AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 863
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....etting 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 Rs. 63,830/-. Assessment was completed under section 143(3) of the Act on 29.12.2011 determining the income at Rs. 62,96,560/- by making additions under section 68 / 69 of the Act and also disallowance towards depreciation and interest to loan creditors. Subsequently notice under section 263 was issued by the Commissioner of Income Tax stating that on verification from records, it is seen that Assessing Officer has taken peak credit of cash deposits without giving any reasons or obtaining necessary evidences from 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....
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.... interests of the Revenue. 5. The Commissioner of Income Tax passed order under section 263 of the Act holding that assessment 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 transaction giving elaborate details for each and every transaction and that no other investments or loans have come to light duringthe survey. On the other hand, the assessee states that he is a financer of repute in Pondicherry Town; that many of the top business men have had transactions with him during the past three decades that considering his longstanding reputation and goodwill, a lot of people park their money with him for safe custody and draw it back In times of need ;that no documentary records have been created for such transactions ; that he had not only ke....
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....ing Officer, the order cannot said to be erroneous or prejudicial to the interests of the Revenue. The counsel places reliance on the decision of the Madras High Court in the case of CIT Vs. PVP Ventures Ltd. (90 DTR 340) and the decision of Supreme Court in the case of CIT Vs. Max India Ltd. (295 ITR 282) in support of his contentions. 7. Departmental Representative supports the order of the Commissioner of Income Tax in directing the Assessing Officer to redo the assessment denovo. Departmental Representative submits that 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 Assessing Officer called for details in respect of the cash deposits made into savings bank account in Lakshmi Vilas Bank, Pondicherry where sum of Rs. 1,11,60,000/- was de....
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....t 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 the assessee has not furnished any details in respect of nature of these deposits. Further, the assessee has not proved that there are recycling of funds and therefore peak credit should be considered. The assessee has also not proved that withdrawals were not utilized for other expenses or investments and were available for making subsequent deposits in the said bank account . There was no evidence furnished by the assessee to show that earlier withdrawals have been re-deposited in the bank account 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 ....