THE DCIT, Central Circle, Vijayawada, Vijayawada V. Sri Dhanekula Rama Raoi, Vijayawada

CO 19/VIZ/2012

• Counselvise Citation: [2016] 119 COUNSELVISE.COM (IT) 3333 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 8 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 03-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C P RAMASWAMYAR
• Assessee Lawyers: P HARIPRASADA RAODR
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Peak credit; Revised return
• Section: 153A; 234B; 132

Judgement Text

ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.206 TO 211/VIZAG/2012 ( / ASSESSMENT YEARS: 2004-05 TO 2009-10 RESPECTIVEL Y) DCIT, CENTRAL CIRCLE, VIJAYAWADA VS. DHANEKULA RAMA RAO, VIJAYAWADA [PAN: AIPBD4189I ] ( % / APPELLANT) ( &'% / RESPONDENT) C.O. NOS.16 TO 21/VIZAG/2012 (ARISING OUT OF I.T.A.NOS.206 TO 211/VIZAG/2012) ( / ASSESSMENT YEARS: 2004-05 TO 2009-10 RESPECTIVEL Y) DHANEKULA RAMA RAO, VIJAYAWADA VS. DCIT, CENTRAL CIRCLE, VIJAYAWADA ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI P. HARIPRASADA RAO,DR / RESPONDENT BY : SHRI C.P. RAMASWAMY,AR / DATE OF HEARING : 28.04.2016 / DATE OF PRONOUNCEMENT : 2 7 .05.2016 ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 2 / O R D E R PER BENCH THESE ARE SIX APPEALS FILED BY THE REVENUE AND SIX CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE COMM ON ORDER PASSED BY THE CIT(A)-I, HYDERABAD DATED 22.3.2012 FOR THE ASS ESSMENT YEARS 2004-05 TO 2009-10. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOS ED OFF, BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL DERIVING INCOME FROM HOUSE PROPERTY, SHARE OF PROFI T AND INTEREST ON CAPITAL FROM DIFFERENT PARTNERSHIP FIRMS HAS FILED HIS REGULAR RETURNS OF INCOME FOR THE RESPECTIVE ASSESSMENT YEARS U/S 139( 1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT'). A SEARCH & SEIZURE OPERATION U/S 132(1) OF THE ACT WAS CONDUCTED IN TH E RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE ON 22.11.2008. D URING THE COURSE OF SEARCH PROCEEDINGS, A DOCUMENT WAS SEIZED VIDE ANNE XURE DRR/A/1 WHICH CONTAIN A LIST OF 37 NAMES GROUPED INTO 4 BRA NCHES OF THE SAPTAGIRI GRAMEENA BANK (SGB) AGAINST WHICH CERTAIN FIGURES HAVE BEEN MENTIONED AND THE AGGREGATE OF SUCH FIGURE WAS AT ` 11.40 CRORES. DURING THE COURSE OF SEARCH PROCEEDINGS, IN RESPONS E TO STATEMENT ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 3 RECORDED U/S 132(4) OF THE ACT ON 22.11.2008, THE A SSESSEE STATED THAT THE ABOVE LIST REPRESENTS HIS UNACCOUNTED INCOME EA RNED FROM REAL ESTATE BUSINESS, DEPOSITED IN BENAMI RECURRING DEPO SIT ACCOUNTS IN VARIOUS BRANCHES OF SGB. THE ASSESSEE FURTHER STATE D THAT HE HAD EARNED THE SAID UNACCOUNTED INCOME FROM THE REAL ES TATE BUSINESS IN HIS INDIVIDUAL CAPACITY AND THE SAID SUM WAS DEPOSITED IN VARIOUS NAMES AS CONTAINED IN THE SAID DOCUMENT IN 4 BRANCHES OF SGB AND AGREED TO DISCLOSE UNDISCLOSED INCOME OF ` 11.40 CRORES FOR VARIOUS ASSESSMENT YEARS FROM 2004-05 TO 2009-10. DURING THE COURSE OF SEARCH ON 22.11.2008, THE DEPARTMENT HAS FOUND CASH AMOUNTING TO ` 4,34,00,000/- FROM THE RESIDENTIAL PREMISES OF ONE MR. M. HARINATH WHO WAS THE CASHIER OF THE ASSESSEE. ON EXAMINATION, MR . M. HARINATH CONFESSED THAT THE SAID CASH WAS BELONGED TO HIS EM PLOYER SHRI DHANEKULA RAMA RAO. WHEN THE SAID STATEMENT WAS CON FRONTED TO THE ASSESSEE, THE ASSESSEE ADMITTED THAT THE CASH FOUND FROM THE POSSESSION OF SHRI M. HARINATH BELONGS TO HIM AND S TATED THAT CASH REPRESENTS CLOSURE PROCEEDS OF CERTAIN RECURRING DE POSITS KEPT IN VARIOUS BRANCHES OF SGB. THE ASSESSEE FURTHER AGREED THAT HE WOULD DISCLOSE THE CASH FOUND IN THE POSSESSION OF HIS EMPLOYEE AL ONG WITH EARLIER DISCLOSURE OF ` 11,40,00,000/- AS UNDISCLOSED INCOME FOR THE PERIO D FROM 2004-05 TO 2009-10. ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 4 3. CONSEQUENT TO SEARCH PROCEEDINGS U/S 132(4) OF T HE ACT, THE ASSESSEES CASE HAS BEEN NOTIFIED TO CENTRAL CIRCLE , VIJAYAWADA. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICES U/ S 153A OF THE ACT REQUIRING ASSESSEE TO FURNISH THE RETURN OF INCOME FOR THE ASSESSMENT YEARS 2004-05 TO 2009-10. IN RESPONSE TO THE NOTIC ES U/S 153A OF THE ACT, THE ASSESSEE HAS FILED REVISED RETURNS ON 11.5 .2009 FOR ALL THE ASSESSMENT YEARS FROM 2004-05 TO 2009-10 AND DECLAR ED THE UNDISCLOSED INCOME DECLARED IN THE STATEMENT RECORD ED U/S 132(4) OF THE ACT. THE CASE HAS BEEN SELECTED FOR SCRUTINY A ND ACCORDINGLY, NOTICE U/S 143(2) OF THE ACT DATED 14.9.2009 ALONG WITH DE TAILED QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOT ICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME T O TIME AND FILED THE INFORMATION CALLED FOR. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT SEARCH PROCEEDINGS REVEALED T HAT ASSESSEE DEPOSITED UNACCOUNTED INCOME EARNED BY HIM OVER THE YEARS IN HIGH VALUE RECURRING DEPOSITS OPENED IN THE NAMES OF FIC TITIOUS PERSONS IN DIFFERENT BRANCHES OF SGB AT VIJAYAWADA. THE A.O. F URTHER OBSERVED THAT THE ASSESSEE HAS OPENED BENAMI R.D. ACCOUNTS WITH T HE ACTIVE HELP OF CONCERNED BRANCH MANAGERS AND MODUS OPERANDI OF THE ASSESSEE CAME TO THE LIGHT WHEN INCRIMINATING MATERIALS IN THE FO RM OF LOOSE SHEETS WAS ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 5 FOUND AND ALSO HUGE CASH WAS SEIZED FROM THE RESIDE NCE OF ONE OF HIS EMPLOYEE. THE A.O. FURTHER OBSERVED THAT THE POST SEARCH ENQUIRIES CONDUCTED BY THE DEPARTMENT REVEALS THAT THE ASSESS EE HAS OPERATED MORE FICTITIOUS RECURRING DEPOSIT ACCOUNTS OVER AND ABOVE THE RECURRING DEPOSITS DISCLOSED DURING THE COURSE OF SEARCH PROC EEDINGS WHILE RECORDING STATEMENT U/S 132(4) OF THE ACT. THEREFO RE, ISSUED SUMMONS TO THE RESPECTIVE BRANCH MANAGERS AND RECORDED THEI R STATEMENT. THE BRANCH MANAGER OF THE CONCERNED BRANCHES HAVE DEPOS ED BEFORE THE A.O. AND ADMITTED THAT THE ASSESSEE HAS OPERATED VA RIOUS BENAMI RECURRING DEPOSIT ACCOUNTS AND FURNISHED LIST OF SU CH RECURRING DEPOSIT ACCOUNTS INCLUDING CLOSED ACCOUNTS. THE A.O., BASE D ON SUCH INFORMATION HAS LISTED OUT BRANCHWISE AND YEARWISE R.D. ACCOUNTS AND WORKED OUT THE NET PEAK CREDIT OF DEPOSITS IN A YEA R AND AGGREGATED THE SUM FOR ALL THE BRANCHES AND REWORKED THE NET PEAK CREDIT FOR ALL THE YEARS. WITH THESE OBSERVATIONS, ISSUED A SHOW CAUSE NOTICE AND ASKED TO EXPLAIN WHY THE PEAK CREDIT WORKED OUT AS PER THE D ETAILS FURNISHED BY THE BRANCH MANAGERS SHALL NOT BE ADOPTED AS UNDISCL OSED INCOME FOR THE PERIOD. 5. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE S UBMITTED THAT THE NET PEAK CREDIT ARRIVED BY YOU BASED ON THE STATEME NTS OF THE BANK MANAGERS IS TOTALLY INCORRECT. THE ASSESSEE FURTHER SUBMITTED THAT HE ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 6 HAS WORKED OUT THE NET PEAK CREDIT BY TAKING INTO A CCOUNT INTER BRANCH TRANSFERS BETWEEN ALL THE BRANCHES AND AS PER WHICH THE NET PEAK CREDIT WORKS OUT TO THE INCOME DECLARED IN THE STATEMENT R ECORDED DURING THE COURSE OF SEARCH PROCEEDINGS. THE ASSESSEE FURTHER SUBMITTED THAT THE NET PEAK CREDIT FOR THE YEAR SHOULD BE WORKED OUT B Y TAKING INTO THE INTER BRANCH TRANSFERS OF DEPOSITS. HOWEVER, YOU HA VE TAKEN THE BRANCH WISE NET PEAK CREDIT WITHOUT TELESCOPING THE INTER BRANCH TRANSFERS BETWEEN THE 4 BRANCHES OF SGB. IT WAS FURTHER SUBM ITTED THAT THOUGH THE BANK MANAGERS ADMITTED THAT THERE ARE FEW MORE DEPOSITS WHICH BELONG TO ME, THE BRANCH MANAGERS HAVE FAILED TO ES TABLISH THAT THOSE DEPOSITS ARE BELONGING TO ME. THEREFORE, THE NET PE AK CREDIT WORKED OUT BY YOU BASED ON THE STATEMENT GIVEN BY THE BANK MAN AGERS WITHOUT ANY SEIZED MATERIALS IS NOT CORRECT. THE ASSESSEE FURTH ER SUBMITTED THAT WHILE ARRIVING AT THE PEAK CREDIT, YOU ARE FAILED T O CONSIDER THE FACT THAT THE FUNDS BELONG TO A SINGLE PERSON AND THE SAME HA S BEEN KEPT IN VARIOUS BRANCHES OF SAME BANK IN AND AROUND VIJAYAW ADA AND IN MAJORITY OF CASES, THE DEPOSITS ARE IN THE SAME NAM ES IN DIFFERENT BRANCHES AND HENCE, IT IS NATURAL TO ASSUME AND CON CLUDE THAT THE SAME FUNDS ARE USED IN DIFFERENT BRANCHES FOR WITHDRAWAL S AND DEPOSITS THEREIN. IT WAS FURTHER SUBMITTED THAT THE BRANCH M ANAGERS WHILE DEPOSING BEFORE YOU ADMITTED THAT THE ASSESSEE HAS TRANSFERRED FUNDS ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 7 BETWEEN ONE BRANCHES TO ANOTHER BRANCH WHICH IS EVI DENT FROM THE STATEMENT GIVEN BY THE BRANCH MANAGERS. UNDER THES E CIRCUMSTANCES, TAKING PEAK CREDIT OF INDIVIDUAL BRANCH IS NOT CORR ECT. 6. THE A.O. AFTER CONSIDERING THE EXPLANATIONS FURN ISHED BY THE ASSESSEE HELD THAT THE ASSESSEE HAS NOT CONTRADICTE D THE STATEMENT GIVEN BY THE BANK MANAGERS WITH ANY MATERIAL EVIDEN CE TO PROVE THAT THE DISOWNED DEPOSITS ARE NOT BELONGING TO HIM. TH E A.O. FURTHER HELD THAT THE INFORMATION GATHERED BY THE DEPARTMENT DUR ING THE COURSE OF SEARCH AND ALSO POST SEARCH ENQUIRIES REVEALS THAT THOSE DEPOSITS DENIED BY THE ASSESSEE ARE BELONGING TO THE ASSESSEE WHICH WAS FURTHER SUPPORTED BY DEPOSITION GIVEN BY THE RESPECTIVE BRA NCH MANAGERS. WITH THESE OBSERVATIONS, THE A.O. HAS REWORKED THE BRANC H WISE NET PEAK CREDIT OF DEPOSITS AND AGGREGATED THE SAME FOR THE YEAR AND CONSIDERED AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE RESPE CTIVE FINANCIAL YEARS. THE A.O. HAS GIVEN VARIOUS REASONS FOR REWORKING TH E NET PEAK CREDIT BASED ON INDIVIDUAL BRANCH F.DS. THE A.O. STATED T HAT HE HAS ENOUGH MATERIALS TO INTERLINK THE DENIED RECURRING DEPOSIT S. THE A.O. FURTHER HELD THAT THE ASSESSEE HAS NOT PROVED DENIAL OF 4 R ECURRING DEPOSITS AT PATAMATA BRANCH AND ALSO VELLATURU BRANCH OF SGB. T HE MATERIAL GATHERED BY THE DEPARTMENT INDICATES THAT THESE DEP OSITS ARE BELONGING TO THE ASSESSEE. WITH THESE OBSERVATIONS MADE ADDI TIONS TO THE INCOME ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 8 TOWARDS 4 DENIED DEPOSITS. WHILE DOING SO, THE A.O. HAS RELIED UPON THE RATIOS OF THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. DURGA PRASAD MORE (1917) 82 ITR 540 (SC) AN D SUMATI DAYAL VS. CIT (1994) 214 ITR 801. 7. AGGRIEVED BY THE ASSESSMENT ORDERS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE ASSESSEE FURTHER SUBMITTED THAT THE A.O. HAS ERRED IN FACTS IN ADDING ALLEGED R.D. DEPOSITS WHEN THE ASSESSEE HAS SPECIFICALLY DENIED THOSE DEPOSITS WHI CH ARE NOT BELONGING TO HIM. THE A.O. ERRED IN STATING THAT EXCEPT DISOW NING THE BENAMI DEPOSITS, THE ASSESSEE COULD NOT PRODUCE THE DETAIL S OF REAL OWNERS OF ACCOUNTS, NOR PRODUCED ANY EVIDENCE TO SHOW THAT TH OSE DEPOSITS ARE NOT BELONGING TO HIM. THE ASSESSEE FURTHER SUBMITT ED THAT THE A.O. ERRED IN NOT GIVING THE BENEFIT OF INTER BRANCH TEL ESCOPING FOR RECURRING DEPOSITS OF SGB THOUGH RIGHTLY CLAIMED BY THE ASSES SEE. THE A.O. FAILED TO FOLLOW THE NORMAL PRACTICE OF ALLOWING THE INTER BRANCH TELESCOPING INSPITE OF THE FACT THAT HE GAVE MANY DIRECT INSTAN CES OF INTER BRANCH FUND TRANSFERS IN RESPECT OF THESE DEPOSITS PARTICU LARS, IN RESPECT OF DEPOSITS IN GOVERNORPET AND PATAMATA BRANCHES. THE A.O. RELIED UPON THE STATEMENT GIVEN BY THE BANK MANAGERS, HOWEVER, IN THE SAME STATEMENTS, THE BANK MANAGERS CLEARLY STATED THAT T HERE ARE INSTANCES OF ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 9 INTER BRANCH TRANSFERS OF FUNDS BETWEEN ONE BRANCH TO ANOTHER BRANCH. 8. THE ASSESSEE FURTHER SUBMITTED THAT DURING THE C OURSE OF SEARCH, HE HAS WORKED OUT THE NET PEAK DEPOSITS FOR ALL THE YEARS BY TAKING INTO ACCOUNT THE INTER BRANCH TRANSFERS OF FUNDS WHEREVE R THE DEPOSITS ARE BELONGING TO HIM. THE REMAINING DEPOSITS CONSIDERE D BY THE A.O. ARE NOT BASED ON ANY MATERIALS FOUND DURING THE COURSE OF SEARCH AND WHICH ARE BASED ON THE STATEMENTS GIVEN BY THE BANK MANAG ERS ALONE. THEREFORE, THE A.O. WAS NOT CORRECT IN REWORKING TH E PEAK CREDIT WITHOUT ALLOWING INTER BRANCH TRANSFER OF FUNDS AND ALSO CO NSIDERED THE DENIED DEPOSITS IN THE HANDS OF THE ASSESSEE. THE ASSESSE E FURTHER SUBMITTED THAT THE A.O. HAS TOTALLY ERRED IN ADOPTING NET PEA K OF EACH BRANCH WHEN IT IS A CASE OF SINGLE OPERATOR, COMMON POOL OF FUN DS, LOCATION OF ALL BRANCHES IN AND AROUND VIJAYAWADA AND IN MAJORITY O F CASES, THE DEPOSITS ARE IN THE NAME OF SOME PERSONS IN DIFFERE NT BRANCHES AND HENCE IT IS NATURAL TO ASSUME AND CONCLUDE THAT THE SAME FUNDS ARE USED IN DIFFERENT BRANCHES FOR WITHDRAWAL/DEPOSITS, THER EFORE, THE CLAIM OF INTER BRANCH TELESCOPING IS VERY REASONABLE AND JUS TIFIED. THE A.O. WAS NOT CORRECT IN WORKING OUT THE BRANCHWISE NET PEAK CREDIT TO ARRIVE AT THE UNDISCLOSED INCOME. ALTERNATIVELY, THE ASSESSEE SUBMITTED THAT IN CASE THE NET PEAK CREDIT WORKED OUT BY THE ASSESSEE BY TAKING INTO ACCOUNT INTER BRANCH TRANSFERS IS CONSIDERED, HE WO ULD ACCEPT THE DENIED ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 10 DEPOSITS ARE BELONGING TO HIM. SIMILARLY, AS REGARD S THE COMPUTATION OF INTEREST UNDER SEC. 234B, THE ASSESSEE SUBMITTED TH AT THE ASSESSING OFFICER WAS ERRED IN CHARGING INTEREST U/S 234B OF THE ACT UP TO THE DATE OF ASSESSMENT, THOUGH THE DEPARTMENT HAS SEIZED ABO UT ` 15.99 CRORES AMOUNT DURING THE COURSE OF SEARCH PROCEEDINGS AND SAME FUNDS ARE ALREADY LYING WITH THE DEPARTMENT IN WHICH CASE IT SHOULD HAVE BEEN TREATED AS ADVANCE TAX PAYMENT AND HENCE SHOULD HAV E LEVIED INTEREST ONLY UP TO THE DATE OF SEARCH. 9. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE ASSESSEE HAS FAILED TO PROVE WITH ANY EVID ENCES THAT THE DENIED DEPOSITS ARE NOT BELONGING TO HIM. THE ASSESSING O FFICER, ON THE OTHER HAND NARRATED A NUMBER OF INSTANCES WHERE NEXUS BET WEEN THE OWNED UP DEPOSITS WITH DENIED DEPOSITS OF ALL THESE BRANC HES. THEREFORE, THE DIRECT NEXUS AMONG THESE DEPOSITS HELD AT VARIOUS B RANCHES HAS ESTABLISHED IN CLEAR TERMS. THE CIT(A) FURTHER HELD THAT THE BANK MANAGERS WHILE DEPOSING BEFORE THE A.O. HAVE CLEARL Y ACCEPTED THAT THOSE DENIED DEPOSITS ARE BELONGING TO THE ASSESSEE . WITH THESE OBSERVATIONS, HELD THAT THE ACTION OF THE A.O. IN T AXING THE DENIED DEPOSITS HELD AT VELLATURU BRANCH AS WELL AS OTHER BRANCHES BELONG TO THE ASSESSEE FOR ALL THE YEARS IS UPHELD. AS REGAR DS THE WORKING OF PEAK CREDIT, THE CIT(A) HELD THAT IT IS A FACT THAT THER E ARE A NUMBER INTER ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 11 BRANCH TRANSFERS AMONG THESE BRANCHES ALONG WITH CA SH PAYMENTS AND RECEIPTS OUT OF THESE ACCOUNTS ARE MADE OUT BY THE ASSESSEE. THE A.O. WORKED OUT THE PEAK CREDIT OF EACH BRANCH TO ARRIVE AT THE UNDISCLOSED INCOME FOR EACH YEAR. SUCH METHOD OF WORKING PEAK CREDIT DOES NOT GIVE A CORRECT PICTURE OF WORKING OF PEAK CREDIT, A S THE ASSESSEE IS ONE PERSON AND ALL THE DEPOSITS HAVE BEEN HELD AS BELON GING TO HIM. THE CIT(A) FURTHER HELD THAT WORKING OUT PEAK CREDIT FO R EACH BRANCH INDEPENDENTLY WITHOUT ALLOWING TELESCOPING BENEFIT OF INTER BRANCH TRANSFERS IS NOT CORRECT. UNLESS THE CASH BALANCE OF CLOSURE PROCEEDS OF ACCOUNTS ARE UTILIZED BY THE ASSESSEE ELSEWHERE, TH E CREDIT FOR AVAILABLE CASH BALANCE IN A PARTICULAR PERIOD SHOULD BE TELES COPED AGAINST THE FURTHER DEPOSITS EITHER MAINTAINED AT SAME BRANCH O R OTHER BRANCHES. THE A.O. FAILED TO BRING ON RECORD ANY EVIDENCES TO SAY THAT THE FUNDS AVAILABLE WITH THE ASSESSEE HAVE BEEN INVESTED ELSE WHERE. THE QUESTION OF UNEXPLAINED INVESTMENT COMES INTO PLAY ONLY WHEN ASSESSEE HAS NO MONEY TO EXPLAIN. THERE IS NO DISPUTE ABOUT AVAILAB ILITY OF CASH IN THE HANDS OF THE ASSESSEE WHICH REPRESENTS PROCEEDS OF R.D. ACCOUNTS. THE DISPUTE IS ARISING FOR TELESCOPING OF SUCH CASH TO THE INVESTMENTS IN DEPOSITS OF OTHER BRANCHES. ALL THE BRANCHES ARE LO CATED AT VERY REACHABLE DISTANCES AND IT IS NOT THE CASE THAT THE Y ARE LOCATED IN DIFFERENT TOWNS AND STATIONS AND A PERSON CANNOT RE ACH ANOTHER BRANCH ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 12 IN A DAY. IN FACT IN A SINGLE DAY, A PERSON CAN RE ACH ALL THESE 5 BRANCHES WITHOUT ANY DIFFICULTY AND TRANSACT BUSINESS IN THO SE BRANCHES. THE CIT(A) FURTHER HELD THAT IT IS IMPORTANT TO NOTE TH AT THE BANK MANAGERS IN THE STATEMENT RECORDED BEFORE THE A.O. HAS SAID THAT THERE ARE FEW ACCOUNTS FOR WHICH MONEY HAS BEEN TRANSFERRED FROM ONE BRANCH TO ANOTHER BRANCH. WITH THESE OBSERVATIONS, THE CIT(A ) HAS ACCEPTED THE NET PEAK CREDIT ARRIVED AT BY THE ASSESSEE AFTER TE LESCOPING THE INTER BRANCH TRANSFER OF FUNDS BETWEEN ONE BRANCH TO ANOT HER BRANCH AND DIRECTED THE A.O. TO ACCEPT THE PEAK CREDIT WORKED OUT BY THE ASSESSEE AFTER TELESCOPING THE INTER BRANCH TRANSFERS. THE C IT(A) FURTHER DIRECTED THE A.O. TO VERIFY WHETHER ALL DEPOSITS AND INSTALM ENTS HAVE BEEN CORRECTLY TAKEN INTO ACCOUNT IN THE NET PEAK CREDIT AS WORKED OUT BY THE ASSESSEE AND ACCORDINGLY DIRECTED TO RE-COMPUTE THE INCOME FOR ALL THE ASSESSMENT YEARS. 10. AS REGARDS THE LEVY OF INTEREST U/S 234B OF THE ACT, THE CIT(A) HELD THAT INTEREST U/S 234B OF THE ACT IS REQUIRED TO B E CHARGED UP TO THE DATE OF FILING OF RETURN IN RESPONSE TO NOTICE U/S 153A OF THE ACT. IT IS DUE TO THE FACT THAT IN THE RETURN OF INCOME THE AS SESSEE HAD CLEARLY MADE A REQUEST TO ADJUST THE SEIZED AMOUNT TOWARDS THE LIABILITY OF SELF ASSESSMENT TAX. ONCE RETURN IS FILED, ANY TAX DUE ON ACCOUNT OF THE INCOME DISCLOSED IS AMOUNTING TO EXISTING TAX LIABI LITY AND THE ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 13 DEPARTMENT IS BOUND TO ADJUST THE SEIZED ASSET TOWA RDS THE EXISTING LIABILITY OF THE ASSESSEE TO THE EXTENT OF LIABILIT Y BY SELF ASSESSMENT TAX ONLY. THEREFORE, IT IS NOT CORRECT ON THE PART OF THE A.O. TO CHARGE INTEREST UP TO THE DATE OF ASSESSMENT WITHOUT ADJUS TING THE SEIZED AMOUNT. SINCE THE DEPARTMENT HAS SEIZED CASH DURIN G THE COURSE OF SEARCH, IT IS BOUND TO ADJUST THE SEIZED CASH AVAIL ABLE WITH THE DEPARTMENT TO THE SELF ASSESSMENT TAX AND THEN CALC ULATE INTEREST. ACCORDINGLY, THE A.O. IS DIRECTED TO REWORK THE LEV Y OF INTEREST U/S 234B OF THE ACT UP TO THE DATE OF FILING OF THE RETURN, WHEREVER THERE WAS A LIABILITY ON ACCOUNT OF SELF ASSESSMENT TAX AND UP TO THE DATE OF ASSESSMENT WHEREVER DEMAND IS RAISED BY MAKING ADDI TIONS TO RETURNED INCOME FOR ALL THE YEARS UNDER APPEAL. AGGRIEVED B Y THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. 11. THE LD. D.R. SUBMITTED THAT THE CIT(A) IS ERRED IN DIRECTING THE A.O. TO WORK OUT PEAK CREDIT AND INTEREST INCOME AF TER TELESCOPING THE INTER BRANCH TRANSFER OF R.DS. THE A.O. HAS RIGHTLY WORKED OUT THE BRANCHWISE PEAK CREDIT AS THE ASSESSEES MODUS OPER ANDI OF OPERATING THE RECURRING DEPOSIT ACCOUNT CLEARLY ESTABLISHED T HAT HE NEVER TRANSFERS FUNDS BETWEEN ONE BRANCHES TO ANOTHER BRANCH. THE BANK MANAGERS HAVE STATED IN THEIR STATEMENT RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT IN ALL THE INSTANCES, THE CLOSURE PROCEEDS OF RECURRING ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 14 DEPOSITS ACCOUNTS HAVE EITHER BEEN PAID IN CASH OR CREDITED TO SAVINGS BANK ACCOUNT. NOWHERE THE FUND HAS BEEN ADJUSTED A GAINST INSTALMENTS OF ANOTHER RECURRING DEPOSIT ACCOUNT OR TRANSFERRED BETWEEN ONE BRANCHS TO ANOTHER BRANCH. THE D.R. FURTHER SUBMITT ED THAT THE ASSESSEE HAS GENERALLY RECYCLED THE FUNDS DEPOSITED IN R.D. ACCOUNTS IN THAT BRANCH ONLY. THIS METHOD IS FOLLOWED BY THE ASSESSE E TO HAVE BETTER CONTROL OVER THE FUNDS DEPOSITED IN VARIOUS BRANCHE S AND ALSO NOT TO SHOW TRANSFER OF MONEY FROM BENAMI RECURRING DEPOSI T OF ONE BRANCH TO BENAMI RECURRING DEPOSIT OF ANOTHER BRANCH, SO THAT NO EVIDENCE IS LEFT BEHIND TO LINK UP ONE BRANCH TO ANOTHER BRANCH. TH E A.O. HAS GIVEN HIS FINDINGS IN THE ASSESSMENT ORDER THAT THE MODUS OPE RANDI FOLLOWED BY THE ASSESSEE NOT ALLOWS TRANSFER OF FUNDS BETWEEN O NE BRANCH TO ANOTHER BRANCH. UNDER THESE CIRCUMSTANCES, ALLOWING BENEFIT OF TELESCOPING INTER BRANCH TRANSFERS IS NOT CORRECT. 12. ON THE OTHER HAND, THE LD. A.R. FOR THE ASSESSE E STRONGLY SUPPORTED THE ORDER OF THE CIT(A). THE A.R. FURTHE R SUBMITTED THAT THE A.O. WAS COMPLETELY ERRED IN WORKING OUT THE BRANCH WISE NET PEAK OF RECURRING DEPOSITS WITHOUT ALLOWING TELESCOPING BEN EFIT OF INTER BRANCH TRANSFERS, WHEN EVIDENCES CLEARLY ESTABLISHED THE L INK BETWEEN TRANSFER OF FUNDS BETWEEN ONE BRANCH TO ANOTHER BRANCH. THE A.R. FURTHER SUBMITTED THAT THE BRANCH MANAGERS IN THEIR STATEME NT GIVEN BEFORE THE ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 15 A.O. CLEARLY STATED THAT THE ASSESSEE HAS MADE TRAN SFER OF FUNDS FROM ONE BRANCH TO ANOTHER BRANCH TO PAY THE INSTALMENTS OF RECURRING DEPOSIT ACCOUNTS. THE CIT(A) WAS RIGHTLY ALLOWED TH E TELESCOPING BENEFIT OF FUNDS TRANSFERRED BETWEEN ONE BRANCH TO ANOTHER BRANCH AND REWORKED THE NET PEAK CREDIT BY TAKING INTO ACCOUNT THE TOTAL DEPOSITS IN A PARTICULAR YEAR AND HIS ORDER SHOULD BE UPHELD. 13. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. WORKED OUT THE BRANCH WISE NET PEAK CREDIT OF RECURRING DEPOSITS AND THE AGGREGATE TOTAL PEAK CREDIT OF ALL THE BRAN CHES HAS BEEN CONSIDERED AS UNDISCLOSED INCOME OF THE ASSESSEE FO R THE RELEVANT PERIOD. THE A.O. WAS OF THE OPINION THAT THE MODUS OPERANDI FOLLOWED BY THE ASSESSEE CLEARLY ESTABLISHES THAT THERE ARE NO FUNDS TRANSFERRED BETWEEN ONE BRANCHES TO ANOTHER BRANCH. THEREFORE, WORKING OUT BRANCH WISE PEAK CREDIT GIVES CLEAR PICTURE OF UNDI SCLOSED INCOME OF EACH YEAR. IT IS THE CONTENTION OF THE ASSESSEE TH AT HE HAS OPERATED RECURRING DEPOSIT ACCOUNTS IN 5 BRANCHES OF SAME BA NK AND IN MANY CASES THE FUND HAS BEEN TRANSFERRED BETWEEN ONE BRA NCH TO ANOTHER BRANCH. IT IS FURTHER CONTENDED THAT THE BRANCH MA NAGERS IN THE STATEMENT GIVEN BEFORE THE A.O. HAS CLEARLY ACCEPTE D THAT THERE ARE INSTANCES OF TRANSFER OF FUNDS BETWEEN ONE BRANCH T O ANOTHER BRANCH. ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 16 THEREFORE, THE A.O. WAS NOT CORRECT IN WORKING OUT THE NET PEAK OF EACH BRANCH INDEPENDENTLY WITHOUT ALLOWING THE TELESCOPI NG BENEFIT OF INTER BRANCH TRANSFERS. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT IN A CASE OF SINGLE OPERATOR AND CO MMON POOL OF FUNDS, THE POSSIBILITY OF TRANSFER OF FUNDS BETWEEN ONE BR ANCH TO ANOTHER BRANCH IS QUITE POSSIBLE. THE BRANCH MANAGERS IN T HEIR STATEMENT GIVEN BEFORE THE A.O. ACCEPTED THAT THE ASSESSEE HAS TRAN SFERRED FUNDS BETWEEN ONE BRANCH TO ANOTHER BRANCH TO REPAY THE I NSTALMENT OF RECURRING DEPOSIT ACCOUNTS. AS POINTED OUT BY THE LD. CIT(A) ALL THE BRANCHES ARE LOCATED IN A SAME PLACE AND WHICH CAN BE REACHED IN A SAME DAY. THEREFORE, WORKING OF BRANCH WISE PEAK CR EDIT WITHOUT ALLOWING TELESCOPING OF INTER BRANCH TRANSFERS IS N OT CORRECT. THE CIT(A) AFTER CONSIDERING THE DETAILS FURNISHED BY THE ASSE SSEE DIRECTED THE A.O. TO ALLOW THE TELESCOPING BENEFIT FOR INTER BRANCH T RANSFERS OF FUNDS. THE RELEVANT FINDINGS OF THE CIT(A) ARE REPRODUCED AS U NDER: 07.0 THE ONLY ISSUE EMANATING FROM ALL THE ASSESSMENT YE ARS UNDER APPEAL IS IN RESPECT OF ASSESSMENT OF RECURRING DEP OSIT ACCOUNTS HELD IN 5 BRANCHES OF SAPTAGIRI GRARNEENA BANK LOCATED IN AND AROUND VIJAYAWADA. ACTION U/S.132 OF THE I.T.ACT INITIATED AGAINST THE ASSESSEE ON 22-11-2008. CONSEQUENT TO THE SEARCH THE DEPARTMENT LAID THEIR HANDS ON A NUMBER OF RECURRING DEPOSIT ACCOUNTS IN THE NAMES OF VARIOUS PERSONS IN THE SAPTAGIRI GRAMEENA BANK, VIJAYAWADA AT 5 BRANCHES AS FOLLOWS. 1. PATAMATA, 2. GOVERNORPET, 3. YENAMALAKUDURU, 4.EEDUPUGALLU AND 5 . VELLATURU BRANCH. IN THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS, THE APPEL LANT OWNED UP A NUMBER OF RD ACCOUNTS, THOUGH HELD IN DIFFERENT NAMES, AS HIS OW N AND DECLARED THE INVESTMENTS IN THOSE ACCOUNTS AS HIS UNACCOUNTED IN COME INVESTED IN THOSE ACCOUNTS. HOWEVER, THE ASSESSEE VEHEMENTLY OBJECTED TO THE DEPOSITS FOUND AT ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 17 VELLATURU BRANCH IN THE NAMES OF VARIOUS PERSONS AS WELL AS SOME ACCOUNTS HELD IN OTHER BRANCHES MENTIONED ABOVE AS WELL. THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND PROCEED ED TO ASSESS THOSE DEPOSITS ALSO AS BELONGING TO THE ASSESSEE AND INCL UDED IN THE INCOME OF THE APPELLANT ON THE GROUND THAT THE BRANCH MANAGER S OF ALL BRANCHES HAVE CATEGORICALLY STATED THAT THE RD ACCOUNTS HELD AT VELLATURU BRANCH AND OTHER BRANCHES WERE ALSO BELONGING TO THE APPEL LANT AS WELL AS PROCEEDS OF DEPOSITS HELD - AT THAT BRANCH ARE SUBSEQUENTLY RE-INVESTED AS PART OF THE INSTALMENTS OF RD ACCOUNT IN OTHER BRAN CHES. THE AO HAS NARRATED IN DETAIL THE REASONS AND DISCUSSED FACTS FOR HER CONCLUSIONS. ACCORDINGLY, THE AO HELD THAT THESE DEPOSITS ARE AL SO BELONGING TO THE ASSESSEE AS HELD IN OTHER BRANCHES. ON THE OTHER HA ND, THE APPELLANT ARGUED THAT THERE IS NO EVIDENCE TO SUGGEST THAT TH ESE DEPOSITS ARE BELONGING TO THE ASSESSEE AND ASSESSEE CANNOT BE PE NALIZED ON THE BASIS OF THE SWORN STATEMENT OF THE MANAGERS OF THOSE BRANCHES WHICH SERVES THEIR PURPOSE ONLY. BEING A PUBLIC SECTOR BANK, IT IS TOTALLY ILLOGICAL TO HOLD THE VIEW THAT ALL THE BIG DEPOSITS ARE BELONGING TO THE ASSESSEE ONLY AND NO OTHER PERSON DEPOSITED OR OPENED DEPOSIT ACCOUNT IN SUCH BRANCHES. 08.0 AFTER CAREFUL CONSIDERATION OF THE SUBMISSIONS OF T HE AO AS WELL AS APPELLANT AND ALSO ON PERUSAL OF THE FACTS, I AM OF THE VIEW THAT THESE D ENIED RD ACCOUNTS HELD AT VARIOUS BRANCHES OF SAPTAGIRI GRAM EENA BANK ARE ALSO BELONGING TO THE ASSESSEE AS THERE ARE NUMBER OF INTER-BRANCH TRANSACTIONS WHICH INCLUDES TO AND FROM THESE DENIE D DEPOSITS TO OWNED UP DEPOSITS AND VICE VERSA. THE ASSESSING OFFICER H AS NARRATED A NUMBER OF INSTANCES WHERE NEXUS BETWEEN THE OWNED UP DEPOS ITS WITH DENIED DEPOSITS OF ALL THESE BRANCHES. THEREFORE, THE DIRE CT NEXUS AMONG THESE DEPOSITS HELD AT VARIOUS BRANCHES (5) HAS BEEN ESTA BLISHED IN CLEAR TERMS. THEREFORE, IT IS VERY DIFFICULT TO ISOLATE CERTAIN RD ACCOUNTS AS NOT BELONGING TO THE ASSESSEE WHEN THERE IS ALIVE LINK BETWEEN THOSE DEPOSITS VIS--VIS DEPOSITS IDENTIFIED AS BELONGING TO THE A SSESSEE AND ADMITTED BY THE ASSESSEE. THERE CANNOT BE ISOLATED OWNERSHIP OF THE DEPOSITS WHEN ALL THESE DEPOSITS ARE INTER-CONNECTED AND INTER-WO VEN AND HAVING A COMMON POOL OF FUNDS. BRANCH MANAGERS AS PUBLIC FUN CTIONARIES WOULD NOT HAVE STATED THESE DEPOSITS ARE ALSO BELONGING TO TH E ASSESSEE WITHOUT HAVING KNOWLEDGE OF OWNERSHIP OF THESE DEPOSITS. DU E TO THEIR CONSTANT AND REGULAR RELATIONS WITH THE APPELLANT, THE MANAG ERS ARE WELL AWARE OF THE OWNERS OF THE DEPOSITS. BEING A GRAMEENA BANK, VERY FEW INSTANCES OF SUCH HIGH NET WORTH DEPOSITS ARE HELD IN SUCH BRANC HES. THEY ARE NOT A REGULAR COMMERCIAL BRANCH AND THEIR OPERATIONS ARE VERY LIMITED. THESE MANAGERS HAD SERVED THE ASSESSEE, BEING A VALUED CU STOMER, BY TRANSFERRING DEPOSIT AMOUNTS FROM ONE BRANCH TO ANO THER BRANCH REGULARLY. THEREFORE, MANAGERS' PERSONAL KNOWLEDGE OF THESE DEPOSITS CANNOT BE DOUBTED. FURTHER, ANOTHER FACT TO BE CONS IDERED IN ALL THESE DEPOSITS IS THE INSTALMENT ARE AT VERY HIGH AMOUNTS I.E RS 5LAKHS WHICH IS A COMMON FEATURE TO CONSIDER THAT THESE DENIED ACCO UNTS ARE ALSO BELONGING TO THE APPELLANT. ACCORDINGLY, THE ACTION OF THE AO IS SUSTAINED ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 18 TO ASSESS THESE DENIED DEPOSITS HELD AT VELLATUR BR ANCH AS WELL AS OTHER BRANCHES AS BELONGING TO THE APPELLANT FOR ALL THE YEARS UNDER APPEAL I.E. AY 2004-05 TO 2009-10. 09.0 HAVING SAID THAT THESE DENIED DEPOSITS HELD AT VELL ATUR AND OTHER BRANCHES ARE ALSO OWNED BY THE ASSESSEE, IT IS TO BE SEEN HO W THESE ACCOUNTS ARE MAINTAINED AND INSTALMENTS HAVE BEEN PAID FROM TIME TO TIME IN ALL THESE BRANCHES. IT IS A FACT THAT THERE ARE A NUMBER OF I NTER-BRANCH TRANSACTIONS AMONG THESE BRANCHES ALONG WITH CASH PAYMENTS AND R ECEIPTS OUT OF THESE ACCOUNTS. THE AG WORKED OUT THE PEAK BALANCE OF EAC H BRANCH IGNORING OTHER BRANCHES AND ALL SUCH PEAKS OF EACH BRANCH AR E ADDED TO ARRIVE AT THE UNDISCLOSED INCOME FOR EACH YEAR. SUCH METHOD O F WORKING PEAK CREDIT DOES NOT GIVE CORRECT PICTURE OF WORKING AS THE ASS ESSEE IS ONE PERSON AND ALL THE DEPOSITS HAVE BEEN HELD AS BELONGING TO HIM . WHEN THE ASSESSEE IS HAVING CASH IN HAND BY VIRTUE OF MATURITY OF SOME R D ACCOUNTS, THE AG CANNOT ASSESS UNEXPLAINED INVESTMENT IN RESPECT OF REMITTANCES MADE IN THE RD ACCOUNTS MAINTAINED AT OTHER BRANCHES. THIS ACT OF AG GIVES A DISTORTED PICTURE OF THE FINANCIAL AFFAIRS OF THE A SSESSEE. WHEN ASSESSEE IS HAVING SUFFICIENT CASH IN HIS HAND WHICH REPRESENTS PROCEEDS OF SOME OF THE RD ACCOUNTS, WHICH IS AN ADMITTED FACT, THE SAME ASSES SEE CANNOT BE FASTENED WITH TAX LIABILITY ON ACCOUNT OF UNEXPLAINED INVESTMENT IN OTHER ACCOUNTS. SUCH TREATMENT DEFIES LOGIC. PEAK CREDIT HAS TO BE WORKE D OUT BY TAKING THE ASSESSEE AS ONE PERSON THOUGH THE ACCOUNTS ARE HELD IN THE NAMES OF DIFFERENT PERSONS, MOREOVER, ALL THE 5 BRANCHES OF THE BANK ARE LOCATED AT NEARBY STATIONS; THEREFORE, THE CASH BALANCES ON AC COUNT OF MATURITY OF SOME ACCOUNTS HAVE TO BE ALLOWED IN THE HANDS OF TH E ASSESSEE HAVING BEEN UTILIZED FOR DEPOSITING IN THE ACCOUNTS OF OTH ER BRANCHES. WORKING OUT PEAK CREDIT FOR EACH BRANCH INDEPENDENTLY IS NO T CORRECT ON THE PART OF THE ASSESSING OFFICER. UNLESS THE CASH BALANCES OUT OF CLOSURE OF ACCOUNTS ARE UTILIZED BY THE ASSESSEE ELSEWHERE, TH E CREDIT FOR SUCH BALANCES HAS TO BE GIVEN FOR THE PURPOSE OF INVESTI NG IN OTHER RD ACCOUNTS EITHER MAINTAINED AT THE SAME BRANCH OR AT OTHER BRANCHES. IT IS NOT THE CASE THAT THE ASSESSEE HAS INVESTED THESE C ASH BALANCES ELSEWHERE. AT LEAST TO THAT EXTENT, NO EVIDENCES HA VE BEEN BROUGHT ON RECORD TO SUGGEST THAT THE ASSESSEE HAD INVESTED SU CH CASH BALANCES IN OTHER PROPERTIES OR INCURRED SOME EXPENDITURE SO TH AT NO BENEFIT OF SUCH CASH CAN BE ALLOWED IN THE HANDS OF THE ASSESSEE FO R THE PURPOSE OF INVESTMENT IN RD ACCOUNTS AT OTHER BRANCHES. THE QU ESTION OF UNEXPLAINED INVESTMENT COMES INTO PLAY ONLY WHEN AS SESSEE HAS NO MONEY TO EXPLAIN. THERE IS NO DISPUTE ABOUT THE CASH AVAILABILITY IN THE HANDS OF APPELLANT, WHICH REPRESENTS PROCEEDS OF RD ACCOUNTS. THE DISPUTE IS ARISING FOR TELESCOPING OF SUCH CASH TO THE INVESTMENTS IN DEPOSITS OF OTHER BRANCHES. ALL THE BRANCHES ARE LO CATED AT VERY REACHABLE DISTANCES AND IT IS NOT THE CASE THAT THEY ARE LOCA TED IN DIFFERENT TOWNS AND STATIONS AND A PERSON FROM ONE BRANCH CANNOT RE ACH THE OTHER BRANCH IN A DAY. IN FACT, IN A SINGLE DAY A PERSON CAN VIS IT ALL THESE S BRANCHES WITHOUT ANY DIFFICULTY AND TRANSACT BUSINESS IN THO SE BRANCHES. IN FACT ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 19 MAJORITY OF SUCH CASH TRANSFERS TOOK PLACE BETWEEN PATAMATA AND GOVERNORPETA BRANCHES, WHICH ARE LOCATED VERY NEARB Y. THERE IS NO REASON TO DISBELIEVE SUCH CASH TRANSFERS AMONG THES E BRANCHES OF SAME BANK. 10.0 IT IS IMPORTANT TO NOTE THAT IN HIS SWORN STATEMENT SHRI T.V.S.S.S. ESWARA VARA PRAGAD, MANAGER OF 5GB, GOVERNORPET BRANCH (LA TER SHIFTED TO AMAVARAPPADU BRANCH) HAD STATED THAT AN RD A/C BEARING NO.386 WA S OPENED ON 30-05-2005 IN THE NAME OF MR. MADALA GOPAL WITH A MONTHLY INSTALM ENT, RS.5 LAKHS AND THE SAME WAS FORECLOSED ON 30-1-2006 WITH MATURITY VALUE OF RS. 40,70,000/- AND THE SAME WAS TRANSFERRED TO THE JOI NT A/C OF MADALA GOPAL AND VELAGAPUDI RAJASEKHAR BEARING A/C NO. 9607 FROM WHICH AN AMOUNT OF RS.40,70,000/- WAS PAID IN CASH ON THE SAME DAY. FR OM THIS AMOUNT RS.15 LAKHS WAS REMITTED TOWARDS RD INSTALMENTS OF RS,5 L AKHS EACH, FOR THE RD ACCOUNT NOS. 381, 382, 388 HELD IN THE NAMES OF Y.V .KRISHNA RAO, GOLLAPUDI PRASAD AND P. RAMAKRISHNA RESPECTIVELY IN GOVERNORPET BRANCH ITSELF AND THE REMAINING AMOUNT OF RS.25 LAKHS WAS TRANSFERRED TO PATAMATA BRANCH THROUGH CREDIT ADVICE ON 30-1-2000 IN THE NAMES OF P.CHANDRASEKHARA RAO, R.SATYAPRASAD, T.NARAYANA RAO , M.NAGENDRA AND P.CHANDRASEKHARA RAO (NO.2). IT SHOWS THAT THE ACCO UNTS ARE NOT MAINTAINED NAME SPECIFIC; THEY ARE ALL HAVING IN GR OUPS AND TRANSFERRABLE AMONG ONE ENTITY TO OTHER ENTITY. IT ONLY CONFIRMS AND REITERATES THE FACT OF COMMON OWNERSHIP OF ALL THESE ACCOUNTS MAINTAINE D AT VARIOUS BRANCHES LOCATED, AT VIJAYAWADA AND NEARBY STATIONS. THE BRA NCH MANAGER ALSO CONFIRMED THAT THE INTER BRANCH TRANSFERS ARE PREVA LENT IN THEIR BANK ALSO. ASSESSEE BEING ONE PERSON HAVING OWNED UP ALL DEPOS ITS HELD IN VARIOUS NAMES AND INVESTED IN THOSE ACCOUNTS BY A COMMON PO OL OF FINANCE, IT IS RATIONAL AND PRUDENT TO ALLOW NET PEAK CREDIT BY CO NSIDERING ALL DEPOSITS INCLUDING DENIED DEPOSITS HELD IN ALL 5 BRANCHES. T HEREAFTER THE DIFFERENCE OF SUCH NET PEAK CREDIT WITH THAT OF INCOME DISCLOS ED BY THE ASSESSEE SHOULD BE TREATED AS UNACCOUNTED INCOME INVESTED IN THOSE DEPOSITS FOR EACH ASSESSMENT YEAR. IN THE COURSE OF APPELLATE PR OCEEDINGS, THE AUTHORIZED REPRESENTATIVE HAS STATED THAT IF PEAK I S ADOPTED BY CONSIDERING ALL BRANCHES, THE APPELLANT HAS NO OBJE CTION TO TREAT THE DENIED ACCOUNTS ALSO AS BELONGING TO HIM. 11.0 IN VIEW OF THE ABOVE DISCUSSION, IN THE COURSE OF A PPELLATE PROCEEDINGS, THE AR OF THE APPELLANT HAS BEEN ASKED TO PREPARE PEAK CREDITS AFTER TAKING INTO ACCOUNT ALL DEPOSITS FOR EACH ASSESSMENT YEAR. ACCORDINGLY, THE AR OF THE APPELLANT PREPARED THE SAME AND FILED WHICH IS AS UNDER. ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 20 ASST. YEAR GROSS PEAK NET PEAK INCOME OFFERED AS PER I.T. RETURN 2004-05 2,58,00,000 2,58,00,000 1,38,00,000 2005-06 7,42,80,000 4,84,80,000 NIL 2006-07 8,15,07,992 72,27,992 1 1 37,00,000 2007-08 10,41,71,949 2,26,63,957 NIL 2008-09 15,04,47,390 4,62,75,441 3,10,00,000 2009-10 14,50,78,767 NIL 10,39,00,000 IT IS CONTENDED BEFORE ME THAT THE SAME WORKING WAS ALSO FILED BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS. THE A BOVE WORKING OF THE ASSESSEE HAS BEEN VERIFIED ON RANDOM BASIS TO F IND OUT WHETHER THE PEAK CREDIT IS CORRECTLY ARRIVED AT OR NOT. THE AO IS DIRECTED TO VERIFY WHETHER ALL DEPOSITS AND INSTALMENTS HAVE BEEN CORR ECTLY TAKEN INTO ACCOUNT IN THE NET PEAK CREDIT AS WORKED OUT BY THE APPELLANT AND ACCORDINGLY COMPUTATION OF INCOME OF THE ASSESSEE I S TO BE RE-WORKED. ANY VARIATION NOTICED IN SUCH WORKING OF THE PEAK CREDI T IS TO BE INCORPORATED IN THE COMPUTATION OF INCOME OF THE ASSESSEE. SIMILARL Y, INTEREST RECEIVED BY THE APPELLANT ON MATURITY OF VARIOUS DEPOSITS FOR V ARIOUS YEARS ARE ALSO TO BE TAKEN INTO ACCOUNT CORRECTLY WHILE WORKING OUT THE COMPUTATION OF TOTAL INCOME. BY TAKING INTO ACCOUNT THE ABOVE PEAK CREDI T WORKING AS WELL AS INTEREST INCOME, I DIRECT THE ASSESSING OFFICER TO RE-COMPUTE, THE TOTAL INCOME FOR EACH ASSESSMENT YEAR AS UNDER SUBJECT TO VERIFICATION. 14. THE CIT(A) AFTER CONSIDERING THE DETAILS OF INT ER BRANCH TRANSFERS ALLOWED THE TELESCOPING BENEFIT AND REWORKED THE NE T PEAK CREDIT. THE FACTS REMAIN SAME BEFORE US. THE REVENUE FAILED TO CONTRADICT THE FINDINGS OF THE FACTS RECORDED BY THE CIT(A). WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER PASSED BY THE CIT(A). HENCE , WE INCLINED TO UPHOLD THE ORDER PASSED BY THE CIT(A) AND REJECT TH E GROUND RAISED BY THE REVENUE. 15. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS COMPUTATION OF INTEREST U/S 234B OF THE ACT AND ADJUSTMENT OF S EIZED CASH TOWARDS TAX LIABILITY. THE A.O. COMPUTED INTEREST U/S 234B OF THE ACT UP TO THE ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 21 DATE OF ASSESSMENT ON THE TOTAL INCOME ASSESSED. IT IS THE CONTENTION OF THE ASSESSEE THAT THE DEPARTMENT HAS SEIZED CASH WH ICH WAS AVAILABLE WITH THE DEPARTMENT, THEREFORE, THE SAME SHOULD BE ADJUSTED AGAINST THE TAX LIABILITY BEFORE LEVY OF INTEREST U/S 234B OF THE ACT. THE LD. A.R. SUBMITTED THAT AT THE TIME OF SEARCH U/S 132 OF THE ACT, THE DEPARTMENT HAS SEIZED ABOUT ` 15.99 CRORES FROM THE ASSESSEE. THE ASSESSEE HAD REQUESTED THE DEPARTMENT TO ADJUST THE SEIZED FUNDS TOWARDS TAX LIABILITIES OF THE ASSESSEE FOR THE ABOVE ASSESSMEN T YEARS. THEREFORE, CHARGING OF INTEREST WITHOUT ADJUSTING THE SEIZED C ASH IS UNJUSTIFIED WHEN THE FUNDS OF THE ASSESSEE ARE ALREADY WITH THE DEPA RTMENT AND THE ASSESSEE HAD NOT ENJOYED THESE FUNDS FROM THE DATE OF SEARCH. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REAS ON THAT AS PER THE PROVISIONS OF SECTION 132B OF THE ACT, THE SEIZED A SSETS ARE TO BE ADJUSTED TOWARDS ANY EXISTING TAX LIABILITY UNDER T HE DIRECT TAXES AND TOWARDS ANY LIABILITY THAT ARISES ON COMPLETION OF ASSESSMENT ETC. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE DOCUMENTS A VAILABLE ON RECORD, WE FIND THAT AT THE TIME OF SEARCH THE DEPARTMENT H AS SEIZED ABOUT ` 15.99 CRORES. THE ASSESSEE HAS MADE SEVERAL REQUEST S EVEN BEFORE THE INVESTIGATION DEPARTMENT TOWARDS ADJUSTMENT OF SEIZ ED CASH TOWARDS THE TAX LIABILITY AROUSED ON ACCOUNT OF FILING OF REVIS ED RETURNS U/S 153A OF THE ACT. THE A.O. WITHOUT ADJUSTING THE SEIZED CAS H COMPUTED THE ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 22 INTEREST UP TO THE DATE OF ASSESSMENT. AS PER THE PROVISIONS OF SECTION 234B OF THE ACT, INTEREST IS REQUIRED TO BE CHARGED UP TO THE DATE OF FILING OF RETURN U/S 153A OF THE ACT. IT IS DUE TO THE FACT THAT IN THE RETURNS OF INCOME, THE ASSESSEE HAD CLEARLY MADE A REQUEST TO ADJUST THE SEIZED AMOUNT TOWARDS THE LIABILITY OF SELF ASS ESSMENT TAX. ONCE THE RETURN IS FILED, ANY TAX DUE ON ACCOUNT OF INCOME D ISCLOSED IS AMOUNTING TO EXISTING TAX LIABILITY AND THE DEPARTMENT IS BOU ND TO ADJUST THE SEIZED CASH TOWARDS THE EXISTING TAX LIABILITY OF THE ASSE SSEE TO THE EXTENT OF LIABILITY OF SELF ASSESSMENT TAX. THEREFORE, THE A .O. IS NOT CORRECT ON CHARGING INTEREST ON TOTAL INCOME ASSESSED UP TO TH E DATE OF ASSESSMENT. THE CIT(A) AFTER CONSIDERING THE RELEV ANT FACTS DIRECTED THE A.O. TO CHARGE THE INTEREST ON RETURNED INCOME, UP TO THE DATE OF FILING RETURN OF INCOME IN RESPONSE TO NOTICE U/S 153A AFT ER ADJUSTING THE SEIZED CASH, AND WHEREVER THERE IS A TAX LIABILITY ON ACCOUNT OF ADDITIONS MADE TO ASSESSED INCOME, THE INTEREST IS TO BE CHAR GED UP TO THE DATE OF ASSESSMENT. WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER PASSED BY THE CIT(A). THEREFORE, WE ARE INCLINED TO UPHOLD T HE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE REVENUE. 16. THE ASSESSEE HAS FILED CROSS OBJECTIONS FOR ALL THE YEARS CHALLENGING THE ORDER OF CIT(A), CONFIRMING THE LEV Y OF INTEREST U/S 234B UP TO THE DATE OF FILING RETURN OF INCOME IN RESPON SE TO NOTICE UNDER SEC. ITA NOS.206 TO 211/VIZAG/2012 & CO NOS.16 TO 21/VIZ AG/2012 DHANEKULA RAMA RAO, VIJAYAWADA 23 153A ON RETURNED INCOME AND UP TO THE DATE OF ASSES SMENT WHEREVER THERE IS ADDITIONS TO RETURNED INCOME. THEREFORE, F OR THE REASONS RECORDED IN THE PRECEDING PARAGRAPHS, WE DISMISS TH E CROSS OBJECTIONS FILED BY THE ASSESSEE FOR ALL THE ASSESSMENT YEARS. 17. IN THE RESULT, THE APPEALS FILED BY THE REVENUE IN ITA NOS.206 TO 211/VIZAG/2012 AND CO FILED BY THE ASSESSEE IN C.O. NOS. 16 TO 21/VIZAG/2012 ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27 TH MAY16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 27.05.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE DCIT, CENTRAL CIRCLE, VIJAYA WADA 2. / THE RESPONDENT SHRI DHANEKULA RAMA RAO, 40-5-1 9, SIDDHARTHA ROAD, VENKATESWARA PURAM, VIJAYAWADA 3. + / THE CIT (CENTRAL), HYDERABAD 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM