AVEO PHARMACEUTICALS PRIVATE LIMITED,MUMBAI V. DCIT CC 2.4, MUMBAI., MUMBAI

CO 243/MUM/2024

AI Insights

The case involves Aveo Pharmaceuticals Pvt. Ltd., which faced scrutiny under sections 68 and 69C of the Income-tax Act, 1961, following a search and seizure operation conducted by the Narcotics Control Bureau (NCB) and subsequent requisition by the Income-tax Department. The primary issues revolved around unexplained cash receipts and expenditures amounting to significant sums for the assessment years 2020-21 and 2021-22. The Assessing Officer (AO) made additions to the income of the assessee based on these unexplained transactions. The Commissioner of Income-tax (Appeals) upheld some of these additions but also applied the 'Peak Credit Theory' to restrict the additions for certain years. The Tribunal's decision focused on the proper application of this theory and the correct treatment of the transactions in question.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 38069 (ITAT-MUMBAI)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2021-2022
• Other Referred Cases: Commissioner of Income-tax (Central), Kanpur v. Fertilizer Traders, Bhaiyalal Shyam Behari v CIT, Poonam Developers Vs ACIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K.R. SUBHASH
• Keywords: Business income; Corroborative evidences; Unexplained cash credit; Unexplained expenditure; Document seized; Peak credit; Loose papers
• Section: 143(3); 153; 153A; 68; 22; 69C; 13; 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA Nos. 3009 & 3008/MUM/2024 Assessment Years: 2020-21 & 2021-22 DCIT(CC)-2(4), 802, 8th floor, Pratishtha Bhavan, Mumbai-400020. Vs. Aveo Pharmaceuticals Pvt. Ltd., Office No. 01, Gorai Ruby CHSL Plot No. 51, RDPI Gorai 2, Borivali West, Mumbai-400091. PAN NO. AANCA 2009 B Appellant Respondent CO No. 242 & 243/Mum/2024 (Arising out of ITA Nos. 3009 & 3008/MUM/2024) Assessment Years: 2020-21 & 2021-22 Aveo Pharmaceuticals Pvt. Ltd., Office No. 01, Gorai Ruby CHSL Plot No. 51, RDPI Gorai 2, Borivali West, Mumbai-400091. Vs. DCIT(CC)-2(4), 802, 8th floor, Pratishtha Bhavan, Mumbai-400020. PAN NO. AANCA 2009 B Appellant Respondent Assessee by : None Revenue by : Dr. K. R. Subhash, CIT-DR Date of Hearing : 12/03/2025 Date of pronouncement : 26/03/2025 PER OM PRAKASH KANT, AM The captioned filed by the assessee are directed against a common order dated 29.03.2024 passed by the Ld. Commissioner of Income (Appeals) – 48, Mumbai [in short ‘the Ld. CIT(A)’] for assessment years 2020-21 and 2021 in these appeals and therefore, same were heard together and disposed off by way of this consolidated order for the sake of convenience. 2. Firstly, we take up the appeal of the Revenue and cross objection of the assess raised by the Revenue in its appeal are reproduced as under: i. \"Whether on the facts and circumstances of the case the Ld. CIT(A) has erred in directing the AO to delete the addition made u/s. 68 and restricting without taking into consideration the fact that the assessee had failed to provide any cogent explanation/material with respect to the same during the assessment proceedings\". ii. Whether on the facts and circumstance CIT(A) has erred in applying the Peak Credit Theory without considering the fact that the assessee had failed to provide an explanation as to how the expenditure incurred was for the purpose of its business and hence was directly link income\". 2.1 The grounds raised by the assessee in its cross reproduced as under: Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 ORDER PER OM PRAKASH KANT, AM The captioned appeals by the Revenue and cross filed by the assessee are directed against a common order dated 29.03.2024 passed by the Ld. Commissioner of Income 48, Mumbai [in short ‘the Ld. CIT(A)’] for assessment 21 and 2021-22. As common grounds have been raised in these appeals and therefore, same were heard together and disposed off by way of this consolidated order for the sake of Firstly, we take up the appeal of the Revenue and cross objection of the assessee for assessment year 2020-21. The grounds raised by the Revenue in its appeal are reproduced as under: i. \"Whether on the facts and circumstances of the case the Ld. CIT(A) has erred in directing the AO to delete the addition made u/s. 68 and restricting the unexplained expenditure u/s. 69C without taking into consideration the fact that the assessee had failed to provide any cogent explanation/material with respect to the same during the assessment proceedings\". ii. Whether on the facts and circumstances of the case the Ld. CIT(A) has erred in applying the Peak Credit Theory without considering the fact that the assessee had failed to provide an explanation as to how the expenditure incurred was for the purpose of its business and hence was directly link The grounds raised by the assessee in its cross reproduced as under: Aveo Pharmaceuticals Pvt. Ltd 2 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 appeals by the Revenue and cross-objections filed by the assessee are directed against a common order dated 29.03.2024 passed by the Ld. Commissioner of Income-tax 48, Mumbai [in short ‘the Ld. CIT(A)’] for assessment As common grounds have been raised in these appeals and therefore, same were heard together and disposed off by way of this consolidated order for the sake of Firstly, we take up the appeal of the Revenue and cross- 21. The grounds raised by the Revenue in its appeal are reproduced as under: i. \"Whether on the facts and circumstances of the case the Ld. CIT(A) has erred in directing the AO to delete the addition made the unexplained expenditure u/s. 69C without taking into consideration the fact that the assessee had failed to provide any cogent explanation/material with respect s of the case the Ld. CIT(A) has erred in applying the Peak Credit Theory without considering the fact that the assessee had failed to provide an explanation as to how the expenditure incurred was for the purpose of its business and hence was directly linked to its The grounds raised by the assessee in its cross-objection are 1. The notice u/s. I53A of the Act dated 28.06.2021 is without jurisdiction, non 2. The order u/s. 143(3) r.w.s 153 A 51.03.2022 is non 3. The Ld. CIT(A) erred in law & facts in not appreciating [hat addition in respect of the documents (bund at the premise of Shri. Vinod Kumar Sharma was warranted in the case of the appellant. 4. All the above grounds are prejudice to each other. 3. At the outset, we may like to mention that despite notifying none attended on behalf of the assessee nor any adjournment application was filed and therefore, we assessee was not interested in prosecuting the appeal and same were heard ex arguments of the Ld. Departmental Representative (DR). 4. Briefly stated, facts of the case are that in view action carried out by the Narcotics Control Bureau (NCB) and seizure different drugs company, a search was also carried out at the residence of the Director of the company and certain loose documents alo foreign currency was found and seized. NCB was requisitioned by the Income of the Income-tax Act, 1961 ( in short the Act) and consequently proceeding u/s 153A of the Act was initiated and case of the assessee. Thereafter, the assessee file return of income for the assessment year under consideration declaring total income Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 1. The notice u/s. I53A of the Act dated 28.06.2021 is without jurisdiction, non-cst. invalid and bad in law. 2. The order u/s. 143(3) r.w.s 153 A of the Act dated 51.03.2022 is non-est. invalid and bad in law. 3. The Ld. CIT(A) erred in law & facts in not appreciating [hat addition in respect of the documents (bund at the premise of Shri. Vinod Kumar Sharma was warranted in the case of the he above grounds are independent and without prejudice to each other. At the outset, we may like to mention that despite notifying none attended on behalf of the assessee nor any adjournment application was filed and therefore, we were of the opinion that not interested in prosecuting the appeal and ex-parte qua the assessee after hearing the arguments of the Ld. Departmental Representative (DR). Briefly stated, facts of the case are that in view action carried out by the Narcotics Control Bureau (NCB) and seizure different drugs tablets from import consignment of the earch was also carried out at the residence of the Director of the company and certain loose documents alo foreign currency was found and seized. The document seized by the NCB was requisitioned by the Income-tax Department u/s 132A(1) tax Act, 1961 ( in short the Act) and consequently proceeding u/s 153A of the Act was initiated and carri . Thereafter, the assessee file return of income for the assessment year under consideration declaring total income Aveo Pharmaceuticals Pvt. Ltd 3 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 1. The notice u/s. I53A of the Act dated 28.06.2021 is without of the Act dated 3. The Ld. CIT(A) erred in law & facts in not appreciating [hat addition in respect of the documents (bund at the premise of Shri. Vinod Kumar Sharma was warranted in the case of the independent and without At the outset, we may like to mention that despite notifying none attended on behalf of the assessee nor any adjournment of the opinion that not interested in prosecuting the appeal and hence, parte qua the assessee after hearing the arguments of the Ld. Departmental Representative (DR). Briefly stated, facts of the case are that in view of the search action carried out by the Narcotics Control Bureau (NCB) and tablets from import consignment of the earch was also carried out at the residence of the Director of the company and certain loose documents along with The document seized by the tax Department u/s 132A(1) tax Act, 1961 ( in short the Act) and consequently carried out in the . Thereafter, the assessee file return of income for the assessment year under consideration declaring total income at Rs.1,19,64,700/-. I Officer made addition in respect of unexpl of the Act amounting to Rs.1,31,15,474/ expenditure u/s 69C of the Act amounting to Rs.98,45,506/ this manner, total addition amounting to Rs.2,29,60,980/ made. The assessment in the case of the assessee u/s 153A r.w.s. 143(3) of the Act on 31.03.2020. 4.1 On further appeal, the Ld. CIT(A) upheld the addition of the cash receipt from para 6.1 to 6.6 of the impugned order. The relevant part of the order is reproduced as under: 6.1 Decision o assessment order and submissions of the appellant, it is observed that the issue involved in the year under consideration is:- (i) Cash receipt vouchers found during the search by NCB at residence of Shri Vinod unexplained receipts pertaining to F.Y. 2019 2020-21 'aggregating to Rs. 1,31,15,474. (ii) Cash payment vouchers found during the search by NCB at residence of Shri. Vinod Kumar Sharma representing unexplained expenditure pertaining to year: Assessment Year Α.Υ. 2020-21 With regards to the issue related to unexplained receipts, a perusal from the material placed on record, it is observed that as per AO, out of the total seized loose papers following documents unexplained receipts of the Assessment Year Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 . In the assessment completed, t Officer made addition in respect of unexplained cash receipt u/s 68 of the Act amounting to Rs.1,31,15,474/- and unexplained expenditure u/s 69C of the Act amounting to Rs.98,45,506/ this manner, total addition amounting to Rs.2,29,60,980/ made. The assessment in the case of the assessee u/s 153A r.w.s. 143(3) of the Act on 31.03.2020. On further appeal, the Ld. CIT(A) upheld the addition of the cash receipt from para 6.1 to 6.6 of the impugned order. The relevant part of the order is reproduced as under: 6.1 Decision on Ground No. 1 and 2: From perusal of facts, assessment order and submissions of the appellant, it is observed that the issue involved in the year under consideration ) Cash receipt vouchers found during the search by NCB at residence of Shri Vinod Kumar Sharma representing unexplained receipts pertaining to F.Y. 2019-20 relevant to A.Y. 21 'aggregating to Rs. 1,31,15,474. (ii) Cash payment vouchers found during the search by NCB at residence of Shri. Vinod Kumar Sharma representing expenditure pertaining to year:- Assessment Year Amount 21 98,45,506/- With regards to the issue related to unexplained receipts, a perusal from the material placed on record, it is observed that as per AO, out of the total seized loose papers documents in respect of receipt vouchers, represent unexplained receipts of the appellant:- Assessment Year Document ref no. Aggregate Amount Aveo Pharmaceuticals Pvt. Ltd 4 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 completed, the Assessing ained cash receipt u/s 68 and unexplained expenditure u/s 69C of the Act amounting to Rs.98,45,506/-. In this manner, total addition amounting to Rs.2,29,60,980/- was made. The assessment in the case of the assessee was completed On further appeal, the Ld. CIT(A) upheld the addition of the cash receipt from para 6.1 to 6.6 of the impugned order. The n Ground No. 1 and 2: From perusal of facts, assessment order and submissions of the appellant, it is observed that the issue involved in the year under consideration ) Cash receipt vouchers found during the search by NCB at Kumar Sharma representing 20 relevant to A.Y. (ii) Cash payment vouchers found during the search by NCB at residence of Shri. Vinod Kumar Sharma representing With regards to the issue related to unexplained receipts, a perusal from the material placed on record, it is observed that as per AO, out of the total seized loose papers by NCB, respect of receipt vouchers, represent Aggregate Amount A.Y. 2020-21 6.3 The AO, during the course of assessment, .had called for the cash book, bank book and financial statements of the appellant, invoices raised to the different parties by the assessee related to response to the same, the appellant had submitted the cash book of itself as well as that of M/s, Westfin International Pvt Ltd. and claimed that the bills / invoices related to cash receipts vouchers were raised by M/s (sister concern of assessee) to its clients and said cash vouchers were^ related to receipts of amounts which were already credited in the banks of M/s. Westfin International Pvt. Ltd. The assessee also claimed that the ca raised to compute the commission to be given to agents in cash. 6.4 However, the AO, in the assessment order for A.Y. 2020 21 has contended that the receipts recorded in above referred cash vouchers has remained unex reasons:- (i)The names mentioned in the cash vouchers of receipts were different from the names mentioned in the final invoices. (ii)The actual amount of invoices were raised in the names of foreign parties, and the amounts have been recei banking channel, which gives no reason to the assessee to raise cash vouchers. iii)No supporting documents have been submitted regarding the computation of commission of agents / invoices raised by the agents. (iv)Even after giving multiple opp assessee has reiterated its same submission. 6.5 As against this, the appellant during the course of appellate proceedings has filed its submissions. From the submissions, it has been observed that the appellant has resubmit documents and explanations in respect of the cash receipt vouchers concerned which were provided by it before the investigation wing as well as during the assessment Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 (inRs.) D-47, D-57, D-55, D- 58,D12, D-45, D-48, D-49, D-50, D-66, D-61, D-46 D- 60 1,31,15,474/ Total 1,31,15,474/ 3 The AO, during the course of assessment, .had called for the cash book, bank book and financial statements of the appellant, invoices raised to the different parties by the assessee related to impounded documents D-l to D response to the same, the appellant had submitted the cash book of itself as well as that of M/s, Westfin International Pvt Ltd. and claimed that the bills / invoices related to cash receipts vouchers were raised by M/s. Westfin International Pvt. Ltd. (sister concern of assessee) to its clients and said cash vouchers were^ related to receipts of amounts which were already credited in the banks of M/s. Westfin International Pvt. Ltd. The assessee also claimed that the cash vouchers of receipts were raised to compute the commission to be given to agents in cash. 6.4 However, the AO, in the assessment order for A.Y. 2020 21 has contended that the receipts recorded in above referred cash vouchers has remained unexplained due to following (i)The names mentioned in the cash vouchers of receipts were different from the names mentioned in the final invoices. (ii)The actual amount of invoices were raised in the names of foreign parties, and the amounts have been received through banking channel, which gives no reason to the assessee to raise cash vouchers. iii)No supporting documents have been submitted regarding the computation of commission of agents / invoices raised by the after giving multiple opportunities to the assessee, the assessee has reiterated its same submission. As against this, the appellant during the course of appellate proceedings has filed its submissions. From the submissions, it has been observed that the appellant has resubmitted various documents and explanations in respect of the cash receipt vouchers concerned which were provided by it before the investigation wing as well as during the assessment Aveo Pharmaceuticals Pvt. Ltd 5 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 (inRs.) 1,31,15,474/- 1,31,15,474/- 3 The AO, during the course of assessment, .had called for the cash book, bank book and financial statements of the appellant, invoices raised to the different parties by the l to D-97. In response to the same, the appellant had submitted the cash book of itself as well as that of M/s, Westfin International Pvt- Ltd. and claimed that the bills / invoices related to cash receipts . Westfin International Pvt. Ltd. (sister concern of assessee) to its clients and said cash vouchers were^ related to receipts of amounts which were already credited in the banks of M/s. Westfin International Pvt. Ltd. The sh vouchers of receipts were raised to compute the commission to be given to agents in cash. 6.4 However, the AO, in the assessment order for A.Y. 2020- 21 has contended that the receipts recorded in above referred due to following (i)The names mentioned in the cash vouchers of receipts were different from the names mentioned in the final invoices. (ii)The actual amount of invoices were raised in the names of ved through banking channel, which gives no reason to the assessee to raise iii)No supporting documents have been submitted regarding the computation of commission of agents / invoices raised by the ortunities to the assessee, the As against this, the appellant during the course of appellate proceedings has filed its submissions. From the submissions, it ted various documents and explanations in respect of the cash receipt vouchers concerned which were provided by it before the investigation wing as well as during the assessment proceedings. The appellant in its submission dated 03.01.2024 for A.Y. 2020 vouchers were prepared merely for internal record purpose to note the foreign remittances towards export sales received in Westfin International Pvt. Ltd. which is the sister concerns of the appellant company and business of the appellant. enclosed several export invoices, shipping bills, inward remittance certificates, packing lists, airway bills etc. However, on perusal of said documents, it is seen tha and amounts mentioned by the appellant is different than those mentioned on the supporting evidences. Further, the explanation given by the appellant that the cash vouchers were merely prepared for internal record purpose cannot be accep same contains the name of the appellant on each of the document. Further, with respect to one document, the appellant has merely claimed that the same was wrongly prepared. However, in absence of any documentary evidence/ corroborative material, genuine explanation. 6.6 In view of above, I find no infirmity in the observations of AO with regards to the cash receipt vouchers referred to in para 6.2 above and therefore the AO has rightly held that the same represents unexplained business receipts of the appellant for A.Y. 2020 4.1 Thereafter, in respect of vouchers of the expenditure, the Ld. CIT(A) found the expenditure to the extent of Rs.25,94,699/ explained and addition for the balance expenditure of Rs.1,40,92,307/- was sustained subject to peak credit. The relevant paragraphs of the impugned order are reproduced as under: 6.7 Further, with respect to the issue relating to unexplained expenditure, a perusal placed on record, it is observed that as per AO, out of the total seized loose papers by NCB, following documents in respect of represent unexplained expenditure of the appellant:- Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 proceedings. The appellant in its submission dated 03.01.2024 for A.Y. 2020-21 has claimed that some of the cash receipt vouchers were prepared merely for internal record purpose to note the foreign remittances towards export sales received in Westfin International Pvt. Ltd. which is the sister concerns of the appellant company and deals with the export related business of the appellant. In support of the same, it has enclosed several export invoices, shipping bills, inward remittance certificates, packing lists, airway bills etc. However, on perusal of said documents, it is seen that the names, dates and amounts mentioned by the appellant is different than those mentioned on the supporting evidences. Further, the explanation given by the appellant that the cash vouchers were merely prepared for internal record purpose cannot be accepted as the same contains the name of the appellant on each of the document. Further, with respect to one document, the appellant has merely claimed that the same was wrongly prepared. However, in absence of any documentary evidence/ corroborative material, the same cannot bé considered a genuine explanation. In view of above, I find no infirmity in the observations of AO with regards to the cash receipt vouchers referred to in para 6.2 above and therefore the AO has rightly held that the same unexplained business receipts of the appellant 2020-21. Thereafter, in respect of vouchers of the expenditure, the Ld. CIT(A) found the expenditure to the extent of Rs.25,94,699/ addition for the balance expenditure of was sustained subject to peak credit. The relevant paragraphs of the impugned order are reproduced as under: 6.7 Further, with respect to the issue relating to unexplained expenditure, a perusal from the material placed on record, it is observed that as per AO, out of the total seized loose papers by NCB, following documents in respect of represent unexplained expenditure of the Aveo Pharmaceuticals Pvt. Ltd 6 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 proceedings. The appellant in its submission dated 03.01.2024 has claimed that some of the cash receipt vouchers were prepared merely for internal record purpose to note the foreign remittances towards export sales received in Westfin International Pvt. Ltd. which is the sister concerns of deals with the export related In support of the same, it has enclosed several export invoices, shipping bills, inward remittance certificates, packing lists, airway bills etc. However, t the names, dates and amounts mentioned by the appellant is different than those mentioned on the supporting evidences. Further, the explanation given by the appellant that the cash vouchers were merely ted as the same contains the name of the appellant on each of the document. Further, with respect to one document, the appellant has merely claimed that the same was wrongly prepared. However, in absence of any documentary evidence/ the same cannot bé considered a In view of above, I find no infirmity in the observations of AO with regards to the cash receipt vouchers referred to in para 6.2 above and therefore the AO has rightly held that the same unexplained business receipts of the appellant Thereafter, in respect of vouchers of the expenditure, the Ld. CIT(A) found the expenditure to the extent of Rs.25,94,699/- as addition for the balance expenditure of was sustained subject to peak credit. The relevant paragraphs of the impugned order are reproduced as under: 6.7 Further, with respect to the issue relating to from the material placed on record, it is observed that as per AO, out of the total seized loose papers by NCB, following documents in respect of represent unexplained expenditure of the Assessment Year •A.Y. 2020-21 Total 6.8 However, the AO, based on the explanations and submissions made in the assessment order for the year under consideration has contended that the payments recorded in above referred cash vouchers has retnained unexplained due to following reasons: (i)Upon analysis, it was seen that most of the payments as per the cash vouchers were related to commission payouts, for which no cogent evidences have been produced and no IDS was deducted by the assessee. (ii)The source of cash for cash payment were also not explained by the assessee (iii)There were also payments against which purchase invoice were submitted, however, no explanation was submitted as to why cash vouchers were raised. (iv) In one instance, amount mentioned in voucher No. D [dt.20.12.2019, Rs.3 bank books of Westfin& Aveo, which showed that the payment of Rs.20,00,000/ Westfin through bank and Rs.12,00,000/ was made by Aveo again through bank. dates in ban vouchers raised and it was also not properly explained by Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 Document ref no. Aggregate Amount In Rs.) D-13,D-16,D-17,D-18, 0-19, D-20, 0-25, D-29, 0-32, D-33, D-34, D-35, D-37, D-40, D-41, D-42, D-43, D-44, D-14, D-24, D-26, D-27, 0-28, D-30, D-67, D-68, D-21, D-74 andD-75 98,45,5067- 98,45,5067- 4 However, the AO, based on the explanations and submissions made in the assessment order for the year under consideration has contended that the payments recorded in above referred cash vouchers has retnained unexplained due to following reasons:- nalysis, it was seen that most of the payments as per the cash vouchers were related to commission payouts, for which no cogent evidences have been produced and no IDS was deducted by the assessee. (ii)The source of cash for cash payment were also not ained by the assessee- (iii)There were also payments against which purchase invoice were submitted, however, no explanation was submitted as to why cash vouchers were raised. (iv) In one instance, amount mentioned in voucher No. D [dt.20.12.2019, Rs.32,00,000], assessee submitted the bank books of Westfin& Aveo, which showed that the payment of Rs.20,00,000/-[dt.19.12.2019] was made by Westfin through bank and Rs.12,00,000/- [dt.20.12.2019] was made by Aveo again through bank. However, the dates in bank book entries did not match with the cash vouchers raised and it was also not properly explained by Aveo Pharmaceuticals Pvt. Ltd 7 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 Aggregate Amount However, the AO, based on the explanations and submissions made in the assessment order for the year under consideration has contended that the payments recorded in above referred cash vouchers has retnained nalysis, it was seen that most of the payments as per the cash vouchers were related to commission payouts, for which no cogent evidences have been produced and no IDS was deducted by the assessee. (ii)The source of cash for cash payment were also not (iii)There were also payments against which purchase invoice were submitted, however, no explanation was (iv) In one instance, amount mentioned in voucher No. D-68 2,00,000], assessee submitted the bank books of Westfin& Aveo, which showed that the [dt.19.12.2019] was made by [dt.20.12.2019] However, the k book entries did not match with the cash vouchers raised and it was also not properly explained by the assessee as to why cash vouchers had been raised for these transactions. (v)Dates in bank book entries did not match with cash vouchers raised. (vi)From the voucher details, it is clear that the assessee had done most of payments in cash, be it purchase of material or payment of commission and the assessee was not able to satisfactorily explain the discrepancies. 6.9 The submissions made by the appellant course of these appellate proceedings in each of these years have been considered. explanations of the appellant, it is seen that in respect of vouchers contained in documents D D-44, D-43, D 21, D-20, D- has submitted cash book evidencing the fact that they have already been recorded in the cash books of the appellant. Further, in respect of these vouchers, the nam date of payment, amount of payment as entered into cash book. also matches with the date, name, amount and description on cash vouchers generated by the appellant. Further, with respect to the source of said expenditure incurred by the appellant, the ap that the source of said expenditure was cash receipts in the ordinary course of appellant's business and which were already recorded in cash book of the appellant and also offered to tax. On detailed perusal of the cash book of the appellant and details contention of the appellant is found to be correct. Further, with respect to the cash voucher D said voucher states that the payment of Rs.5,00,000/ made to one M/s. Vanilla Food assessee has explained that the said payment was made by M/s. Westfin International Pvt. Ltd through banking channels and had also submitted extract of bank statement of M/s. Westfin in this regard. Further, with respect to D 1,82,000/- 1,18,000/- was paid by M/s. Westfin International Pvt. Ltd. and Rs. 5,00,000/ Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 assessee as to why cash vouchers had been raised for these transactions. (v)Dates in bank book entries did not match with cash vouchers raised. m the voucher details, it is clear that the assessee had done most of payments in cash, be it purchase of material or payment of commission and the assessee was not able to satisfactorily explain the discrepancies. The submissions made by the appellant during the course of these appellate proceedings in each of these years have been considered. From the submissions and explanations of the appellant, it is seen that in respect of vouchers contained in documents D-40, D-41, D-42, D 43, D-34, D-35, D-67, D-32, D-33, D-29, D -19, D-18, D-16, D-17 and D-13, the assessee has submitted cash book evidencing the fact that they have already been recorded in the cash books of the appellant. Further, in respect of these vouchers, the nam date of payment, amount of payment as entered into cash book. also matches with the date, name, amount and description on cash vouchers generated by the appellant. Further, with respect to the source of said expenditure incurred by the appellant, the appellant has submitted that the source of said expenditure was cash receipts in the ordinary course of appellant's business and which were already recorded in cash book of the appellant and also offered to tax. On detailed perusal of the cash book of pellant and details of sales of the appellant, the contention of the appellant is found to be correct. Further, with respect to the cash voucher D-67, the description of said voucher states that the payment of Rs.5,00,000/ made to one M/s. Vanilla Food Products Pvt. Ltd. The assessee has explained that the said payment was made by M/s. Westfin International Pvt. Ltd through banking channels and had also submitted extract of bank statement of M/s. Westfin in this regard. Further, with respect to D-21, the appellant has explained that Rs. was paid in cash by the appellant, Rs. was paid by M/s. Westfin International Pvt. Ltd. and Rs. 5,00,000/- represents exchange value of old Aveo Pharmaceuticals Pvt. Ltd 8 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 assessee as to why cash vouchers had been raised for (v)Dates in bank book entries did not match with cash m the voucher details, it is clear that the assessee had done most of payments in cash, be it purchase of material or payment of commission and the assessee was not able to satisfactorily explain the discrepancies. during the course of these appellate proceedings in each of these From the submissions and explanations of the appellant, it is seen that in respect of 42, D-37, 29, D-25, D- 13, the assessee has submitted cash book evidencing the fact that they have already been recorded in the cash books of the appellant. Further, in respect of these vouchers, the name, date of payment, amount of payment as entered into cash book. also matches with the date, name, amount and description on cash vouchers generated by the appellant. Further, with respect to the source of said expenditure pellant has submitted that the source of said expenditure was cash receipts in the ordinary course of appellant's business and which were already recorded in cash book of the appellant and also offered to tax. On detailed perusal of the cash book of of the appellant, the contention of the appellant is found to be correct. Further, 67, the description of said voucher states that the payment of Rs.5,00,000/-was Products Pvt. Ltd. The assessee has explained that the said payment was made by M/s. Westfin International Pvt. Ltd through banking channels and had also submitted extract of bank statement of M/s. Westfin in this regard. Further, with e appellant has explained that Rs. was paid in cash by the appellant, Rs. was paid by M/s. Westfin International Pvt. represents exchange value of old machinery. In this regard, the appellant has submitted the copy of cash book of appellant and bank statement of M/s. Westfin to establish the above facts. 6.10 Further, with respect to the other vouchers, I concur with the observations made by the A.O. as discussed in para 6.8 above. With respect to these vouchers appellant has failed to satisfactorily explain the source of the expenditure and the documents submitted by the appellant does not corroborate with the cash vouchers in terms of date of transactions, party to whom payment is made, amounts recorded in in cash book or bank book of either appellant or M/s. Westfin International Pvt. Ltd. 6.11 Accordingly, in view of above, out of total expenditure of Rs.1,66,87,006/ 98,45,506/- 2021-221, I hold that the expenditure contained in cash vouchers to the extent of Rs.25,94,699/ and in respect of balance expenditure of Rs.1,40,92,307/ the same represents unexplained expenditure of appel over the period from F.Y. 2018 to A.Y. 2019- 4.2 Thereafter, the Ld. CIT(A) proceeded to apply the peak credit theory and restricted the addition to the extent of Rs.9 lakhs in assessment year 2019 2021-22. The relevant finding of the Ld. CIT(A) is reproduced as under: “6.12 However, in the submissions of the appellant made during the course of the appellate proceedings, the appellant has raised an argument relatin 'Peak Credit Theory' to the 6.13 As per this theory, the unexplained credits and debits of the assessee has to be arranged in serial order in the manner that a credit following a debit entry should be Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 machinery. In this regard, the appellant has submitted the copy of cash book of appellant and bank statement of M/s. Westfin to establish the above facts. 6.10 Further, with respect to the other vouchers, I concur with the observations made by the A.O. as discussed in para 6.8 above. With respect to these vouchers appellant has failed to satisfactorily explain the source of the expenditure and the documents submitted by the appellant does not corroborate with the cash vouchers in terms of date of transactions, party to whom payment is made, amounts recorded in vouchers and those recorded in cash book or bank book of either appellant or M/s. Westfin International Pvt. Ltd. 6.11 Accordingly, in view of above, out of total expenditure of Rs.1,66,87,006/-, [Rs. 9,00,000/- for AY 2019 for AY 2020-21 and Rs. 59,41,500/ 221, I hold that the expenditure contained in cash vouchers to the extent of Rs.25,94,699/- stands explained and in respect of balance expenditure of Rs.1,40,92,307/ the same represents unexplained expenditure of appel over the period from F.Y. 2018-19 to F.Y. 2020-21 relevant to A.Y. 2019-20 to A.Y. 2021-22.” Thereafter, the Ld. CIT(A) proceeded to apply the peak credit theory and restricted the addition to the extent of Rs.9 lakhs in 2019-20 and Rs.76,833/- in assessment year 22. The relevant finding of the Ld. CIT(A) is reproduced as “6.12 However, in the submissions of the appellant made during the course of the appellate proceedings, the appellant has raised an argument relating to application of 'Peak Credit Theory' to the current case. 6.13 As per this theory, the unexplained credits and debits of the assessee has to be arranged in serial order in the manner that a credit following a debit entry should be Aveo Pharmaceuticals Pvt. Ltd 9 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 machinery. In this regard, the appellant has submitted the copy of cash book of appellant and bank statement of 6.10 Further, with respect to the other vouchers, I concur with the observations made by the A.O. as discussed in para 6.8 above. With respect to these vouchers, the appellant has failed to satisfactorily explain the source of the expenditure and the documents submitted by the appellant does not corroborate with the cash vouchers in terms of date of transactions, party to whom payment is vouchers and those recorded in cash book or bank book of either appellant or M/s. 6.11 Accordingly, in view of above, out of total expenditure for AY 2019-20, Rs. 21 and Rs. 59,41,500/- for AY 221, I hold that the expenditure contained in cash stands explained and in respect of balance expenditure of Rs.1,40,92,307/-, the same represents unexplained expenditure of appellant 21 relevant Thereafter, the Ld. CIT(A) proceeded to apply the peak credit theory and restricted the addition to the extent of Rs.9 lakhs in in assessment year 22. The relevant finding of the Ld. CIT(A) is reproduced as “6.12 However, in the submissions of the appellant made during the course of the appellate proceedings, the g to application of 6.13 As per this theory, the unexplained credits and debits of the assessee has to be arranged in serial order in the manner that a credit following a debit entry should be treated as referable then only the 'peak' of the credits (i.e. the unexplained expenses for which there is no corresponding unexplained receipts) should be treated as unexplained. In other words, 'Peak Credit Theory' involves knocking o credits and unexplained debits arranged in a chronological order. 6.14 Further, the Hon'ble Allahabad High Court in the cases of Commissioner' of Income Fertilizer Traders [2014] 42 taxmann.com 476 (Allahabad) has held as under: \"14. Regarding the peak theory, it may be mentioned that the peak theory was defined in the Sampath Iyengar's Law of Income edition, page 3547. Accordingly, \"Peak credit theory\" - One of the commonest defects of an assesse where a single credit or number of credits appear in the books in the account of any particular person side by side with a number of debits is that they should all be arranged in serial order, that a credit following a debit entry should be treated as referable to the latter to the extent possible and that, not the aggregate but only the \"peak\" of the credit should be treated as own explained. To, give a simple example, suppose there are credits in the assessee's book in the account. A or Rs. 5,000 each on ]«October, 1990 and again on 5th November, 1990 but there is a debit by way of repayment shown on 27th October, 1990, the explanation will be that the credit appearing on 5th November, • 198lhas or could have come out of the withdrawal/repayment on 27th plea is generally as it is logical and acceptable (whether the creditor is a genuine party or not), provided there is nothing in the material on record to show that a particular withdrawal/repayment could not have been available on the subsequent credit. 15. A refinement or extension of the plea occurs where the credits appear not in the same account Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 treated as referable to the latter to the extent possible and then only the 'peak' of the credits (i.e. the unexplained expenses for which there is no corresponding unexplained receipts) should be treated as unexplained. In other words, 'Peak Credit Theory' involves knocking off of unexplained credits and unexplained debits arranged in a chronological 6.14 Further, the Hon'ble Allahabad High Court in the cases of Commissioner' of Income-tax (Central), Kanpur v. Fertilizer Traders [2014] 42 taxmann.com 476 (Allahabad) held as under:- \"14. Regarding the peak theory, it may be mentioned that the peak theory was defined in the Sampath Iyengar's Law of Income-tax, Vol. edition, page 3547. Accordingly, \"Peak credit theory\" One of the commonest defects of an assesse where a single credit or number of credits appear in the books in the account of any particular person side by side with a number of debits is that they should all be arranged in serial order, that a credit following a debit entry should be treated as eferable to the latter to the extent possible and that, not the aggregate but only the \"peak\" of the credit should be treated as own explained. To, give a simple example, suppose there are credits in the assessee's book in the account. A or Rs. 5,000 each on ]«October, 1990 and again on 5th November, 1990 but there is a debit by way of repayment shown on 27th October, 1990, the explanation will be that the credit appearing on 5th November, • 198lhas or could have come out of the withdrawal/repayment on 27th October, 1981. This plea is generally as it is logical and acceptable (whether the creditor is a genuine party or not), provided there is nothing in the material on record to show that a particular withdrawal/repayment could not have been available on the date of the subsequent credit. 15. A refinement or extension of the plea occurs where the credits appear not in the same account Aveo Pharmaceuticals Pvt. Ltd 10 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 to the latter to the extent possible and then only the 'peak' of the credits (i.e. the unexplained expenses for which there is no corresponding unexplained receipts) should be treated as unexplained. In other words, ff of unexplained credits and unexplained debits arranged in a chronological 6.14 Further, the Hon'ble Allahabad High Court in the tax (Central), Kanpur v. Fertilizer Traders [2014] 42 taxmann.com 476 (Allahabad) \"14. Regarding the peak theory, it may be mentioned that the peak theory was defined in the tax, Vol.-3, 9th edition, page 3547. Accordingly, \"Peak credit theory\" One of the commonest defects of an assessee, where a single credit or number of credits appear in the books in the account of any particular person side by side with a number of debits is that they should all be arranged in serial order, that a credit following a debit entry should be treated as eferable to the latter to the extent possible and that, not the aggregate but only the \"peak\" of the credit should be treated as own explained. To, give a simple example, suppose there are credits in the assessee's book in the account. A or Rs. 5,000 each on ]«October, 1990 and again on 5th November, 1990 but there is a debit by way of repayment shown on 27th October, 1990, the explanation will be that the credit appearing on 5th November, • 198lhas or could have come out of the October, 1981. This plea is generally as it is logical and acceptable (whether the creditor is a genuine party or not), provided there is nothing in the material on record to show that a particular withdrawal/repayment could date of the 15. A refinement or extension of the plea occurs where the credits appear not in the same account but in the accounts of different persons. Even then, if the genuineness of all the person is disbelieved and all the credits a are held to be the assessee's own moneys, the assessee will be entitled a determination of the peak credit after arranging all the credits in the chronological order.\" 6.15 An identical view has also been ta Allahabad High Court in the case of Commissioner of Income-tax (Central), Kanpur v. Sharraf Trading Co. [2016] 67 taxmann.com 176 (Allahabad). 6.16 Further, in case of Bhaiyalal Shyam Behari v CIT (2005) 276 ITR 38 (AIl.), the Hon'ble High Court the view of the tribunal that working of the peak should be confined to the credits and withdrawals which are held to be non-genuine. 6.17 Further, Hon'ble Surat ITAT in the case of Poonam Developers Vs ACIT ITA Nos. 15/SRT/2021 has held that the it is the net profit net income which has to be taxed when the transactions of receipts and expenses are related to business of the assessee. 6.18 In the current case, as discussed above, the appellant has both unexplained receipts as well as unexplained expenditure of Rs.1,31,15,474/ Rs.1,40,92,307/ transactions of the appellant's business. Moreover, documents representing unaccounted receipts as well as unexplained expenditure were requisitioned during the action u/s 132A. Further, it is also noted that expenditure was incurred for the purpose of business and has direct link with income earned. Therefore, the contention of appellant for application of 'Peak Credit' in the current case is found to be acceptable. 6.19 Further, during the course of appellate proceedings, the appellant, vide its submission dated 03.01.2024 had submitted a working containing details of all the vouchers representing unexplained receipts and expenditure aggregating to Rs.1,31,15,474/ Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 but in the accounts of different persons. Even then, if the genuineness of all the person is disbelieved and all the credits appearing in the different account are held to be the assessee's own moneys, the assessee will be entitled to set off and determination of the peak credit after arranging all the credits in the chronological order.\" 6.15 An identical view has also been taken by the Allahabad High Court in the case of Commissioner of tax (Central), Kanpur v. Sharraf Trading Co. [2016] 67 taxmann.com 176 (Allahabad). 6.16 Further, in case of Bhaiyalal Shyam Behari v CIT (2005) 276 ITR 38 (AIl.), the Hon'ble High Court has upheld the view of the tribunal that working of the peak should be confined to the credits and withdrawals which are held to genuine. 6.17 Further, Hon'ble Surat ITAT in the case of Poonam Developers Vs ACIT ITA Nos. 15/SRT/2021 has held that he it is the net profit net income which has to be taxed when the transactions of receipts and expenses are related to business of the assessee. 6.18 In the current case, as discussed above, the appellant has both unexplained receipts as well as d expenditure of Rs.1,31,15,474/ Rs.1,40,92,307/- respectively which represents the transactions of the appellant's business. Moreover, documents representing unaccounted receipts as well as unexplained expenditure were requisitioned during the u/s 132A. Further, it is also noted that expenditure was incurred for the purpose of business and has direct link with income earned. Therefore, the contention of appellant for application of 'Peak Credit' in the current case is found to be acceptable. 19 Further, during the course of appellate proceedings, the appellant, vide its submission dated 03.01.2024 had submitted a working containing details of all the vouchers representing unexplained receipts and expenditure aggregating to Rs.1,31,15,474/- and Rs. 1,40,92,307/ Aveo Pharmaceuticals Pvt. Ltd 11 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 but in the accounts of different persons. Even then, if the genuineness of all the person is disbelieved ppearing in the different account are held to be the assessee's own moneys, the to set off and determination of the peak credit after arranging ken by the Allahabad High Court in the case of Commissioner of tax (Central), Kanpur v. Sharraf Trading Co. [2016] 6.16 Further, in case of Bhaiyalal Shyam Behari v CIT has upheld the view of the tribunal that working of the peak should be confined to the credits and withdrawals which are held to 6.17 Further, Hon'ble Surat ITAT in the case of Poonam Developers Vs ACIT ITA Nos. 15/SRT/2021 has held that he it is the net profit net income which has to be taxed when the transactions of receipts and expenses are 6.18 In the current case, as discussed above, the appellant has both unexplained receipts as well as d expenditure of Rs.1,31,15,474/- and respectively which represents the transactions of the appellant's business. Moreover, documents representing unaccounted receipts as well as unexplained expenditure were requisitioned during the u/s 132A. Further, it is also noted that expenditure was incurred for the purpose of business and has direct link with income earned. Therefore, the contention of appellant for application of 'Peak Credit' in the current 19 Further, during the course of appellate proceedings, the appellant, vide its submission dated 03.01.2024 had submitted a working containing details of all the vouchers representing unexplained receipts and expenditure Rs. 1,40,92,307/- (refer para. 3.14) above arranged in chronological sequence of dates appearing on cash vouchers. The copy of the same is being reproduced 6.20 A detailed perusal of the above working reveals that after arranging all the chronological sequence and after inclusion of entry of 'Unexplained Introduction le aggregating to Rs.9,76,833/ (Rs.9,00,000/ F.Y, 2021-22) whenever the unexplained rece unexplained expenditure, the total closing balance comes Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 (refer para. 3.14) above arranged in chronological sequence of dates appearing on cash vouchers. The copy of the same is being reproduced hereunder: 6.20 A detailed perusal of the above working reveals that after arranging all the unexplained receipts and expenditure in chronological sequence and after inclusion of entry of 'Unexplained Introduction le aggregating to Rs.9,76,833/ (Rs.9,00,000/- during F.Y. 2018-19 plus-i s.76,833/ 22) whenever the unexplained receipts. Sell short of unexplained expenditure, the total closing comes to 'Nil'. Aveo Pharmaceuticals Pvt. Ltd 12 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 (refer para. 3.14) above arranged in chronological sequence of dates appearing on cash vouchers. The copy 6.20 A detailed perusal of the above working reveals that after unexplained receipts and expenditure in chronological sequence and after inclusion of entry of 'Unexplained Introduction le aggregating to Rs.9,76,833/- i s.76,833/- during Sell short of unexplained expenditure, the total closing 6.21 Therefore, applying the above concept of 'Peak Credit', this Rs.9,76,833/ unexplained expenditure of Rs,l,40,92,307/ total unexplained receipts of Rs.1,31,15,474/ represents the actual net unexplained expenditure incurred by the appellant during the period from F.Y. 2018 21 relevant to A.Y. 2019 6.22 Therefore, after applying the concept of 'Peak Credit1 in the current case and relying on the various applicable judicial precedents, the aggregate amount of net unexplained expenditure of Rs.9,76,833/ as under:- Assessment Year A.Y. 2019 A.Y. 2020 A.Y. 2021 Accordingly, the addition of Rs.1,31,15,474/ u/s. 68 of t^ie unexplained expenditure made by the AO u/s. 69C of the Act aggregating to Rs.1,66,87,006/ Rs.9,76,833/ 5. We have heard the arguments of the Ld written submission and paper book of the assessee available on record. We find that in the case, the documents of the cash vouchers were found to be entered in the cash book and after the search, the assessee has produced a cash flow s entered all those cash vouchers in the cash book. The source of the Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 6.21 Therefore, applying the above concept of 'Peak Credit', this 'Unexplained Introduction' aggregating to Rs.9,76,833/- actually represents the excess of unexplained expenditure of Rs,l,40,92,307/- over and above the total unexplained receipts of Rs.1,31,15,474/- which ultimately represents the actual net unexplained expenditure incurred by the appellant during the period from F.Y. 2018-19 'to F.Y. 2 21 relevant to A.Y. 2019-20 to A.Y. 2021-22, 6.22 Therefore, after applying the concept of 'Peak Credit1 in the current case and relying on the various applicable judicial precedents, the aggregate amount of net unexplained expenditure of Rs.9,76,833/-shallbe taxed u/s. 69C of the Act Assessment Year Amount of addition u/s. 69C6fthe Act A.Y. 2019-20 Rs.9,00,000 A.Y. 2020-21 Rs. NIL A.Y. 2021-22 Rs.76,833 Accordingly, the addition of Rs.1,31,15,474/- made by the AO u/s. 68 of t^ie Act is being deleted and the addition of unexplained expenditure made by the AO u/s. 69C of the Act aggregating to Rs.1,66,87,006/- is being restricted to Rs.9,76,833/- in accordance with the table mentioned above. rd the arguments of the Ld. DR and perused the written submission and paper book of the assessee available on We find that in the case, the documents of the cash vouchers were found to be entered in the cash book and after the search, the assessee has produced a cash flow s entered all those cash vouchers in the cash book. The source of the Aveo Pharmaceuticals Pvt. Ltd 13 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 6.21 Therefore, applying the above concept of 'Peak 'Unexplained Introduction' aggregating to actually represents the excess of total over and above the which ultimately represents the actual net unexplained expenditure incurred by 19 'to F.Y. 2020- 6.22 Therefore, after applying the concept of 'Peak Credit1 in the current case and relying on the various applicable judicial precedents, the aggregate amount of net unexplained shallbe taxed u/s. 69C of the Act made by the AO Act is being deleted and the addition of unexplained expenditure made by the AO u/s. 69C of the Act is being restricted to in accordance with the table mentioned above.” . DR and perused the written submission and paper book of the assessee available on We find that in the case, the documents of the cash vouchers were found to be entered in the cash book and after the search, the assessee has produced a cash flow statement and entered all those cash vouchers in the cash book. The source of the cash expenditure has been explained through cash book. Therefore, in the case of the assessee, the theory of the peak credit cannot be applied and addition for the entire cash entered into the cash book or source explained or co-related as either any sales or loans or other source. In the circumstances, such cash receipts are liable to be addition u/s 68 of the Act. The expenses whi cash flow statement and source disclosed source or undisclosed source addition for which has been made u/d 68 of the Act remaining expenses has to be hel Ld. CIT(A) though in para 6.6 has treated the entire cash unexplained and upheld the addition made by the AO. However, deleted the addition in para 6.22 without any reasoning. In view of the above action of accordingly, we restore the matter back to the file of the Ld. Assessing Officer for deciding afresh in the light of our direction above. 5.1 The grounds of appeal of the Revenue are accordingly allowed for statistical purposes. 6. As far as grounds raised by the assessee in cross concerned, the assessee has raised ground the proceedings u/s 153A of the Act. A Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 cash expenditure has been explained through cash book. Therefore, in the case of the assessee, the theory of the peak credit cannot be applied and addition for the entire cash vouchers which were not entered into the cash book or source of which has not been related as either any sales or loans or other source. In the circumstances, such cash receipts are liable to be addition u/s 68 of the Act. The expenses which are explained by way of the cash flow statement and source of which attributed either to the disclosed source or undisclosed source addition for which has been made u/d 68 of the Act, can only be treated as has to be held as unexplained expenditure. The Ld. CIT(A) though in para 6.6 has treated the entire cash unexplained and upheld the addition made by the AO. However, deleted the addition in para 6.22 without any reasoning. In view of action of the Ld. CIT(A) cannot be we restore the matter back to the file of the Ld. Assessing Officer for deciding afresh in the light of our direction The grounds of appeal of the Revenue are accordingly allowed purposes. As far as grounds raised by the assessee in cross , the assessee has raised grounds challenging validity of roceedings u/s 153A of the Act. As no documentary evidence Aveo Pharmaceuticals Pvt. Ltd 14 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 cash expenditure has been explained through cash book. Therefore, in the case of the assessee, the theory of the peak credit cannot be vouchers which were not which has not been related as either any sales or loans or other source. In the circumstances, such cash receipts are liable to be addition ch are explained by way of the which attributed either to the disclosed source or undisclosed source addition for which has been ly be treated as explained and expenditure. The Ld. CIT(A) though in para 6.6 has treated the entire cash receipts as unexplained and upheld the addition made by the AO. However, deleted the addition in para 6.22 without any reasoning. In view of e Ld. CIT(A) cannot be sustained and we restore the matter back to the file of the Ld. Assessing Officer for deciding afresh in the light of our direction The grounds of appeal of the Revenue are accordingly allowed As far as grounds raised by the assessee in cross-objection are challenging validity of s no documentary evidence in support of grounds raised have been filed b these grounds are dismissed as infructuous. 7. Identical grounds have been raised in the assessment year 2021-22 by the Revenue and the assessee therefore, following our finding in assessment year 2020 appeal of the Revenue for assessment year 2021 statistical purposes whereas grounds raised in the cross by the assessee are dismissed. 8. In the result, the appeals of the Revenue for both the assessment years are allowed for cross-objection of the assessee for both the assessment years are dismissed. Order pronounced in the open Court on Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 26/03/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Aveo Pharmaceuticals Pvt. Ltd ITA Nos. 3009 & 3008/MUM/2024 CO No. 242 & 243/Mum/2024 in support of grounds raised have been filed before us therefore, all these grounds are dismissed as infructuous. Identical grounds have been raised in the assessment year 22 by the Revenue and the assessee therefore, following our finding in assessment year 2020-21, the grounds raised in the appeal of the Revenue for assessment year 2021-22 are allowed for statistical purposes whereas grounds raised in the cross by the assessee are dismissed. In the result, the appeals of the Revenue for both the assessment years are allowed for statistical purposes whereas the objection of the assessee for both the assessment years are nounced in the open Court on 26/03/2025. Sd/- Sd/ (KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Aveo Pharmaceuticals Pvt. Ltd 15 ITA Nos. 3009 & 3008/MUM/2024 & CO No. 242 & 243/Mum/2024 efore us therefore, all Identical grounds have been raised in the assessment year 22 by the Revenue and the assessee therefore, following our 21, the grounds raised in the 22 are allowed for statistical purposes whereas grounds raised in the cross-objection In the result, the appeals of the Revenue for both the statistical purposes whereas the objection of the assessee for both the assessment years are Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "