Sh. Rajiv Bajaj, Ludhiana V. ACIT, Ludhiana

ITA 1174/CHANDI/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7797 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-03-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 05-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Keywords: Business income; Income from undisclosed sources
• Section: 142(1); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.1168 TO 1170 & 1174 /CHD/2011 (ASSESSMENT YEARS : 2002-03 TO 2004-05) SH.RAJIV BAJAJ, VS. THE A.C.I.T., ST.NO.10, GOBIND NAGAR, CENTRAL CIRCLE-V, JAMALPUR, CHANDIGARH ROAD LUDHIANA. NOW MIG FLAT 1386, SECTOR 32, LUDHIANA. PAN: ACWPB4353P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SMT.JAISHREE SHARMA, DR DATE OF HEARING : 15.03.2012 DATE OF PRONOUNCEMENT : 19.04.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THESE FOUR APPEALS FILED BY THE ASSESSEE ARE AGAINS T THE ORDER/S OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIA NA DATED 22.09.2011 AND 15.09.2011 RELATING TO ASSESSMENT YE ARS 2002-03 TO 2004- 05 AGAINST THE ORDER PASSED U/S 153(A)/144 AND 271 (1) (B) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). 2. COMMON GROUNDS OF APPEAL HAVE BEEN RAISED IN ALL THE QUANTUM APPEALS WHICH ARE AS UNDER: 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING ADDITION OF RS.35,41,860/- ON ACCOUNT OF SO-CALLED UNEXPLAINED PEAK OF BANK DEPOSITS IN BANK ACCOUNT AS CALCULATED BY THE ASSESSING OFFICER (AO). 2. THAT THE ADDITION AS PER PARA-1 HAS BEEN MADE AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSION MADE BY THE ASSESSEE HAS NOT BEEN CONSIDERED PROPERLY. 2 3. THAT THE CIT(A) HAS FAILED TO CONSIDER THE STATEMENT RECORDED DURING THE COURSE OF SEARCH OF THE APPELLANT THAT HE HAD ONLY LENT HIS NAME WITHOUT ACTUAL PURCHASES AND SALES OF CLOTH AND, IN FACT, HE HAS TOTALLY IGNORED THE FACTUAL ASPECT OF THE STATEMENT GIVEN BY THE APPELLANT DURING THE COURSE OF SEARCH. 4. THAT THE CIT(A) HAS FAILED TO TAKE INTO CONSIDERATION THE FINANCIAL STATUS OF THE ASSESSEE IN AS MUCH AS, THE APPELLANT DID NOT HAVE MOVABLE/IMMOVABLE ASSETS OR ANY OTHER INVESTMENT EXCEPT ONE MARUTI CAR. 5. THAT THE CIT(A) HAS ALSO IGNORED THE EVIDENTIARY VALUE OF THE WITHDRAWALS MADE FORM THE BANK ACCOUNT BY WAY OF SELF CHEQUES IMMEDIATELY AFTER THE RECEIPT OF CHEQUES FROM M/S DUGGAL EXPORTS/M/S S.J.EXPORTS AND WHICH WAS UTILIZED FOR RETURNING THE MONEY BACK TO THOSE CONCERNS AND THAT VITAL EVIDENCE HAS NOT BEEN CONSIDERED BY THE CIT(A), LUDHIANA. 3. ALL THESE APPEALS RELATING TO THE SAME ASSESSEE ON THE SAME ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY T HIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 4. THE BRIEF FACTS IN ITA NO.1168/CHD/2011 ARE THAT SEARCH, SEIZURE/SURVEY OPERATIONS UNDER SECTION 132/133A OF THE ACT WERE CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 15.1 0.2003. THE ASSESSEE FAILED TO FURNISH ANY RETURN OF INCOME IN RESPONSE NOTICES ISSUED U/ 153A OF THE ACT. DURING THE COURSE OF SEARCH/SURVEY DOC UMENTS AND BANK ACCOUNTS WERE DETECTED/FOUND. THE ASSESSING OFFICE R ISSUED VARIOUS QUESTIONNAIRES TO THE ASSESSEE IN ORDER TO EXPLAIN THE ENTRIES IN VARIOUS BANK ACCOUNTS WITH EVIDENCE AND ALSO TO PRODUCE BOO KS OF ACCOUNT. THE PERUSAL OF THE ASSESSMENT ORDER REVEALS THE TOTAL N ON-COOPERATIVE ATTITUDE OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS A ND THE ASSESSING OFFICER ACCORDINGLY COMPUTED THE INCOME UNDER SECTI ON 153A OF THE ACT R.W.S.144 OF THE ACT. THE ASSESSING OFFICER COMPUT ED THE PEAK DEPOSITS IN THE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE AN ADDITION WAS MADE IN RESPECT OF THE SAID PEAK DEPOSITS IN THE RESPECTIVE ASSESSMENT YEARS. 3 5. THE CIT (APPEALS) UPHELD THE ORDER OF THE ASSESS ING OFFICER. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT (APP EALS). 6. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT THE ASSESSEE WAS EARNING INCOME FROM COMMISSION ON SALE OF CLOTH AND YARN AND SEARCH/SURVEY OPERATIONS WERE BECAUSE OF THE PURCHA SE BILLS ISSUED BY THE ASSESSEE TO M/S DUGGAL EXPORTS. THE LEARNED A. R. FOR THE ASSESSEE FAIRLY ADMITTED THAT NO RETURN OF INCOME WAS FILED PURSUANT TO NOTICES ISSUED UNDER SECTION 153A OF THE ACT. IT WAS FURTH ER POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT COMMISSION INCOM E WAS ALREADY DECLARED IN THE ORIGINAL RETURN OF INCOME FILED. T HE LEARNED A.R. FOR THE ASSESSEE FAIRLY ADMITTED THAT THE ISSUE RAISED IN A LL THE APPEALS WAS IDENTICAL AND ONLY IN ASSESSMENT YEARS 2003-04 AND 2004-05 THE ASSESSEE HAD RAISED AN ALTERNATIVE PLEA OF ADJUSTMENT OF PEA K CREDITS. 7. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE ASSESSING OFFICER AND CIT (APPEALS) AND POINTED OUT THE TOTAL NON- COOPERATION BY THE ASSESSEE BEFORE THE ASSESSING OF FICER WAS EVIDENT FROM THE PERUSAL OF THE ASSESSMENT ORDER. IN RESPE CT OF SET OFF OF PEAK DEPOSITS, THE LEARNED D.R. FOR THE REVENUE PLACED R ELIANCE ON THE ORDER OF THE CIT (APPEALS) AND ASSESSING OFFICER. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FACTS OF THE CASE ARE THAT SEARCH/SURVEY OPERATIONS UNDER SECTION 132/133A OF THE ACT WERE CARRIED OUT ON THE RESIDEN TIAL AND BUSINESS PREMISES OF THE ASSESSEE ON 15.10.2003. SIMILAR SE ARCH/SURVEY OPERATIONS WERE ALSO CARRIED OUT ON THE PREMISES OF M/S DUGGAL EXPORTS AND M/S S.G.EXPORTS ON 15.10.2003. THE ASSESSING O FFICER ISSUED NOTICE UNDER SECTION 153A OF THE ACT REQUIRING THE ASSESSE E TO FURNISH RETURN OF INCOME FOR THE RELEVANT PERIOD. THE RETURN WAS DUE TOBE FURNISHED ON OR 4 BEFORE 7.1.2006, BUT NO SUCH RETURN OF INCOME WAS F URNISHED BY THE ASSESSEE. ON 9.1.2006 THE ASSESSEE MOVED AN APPLIC ATION SEEKING COPIES OF THE SEIZED/IMPOUNDED DOCUMENTS WHICH WERE SUPPLI ED TO HIM ON 17.1.2006. THE ASSESSEE FAILED TO FURNISH ANY RETU RN OF INCOME EVEN THEREAFTER. THE ASSESSING OFFICER ISSUED QUESTIONN AIRE ALONGWITH NOTICE/S UNDER SECTION 142(1) OF THE ACT DATED 16.1 .2006. THE ASSESSEE SOUGHT ADJOURNMENT FROM DATE TO DATE. THE ASSESSEE DID NOT COMPLY WITH THE NOTICE/S OF HEARING AND ALSO DID NOT PRODUCE CO MPLETE SET OF BOOKS OF ACCOUNT FOR THE PERIOD 1.4.1997 TO 31.3.2004. BECA USE OF THE NON- COMPLIANCE OF THE ASSESSEE SUMMONS WERE ISSUED UNDE R SECTION 131(1) OF THE ACT TO THE ASSESSEE ON 1.2.2006 FOR COMPLIANCE WITH REGARD TO BOOKS OF ACCOUNT. THE ASSESSEE DID APPEAR ON 6.2.2006 I. E. THE APPOINTED DATE OF HEARING BUT WITHOUT BOOKS OF ACCOUNT. THE STATE MENT OF THE ASSESSEE WAS RECORDED ON 6.2.2006, WHICH WAS REFUSED TO BE S IGNED BY HIM, IN WHICH HE DENIED HAVING KEPT AND MAINTAINED ANY BOOK S OF ACCOUNT. ANOTHER NOTICE UNDER SECTION 142(1) ALONGWITH QUEST IONNAIRE DATED 20.2.2006 WAS ISSUED BUT THE SAME REMAINED UN-COMPL IED WITH. THE ASSESSING OFFICER ACCORDINGLY PROCEEDED TO FINALIZE THE ASSESSMENT EX- PARTE UNDER SECTION 153A R.W.S.144 OF THE ACT ON TH E BASIS OF THE INFORMATION AVAILABLE ON RECORD TO THE BEST OF HIS JUDGMENT. 9. THE ABOVE SAID NARRATION OF THE NON-COMPLIANCE B Y THE ASSESSEE I.E. NON-FURNISHING OF RETURN OF INCOME PURSUANT TO NOTI CE ISSUED UNDER SECTION 153A OF THE ACT AND NON-APPEARANCE BEFORE T HE ASSESSING OFFICER DURING THE PROCEEDINGS FOR COMPLETING ASSESSMENT FO R THE BLOCK PERIOD AND NON-PRODUCTION OF THE BOOKS OF ACCOUNT DESPITE VARIOUS OPPORTUNITIES BEING ALLOWED TO THE ASSESSEE BY THE ASSESSING OFFI CER ESTABLISHES NON- COOPERATIVE ATTITUDE OF THE ASSESSEE DURING THE ASS ESSMENT PROCEEDINGS. IN VIEW OF THE AFORESAID CIRCUMSTANCES THE ASSESSIN G OFFICER WAS LEFT 5 WITH NO OTHER ALTERNATIVE BUT TO COMPLETE THE ASSES SMENT UNDER SECTION 153A R.W.S. 144 OF THE ACT. THE ASSESSING OFFICER AT PAGES 2 TO 5 OF THE ASSESSMENT ORDER HAS REPRODUCED VARIOUS QUESTIONNAI RES ISSUED TO THE ASSESSEE FROM TIME TO TIME. THE BASIC QUERIES IN A LL THE AFORESAID NOTICES WERE IN RELATION TO VARIOUS ENTRIES I.E. BO TH DEBITS AND CREDITS IN VARIOUS BANK ACCOUNTS MAINTAINED BY THE ASSESSEE. THE ASSESSEE WAS FOUND TO HAVE BEEN MAINTAINING THE FOLLOWING BANK A CCOUNTS: (I) CENTURIAN BANK LTD., 15, FEROZE GANDHI MARKET, LUDHIANA(A/C NO.5777181) (II) CANARA BANK, BHARAT NAGAR CHOWK, LUDHIANA (A) A/C NO.4480 (B) A/C NO.4459 (III) ICICI BANK, FEROZE GANDI MARKET, LUDHIANA (A) A/C NO.1338 (B) A/C NO.1339 10. THE ASSESSING OFFICER VIDE QUESTIONNAIRE ISSUED DATED 27.2.2006, SHOW CAUSED THE ASSESSEE TO EXPLAIN THE PEAK DEPOSI TS IN SAVING ACCOUNTS WITH EVIDENCE BOTH IN ICICI BANK AND CANARA BANK. THE ASSESSEE FAILED TO FURNISH THE NATURE AND SOURCE OF THE SAID ENTRIE S IN THE BANK ACCOUNTS. THE ASSESSING OFFICER WHILE COMPUTING THE INCOME IN THE HANDS OF THE ASSESSEE ADOPTED THE PEAK DEPOSITS IN ICICI BANK, T HE SAID ACCOUNT WAS IN OPERATION DURING THE ASSESSMENT YEAR 2002-03, BO TH SAVING ACCOUNTS, AS INCOME OF THE ASSESSEE. THE BREAK-UP OF THE PEAK AMOUNT OF DEPOSITS/WITHDRAWALS IS AS UNDER: ACCOUNT NO. NAME & ADDR ESS OF THE BANK BRANCH TOTAL AMOUNT OF DEPOSITS MADE DURING THE YEAR UNDER ASSESSMENT TOTAL AMOUNT OF WITHDRAWLS MADE DURING THE YEAR UNDER ASSESSMENT DATE OF PEAK AMOUNT OF DEPOSIT AMOUNT OF PEAK DEPOSIT 1338 ICICI BANK, FEROZE 69,15,250/- 67,49,160/- 16.03.2002 20,03,450/- 6 GANDI MARKET, LUDHIANA. 1339 ICICI BANK, FEROZE GANDI MARKET, LUDHIANA 51,56,250/- 51,53,422/- 18.02.2002 15,01,950/- TOTAL 1,20,71,500/- 1.19.02,582/- 35,05,400/- 11. ACCORDINGLY, ADDITION OF RS.35,05,400/- WAS MAD E IN THE HANDS OF THE ASSESSEE. 12. BEFORE THE CIT (APPEALS) THE ASSESSEE FURNISHED ONLY AN EXPLANATION THAT IT WAS CARRYING ON THE BUSINESS OF DALALI IN RESPECT OF WASTE YARN AND WASTE CLOTH. THE MODUS OPERANDI OF THE BUSINESS WAS ARRANGING OF SUPPLY OF WASTE YARN/CLOTH TO VARIOUS MILLS AND DALALI INCOME BEING EARNED THEREFROM. THE ASSESSEE OPERAT ED VARIOUS BANK ACCOUNTS BUT CLAIMED THAT THE BILLS WERE ISSUED TO THE CONCERN OF S/SHRI SUBHASH DUGGAL AND JAGDISH DUGGAL, AGAINST WHICH PA YMENT WAS RECEIVED BY ACCOUNT PAYEE CHEQUES AND IMMEDIATELY T HE AMOUNTS WITHDRAWN IN CASH TO GIVE BACK THE AMOUNT TO THE SA ID PERSON. THE CIT (APPEALS) OBSERVED THAT THE ASSESSEE HAD NOT DENIED THAT HE HAD NOT OPERATED THE BANK ACCOUNTS, RATHER HE HAD OPERATED VARIOUS BANK ACCOUNTS. HE HAD ALSO ACCEPTED THE TRANSACTIONS IN THE BANK ACCOUNTS. HOWEVER, THE ASSESSEE WAS UNABLE TO SUBSTANTIATE HI S CLAIM EXCEPT THE STATEMENT RECORDED DURING THE SURVEY I.E. HE WAS ON LY ENGAGED IN THE BUSINESS OF ISSUING FAKE BILLS OF THE PARTIES CONCE RNED. IN THE ABSENCE OF ANY BOOKS OF ACCOUNT BEING PRODUCED, THE CIT (APPEA LS) HAD UPHELD THE ADDITION OF PEAK DEPOSITS TO THE TUNE OF RS.35,05,4 00/-. 13. WE FIND THAT DURING THE COURSE OF SEARCH, STATE MENT OF THE ASSESSEE WAS RECORDED ON 15.10.2003 IN WHICH HE STATED THAT HE HAD NOT MADE ANY PURCHASES IN ACTUAL FACT AND THE TRANSACTIONS WERE ONLY ON PAPERS. IN 7 REPLY TO THE QUESTION RAISED BY THE SEARCH TEAM THE ASSESSEE HAD STATED THAT S/SHRI SUBHASH DUGGAL AND JAGDISH DUGGAL USED TO GIVE HIM CHEQUES WHICH WERE DEPOSITED IN HIS CURRENT ACCOUNT NOS.448 0 AND 4459 WITH CANARA BANK, LUDHIANA AND THE SAID AMOUNT WAS THERE AFTER WITHDRAWN BY SELF CHEQUES AND CASH SO WITHDRAWN WAS HANDED OVER TO THE AFORESAID PERSONS. IN THE SAID STATEMENT RECORDED ON 15.10.2 003 THE ASSESSEE STATED AS UNDER: THE PRACTICE IS GOING ON FOR LAST ONE TO ONE AND HALF YEAR. I WANT TO ADD FURTHER THAT THESE TWO ACCOUNTS HAVE BEEN USED MOSTLY FOR THE BENEFIT OF M /S DUGGAL EXPORTS, 165, I.A.A., BADDI (H.P.), S.G. EXPORTS, BOTH BELONGS TO SH.JAGDISH DUGGAL, SUBHASH DUGGAL OF SARABHA NAGAR, LUDHIANA. 14. ON THE AFORESAID COMMISSION @ 0.25% WAS EARNED BY THE ASSESSEE. COPY OF STATEMENT OF THE ASSESSEE RECORDED IS PLACE D ON RECORD. IN REPLY TO QUESTION NO.4 I.E. WITH REGARD TO THE DETAILS OF BANK ACCOUNTS MAINTAINED, THE ASSESSEE HAD STATED AS UNDER: PERIOD DR. CR. (III) CENTURIAN BANK LTD., 15, FEROZE GANDHI MARKET , LUDHIANA(A/C NO.5777181) (I) CANARA BANK, BHARAT NAGAR CHOWK, LUDHIANA (A) A/C NO.4480 (B) A/C NO.4459 (II) ICICI BANK, FEROZE GANDI MARKET, LUDHIANA (A) A/C NO.1338 (B) A/C NO.1339 15. IN REPLY TO QUESTION NO.5, THE ASSESSEE CLAIME D TO HAVE MAINTAINED BOOKS OF ACCOUNT REGULARLY FROM 1.4.2003 UPTO DATE ON COMPUTERS AND PRIOR TO THAT THE BOOKS WERE MAINTAINED AND WERE WI TH HIS CHARTERED ACCOUNTANT. THE NATURE OF BUSINESS AS PER ANSWER O F QUESTION NO.6, THE ASSESSEE WAS TRADING IN YARN FIBRE, CLOTH HOSIERY, ETC. WITH REGARD TO QUESTION NO.7, THE ASSESSEE STATED TO HAVE ONE SHOP AT SCO 42 IN APRON, 8 HOUSE LINK ROAD AND GODOWN AT GROUND FLOOR. THE PO SITION OF THE CLOSING STOCK AS ON THE DATE OF SEARCH WAS STATED T O BE NIL. THE ASSESSEE VIDE ANSWER TO QUESTION NO.8 STATED THAT NORMALLY GOODS ARE SUPPLIED TO THE CUSTOMERS DIRECTLY AFTER RECEIVING ORDER FROM T HEM . IN REPLY TO QUESTION NO.9, THE INTRODUCER OF ACCOUNT NO.4459 WI TH CANARA BANK WAS SHRI JAGDISH DUGGAL. IN REPLY TO QUESTION NO.10, T HE ASSESSEE STATED THAT HE USED TO SUPPLY GOODS TO THE ABOVE SAID PERSONS O N BROKERAGE AND LATER ON WHEN HE STARTED TRADING GOODS, THESE WERE SUPPLI ED ON ORDER. IN REPLY TO QUESTION NO.11, THE ASSESSEE DECLARED THAT FOR T HE PERIOD 1.4.2003 TO 15.10.2003 THE SALES AFFECTED WERE APPROXIMATELY RS .7 TO 8 CRORES. AS PER REPLY TO QUESTION NO.12, THE PURCHASES WERE OF RS.49 LACS. THE NAMES OF THE PARTIES FROM WHOM THE PURCHASES WERE M ADE WERE ALSO GIVEN BY THE ASSESSEE. IN REPLY TO QUESTION NO.16 , THE ASSESSEE REITERATED THAT THE TRANSACTIONS REFLECTED IN CURRE NT ACCOUNT NO.4480 WITH CANARA BANK, BHARAT NAGAR CHOWK, LUDHIANA WAS AT TH E INSTANCE OF S/SHRI SUBHASH DUGGAL AND JAGDISH DUGGAL. THE CHEQ UES WERE GIVEN BY THEM AND DEPOSITED IN THE ACCOUNT AND CASH ON WITHD RAWAL WAS HANDED OVER BACK TO THEM OR ALTERNATIVELY THEY USED TO TAK E SELF CHEQUES OF EQUAL AMOUNT AND WITHDREW THE CASH THEMSELVES. SIM ILAR TRANSACTION WAS CLAIMED TO BE ROUTED THROUGH BANK ACCOUNT NO.4469 W ITH CANARA BANK, LUDHIANA. THE ASSESSEE FURTHER REITERATED THAT TWO ACCOUNTS WERE USED MOSTLY FOR THE BENEFIT OF M/S DUGGAL EXPORTS AND S. G.,EXPORTS BOTH BELONGING TO S/SHRI SUBHASH DUGGAL AND JAGDISH DUGG AL OF LUDHIANA. IN REPLY TO QUESTION NO.17, IT WAS EXPLAINED THAT COMM ISSION @ 0.25% FOR TRANSACTION OF RS.10 LACS WAS GIVEN SOMETIME THROUG H CHEQUES AND SOMETIME IN CASH. 16. FROM THE PERUSAL OF THE STATEMENT RECORDED DURI NG THE COURSE OF SEARCH IT IS APPARENT THAT THE ASSESSEE HAD CLAIMED THE TRANSACTIONS IN THE 9 SAVING ACCOUNT NOS.4480 AND 4459 OF CANARA BANK TO BE RELATABLE TO TWO PERSONS I.E. S/SHRI SUBHASH DUGGAL AND JAGDISH DUGG AL ON WHICH THE ASSESSEE CLAIMS TO BE EARNING COMMISSION INCOME. T HE ASSESSEE IN HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION H AD DECLARED BUSINESS INCOME OF RS.68,790/- AS IS APPARENT FROM PARA 3 OF THE APPELLATE ORDER. THE ASSESSEE HAD NOT FURNISHED ANY RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT NOR COO PERATED WITH THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS OR FURNISHED ANY OTHER EVIDENCE BEFORE THE CIT (APPEALS). EVEN BEFO RE US THE ASSESSEE HAS ONLY FURNISHED COPY OF STATEMENT RECORDED DURIN G THE COURSE OF SEARCH VEHEMENTLY STATING THAT ONLY THE COMMISSION INCOME WAS EARNED BY THE ASSESSEE. FROM PERUSAL OF THE ASSESSMENT OR DER IT TRANSPIRES THAT VIDE QUESTIONNAIRE DATED 20.2.2006. THE ASSESSEE W AS ASKED TO EXPLAIN THE SOURCE OF THE DEPOSIT AND SOURCE OF EACH OF THE DEPOSITS AND PURPOSE OF EACH OF THE WITHDRAWALS MADE IN/FROM THE FOLLOWI NG BANK ACCOUNTS: (I) CENTURIAN BANK LTD., 15, FEROZE GANDHI MARKET, LUDH IANA(A/C NO.5777181) PERIOD DR. CR. 11.10.2003 TO 31.03.2004 63,94,757/- 64,00,800/ - (II) CANARA BANK, BHARAT NAGAR CHOWK, LUDHIANA (A) A/C NO.4480 DR. CR. 07.12.2002 TO 31.03.2003 2,31,49,494/- 2,31,51 ,000/- 01.04.2003 TO 31.03.2004 3,90,98,550/- 3,91,00 ,000/- (B) A/C NO.4459 DR. CR. 25.09.2002 TO 31.03.2003 3,55,96,043/- 3,55,99 ,000/- 01.04.2003 TO 31.03.2004 1,73,51,117/- 1,73,50 ,000/- 17. THE ASSESSEE WAS ALSO ASKED TO PRODUCE BOOKS OF ACCOUNT MAINTAINED FOR THE PURPOSE FROM 1.4.1997 TO 31.3.20 04. VIDE THE SAID QUESTIONNAIRE THE ASSESSEE WAS FURTHER ASKED TO FUR NISH THE STATEMENT OF ACCOUNTS OF SAVING ACCOUNT NOS.1338 AND 1339 WITH I CICI BANK LTD., 10 FEROZE GANDHI MARKET, LUDHIANA, WITH EXPLANATION/EV IDENCE IN SUPPORT OF EACH OF THE DEPOSITS/WITHDRAWALS MADE THEREIN/FR OM. THE ASSESSEE FAILED TO COMPLY WITH THE SAID QUESTIONNAIRE AND AN OTHER QUESTIONNAIRE DATED 27.2.2006 WAS ISSUED TO THE ASSESSEE. IN THE SAID QUESTIONNAIRE THE ASSESSING OFFICER STATED THAT AS THE ASSESSEE HAS F AILED TO FURNISH THE STATEMENT OF BANK ACCOUNTS MAINTAINED WITH ICICI BA NK, SAME WERE DIRECTLY CALLED FROM THE BANK AND PERUSAL OF THE EN TRIES IN THE SAID ACCOUNTS REVEALED VARIOUS DEPOSITS AND WITHDRAWALS AND ALSO PEAK DEPOSITS AS UNDER: ICICI BANK, FEROZE GANDI MARKET, LUDHIANA (I) A/C NO.1338 PERIOD WITHDRAWALS DEPOSITS PEAK DEPOSIT/ DATE 14.02.2002 TO 31.03.2002 67,49,160/- 69,15, 250/- 20,03,450/16.03.2002 01.04.2003 TO 31.03.2003 1,52,00,708/- 1,52,08, 300/- 14,51,430/20.012003 01.04.2003 TO 31.03.2004 1,30,10,315/- 1,30,04,0 25/- 15,05,772/19.01.2004 ICICI BANK, FEROZE GANDI MARKET, LUDHIANA (II) A/C NO.1339 14.02.2002 TO 31.03.2002 51,53,422/- 51,56,2 50/- 15,01,950/18.02.2002 01.04.2003 TO 31.03.2003 49,52,786/- 49,5 0,928/- 11,48,304/18.07.2002 01.04.2003 TO 31.03.2004 93,09,310/- 93,10,35 4/- 18,06,424/08.10.2003 18. THE ASSESSEE WAS AGAIN ASKED TO EXPLAIN THE SOU RCE OF ABOVE ENTRIES AND PRODUCE THE BOOKS OF ACCOUNT. THE ASSE SSING OFFICER IN THE SAID LETTER ALSO WORKED OUT THE PEAK DEPOSITS IN SA VING ACCOUNT NOS.4459 AND 4480 WITH CANARA BANK WHICH ARE AS UNDER: CANARA BANK, BHARAT NAGAR CHOWK, LUDHIANA PERIOD DATE OF PEAK DEPOSIT AMOUNT OF PEAK DEPOSIT (I) A/C NO.4459 25.09.2002 TO 31.03.2003 12.11.2002 25,01,345/- 01.04.2003 TO 31.03.2004 21.08.2003 30,01,957/- (I) A/C NO.4480 07.12.2002 TO 31.03.2003 10.03.2003 20,01,310/- 11 01.04.2003 TO 31.03.2004 08.08.2003 40,01,560/- 19. ANOTHER QUESTIONNAIRE DATED 6.3.2006 WAS ISSUED TO THE ASSESSEE IN WHICH THE EARLIER QUERIES RAISED BY THE ASSESSING O FFICER WERE REPEATED AND THE ASSESSEE WAS ALSO ASKED TO SUBSTANTIATE ITS CLAIM OF HAVING RECEIVED COMMISSION @ 0.25% FROM TWO CONCERNS M/S D UGGAL EXPORTS AND M/S S.G. EXPORTS. VIDE PARA 5.1 OF THE SAID QU ESTIONNAIRE THE ASSESSEE WAS CONFRONTED THAT IN ADDITION TO THE ABO VE SAID TWO COMPANIES THERE WERE TRANSACTIONS WITH OTHER PARTIES AND THE ASSESSEE WAS ASKED TO EXPLAIN THE FATE OF ALL SUCH TRANSACTIONS WHETHER A CTUAL OR OTHERWISE WITH EVIDENCE. THE ASSESSING OFFICER ALSO ASKED THE ASS ESSEE TO PRODUCE THE BOOKS OF ACCOUNT BEING MAINTAINED BY IT, PRESENCE O F WHICH WAS ACKNOWLEDGED IN THE RETURN OF INCOME FILED FOR ASSE SSMENT YEAR 2002-03. THE ASSESSING OFFICER ISSUED ANOTHER QUESTIONNAIRE DATED 27.2.2006 IN WHICH IT REQUISITIONED THE ASSESSEE TO EXPLAIN THE TRANSACTIONS REFLECTED IN TRADING ACCOUNT PROFIT & LOSS ACCOUNT AND BALANC E SHEET RELATING TO ASSESSMENT YEAR 2002-03 IN RESPECT OF THE TWO PROPR IETARY CONCERNS OF THE ASSESSEE M/S BHAGWATI TRADING CORP. AND M/S SHI V SHAKTI INDL. CORP. FURTHER THE ASSESSEE WAS ALSO CONFRONTED ONC E AGAIN WITH THE TOTAL AMOUNT OF DEPOSITS/WITHDRAWALS IN SAVING ACCOUNT NO S.1338 AND 1339 WITH ICICI BANK, FEROZE GANDHI MARKET, LUDHIANA TOT ALING RS.35,05,400/- FOR THE PERIOD ENDING 31.3.2002 AND ALSO WITH CANARA BANK AND CENTURIAN BANK FOR SUCCEEDING YEAR/S. 20. TAKING INTO CONSIDERATION THE TOTALITY OF THE F ACTS AND CIRCUMSTANCES OF THE CASE I.E. THE STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH ON 15.10.2003, VARIOUS REPLIES GIVEN BY THE ASSESSEE TO THE QUERIES RAISED BY THE SEARCH TEAM A ND VARIOUS QUESTIONNAIRES ISSUED BY THE ASSESSING OFFICER DURI NG THE ASSESSMENT PROCEEDINGS, WE FIND CERTAIN ANOMALIES IN THE STATE MENT OF THE ASSESSEE. 12 FIRST OF ALL THE ASSESSEE IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH HAD ADMITTED TO HAVE BEEN MAINTAINED FIVE BA NK ACCOUNTS I.E. TWO BANK ACCOUNTS WITH CANARA BANK, TWO SAVING ACCOUNTS WITH ICICI BANK, LUDHIANA AND ONE SAVING ACCOUNT WITH CENTURIAN BANK , LUDHIANA. THE DETAILS OF THE BANK ACCOUNTS WERE GIVEN BY THE ASSE SSEE IN ANSWER TO QUERY NO.4. THEREAFTER THE ASSESSEE EXPLAINED TO H AVE CARRIED ON THE BUSINESS OF TRADING IN YARN, FIBRE, CLOTH HOSIERY, ETC. DURING THE FINANCIAL YEAR 2001-02 FOR WHICH IT WAS MAINTAINING A SHOP A ND GODOWN AT LUDHIANA. THE ASSESSEE IN ADDITION WAS EARNING COM MISSION INCOME. IN RESPECT OF THE QUERIES RAISED IN CONNECTION WITH SA VING ACCOUNT NO.4459 WITH CANARA BANK, THE ASSESSEE EXPLAINED THAT THE E NTRIES WERE IN RELATION TO PAPER TRANSACTIONS CONDUCTED FOR S/SHRI SUBHASH DUGGAL AND JAGDISH DUGGAL. REFERENCE IS MADE TO QUERY NO.9. FURTHER THE ASSESSEE ALSO GAVE DETAILS OF THE TOTAL SALES MADE BY HIM AT ABOUT RS.7.28 CRORES AGAINST PURCHASE OF RS.49 LACS AS EVIDENCED FROM AN SWER TO QUERY NOS.11 AND 12. THE ASSESSEE FAILED TO FURNISH DETAILS OF ITS INCOME BEFORE ANY OF THE AUTHORITIES AND DESPITE VARIOUS QUERIES AND QUESTIONNAIRES ISSUED BY THE ASSESSING OFFICER REPEATEDLY ASKING TO FURNI SH EXPLANATION OF ITS ENTRIES IN THE BANK ACCOUNTS, THE NATURE OF INCOME REFLECTED AND TO PRODUCE THE BOOKS OF ACCOUNT, THE ASSESSEE FAILED T O COMPLY WITH ANY OF VARIOUS NOTICES SO ISSUED BY THE ASSESSING OFFICER. TOTAL NON- COMPLIANCE OF THE ASSESSEE WITH THE ASSESSING OFFIC ER RESULTED IN THE ASSESSMENT BEING COMPLETED UNDER SECTION 153A R.W.S .144 OF THE ACT. THE ONUS WAS UPON THE ASSESSEE TO EXPLAIN THE NATUR E OF ENTRIES IN ITS BANK ACCOUNTS FOR THE PERIODS UNDER CONSIDERATION. THE ASSESSEE HOWEVER, THOUGH CONFRONTED ON VARIOUS DATES BY THE ASSESSING OFFICER, HAD FAILED TO GIVE/FILE ANY EVIDENCE IN RESPECT OF ENTRIES IN THE TWO SAVING ACCOUNT NOS.1338 AND 1339 WITH ICICI BANK, L UDHIANA OR IN CANARA BANK OR CENTURIAN BANK. NO EXPLANATION WAS FILED BEFORE CIT 13 (APPEALS) EXCEPT THE PLEA OF EARNING COMMISSION AS ENTRY PROVIDER. BUT THE PLEA OF THE ASSESSEE IS NOT ACCEPTABLE AS THE E NTRIES IN THE BANK ACCOUNT DO NOT MATCH. THE PLEA OF COMMISSION INCOM E EARNED IS ALSO BASELESS AS THE ASSESSEE HAS FAILED TO OFFER SUCH I NCOME, EXCEPT FOR THE MEAGER AMOUNTS DECLARED IN THE ORIGINAL RETURN OF I NCOME. FURTHER NO SUCH GROUND OF APPEAL HAS BEEN RAISED BY THE ASSESS EE. ADMITTEDLY, THE BANK TRANSACTIONS WERE OF THE ASSESSEE, BUT THE SUB STANTIVE EXPLANATION OR DOCUMENTARY EVIDENCE HAS NOT BEEN FILED BY THE A SSESSEE. THE ENTRIES IN THE TWO ACCOUNTS REFLECTED CERTAIN ANOMALIES, AS PER WHICH PEAK DEPOSITS WERE WORKED OUT BY THE ASSESSING OFFICER A S UNDER: ACCOUNT NO. NAME & ADDRESS OF THE BANK BRANCH TOTAL AMOUNT OF DEPOSITS MADE DURING THE YEAR UNDER ASSESSMENT TOTAL AMOUNT OF WITHDRAWLS MADE DURING THE YEAR UNDER ASSESSMENT DATE OF PEAK AMOUNT OF DEPOSIT AMOUNT OF PEAK DEPOSIT 1338 ICICI BANK FEROZE GANDHI MARKET, LUDHIANA 69,15,250/- 67,49,160/- 16.03.2002 20,03,450/- 1339 ICICI BANK FEROZE GANDHI MARKET, LUDHIANA 51,56,250/- 51,53,422/- 18.02.2002 15,01,950/- TOTAL 1,20,71,500/- 1,19,02,582/- 35,05,400/- 21. EVEN IN THE APPELLATE PROCEEDINGS BEFORE US THE ASSESSEE THOUGH HAS CHALLENGED THE ADDITION ON ACCOUNT OF UNEXPLAIN ED BANK DEPOSITS IN BANK ACCOUNTS TOTALING RS.35,05,400/- BUT HAS FAILE D TO EXPLAIN THE TRANSACTIONS IN BANK ACCOUNTS. THE ALLEGATION OF THE ASSESSEE IS THAT THE AUTHORITIES BELOW HAD FAILED TO CONSIDER THE STATEM ENT RECORDED DURING THE COURSE OF SEARCH, UNDER WHICH HE HAD CLAIMED TO HAVE LENT NAME ONLY 14 WITHOUT MAKING ACTUAL PURCHASE AND SALE OF CLOTH, H AS NO MERIT, IN VIEW OF THE TOTALAITY OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE ABSENCE OF ANY EXPLANATION/RECONCILIATION OF BANK ENTRIES. THE ASSESSING OFFICER IN ALL FAIRNESS HAS MADE ADDITION ON ACCOUNT OF PEA K DEPOSITS ONLY. AS POINTED OUT BY US IN THE PARAS HEREINABOVE THE ASSE SSEE HIMSELF CLAIMED TO HAVE MAINTAINED FIVE BANK ACCOUNTS, THE ONUS IS UPON THE ASSESSEE TO EXPLAIN THE ENTRIES IN ITS BANK ACCOUNTS THROUGH EN TRIES IN THE BOOKS OF ACCOUNT MAINTAINED BY IT. IN THE ABSENCE OF ONUS B EING DISCHARGED BY THE ASSESSEE, THE SAID RECEIPTS ARE TO BE TREATED A S INCOME OF THE ASSESSEE. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT [ 214 ITR 800 (SC)]. THE ASSESSEE HAVING FAILED TO DISCHARGE THE ONUS IN EXPLAINING THE SOURCE OF PEAK DEPOSITS IN THE SAVING ACCOUNT NOS. 1338 AN D 1339 WITH ICICI BANK DURING THE PERIOD ENDING 31.3.2002, WE UPHOLD THE ADDITION OF RS.35,05,400/- AS INCOME FROM UNDISCLOSED SOURCES. THE GROUND NOS. 1 TO 5 RAISED BY THE ASSESSEE ARE THUS DISMISSED. 22. NOW COMING TO THE APPEALS IN ITA NOS.1169 TO 11 70/CHD/2011, THE LEARNED A.R. FOR THE ASSESSEE AT THE OUTSET HAD POI NTED OUT THAT THE ISSUE IN ALL THE APPEALS I.E. ITA NOS.1168 TO 1170/CHD/20 11 WAS IDENTICAL AND IN VIEW OF OUR DECISION IN ITA NO.1168/CHD/2011 IN THE PARAS HEREINABOVE WE DISMISS GROUND NO. 1 TO 5 RAISED BY THE ASSESSEE IN THIS REGARD. 23. THE ASSESSEE HAS RAISED AN ALTERNATE GROUND OF APPEAL VIDE GROUND NO.6 WHEREIN IT HAD CLAIMED THAT THE BENEFIT OF ADD ITION EARLIER YEARS PEAK AMOUNTING TO RS.35,05,400/- ASSESSED IN ASSESS MENT YEAR 2002-03 SHOULD BE ALLOWED AGAINST THE UNDISCLOSED INCOME OF RS.25,01,350/- ASSESSED IN ASSESSMENT YEAR 2003-04 AND RS.40,01,56 0/- ASSESSED IN ASSESSMENT YEAR 2004-05. WE FIND MERIT IN THE PLEA OF THE ASSESSEE THAT 15 ONCE THE ADDITION HAD BEEN MADE ON ACCOUNT OF THE P EAK OF BANK DEPOSITS IN ASSESSMENT YEAR 2002-03, THE SAID AMOUNT IS AVAI LABLE IN THE HANDS OF THE ASSESSEE AND THE BENEFIT OF THE SAME IS TO BE A LLOWED AGAINST THE ADDITION MADE IN ASSESSMENT YEARS 2003-04 AND 2004- 05. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE IN COME IN THE HANDS OF THE ASSESSEE AFTER APPLYING SUCH SET OFF OF PEAK AD DITIONS. GROUND NO.6 RAISED BY THE ASSESSEE IS THUS ALLOWED. 24. THE ISSUE RAISED IN ITA NO.1174/CHD/2011 IS AGA INST THE LEVY OF PENALTY U/S 271(1)(B) OF THE ACT AMOUNTING TO RS.10 ,000/-. THE ASSESSING OFFICER HAD LEVIED THE AFORESAID PENALTY FOR NON-COMPLIANCE OF NOTICE UNDER SECTION 142(1) OF THE ACT BY THE ASSES SEE. THE SAID NOTICE WAS ISSUED TO THE ASSESSEE ALONGWITH QUESTIONNAIRE ON 16.1.2006 FOR COMPLIANCE ON 20.1.2006, WHICH STOOD ADJOURNED TO 3 1.1.2006. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PENALTY U/S 271(1)(B) OF THE ACT WAS EXIGIBLE FOR THE ABOVE SAID DEFAULT. THE P ERUSAL OF THE ASSESSMENT ORDER REFLECTS THE NON-COMPLIANCE BY THE ASSESSEE ON VARIOUS DATES OF HEARING AS HAS BEEN BROUGHT OUT BY US IN T HE PARAS HEREINABOVE. THE ASSESSEE FAILED TO APPEAR BEFORE THE ASSESSING OFFICER ON DIFFERENT DATES OF HEARING AND ALSO FAILED TO PRODUCE BOOKS O F ACCOUNT. THE ASSESSING OFFICER HAD ISSUED NOTICE UNDER SECTION 1 42(1) OF THE ACT ALONGWITH QUESTIONNAIRE DATED 16.1.2006 FOR COMPLIA NCE ON 20.1.2006. THE ASSESSING OFFICER IN THE ORDER LEVYING PENALTY U/S 271(1)(B) OF THE ACT HAS OBSERVED THAT THE COMPLIANCE ON 20.1.2006 S TOOD ADJOURNED TO 31.3.2006 IMPLYING THEREBY THAT THERE WAS COMPLIAN CE ON 20.1.2006 AND THE MATTER WAS ADJOUNED TO 31.1.2006. PENALTY IN T HE PRESENT CASE HAS BEEN LEVIED U/S 271(1)(B) OF THE ACT AT RS.10,000/- FOR THE AFORESAID DEFAULT OF NON-COMPLIANCE OF NOTICE ISSUED UNDER SE CTION 142(1) ON 16.1.2006. IN THE FACTS AND CIRCUMSTANCES OF THE C ASE WHERE THE ASSESSEE 16 HAD COMPLIED TO THE AFORESAID NOTICE AND HAD APPEAR ED BEFORE THE ASSESSING OFFICER AND SOUGHT ADJOURNMENT FOR 31.1.2 006, THERE IS NO MERIT IN THE LEVY OF PENALTY U/S 271(1)(B) OF THE A CT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S 271(1)(B) OF THE ACT. 25. IN THE RESULT, THE APPEALS IN ITA NO.1168/CHD/2 011 IS DISMISSED, APPEALS IN ITA NOS.1169 & 1170/CHD/2011 ARE PARTLY ALLOWED AND APPEAL IN ITA NO.1174/CHD/2011 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF APRIL, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 TH APRIL, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH