316/- as

made by the AO to Rs.10,67,010/- . The ld. AR did not object to the

submission of the ld. DR for adoption of the correct amount of addition

sustained in the grounds of the Revenue's appeal, without any formal

amendment to the Form No. 36. The assessee in his Cross objection is

aggrieved against the sustenance of addition to the extent of

Rs.10,67,010/-.

3. Briefly stated, the facts of the case are that the assessee, a

practising doctor, filed his return declaring total income of Rs.1,16,650/.

The AO required the assessee to substantiate the contents of his return of 2 ITA Nos.804 & 986/Del/2011.

income. Several opportunities were granted which were not availed by

the assessee. Ultimately, the assessment was completed ex parte u/s 144

of the Income-tax Act, 1961 (hereinafter also called `the Act'). The AO

noticed that the assessee was maintaining the following bank accounts,

which were not disclosed to the Department:-

S.No. Bank account No. Name of Bank Amount credited during the AY 2007-08

1. 55057764337 State Bank of Patiala, Gohana 28,36,338/-

2. 65010109060 -do- 1,53,632/-

3. 65013829258 -do- 5,00,000/-

4. 65015828649 -do 4,00,986/-

5. 65016274449 -do- 1,00,000/-

6. PNB Loan Account (repayments) 2,15,000/-

7. HDFC Auto Loan (Repayments) 1,47,360/-

Total 43,53,316/-

4. On perusal of the computation of income, it was observed that not

only these banks accounts were not disclosed, even no interest income

from such banks accounts was offered. Credit entries in the above bank

accounts were totaled at Rs.43,53,316/-. The AO observed that initial

investment amounting to Rs.11.50 lac was made, to which extent these

deposits were treated as explained. The remaining amount of

Rs.32,03,316/- (Rs.43,53,316 minus Rs.11,50,000) was made as

3 ITA Nos.804 & 986/Del/2011.

addition. The ld. CIT(A) entertained some additional evidence from the

assessee. He called for the remand report. After considering the

additional evidence, the remand report and the rejoinder given by the

assessee, the ld. CIT(A) computed peak credit to the tune of

Rs.9,19,560/- as unexplained cash deposit. He, therefore, directed the

AO to verify the statement filed by the assessee computing such peak

credit before giving effect to his order. As regards the repayment of

loan from HDFC Bank amounting to Rs.1,47,360/-, he sustained

addition for this sum also in the absence of the assessee furnishing any

evidence. Accordingly, total addition was sustained at Rs.10,67,010/-

subject to verification by the AO, as against that made by the AO at

Rs.32,03,316/-. Both the sides are in appeal on their respective stands.

5. We have heard the rival submissions and perused the relevant

material on record. It can be seen from the assessment order that despite

giving several opportunities, the assessee did not participate in the

assessment proceedings. It is also not denied that the assessee had seven

bank accounts which were undisclosed in which there were certain

4 ITA Nos.804 & 986/Del/2011.

deposits and interest was also earned therefrom which was not declared

by the assessee. The ld. CIT(A) accepted the amount of peak credit to

be taxable from the bank accounts, subject to the verification by the

AO. In our considered opinion, if there are certain deposits and also

withdrawals in a bank account which is not disclosed, then a total of all

the credit entries cannot be subjected to addition by disregarding the

withdrawals from such bank account. It is, in fact, the peak credit which

is required to be added because the source of certain deposits can be

clearly made out from the withdrawals from the same bank account.

We, therefore, uphold the view taken by the ld. CIT(A) in directing the

AO to verify the statement of computation of peak credit at

Rs.9,19,650/- and sustaining the addition to this level, if such statement

is found to be correct. As regards the other amount, we find that the

assessee did make repayment of loan from HDFC Bank account to the

tune of Rs.1,47,360/- for which no source was explained to the

satisfaction of the authorities below. Under such circumstances, the ld.

CIT(A) was justified in sustaining addition to this extent. We, therefore,

approve the impugned order.

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ITA Nos.804 & 986/Del/2011.

6. In the result, both the appeals stand dismissed.

The order pronounced in the open court on 20.03.2015.

Sd/- Sd/- [C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated, 20th March, 2015. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.

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