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The Income Tax Officer, Ward-5 (1) , HYDERABAD Versus Sri Khalid Bin Mahfooz Ahmed

Unaccounted cash credit - CIT(A)'s appreciating the fact that the assessee's credit card statements do not show any entry of credit card swiping for cash withdrawals - Uaaccounted credit card swiping for cash withdrawal - peak credit benefit to the assessee on the cash withdrawals from the bank accounts given by CIT(A) = Held that:- It was only during the course of proceedings before the CIT(A), the respondentassessee filed the cash flow statement, wherein the sources for the above are supposed .....

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he respondent-assessee and he went on discussing about peak credit theory without discussing as to how the fact situation of the case fits into peak credit theory and we find from the grounds of appeal filed before him that no such ground was raised. The additions were made purely based on facts, unless the facts were duly verified by the AO, the addition should not have been deleted.

The CIT(A) in the impugned order had not dealt with the facts of the case, he simply referred to cert .....

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an essential feature of providing justice and in fact is the soul of orders. Further, the Supreme Court in the case of Kranti Associates (P) Ltd. Vs. Masood Alam Khan [2010 (9) TMI 886 - SUPREME COURT OF INDIA] has summarized the principles for recording reasons. Thus the order of CIT(A) cannot be sustained in the eyes of law. Remit the matter back to the file of CIT(Appeals) for fresh adjudication of the issue after affording a reasonable opportunity of hearing to the respondent-assessee. - Dec .....

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e assessee's credit card statements do not show any entry of credit card swiping for cash withdrawals. 2. The Ld. CIT(A)'s has erred in appreciating the fact that the assessee has failed to produce any evidence before the AO during assessment proceedings or during submission of remand report in support of credit card swiping for cash withdrawal. 3. The Ld. CIT(A)'s has erred in appreciating the fact that the credit card statements show only personal expenses of the assessee and purch .....

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the cash withdrawals from the bank accounts. In absence of evidence the purpose of withdrawal and immediate re-depositing claim. The CIT(A) failed to appreciate that the cash withdrawals from the bank accounts were in fact utilized for the purpose of personal expenses. 6. The Ld. CIT(A) has erred in appreciating the fact that the assessee has failed to file clear evidence to substantiate his claim that the account statement does not belong to the Asst. Year under reference with regard to the add .....

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f 'SRK Diagnostics' situated near princess Durreshewar hospital in old city. He filed the return of income for the Assessment Year (AY) 2009-10 on 30-07-2009 admitting income of ₹ 2,23,540/-. Agianst said return of income, the assessment was completed u/s. 143(3) of the Income Tax Act, 1961 [Act] vide order dt. 29-12-2011 by the ITO, Ward-5(1), Hyderabad at a total income of ₹ 1,03,28,739/-. While doing so, the Ld. Assessing Officer (AO) made addition of ₹ 79,02,500/- o .....

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0-03-2014 allowed the appeal filed by the respondent-assessee. 3. During the course of proceedings before the CIT(A), the respondent-assessee filed the information such as cash flow statement wherein all the transactions and cash deposits are supposed to have been reflected. The CIT(A) had forwarded this information to the AO and called for the remand report. In response to which, the AO observed that the respondent-assessee failed to explain the sources for credit card bill payments and he furt .....

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es, Jewellery purchases, Latitudes Pro. Furniture purchases, Radio Guys & Gals, Shoes purchase, Fahion paradise, Cloub Mini Travels & Foreign Petrol purchases, Fenandez Maternity, Dimai Student Visa etc., which are in nature of personal use. Further, AO observed that the assessee had not provided complete addresses of all those business entities to examine whether those people are given cash against credit cards swiping which is an unusual practice. 4. The CIT(A) after considering the re .....

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not justified in deleting the additions without properly appreciating the evidence that the credit card statement does not show any transaction of cash withdrawals and further more that the assessee failed to produce any evidence in support of sale of the jewelry of his wife and motor vehicle and opening cash balance. He further argued that the CIT(A) had misdirected himself in applying the peak credit theory in as much as the facts of the case does not justify the application of peak credit. Th .....

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,500/- and as well as payment to credit card as ₹ 22,02,699/-. Apparently, it was only during the course of proceedings before the CIT(A), the respondentassessee filed the cash flow statement, wherein the sources for the above are supposed to have been explained. However, the AO on remand report had not accepted the cash flow statement in the absence of evidence filed in support of the cash sources shown in the cash flow statement. Even during the course of remand proceedings, the Ld. AO w .....

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additions were made purely based on facts, unless the facts were duly verified by the AO, the addition should not have been deleted. Objections raised by AO in his remand report were not met by the CIT(A). The cash flow statement filed by the respondent-assessee before CIT(A) does not indicate the availability of cash on day to day basis. In the absence of this, it cannot be held that the cash deposits made in the savings bank account of the respondent-assessee are explained. Similarly, it cann .....

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an order without reasons. The Hon'ble Supreme Court held in the case of CCT Vs. Shukla Brothers [2010 (4) SCC 785] held that, recording of reasons is an essential feature of providing justice and in fact is the soul of orders. Further, the Supreme Court in the case of Kranti Associates (P) Ltd. Vs. Masood Alam Khan [2010 (9) SCC 496] has summarized the principles for recording reasons as under: (a) In India the judicial trend has always been to record reasons, even in administrative decision .....

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cised by the decision maker on relevant grounds and by disregarding extraneous considerations. (f) Reasons have virtually become as indispensable a competent of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the process of judicial review by superior Courts. (h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decis .....

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tem. (j) Insistence on reason is a requirement for both judicial accountability and transparency. (k) If a judge or a quasi-judicial authority is not candid enough about his/her decision making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism. (l) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or 'rubber stamp reasons' is not to be equated with a valid d .....

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