The Mumbai bench of Income Tax Appellate Tribunal (ITAT) recently held that the revisional jurisdiction cannot be invoked if the assessing officer took one of the possible views of the matter.
The assessee, Chandrahas Shetty is a HUF and it is deriving ‘income from rent’ and ‘income from other sources’. The assessee filed its return of income, declaring a total income of Rs. 5, 86,000/- and the same was selected for limited scrutiny.
In the assessment proceedings, it was noticed that the assessee has deposited a sum of Rs. 15, 00,000/- during the demonetization period. Accordingly the Assessing Officer asked the assessee to explain the sources for the deposits so made.
The assessee submitted that it was having opening cash balance of Rs. 27, 07,500/- and part of the same was deposited into the bank account. The Assessing Officer took the view that there was no reason for the assessee to keep a huge cash balance of around Rs. 27 lakhs in cash, when the assessee is having a bank account.
Accordingly he did not accept the claim of availability of opening cash balance of Rs. 27 lakhs. He took the view that the assessee could be considered as having opening cash balance of Rs.5.50 lakhs only.
The assessing officer held that the peak credit balance should be assessed as income of the assessee. The Assessing Officer computed the peak credit at Rs. 2, 34,000/- and assessed the same as ‘income of the assessee’ under section 68 of the Income Tax Act 1961.
Principal Commissioners of Income Tax (PCIT) set aside the assessment order passed by the Assessing Officer and directed him to take into account the entire cash deposit of Rs. 15 lakhs made during the demonetization period and determine the income of the assessee after examining the source of cash deposits. The assessee is aggrieved.
Counsel for assessee, Rajesh P. Shah submitted that the assessee has been filing return of income regularly and hence the availability of cash with the assessee should not be doubted.
He added that the assessing officer has made necessary inquiries during the course of assessment proceedings with regard to the deposit Rs.15.00 lakhs and finally decided to assess the peak credit amount of Rs.2.34 lakhs as income of the assessee ad the assessee has challenged the addition of Rs.2.34 lakhs before commissioner of income tax (CIT(A)) and the appeal is pending to be decided.
The representative of revenue, V.K. Chaturvedi on the contrary, submitted that the assessee has not maintained books of accounts and the claim of availability of opening cash balance is not substantiated.
He further submitted that the assessee has failed to prove the sources for making deposit of Rs.15.00 lakhs and the assessing officer should not have resorted to peak credit theory to assess the amount of Rs.2.34 lakhs. He contended that the Principal Commissioner of Income Tax (PCIT) was justified in passing the impugned revision order.
The Coram comprising Pavan Kumar Gadale (Judicial member) B.r. Basakaran (accountant member) observed that “In our view, the decision so taken by the assessing officer forms within the ambit of one of the possible views. Merely because the commissioner of Income Tax (CIT(A)) was having a different view in this matter, the same would not render the assessment order erroneous and prejudicial to the interests of revenue’’.
The court held that there was no reason to sustain the impugned revision order passed by the principal commissioner of Income Tax (PCIT).The appeal filed by the assessee allowed.
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