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2016 (1) TMI 863 - ITAT CHENNAI

2016 (1) TMI 863 - ITAT CHENNAI - TMI - Revision u/s 263 - as per CIT(A) Assessing Officer under section 143(3) allowing the claim of the assessee in considering peak credit on the cash deposits is without application of mind - Held that:- In the instant case, the Assessing Officer neither examined any details with regard to the request of the assessee to adopt peak credit nor made any enquiry before allowing such claim of the assessee while completing the assessment. Therefore, in view of the a .....

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g Officer to redo the assessment under section 143(3) of the Act afresh. Accordingly, we uphold the impugned order of the Commissioner of Income Tax and reject the grounds of appeal raised by the assessee. - Decided against assessee - I.T.A.No.1170/Mds/2014 - Dated:- 6-11-2015 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER For The Appellant : Mr. S.Sridhar, Advocate For The Respondent : Mr. M.N.Maurya, CIT ORDER Per Challa Nagendra Prasad, JM: This app .....

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(3) of the Act on 29.12.2011. The Commissioner of Income Tax failed to appreciate that source for cash deposits were properly explained with material evidence and ought to have appreciated that assumption of facts based on surmise would nullify his action in setting aside the assessment framed on proper examination of facts. 3. Brief facts are that assessee, an individual, engaging in the money lending business filed his return of income on 31.07.2009 admitting income of ₹ 63,830/-. Assess .....

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om the assessee. The peak credit has been taken on the basis of oral submissions without any clear proof or substantial material to support. The benefit of peak credit can be given only when the recycling of funds is proved by the assessee i.e. withdrawals were not utilized for other expenses or investments and were available for subsequent deposits in bank accounts. The assessee has to give proof of the fact that earlier withdrawals have been re-deposited in the bank account and he has to expla .....

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stated that petitioner had not included the savings bank account in the balance sheet prepared , as the balance sheet relates to his business assets and liabilities only. The petitioner had inadvertently missed out to report the transactions relating to cash deposits in excess of ₹ 10,00,000/- in the financial year. The petitioner is a financier of repute in Pondicherry town and many of the business men have had transactions with him during the past three decades considering his longstandi .....

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to the unwritten understanding between the petitioner and the parties with whom the petitioner had transacted barred him from furnishing any further details regarding cash transactions. Therefore, it was contended that neither any income had factually accrued to the petitioner from the transactions nor any asset / investment had been created/taken place in respect of the above transactions. It was contended that for want of corroborative evidence in support of his claim, the assessee had pleaded .....

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order passed under section 143(3) dated 29.12.2011 is erroneous and prejudicial to the interests of the Revenue and directed to do the assessment de novo holding that Assessing Officer has completed the assessment proceedings without proper enquiry and investigation on various aspects observing as under:- 5. In his petition, the assessee has stated that subsequent to survey in his premises on 08.09.2011 the documents were impounded that he had maintained perfect records for his business transac .....

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ords have been created for such transactions ; that he had not only kept up his words but also proved in action by prompt payment on demand ; that he is not in possession of any documentary evidence in support of his claim and his business ethics in addition to the unwritten understanding between him and the parties with whom he had transacted barred him from furnishing any further details regarding the cash transactions ; that neither any income had factually accrued to him from the said transa .....

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but has accepted the oral statements made by the Authorised Representatives of the assessee which are not supported by any evidences." When the assessee has been carrying on a business complying with various legal requirements, it becomes his statutory obligation to furnish all the details called for as per the provisions of the Income Tax Act, 1961 during any proceedings and he cannot be selective in furnishing the details and information. The assessee's versions that he is accepting t .....

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nto account the facts and the circumstances the present case. 6. Counsel for the assessee reiterated the submissions made before the Commissioner of Income Tax, Puducherry stating that Assessing Officer has applied peak credit on examining the details and therefore the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interests of the Revenue. He further contends that if two views are possible and one of the views is adopted by the Assessing Officer, the order can .....

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hat Assessing Officer completed the assessment without examining the details of peak credit and simply accepted the request of the assessee to adopt peak credit as submitted by the assessee. Therefore, the assessment order passed under section 143(3) by the Assessing Officer is certainly erroneous and prejudicial to the interests of the Revenue. 8. Heard both sides. Perused orders of lower authorities and the decisions relied on. In the course of assessment proceedings under section 143(3), the .....

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quested for taking peak credit of cash deposits as income. The Assessing Officer simply accepted the request of the assessee and adopted peak credit on these deposits at ₹ 50,76,005/- as income of the assessee under section 69 of the Act and accordingly assessment was completed. On a reading of the assessment order, we find that the assessee has not produced any details in respect of these deposits in spite of the Assessing Officer calling for details and explanation, but a request was mad .....

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is accepting parking of funds by lot of persons with him and out of which no benefit is derived by him and the unwritten understanding between the assessee and the parties with whom he had transacted barred the assessee from furnishing any further details regarding the cash details clearly go to show that Assessing Officer has completed the assessment proceedings without proper enquiry and investigation on various aspects. We agree with the above view of the Commissioner of Income Tax since no e .....

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Co.Ltd. vs. CIT (243 ITR 83), the Hon ble Supreme Court held that an incorrect assumption of facts or incorrect application of law will satisfy the requirement of the order being erroneous. Similarly, orders passed without applying the principles of natural justice or without application of mind are also erroneous . In the instant case, the Assessing Officer had never applied his mind to the issue of whether peak credit of the cash deposits can be considered for addition or not especially when t .....

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unt and no explanation was given as to how the withdrawals were utilized in the intervening period. None of the details have been examined by the Assessing Officer while completing the assessment under section 143(3) of the Act. The Assessing Officer has passed the assessment order simply accepting the request of the assessee that peak credit should be taken as income and without examining the correct position of law. Therefore, the order passed by the Assessing Officer without application of mi .....

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Paper and Boards Ltd. (242 ITR 490) while examining the powers of Commissioner of Income Tax under section 263 observed as under:- That the Commissioner found that the Income-tax Officer was not correct in granting relief with respect to some of the items considered in the original assessment proceedings and from the instances or specimens of some of the cases examined by him, he came to the conclusion that the Income-tax Officer had not completed the assessment by following the procedure expect .....

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