Appeal details
Counselvise Citation
[2018] 121 COUNSELVISE.COM (IT) 5836 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 2 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
07-06-2018
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
F
Assessment Year
2005-2006
Appeal Filed On
06-04-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 1788/DEL/2016 ( ASSESSMENT YEAR: 2005-06) CHETAN GUPTA 118, ANSAL BHAWAN, KASTURBA GANDHI MARG, NEW DELHI. AATPG9580E VS DCIT CENTRAL CIRCLE-7, NEW DELHI. & ITA NO. 2389/DEL/2016 ( ASSESSMENT YEAR: 2005-06) ACIT CENT. CIRCLE 7, NEW DELHI. VS CHETAN GUPTA, R/O 118, ANSAL BHAWAN, 16, K.G. MARG, NEW DELHI. AATPG9580E ASSESSEE BY SH. ASHWANI KUMAR, CA SH. ADITYA KUMAR, CA SH. RAHUL CHAURASIA, CA REVENUE BY SH. VIJAY VARMA, CIT DR ORDER PER SHRI BHAVNESH SAINI, J.M. BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORD ER OF LD. CIT (A)-23, NEW DELHI DATED 23.02.2016 FOR A.Y. 200 5-06. DATE OF HEARING 30.05.2018 DATE OF PRONOUNCEMENT 07.06.2018 2 ITA NOS. 1788 & 2389/DEL/2016 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL FILED HIS RETURN OF INCOME U/S 139 OF THE INCOME TAX ACT, 1961 (HEREINAFTER FOR SHORT CALLED AS THE ACT) ON 29.1 0.2005 DECLARING TOTAL INCOME OF RS. 3,41,612/-. THE AO ISSUED NOTI CE U/S 148 OF THE ACT AFTER RECORDING THE REASONS. THE REASONS A RE REPRODUCED IN THE ASSESSMENT ORDER IN WHICH IT IS NOTED THAT P UNJAB STATE VIGILANCE BUREAU HAS CONDUCTED A SEARCH OPERATION O N 17.05.2007 AT THE BUSINESS AS WELL AS THE RESIDENTIAL PREMISES OF THE ASSESSEE. THE PUNJAB POLICE VIGILANCE BUREAU REGISTERED FIR N O. 5 DATED 23.03.2007 IN CONNECTION WITH LUDHIANA CITY CENTRE SCAM AN ASSESSEE WAS ARRESTED ON 17.05.2007. THE POLICE HA VE RECOVERED A COMPUTER AND PEN DRIVE FROM THE ASSESSEE. THE PRIN T OUT FROM THE PEN DRIVE SHOWED THAT THE ASSESSEE HAD RECEIVED CRE DIT ENTRIES FROM VARIOUS PERSONS. IN THE SAID PEN DRIVE, LEDGE R ACCOUNTS OF VARIOUS PERSONS/PARTIES HAVE BEEN MENTIONED. IN TH E CHARGE SHEET FILED BY THE POLICE, IT WAS CLEARLY BROUGHT OUT THA T THE ENTRIES IN THE PEN DRIVE REPRESENT UNACCOUNTED INCOME OF VARIOUS P ERSONS BEING 3 ITA NOS. 1788 & 2389/DEL/2016 DEPOSITED WITH THE ASSESSEE. AS SUCH, THE PEN DRIV E REPRESENTS THE ACCOUNTS OF SUCH UNACCOUNTED TRANSACTIONS WHICH WER E BEING KEPT AND MAINTAINED BY THE ASSESSEE. THE PEAK CREDIT OF ALL THE CREDIT ENTRIES MAINTAINED IN EACH AND EVERY LEDGER ACCOUNT HAS BEEN WORKED OUT WHICH COMES TO RS. 43,67,62,555/-. THE ASSERSSEE HAS HOWEVER, SHOWN SALARY AND INTEREST INCOME IN TH E RETURN OF INCOME. THESE CREDIT ENTRIES ARE NOT SHOWN IN THE RETURN OF INCOME. THE AO, THEREFORE, HAD REASONED TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE ASSE SSEE IN RESPONSE TO NOTICE ISSUED U/S 148 OF THE ACT SUBMIT TED BEFORE THE AO THAT ORIGINAL RETURN FILED MAY BE TREATED AS RET URN HAVING BEEN FILED U/S 148 OF THE ACT. THE AO AT THE REASSESSME NT STAGE ASKED FOR THE EXPLANATION OF THE ASSESSEE WITH REGARD TO THE CREDIT/DEBIT ENTRIES APPEARING ON THESE PAPERS WHICH ARE TAKEN O UT FROM THE PEN DRIVE. THE ASSESSEE SUBMITTED THAT FROM THESE PAPERS THE STATEMENT HAS BEEN PREPARED AFTER POSTING DAY WISE EACH ENTRY REFLECTED IN THE INDIVIDUAL ACCOUNTS OF THE STATEME NTS FROM THE ALLEGED PEN DRIVE AND CONSOLIDATED THE SAME TO FIND OUT BALANCE OF THE DAY. THE SAID ENTRIES ARE VERIFIABLE FROM THE STATEMENT OF ACCOUNTS. ACCORDING TO THE ABOVE STATEMENT, PEAK B ALANCE AS PER 4 ITA NOS. 1788 & 2389/DEL/2016 DETAILS ENCLOSED IS RS. 1,82,59,248/- AS ON 10.04.2 004. HOWEVER, THIS PEAK BALANCE HAS BEEN WORKED OUT AS PER INSTRU CTION OF THE AO AND SINCE THE ALLEGED PEN DRIVE DOES NOT BELONG TO THE ASSESSEE, HE HAS NOTHING TO DO WITH THE SAID PEAK B ALANCE. THE AO NOTED THAT PEN DRIVE WAS RECOVERED FROM THE ASSE SSEE WHICH CONTAINED THE ACCOUNTS OF POLITICAL PERSONS WHOSE U N- ACCOUNTED/BLACK MONEY WAS BEING MANAGED BY THE ASSE SSEE. THE PEN DRIVE HAS DIRECT CO-RELATION WITH THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE EXPLANATION OF ASSESSEE THAT THE PEN DRIVE DOES NOT BELONG TO HIM WAS REJECTED. THE AO ALSO PREPARED W ORKING OF THE PEAK CREDIT AND MENTIONED AT PAGES 7 TO 10 OF THE A SSESSMENT ORDER AND THE TOTAL OF THE SAME COMES TO RS. 43,67, 62,555/- WHICH WAS TREATED AS UNEXPLAINED CREDIT AND ADDITION WAS MADE TO THE INCOME OF THE ASSESSEE. 4. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT (A) AS WELL AS CHALLENGED THE REOPENING OF THE ASSESSMENT IN THE MATTER. THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED IN T HE APPELLATE ORDER IN WHICH THE ASSESSEE EXPLAINED THAT THE ITAT HAD DECIDED THE CASE OF THE ASSESSEE FOR EARLIER ASSESSMENT YEA RS I.E. 2001-02, 5 ITA NOS. 1788 & 2389/DEL/2016 2002-03 & 2003-04, WHEREIN THE ASSESSEE HAS BEEN GR ANTED THE BENEFIT OF CALCULATION OF PEAK BALANCE AND TELESCOP ING THEREOF IN THE MANNER DISCUSSED ABOVE. KEEPING THE SAID DECIS ION IN VIEW, THE ADDITION, IF ANY, AT ALL HAS TO BE LIMITED TO T HE PEAK CREDIT OF RS. 1,82,59,348/- AS ON 10.04.2004 AS TELESCOPE FOR THE MAXIMUM PEAK BALANCE OF EARLIER YEARS I.E. RS. 46,16,837/- FOR AY 2003-04 RESULTING IN NET ADDITION, IF AT ALL, OF RS. 1,36,4 2,861/-. THE ASSESSEE ALSO MADE SUBMISSIONS AGAINST REOPENING OF THE ASSESSMENT. THE ASSESSEE IN THE REJOINDER ALSO EXP LAINED THAT THE PROCESS AND METHODOLOGY ADOPTED BY THE ASSESSEE IN EARLIER YEARS ALSO HAS JUDICIAL SANCTION BECAUSE THE PEAK STATEME NTS WERE FILED BEFORE THE AUTHORITIES BELOW AND THE TRIBUNAL ALSO ACCEPTED THE SAME WHILE DECIDING APPEALS OF THE ASSESSEE FOR ASS ESSMENT YEARS 2002-03, 2003-04 & 2004-05. THE SAID ORDERS OF THE TRIBUNAL SUPPORT, AFFIRM AND APPROVE THE METHODOLOGY ADOPTED BY THE ASSESSEE TO DETERMINE THE PEAK CREDIT FOR THE RESPE CTIVE YEARS AND ACCORDINGLY, THERE IS NO COURSE LEGAL, FACTUAL OR A NY OTHER LOGIC REASON TO DENOTE FROM THE SAME. IT WAS, THEREFORE, SUBMITTED THAT AO SHOULD HAVE ADOPTED THE CALCULATION OF THE PEAK CREDIT AS IS DIRECTED BY THE TRIBUNAL IN EARLIER YEAR. 6 ITA NOS. 1788 & 2389/DEL/2016 5. THE LD. CIT (A) CONFIRMED THE REOPENING OF THE A SSESSMENT AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE . THE LD.CIT (A) AS REGARDS THE WORKING OF THE PEAK CREDIT NOTED THAT THE TRIBUNAL HAS DECIDED THE ISSUE IN EARLIER YEAR AND HAVE CONSIDERED THE METHOD OF WORKING OF THE PEAK CREDIT SUBMITTED BY THE ASSESSEE TO THE AO DURING ASSESSMENT PROCEEDINGS. THE WORKING OF THE PEAK CREDIT, TELESCOPING AND SET OFF ALL THE ENTRIES AND SET OFF OF THE OPENING BALANCES HAVE BEEN ACCEPTED. THE LD . CIT (A) FORWARDED THE COPY OF THE PEAK CREDIT WORKING SUBMI TTED BY THE ASSESSEE TO AO FOR FILING A REMAND REPORT. THE AO FILED THE REMAND REPORT IN WHICH THE AO EXPLAINED THE PEAK CR EDIT IS WORKED OUT ON SIMILAR LINES AS WAS CONSIDERED IN EA RLIER YEARS AY 2002-03 AND 2003-04. HOWEVER, EXAMINATION OF THE W ORKING OF PEAK BALANCES SHOWED THAT ASSESSEE WHILE WORKING OU T THE PEAK BALANCES HAD ALSO DEBITED THE EXPENSES INCURRED. T HIS METHOD IS INCORRECT FOR WORKING PEAK BALANCE. THE AO, THEREF ORE, REPORTED THAT THE PEAK AFTER EXCLUDING THE DEBITS ON ACCOUNT OF EXPENSES FOR ASSESSMENT YEAR UNDER APPEAL WOULD COME TO RS. 5,10 ,51,972/- AS AGAINST CLAIM OF ASSESSEE OF RS. 1,82,59,248/-. TH E LD. CIT (A) ACCEPTED THE CONTENTION OF THE AO AND NOTED THAT TH E DEBIT ENTRIES 7 ITA NOS. 1788 & 2389/DEL/2016 AND EXPENDITURE CANNOT BE CONSIDERED IN THE PEAK AN D ACCORDINGLY, DIRECTED THE AO TO MODIFY THE ASSESSME NT AS PER FRESH PEAK BALANCE WORKING CONSIDERED IN THE ORDER SUBJEC T TO ADJUSTMENT OF OPENING BALANCES AS DIRECTED ABOVE. THE APPEAL OF THE ASSESSEE WAS ACCORDINGLY, PARTLY ALLOWED. 6. THE ASSESSEE IN HIS APPEAL CHALLENGED THE ADDITI ON OF THE PEAK CREDIT TO THE EXTENT OF RS. 5,10,51,972/- AND CHALLENGED THE REOPENING OF THE ASSESSMENT U/S 148 OF THE ACT. TH E REVENUE IN THEIR APPEAL CHALLENGED THE DELETION OF ADDITION OF RS. 38,57,10,583/- ON ACCOUNT OF UNEXPLAINED CREDIT U/S 68 OF THE ACT. 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES. 8. LD. DR RELIED UPON THE ORDER OF THE AO AND SUBMI TTED THAT PEN DRIVE WAS SEIZED BY THE PUNJAB VIGILANCE BUREAU FROM THE POSSESSION OF THE ASSESSEE ON THE BASIS OF WHICH AO MADE AN ADDITION OF PEAK AMOUNT OF CREDIT U/S 68 OF THE ACT . THE CIT (A) DIRECTED THE SET OFF OF OPENING BALANCE OF CASH AVA ILABLE AGAINST THE SAID PEAK CREDIT. THE AO HAD WORKED OUT THE PEAK O F INDIVIDUAL LEDGER ACCOUNT WHILE THE ASSESSEE CONSOLIDATED ALL THE ACCOUNTS IN 8 ITA NOS. 1788 & 2389/DEL/2016 THE WORKING OF THE PEAK. THE ITAT DECIDED THE APPE ALS FOR ASSESSMENT YEARS 2001-02 TO 2004-05 IN WHICH THE WO RKING OF THE PEAK AS PER ASSESSEE HAS BEEN ACCEPTED AND SET OFF HAS BEEN GIVEN OF THE OPENING BALANCE. THE ORDERS OF THE TRIBUNAL DATED 21.06.2013 AND 31.01.2014 ARE FILED IN THE PAPER BO OK. FOR AY 2005-06 THE ORDER OF THE CIT (A) IS DATED 23.02.201 6 ON THE BASIS OF THE REMAND REPORT DATED 22.01.2016 AND BOTH THE DATES ARE SUBSEQUENT TO THE ORDER OF THE TRIBUNAL IN EARLIER YEARS. THE AO IN THE REMAND REPORT MENTIONED THAT THE ASSESSEE IN HI S WORKING OF PEAK HAD ALSO CONSIDERED THE APPLICATION OF INCOME AND EXPENSES IN THE ROTATION OF FUNDS AS THE CASH AVAILABLE WHIC H IS INCORRECT. THE FINDINGS OF THE AO HAVE BEEN UPHELD BY THE CIT (A). THEREFORE, APPEAL OF THE ASSESSEE IS NOT FULLY COVERED BY DECI SION OF THE ITAT. 9. LD. DR SUBMITTED THAT THE ISSUE OF REOPENING OF THE ASSESSMENT U/S 148 OF THE ACT IS COVERED AGAINST TH E ASSESSEE BY ORDER OF THE TRIBUNAL FOR EARLIER YEARS (SUPRA). L D. DR REFERRED TO THE STATEMENT OF PEAK FILED IN THE PAPER BOOK TO SH OW THAT ASSESSEE HAS TAKEN INTO CONSIDERATION THE EXPENSES AND INTEREST WHICH AO HAS EXCLUDED. BEFORE THE ITAT EXPENSES WE RE NOT 9 ITA NOS. 1788 & 2389/DEL/2016 REFERRED, THEREFORE, THE AO MAY BE DIRECTED TO EXCL UDE THE EXPENSES WHILE COMPUTING THE PEAK. SET OFF OF RS. 46,16,387/- OF AY 2003-04 IS NOT AVAILABLE TO ASSESSEE AS IT ALSO CONTAINS THE EXPENSES. 10. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND SUBMITTED THAT BOTH THE ISSUES ARE COVERED BY THE ORDER OF TH E ITAT DELHI BENCH IN THE CASE OF THE ASSESSEE. HE HAS SUBMITTE D THAT THE ISSUE OF PEAK IS COVERED IN FAVOUR OF THE ASSESSEE AND ASSESSEE IS ENTITLED FOR BENEFIT OF SET OFF OF RS. 46,16,387/- FOR AY 2003-04 UPON WHICH ASSESSEE HAD ALREADY PAID THE TAXES. HE HAS SUBMITTED THAT PEAK CONTAINS ALL ENTRIES FOUND IN T HE PEN DRIVE WHICH WAS PROVIDED TO THE ASSESSEE. SIMILAR PEAK W AS CALCULATED IN EARLIER YEARS WHICH HAVE BEEN FOUND ACCEPTED BY THE TRIBUNAL. THEREFORE, ALL THE ISSUES ARE COVERED BY EARLIER OR DERS OF THE TRIBUNAL AND PEAK MAY BE ACCORDINGLY CALCULATED. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE ITAT B BENCH D ELHI IN THE CASE OF THE SAME ASSESSEE FOR ASSESSMENT YEARS 2001-02, 2002-03 & 10 ITA NOS. 1788 & 2389/DEL/2016 2003-04, VIDE ORDER DATED 21.06.2013 DECIDED THE ID ENTICAL ISSUE AND APPEALS OF THE ASSESSEE HAVE BEEN PARTLY ALLOWE D AND DEPARTMENTAL APPEAL HAS BEEN DISMISSED. 12. THE FINDINGS OF THE TRIBUNAL IN PARS 6.13 TO 11 ARE REPRODUCED AS UNDER: 6.13. WE HAVE HEARD BOTH THE PARTIES ON THESE ISS UES AT LENGTH MOST OF THE ARGUMENTS ARE CONTAINED IN THE WRITTEN SUBMISSIONS FILED BEFORE LOWER AUTHORITIES, WHICH ARE MENTIONED ABOVE IN BRIEF. FROM AO'S REMAND REPORTS AND OBSERVATIONS CONTAINED IN THE ORDERS LD. AO AND CIT(A), THE DETAILS FURNISHED BY ASSESSE E ARE AS UNDER: (I) ASSESSEE FILED DETAILS ABOUT EACH AND EVERY ENT RY ON DAY TO DAY BASIS, THESE DETAILS ARE PLACED ON PAPER BOO K OF RESPECTIVE YEAR. (II) FROM THE DETAILS A SUMMARY OF MISTAKES, OPENIN G BALANCES (DEBIT OR CREDIT AS THE CASE MAY BE), CONT RA ENTRIES ETC IS FURNISHED TO WORK OUT THE CORRECT AMOUNT OF CREDITS EMERGING FROM THE PRINT OUTS. (III) THESE DETAILS ARE FURTHER SUPPORTED BY WORKIN G OF PEAK CREDIT FOR EACH YEAR FROM, WHICH ARE FILED BY ASSES SEE. 6.14. ASSESSEE CLAIMS TO HAVE SUBMITTED ALL THESE DETAILS BEFORE AO, WHO THOUGH GAVE SOME CURSORY INTEREST ADJUSTMENTS B UT DID NOT LOOK INTO ALL OTHER DETAILS REFUSING THE ASSESSEE CLAIMS SUMMARILY. THEY WERE FILED BEFORE CIT(A) AGAIN WHO CALLED FOR REMAN D REPORT, HOWEVER CIT(A) ALSO DID NOT DEAL WITH THE CORE ISSU E AND GAVE SOME ADJUSTMENTS HERE AND THERE. THUS ASSESSMENT HAS NOT BEEN FRAMED IN A REASONABLE AND PROPER MANNER. TO ENSURE HIGH P ITCHED ASSESSMENTS THE HUGE ADDITIONS HAVE BEEN MADE ONE W AY OR OTHER IN A CAPRICIOUS MANNER. 6.15. LD COUNSEL TOOK US THROUGH THE RELEVANT ENTR IES TO DEMONSTRATE HOW THE FUNDS HAVE BEEN REUTILIZED FROM ONE A/C TO OTHER, THE EFFECT OF CONTRA ENTRIES AND MISTAKES COMMITTED BY LOWER A UTHORITIES. WHILE WORKING OUT THE PRINTOUTS IT WILL BE DISASTROUS TO ADD EACH AND EVERY ENTRY WITHOUT APPRECIATING THAT SAME MONEYS HAVE BE EN REUSED. SUCH AN ARBITRARY PRACTICE WILL LEAD TO DISASTROUS RESULT AND UNTHINKABLE ADDITIONS WHICH ARE NEITHER JUSTIFIED N OR WARRANTED BY THE MATERIAL ON RECORD. IT HAS BEEN PLEADED THAT AS SESSEE HAS 11 ITA NOS. 1788 & 2389/DEL/2016 DISCHARGED ITS BURDEN IN EXPLAINING EACH AND EVERY ASPECT NECESSARY FOR ARRIVING AT A FAIR AND REASONABLE ASS ESSMENT. LOWER AUTHORITIES HAVE FAILED TO REBUT THE DISCHARGE OF B URDEN BY THE ASSESSEE IN RECONCILING HIS PEAK CREDIT WORKING. TH EREFORE THE PEAK WORKING AS OFFERED BY THE ASSESSEE DESERVES TO BE A CCEPTED. 6.16. AFTER CAREFUL CONSIDERATION OF FACTS, CIRCUM STANCES AND MATERIAL AVAILABLE ON RECORD, CASE LAWS AND RIVAL C ONTENTIONS IT WILL BE DESIRABLE TO DWELL ON THE ASPECTS OF PEAK CREDIT ; TELESCOPING, SET OFF OF ENTRIES, AVAILABILITY OF OPENING BALANCE AND ITS EFFECT IN SUCH PRINT OUT; THIS IS NECESSARY FOR ARRIVING AT A FAIR ESTIMATE OF THE DEEMED INCOME OF THE ASSESSEE FOR AY 2002-03 AND 20 03-04. 6.17. SUCH CONCEPTS ARE WELL KNOWN IN THE LAW WITH A RIDER OF CAUTION THAT THEY ARE QUESTION OF FACTS AND DEPEND ON CASE TO CASE. HONBLE SUPREME COURT AND VARIOUS OTHER HIGH COURTS HAVE LAID DOWN THE PROPOSITIONS THAT SUCH ADJUSTMENTS CAN BE APPLIED WHILE MAKING THE ASSESSMENTS IN THE CASES OF WORKING OUT OF SEIZED AND INCRIMINATING DOCUMENTS IN CASE OF REPETITIVE TRANS ACTIONS. 6.18. WE SHALL START WITH THE THEORY OF THE DEPARTM ENT THAT ASSESSEE IS ACTING AS A MANAGER OR ADMINISTRATOR OF FUNDS FO R 148 OTHER PERSONS. THOUGH SOME NAMES ARE GIVEN HOWEVER NO INF ERENCE ARE DRAWN BY AUTHORITIES BELOW. THEREFORE, WE LEAVE THI S ISSUE HERE. MORE SO THEY BECOME THIRD PARTIES TO THE PROCEEDING S AND ANY OBSERVATIONS ARE UNDESIRABLE AND MAY IMPINGE ON PRI NCIPLES OF NATURAL JUSTICE. THE DEPARTMENTAL THEORY OF ASSESSE E BEING A FUND MANAGER FOR OTHERS IS SUPPORTED BY THE FACT THAT AS SESSEE FILED COMPLETE DAY TO DAY DETAILS AND ENTRY BY ENTRY DETA ILS OF CONTENTS OF PRINT OUTS AVAILABLE WITH THE DEPARTMENT. THEY ALL ARE PART OF THE PAPER BOOKS. THEY WERE SUBMITTED BEFORE ASSESSING O FFICER AND CIT(A). REMAND REPORT WAS SUBMITTED BY AO ON CIT(A) S INITIATIVE. 6.19. FROM THE EXPLANATION OF THE ENTRIES AND DEPA RTMENTAL THEORY, IT EMERGES THAT ASSESSEE WAS WORKING AS THE FUND MA NGER OR ADMINISTRATOR FOR OTHERS. WHILE DEALING WITH THE IS SUE THIS FACT IS TO BE KEPT IN RECKONING. 6.20. PRESUMPTION U/S 292C WILL NOT BE APPLICABLE I N THIS CASE AS ADMITTEDLY THERE WAS NO SEARCH PROCEEDINGS UNDER IN COME TAX ACT ON THE ASSESSEE. A STATUTORY PRESUMPTION CAN BE RAISED AGAINST ASSESSEE WHEN THE PRESCRIPTION OF LAW WARRANTS IT. IN THE ABSENCE OF ENABLING STATUTORY PROVISION SUCH PRESUMPTION CAN N OT BE PROPPED UP AGAINST ASSESSEE. SINCE THERE WAS NO SEARCH ON A SSESSEE U/S 132 UNDER INCOME TAX ACT, PRESUMPTION U/S 292C CAN BE APPLIED TO 12 ITA NOS. 1788 & 2389/DEL/2016 HIM. HOWEVER THE ASSESSEE CASE COMES IN THE KEN OF SEC 68 ABOUT GIVING REASONABLE EXPLANATION OF CASH CREDITS FOUND FROM HIS RECORD. 6.21. THIS SCENARIO DOES NOT ALTER THE SITUATION MA TERIALLY IN AS MUCH AS ASSESSEE HAS TO DISCHARGED THE BURDEN CAST BY DE EMING FICTION OF SEC. 68. THE BURDEN IS BY AND LARGE SIMILAR TO SEC 292C. 6.22. THE DEPARTMENT PROCEEDS ON PREMISE THAT ASSES SEE MANAGES FUNDS FOR 148 PERSON OR SO AND KEEPS A RECORD THERE OF. ASSESSEE FILED EVERY DETAIL IN DATE WISE AND ENTRY WISE MANN ER. AO DOES NOT CONSIDER IT OBJECTIVELY AND ALLOWS SOME COSMETIC RE DUCTION OF INTEREST. ISSUE IS CARRIED IN APPEAL, ALL THE DOCUM ENTS ARE FILED AGAIN BEFORE CIT(A) WHO CALLS FOR A REMAND REPORT FROM AO . THE COURSE OF EVENTS REVEALS THAT ASSESSEES DETAILS ARE AGAIN NOT CONSIDERED OBJECTIVELY AND SOME PRIMA FACIE ADJUSTMENTS ARE RE DUCED BY CIT(A). 6.23. THE PEAK CREDIT THEORY AND THE BENEFIT OF TEL ESCOPING IS GENERALLY ACCEPTED AS IT IS LOGICAL AND ACCEPTABLE PROVIDED THERE IS REASONABLE MATERIAL TO SHOW THAT WITHDRAWALS OR REP AYMENTS COULD HAVE BEEN AVAILABLE ON THE DATE OF SUBSEQUENT CREDI T OR REPAYMENT, MORE SO, IN THE ACCOUNTS OF DIFFERENT PERSONS. THE FACT THAT ASSESSEE HAS BEEN HELD TO BE A FUND MANAGER FOR 148 PERSONS FOR WHICH THE MONEYS ARE FREQUENTLY WITHDRAWN OR DEPOSITED AS PER THESE CASE LAWS AND FACTS AND CIRCUMSTANCES OF THIS CASE ASSES SEE WILL BE ENTITLED TO WORK OUT A PEAK CREDIT AND AVAIL THE BE NEFITS OF TELESCOPING. WE MAY HASTEN TO ADD THAT IT IS NOT A PROPOSITION OF LAW BUT THE EXERCISE IS TO BE UNDERTAKEN ON THE INFEREN CES BASED ON NORMAL PREPONDERANCE OF PROBABILITIES AND BASED ON NORMAL HUMAN CONDUCT. THE DEPARTMENT IS ENTITLED TO DISPLACE SUC H PROPOSITIONS ADVANCED BY THE ASSESSEE ON COGENT REASONS AND NOT BY SUMMARY REJECTION OF THE EXPLANATION. IN THE NEXT PARA WE W ILL BE DEALING WITH VARIOUS CASE LAWS RIGHT UPTO HONBLE SUPREME COURT WHERE THIS FACTUAL PREPOSITION HAS BEEN UPHELD SUBJECT TO CERT AIN CONDITIONS. 6.24. THE IMPORTANT QUESTION WHICH ARISES IS WHETHE R THE ASSESSEE HAS DISCHARGED ITS IN EXPLAINING THE ENTRIES CONTA INED IN THE PEN DRIVE AND ITS PRINT OUTS IN TERMS OF SEC 68 OR ANY OTHER PRESUMPTION STATUTORY OR OTHERWISE WHICH MAY BE RAISED IN THE C ONTEXT OF THE FACTS OF THIS CASE. IN OUR CONSIDERED VIEW ASSESSEE HAS DISCHARGED ITS ONUS IN EXPLAINING THESE ENTRIES BY FILING THE DETAILS BEFORE AO, CIT(A) AND IN REMAND PROCEEDINGS. ASSESSEE HAS PUSH ED THE BALL IN THE COURT OF DEPARTMENT BY DEMONSTRATING FROM THE D ETAILS OF ENTRIES THAT HE MANAGES THE FUNDS FOR OTHERS. IN THE COURSE THEREOF HE REQUESTS FOR NECESSARY WORKING OF PEAK CREDIT, CORR ECTION OF MISTAKES, CONTRA ENTRIES AND CONSIDERING THE CLAIMS OF AVAILABLE OPENING BALANCES. THE CLAIM OF OPENING BALANCES IS MADE AS THE 13 ITA NOS. 1788 & 2389/DEL/2016 DATA RECOVERED PERTAINS TO THREE YEARS AND ASSESSEE S FUND MANAGING ACTIVITIES SPAN TO THREE YEARS. DESPITE AS SESSEES DILIGENCE IN FILING ALL THE DETAILS THE AUTHORITIES BELOW FAI L TO CONSIDER THE ASSESSEE'S OBJECTIONS AND WORKINGS. IN OUR CONSIDER ED VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AND DEPARTMENTAL THEO RY WARRANT APPLICATION OF PEAK THEORY, TELESCOPING, CORRECTION OF MISTAKES AND TAKING COGNIZANCE OF JOURNAL/CONTRA ENTRIES. IN OUR VIEW RATIO OF DECISIONS IN THE CASES OF ANANTHARAM VEERASINGHAI AH & CO. (SUPRA); K.S.M. GURUSWAMY NADAR & SONS (SUPRA); SIN GHAL INDUSTRIAL CORPN. (SUPRA); KANTILAL & BROS. (SUPRA) ; SANJAY KUMAR JAIN (SUPRA); & ISHWARDASS MUTHA (SUPRA), SUPPORT T HE ASSESSEES CASE FOR PEAK CREDIT AND TELESCOPING BENEFITS. 6.25. IN CONSIDERATION OF FOREGOINGS WE HAVE NO HES ITATION TO HOLD THAT ASSESSEE HAS DISCHARGED HIS PRIMARY BURDEN IN EXPLAINING THE ENTRIES IN TERMS OF SEC. 68 OR ANY OTHER PRESUMPTIO N WHICH MAY BE RAISED IN BEHALF OF THE ENTRIES IN THE PRINT OUTS. DEPARTMENT IN EFFECTIVE AND CONVINCING TERMS HAS FAILED TO REBUT THE SAME EXCEPT GIVING SOME GENERAL OBSERVATIONS THAT THE CLAIMS CA N NOT BE CONSIDERED. IN OUR VIEW WE HAVE TO ESTIMATE THE UND ISCLOSED INCOME OF THE ASSESSEE FOR AYS2002-03 & 03-04 KEEPING IN M IND OUR OBSERVATIONS AND CONCLUSIONS IN THIS BEHALF. 6.26. IN THE WAKE OF THESE OBSERVATION WE PROCEED T O DECIDE THE QUANTUM OF UNDISCLOSED INCOME OF THE ASSESSEE AS UN DER: (I) THE REASSESSMENT FOR AY 2001-02 IS QUASHED. (II) FOR AY 2002-03 THE CREDIT FOR OPENING BALANCE IS NOT GIVEN AS WE HAVE QUASHED THE REASSESSMENT FOR AY 2001-02, THERE FORE, THE OPENING FIGURE FLOWING FROM THE QUASHED REASSESSMEN T CANNOT BE VERIFIED. SUBJECT TO THESE OBSERVATIONS THE PEAK CR EDIT AS WORKED OUT BY THE ASSESSEE AT RS. 36,89,310/- IS HELD AS UNDIS CLOSED INCOME FOR THIS YEAR. (III) FOR A.Y. 2003-04: ON THE SAME METHODOLOGY THE PEAK CREDIT WORKED OUT BY THE ASSESSEE AT RS. 46,16,387/- IS HE LD TO BE THE PEAK CREDIT FOR THIS YEAR. HOWEVER, THIS PEAK CREDI T IS TO BE TELESCOPED WITH THE INCOME OF AY 2002-03 AS THE SAM E WAS AVAILABLE WITH THE ASSESSEE FOR UTILIZATION. CONSEQ UENTLY, THE TAXABLE INCOME FOR A.Y. 2003-04 IS WORKED OUT AS UNDER: (I) PEAK CREDIT FOR A.Y. 2003-04 RS. 46,16,387/- (II) LESS: PEAK CREDIT FOR AY 2002-03 RS. 36,89,310 /- TAXABLE INCOME FOR AY 2003-04 RS. 9,27,077/- 7. THUS, THE UNDISCLOSED INCOME TO BE INCLUDED IN T HE ASSESSEES INCOME IS DETERMINED AT RS. 36,89,310/- FOR A.Y. 20 02-03 AND RS. 9,27,077/- FOR A.Y. 2003-04. THESE GROUNDS ARE ACCO RDINGLY PARTLY ALLOWED. 14 ITA NOS. 1788 & 2389/DEL/2016 8. APROPOS THE REMAINING GROUND FOR AY 2002-03 IN R ESPECT OF ADDITION OF RS. 9,21.200/- BEING ALLEGED UNACCOUNTE D PAYMENT OF US $ 20,000 TRANSFERRED TO PARK YOUNG TAE, IT IS PLEAD ED THAT HIS STATEMENT BEFORE ENFORCEMENT DIRECTORATE WAS TAKEN BEHIND HIS BACK. ASSESSEE WAS NEITHER A PARTY TO ED PROCEEDING S NOR THE STATEMENT WAS TAKEN IN HIS PRESENCE. ONLY ON THE BA SIS OF A THIRD PARTY STATEMENT BEFORE SOME OTHER AGENCY ASSESSING OFFICER HAS MADE THE ADDITION WITHOUT GIVING OPPORTUNITY TO CRO SS EXAMINE MR. YOUNG. THIS CLEARLY VIOLATES THE PRINCIPLES OF NATU RAL JUSTICE EMBODIED IN THE MAXIM AUDI ALTERAM PARTEM. WE FIND MERIT I N THE ARGUMENT OF LD. COUNSEL. THE IMPUGNED ADDITION CANNOT BE MADE I N THE HANDS OF THE ASSESSEE UNLESS PROPER OPPORTUNITY TO DEFEND HI MSELF AGAINST THE ALLEGATION INCLUDING THE CROSS-EXAMINATION OF MR. Y OUNG AND THE RESULT OF PROCEEDINGS BEFORE THE E.D. AUTHORITIES A RE TO BE CONSIDERED. THIS GROUND IS SET SIDE RESTORED BACK TO THE FILE O F ASSESSING OFFICER TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW. 9. APROPOS THE REVENUES APPEAL FOR A.Y. 2002-03, R EGARDING THE PROPERTIES SOLD BY THE ASSESSEE, THE SALE CONSIDERA TION HAS BEEN RECEIVED BY THE ASSESSEE THROUGH A REGISTERED SALE DEED. THERE IS NO ALLEGATION ABOUT VIOLATION OF ANY CIRCLE RATE OR CO MPARATIVE SALE INSTANCE. THE PURCHASER OF THE PROPERTY HAS NOT BEE N EXAMINED SO AS TO RAISE ANY DOUBT ABOUT ANY ON MONEY RECEIVED BY T HE ASSESSEE. IN OUR VIEW WHEN A PROPERTY IS SOLD BY A REGISTERED DO CUMENT, THE ADDITION CANNOT BE MADE PURELY ON THE BASIS OF A VA LUATION REPORT WHICH IS ONLY IN THE NATURE OF AN OPINION. CIT(A) W HILE DELETING THE ADDITION, HAS RIGHTLY RELIED ON THE HONBLE DELHI H IGH COURT JUDGMENT IN THE CASE OF CIT IN VIEW THEREOF WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF CIT(A), WHICH IS UPHELD. 9.1. SINCE WE HAVE DISPOSED OF THE ASSESSEES APPEA LS IN ABOVE MANNER, THERE IS NO NEED TO DEAL WITH THE ASSESSEE S GROUND ABOUT ADDITIONAL EVIDENCE. 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 11. IN THE RESULT, ASSESSEES APPEAL FOR A.Y. 2001- 02 IS ALLOWED; FOR A.Y. 2002-03 & 2003-04 ARE PARTLY ALLOWED. REVENUE S APPEAL FOR AY 2002-03 IS DISMISSED. 13. THE ITAT B BENCH DELHI IN THE CASE OF THE SAM E ASSESSEE FOR AY 2004-05, VIDE ORDER DATED 31.01.201 4 FOLLOWING ITS EARLIER ORDER DATED 21.06.2013 (SUPRA ) ALLOWED THE 15 ITA NOS. 1788 & 2389/DEL/2016 APPEAL OF THE ASSESSEE PARTLY. THE FINDINGS OF THE TRIBUNAL IN PARA 6 TO 8 OF THE ORDER ARE REPRODUCED AS UNDER: 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION A ND GONE THROUGH THE RECORD CAREFULLY. BOTH THE ID. REPRESEN TATIVE HAVE AGREED THAT ISSUE REGARDING REOPENING OF THE ASSESS MENT BY ISSUANCE OF A NOTICE U/S 148 HAS BEEN DECIDED AGAIN ST THE ASSESSEE IN AYS 2002-03 AND 2003-04, SIMILAR CIRCUMSTANCES A RE AVAILABLE IN THIS YEAR, HENCE, GROUND NO. 4 RAISED IN THE PRESEN T APPEAL IS TO BE REJECTED. SIMILARLY IT HAS BEEN AGREED THAT THE ENT RIES FOUND IN THE PEN DRIVE IS ADMISSIBLE EVIDENCE AGAINST THE ASSESS EE UPON WHOM INCOME OF THE ASSESSEE CAN BE DETERMINED. THUS GROU ND NO. 2 RAISED BY THE ASSESSEE IN THE PRESENT APPEAL IS ALSO REJEC TED. THE FOLLOWING OBSERVATIONS OF THE TRIBUNAL IN THIS CONNECTION ARE WORTH TO NOTE: AYS 2002-03 & 03-04 6.9. IN THESE TWO ASSESSMENT YEARS THE ONLY CHALLENGE TO JURISDICTION TO REASSESSMENT ON THE ONLY GROUND ABOUT THERE BEING NO LIVE NEXUS BETWEEN THE REASONS RECORDED AND MATERIAL AVAILABLE ON RECORD HAS BEEN ALREADY DISMISSED BY US. CONSEQUENTLY WE PROCEED TO DECIDE THE MERITS OF THE ADDITIONS. 6.10. REVERTING TO THE MERITS OF THE ADDITION, DEPARTMENT HAS CONSISTENTLY HELD THAT ASSESSEE MANAGES WEALTH FOR OTHER 148 PERSONS. IN THIS BEHAL F SOME NAMES OF PARTIES ARE HERE AND THERE IN THE ASSESSMENT ORDER. HOWEVER NO ENQUIRY FROM SUCH PARTIES HAVE BEEN SOLICITED AND FINDINGS ARE GIVEN IN THE ORDER. THUS FROM THE CONSPECTUS OF FACTS MADE AVAIL ABLE BY THE DEPARTMENT IN THIS BEHALF THE ASSESSEES ROLE BY AND LARGE EMERGES TO BE OF A MONEY MANAGER FOR OTHE RS APART FROM THE DEALINGS OF HIS ASSOCIATE CONCERNS. 6.11. APROPOS THE PEAK CREDIT WORKING, SET OFF OF OPENING BALANCES, CONTRA ENTRIES, ROLL OVER UTILIZA TION OF FUNDS WHICH HAS BEEN EXPLAINED IN DETAILS ABOVE; ASSESSEE VEHEMENTLY CLAIMS TO HAVE FULLY RECONCILED THE DETAILS ABOUT EACH AND EVERY ENTRY. THE DETAILS WOR KING THEREOF WERE FILED BEFORE AO AND THEREAFTER BEFORE ID CIT(A), WHO CALLED FOR W REMAND REPORTS ALSO. THESE DETAILS ARE PLACED BEFORE US ALSO ON THE VARIOUS PA PER BOOKS. SOME OF THE RELEVANT PAGES THEREOF ARE MENTIONED ABOVE. 16 ITA NOS. 1788 & 2389/DEL/2016 6.12 AO AND CIT(A) HAVE GIVEN SOME REBATES OR SET OFF OF INTEREST RECEIPTS AND PAYMENTS. ASSESSEE CLAIMS THAT HIS RECONCILIATION OF ENTITIES IS SUPPORTED BY FACT S AND MATERIAL ON RECORD AND IS BACKED BY THE LEGALLY ESTABLISHED PROPOSITIONS OF PEAK CREDIT WORKING, TELESCOPING AND SET OFF, WHICH HAVE NOT BEEN GIVEN TO ASSESSEE DESPITE THE REMAND REPORTS. IT IS AGITATED THAT ASSESSEES VALID CONTENTIONS HAVE NOT BEEN CONSIDER ED AT ALL. ON ONE HAND ASSESSEE IS CONSIDERED AS MONEY MANAGER FOR OTHERS, THUS HIS OSTENSIBLE ROLE WILL B E TO HOLD SUCH FUNDS IN TRUST FOR OTHERS, RECEIVE OR PAY THEM ON THE INSTRUCTIONS OF PRINCIPALS AND TO EARN SOME MANAGERIAL REMUNERATION THEREON. ON THE OTHER HAND IN THE GUISE OF A FICTION OF PRESUMPTION U/S 292C ALL THE FUNDS ARE BEING TREATED AS OWNED BY THE ASSESSEE AN D ON TOP OF THAT PROPER ADJUSTMENTS OF PEAK CREDIT EMERGING FROM THE PEN DRIVE IS BEING REFUSED TO BE WORKED BY THE DEPARTMENT. THAT APART THE OTHER LOGI CAL CLAIMS OF SET OFF ROLE OVER, CORRECTION OF MISTAKES AND CREDIT OF OPENING BALANCES WHICH ARE EMERGING FROM THE SAME CONTENTS I.E. PRINT OUTS OF PEN DRIVE IS NOT B EING ALLOWED TO ASSESSEE. THE ASSESSMENT OF UNDISCLOSED INCOME IS THUS ARBITRARY AND PATENTLY AGAINST THE SETTLED JUDICIAL PROPOSITIONS AND DEPARTMENTS OWN W AY OF WORKING IN OTHER SURVEY, SEARCH OR REASSESSMENT CASES IN WHICH SUCH PRINCIPLES ARE ROUTINELY APPLIE D. 7. AS FAR AS DETERMINATION OF TOTAL UNEXPLAINED CAS H CREDITS ARE CONCERNED, THE TRIBUNAL HAS HELD THAT PEAK CREDIT I S TO BE WORKED OUT AND INCOME ASSESSED IN ANY EARLIER ASSESSMENT Y EAR WHICH IS OPENING BALANCE OF THE CURRENT AY IS TO BE EXCLUDED . IN THE PRESENT AY THE INCOME OF AY 2003-04 DETERMINED AT RS.92,7,0 77/- IS TO BE EXCLUDED FROM THE PEAK CREDIT BECAUSE THIS AMOUNT W AS AVAILABLE TO THE ASSESSEE ON THE FIRST DAY OF THE ACCOUNTING YEA R. THE TRIBUNAL HAS MADE DISCUSSION WITH REGARD TO THIS ISSUE FROM PARAGRAPH NO. 6.13 WHICH READ AS UNDER: 6.13. WE HAVE HEARD BOTH THE PARTIES ON THESE ISSU ES AT LENGTH MOST OF THE ARGUMENTS ARE CONTAINED IN THE W RITTEN SUBMISSIONS FILED BEFORE LOWER AUTHORITIES, WHICH A RE MENTIONED ABOVE IN BRIEF FROM AO'S REMAND REPORTS A ND OBSERVATIONS CONTAINED IN THE ORDERS ID. AO AND CIT (A), THE DETAILS FURNISHED BY ASSESSEE ARE AS UNDER: (I) ASSESSEE FILED DETAILS ABOUT EACH AND EVERY ENTRY ON DAY TO DAY BASIS, THESE DETAILS ARE PLACED ON PAPER BOOK OF RE SPECTIVE YEAR. 17 ITA NOS. 1788 & 2389/DEL/2016 (II) FROM THE DETAILS A SUMMARY OF MISTAKES, OPENING BA LANCES (DEBIT OR CREDIT AS THE CASE MAY BE), CONTRA ENTRIE S ETC IS FURNISHED TO WORK OUT THE CORRECT AMOUNT OF CREDITS EMERGING FRO M THE PRINT OUTS. (III) THESE DETAILS ARE FURTHER SUPPORTED BY WORKIN G OF PEAK CREDIT FOR EACH YEAR FROM, WHICH ARE FILED BY ASSESSEE. 6.14. ASSESSEE CLAIMS TO HAVE SUBMITTED ALL THESE DETAIL S BEFORE AO, WHO THOUGH GAVE SOME CURSORY INTEREST ADJUSTMENTS BUT DID NOT LOOK INTO ALL OTHER DETAILS REFUSING THE ASSESSEE CLAIMS SUMMARILY. THEY WEE FILED BEFOR E CIT(A) AGAIN WHO CALLED FOR REMAND REPORT, HOWEVER CIT(A) ALSO DID NOT DEAL WITH THE CORE ISSUE AND GAVE SOME ADJUSTME NTS HERE AND THERE. THUS ASSESSMENT HAS NOT BEEN FRAMED IN A REASONABLE AND PROPER MANNER. TO ENSURE HIGH PITCHE D ASSESSMENTS THE HUGE ADDITIONS HAVE BEEN MADE ONE W AY OR OTHER IN A CAPRICIOUS MANNER. 6.15. LD COUNSEL TOOK US THROUGH THE RELEVANT ENTRIES TO DEMONSTRATE HOW THE FUNDS HAVE BEEN REUTILIZED FROM ONE A/C TO OTHER, THE EFFECT OF CONTRA ENTRIES AND MIST AKES COMMITTED BY LOWER AUTHORITIES. WHILE WORKING OUT T HE PRINTOUTS IT WILL BE DISASTROUS TO ADD EACH AND EVE RY ENTRY WITHOUT APPRECIATING THAT SAME MONEYS HAVE BEEN REU SED. SUCH AN ARBITRARY PRACTICE WILL LEAD TO DISASTROUS RESULT AND UNTHINKABLE ADDITIONS WHICH ARE NEITHER JUSTIFIED N OR WARRANTED BY THE MATERIAL ON RECORD. IT HAS BEEN PL EADED THAT ASSESSEE HAS DISCHARGED ITS BURDEN IN EXPLAINI NG EACH AND EVERY> ASPECT NECESSARY FOR ARRIVING AT A FAIR AND REASONABLE ASSESSMENT. LOWER AUTHORITIES HAVE FAILE D TO REBUT THE DISCHARGE OF BURDEN BY THE ASSESSEE IN RE CONCILING HIS PEAK CREDIT WORKING. THEREFORE THE PEAK WORKING AS OFFERED BY THE ASSESSEE DESERVES TO BE ACCEPTED. 6.16. AFTER CAREFUL CONSIDERATION OF FACTS, CIRCUMSTANCES AND MATERIAL AVAILABLE ON RECORD, CASE LAWS AND RIVAL CONTENTION S IT WILL BE DESIRABLE TO DWELL ON THE ASPECTS OF PEAK CREDIT; TELESCOPING , SET OFF OF ENTRIES, AVAILABILITY OF OPENING BALANCE AND ITS EFFECT IN S UCH PRINT OUT; THIS IS NECESSARY FOR ARRIVING AT A FAIR ESTIMATE OF THE DE EMED INCOME OF THE ASSESSEE FOR AY 2002-03 AND 2003-04. 6.17. SUCH CONCEPTS ARE WELL KNOWN IN THE LAW WITH A RIDE R OF CAUTION THAT THEY ARE QUESTION OF FACTS AND DEPE ND ON CASE TO CASE. HON BLE SUPREME COURT AND VARIOUS OT HER HIGH COURTS HAVE LAID DOWN THE PROPOSITIONS THAT SUCH ADJUSTMENTS CAN BE APPLIED WHILE MAKING THE ASSESSM ENTS 18 ITA NOS. 1788 & 2389/DEL/2016 IN THE CASES OF WORKING OUT OF SEIZED AND INCRIMINA TING DOCUMENTS IN CASE OF REPETITIVE TRANSACTIONS. 6.18. WE SHALL START WITH THE THEORY) OF THE DEPARTMENT T HAT ASSESSEE IS ACTING AS A MANAGER OR ADMINISTRATOR OF FUNDS FOR 148 OTHER PERSONS. THOUGH SOME NAMES ARE GJYEN HOWEVER NO INFERENCE ARE DRAWN BY AUTHORITIES BELOW. THEREFORE, WE LEAVE THIS ISSUE HERE. MORE SO THEY B ECOME THIRD PARTIES TO THE PROCEEDINGS AND ANY OBSERVATIO NS ARE UNDESIRABLE AND MAY IMPINGE ON PRINCIPLES OF NATURA L JUSTICE. THE DEPARTMENTAL THEORY OF ASSESSEE BEING A FUND MANAGER FOR OTHERS IS SUPPORTED BY THE FACT THAT AS SESSEE FILED COMPLETE DAY TO DAY DETAILS AND ENTRY BY ENTR Y DETAILS OF CONTENTS OF PRINT OUTS AVAILABLE WITH THE DEPART MENT. THEY ALL ARE PART OF THE PAPER BOOKS. THEY WERE SUBMITTE D BEFORE ASSESSING OFFICER AND CIT(A). REMAND REPORT WAS SUB MITTED BY AO ON CIT(A) S INITIATIVE. 6.19. FROM THE EXPLANATION OF THE ENTRIES AND DEPARTMENT AL THEORY, IT EMERGES THAT ASSESSEE WAS WORKING AS THE FUND MANGER OR ADMINISTRATOR FOR OTHERS. WHILE DEALING W ITH THE ISSUE THIS FACT IS TO BE KEPT IN RECKONING. 6.20. PRESUMPTION U/S 292C WILL NOT BE APPLICABLE IN THI S CASE AS ADMITTEDLY THERE WAS NO SEARCH PROCEEDINGS UNDER INCOME TAX ACT ON THE ASSESSEE. A STATUTORY PRESUMP TION CAN BE RAISED AGAINST ASSESSEE WHEN THE PRESCRIPTION OF LAW WARRANTS IT. JN THE ABSENCE OF ENABLING STATUTORY P ROVISION SUCH PRESUMPTION CAN NOT BE PROPPED UP AGAINST ASSE SSEE. SINCE THERE WAS NO SEARCH ON ASSESSEE U/S 132 UNDER INCOME TAX ACT, PRESUMPTION U/S 292C CAN BE APPLIED TO HIM. HOWEVER THE ASSESSEE CASE COMES IN THE KEN OF SEC 68 ABOUT GIVING REASONABLE EXPLANATION OF CASH CREDITS FOUND FROM HIS RECORD. 6.21. THIS SCENARIO DOES NOT ALTER THE SITUATION MATERIAL LY IN AS MUCH AS ASSESSEE HAS TO DISCHARGED THE BURDEN CA ST BY DEEMING FICTION 6F SEC. 68. THE BURDEN IS BY AND LA RGE SIMILAR TO SEC 292C. 6.22. THE DEPARTMENT PROCEEDS ON PREMISE THAT ASSESSEE MANAGES FUNDS FOR 148 PERSON OR SO AND KEEPS A RECO RD THEREOF ASSESSEE FILED EVERY DETAIL IN DATE WISE AN D ENTRY WISE MANNER. AO DOES NOT CONSIDER IT OBJECTIVELY AN D ALLOWS SOME COSMETIC REDUCTION OF INTEREST. ISSUE IS CARRI ED IN APPEAL, ALL THE DOCUMENTS ARE FILED AGAIN BEFORE CI T(A) WHO CALLS FOR A REMAND REPORT FROM AO. THE COURSE OF EV ENTS 19 ITA NOS. 1788 & 2389/DEL/2016 REVEALS THAT ASSESSEES DETAILS ARE AGAIN NOT CONSID ERED OBJECTIVELY AND SOME PRIMA FACIE ADJUSTMENTS ARE RE DUCED BY CIT(A). 6.23. THE PEAK CREDIT THEORY AND THE BENEFIT OF TELESCOPI NG IS GENERALLY ACCEPTED AS IT IS LOGICAL AND ACCEPTABLE PROVIDED THERE IS REASONABLE MATERIAL TO SHOW THAT WITHDRAWA LS OR REPAYMENTS COULD HAVE BEEN AVAILABLE ON THE DATE OF SUBSEQUENT CREDIT OR REPAYMENT, MORE SO, IN THE ACC OUNTS OF DIFFERENT PERSONS. THE FACT THAT ASSESSEE HAS BEEN HELD TO BE A FUND MANAGER FOR 148 PERSONS FOR WHICH THE MONEYS ARE FREQUENTLY WITHDRAWN OR DEPOSITED AS PER THESE CASE LAWS AND FACTS AND CIRCUMSTANCES OF THIS CASE ASSESSEE W ILL BE ENTITLED TO WORK OUT A PEAK CREDIT AND AVAIL THE BE NEFITS OF TELESCOPING. WE MAY HASTEN TO ADD THAT IT IS NOT A PROPOSITION OF LAW BUT THE EXERCISE IS TO BE UNDERT AKEN ON THE INFERENCES BASED ON NORMAL PREPONDERANCE OF PROBABI LITIES AND BASED ON NORMAL HUMAN CONDUCT. THE DEPARTMENT I S ENTITLED TO DISPLACE SUCH PROPOSITIONS ADVANCED BY THE ASSESSEE ON COGENT REASONS AND NOT BY SUMMARY) REJE CTION OF THE EXPLANATION. IN THE NEXT PARA WE WILL BE DEALIN G WITH VARIOUS CASE LAWS RIGHT UPTO HONBLE SUPREME COURT WHERE THIS FACTUAL PREPOSITION HAS BEEN UPHELD SUBJECT TO CERTAIN CONDITIONS. 6.24. THE IMPORTANT QUESTION WHICH ARISES IS WHETHER THE ASSESSEE HAS DISCHARGED ITS IN EXPLAINING THE ENTR IES CONTAINED IN THE PEN DRIVE AND ITS PRINT OUTS IN TE RMS OF SEC 68 OR ANY OTHER PRESUMPTION STATUTORY> OR OTHERWISE WHICH MAY BE RAISED IN THE CONTEXT OF THE FACTS OF THIS C ASE. IN OUR CONSIDERED VIEW ASSESSEE HAS DISCHARGED ITS ONUS I N EXPLAINING THESE ENTRIES BY FILING THE DETAILS BEFO RE AO, CIT(A) AND IN REMAND PROCEEDINGS. ASSESSEE HAS PUSHED THE BALL IN THE COURT OF DEPARTMENT BY DEMONSTRATING FROM THE D ETAILS OF ENTRIES THAT HE MANAGES THE FUNDS FOR OTHERS. IN TH E COURSE THEREOF HE REQUESTS FOR NECESSARY WORKING OF PEAK C REDIT, CORRECTION OF MISTAKES, CONTRA ENTRIES AND CONSIDER ING THE CLAIMS OF AVAILABLE OPENING BALANCES. THE CLAIM OF OPENING BALANCES IS MADE AS THE DATA RECOVERED PERTAINS TO THREE YEARS AND ASSESSEES FUND MANAGING ACTIVITIES SPAN T O THREE YEARS. DESPITE ASSESSEES DILIGENCE IN FILING ALL TH E DETAILS THE AUTHORITIES BELOW FAIL TO CONSIDER THE ASSESSEE'S O BJECTIONS AND WORKINGS. IN OUR CONSIDERED VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AND DEPARTMENTAL THEORY W ARRANT APPLICATION OF PEAK THEORY, TELESCOPING, CORRECTION OF MISTAKES 20 ITA NOS. 1788 & 2389/DEL/2016 AND TAKING COGNIZANCE OF JOURNAL/CONTRA ENTRIES. IN OUR VIEW RATIO OF DECISIONS IN THE CASES OF- ANANTHARAM VEERASINGHAIAH & CO. (SUPRA); K.S.M. GURUSWAMY NADA R & SONS (SUPRA); SINGHAL INDUSTRIAL CORPN. (SUPRA); KA NTILAL & BROS, (SUPRA); SANJAY KUMAR JAIN (SUPRA); & ISHWARD ASS MUTHA (SUPRA), SUPPORT THE ASSESSEES CASE FOR PEAK CREDIT AND TELESCOPING BENEFITS. 6.25. IN CONSIDERATION OF FOREGOINGS WE HAVE NO HESITATIO N TO HOLD THAT ASSESSEE HAS DISCHARGED HIS PRIMARY BURDE N IN EXPLAINING THE ENTRIES IN TERMS OF SEC. 68 OR ANY O THER PRESUMPTION WHICH MAY BE RAISED IN BEHALF OF THE EN TRIES IN THE PRINT OUTS. DEPARTMENT IN EFFECTIVE AND CONVINC ING TERMS HAS FAILED TO REBUT THE SAME EXCEPT GIVING SOME GEN ERAL OBSERVATIONS THAT THE CLAIMS CAN NOT BE CONSIDERED. IN OUR VIEW WE HAVE TO ESTIMATE THE UNDISCLOSED INCOME OF THE ASSESSEE FOR AYS2002-03 & 03-04 KEEPING IN MIND OUR OBSERVATIONS AND CONCLUSIONS IN THIS BEHALF. 6.26. IN THE WAKE OF THESE OBSERVATION WE PROCEED TO DECI DE THE QUANTUM OF UNDISCLOSED INCOME OF THE ASSESSEE A S UNDER: I. THE REASSESSMENT FOR A Y 2001-02 IS QUASHED. II. FOR AY 2002-03 THE CREDIT FOR OPENING BALANCE IS NO T GIVEN AS WE HAVE QUASHED THE REASSESSMENT FOR AY 2001-02, THERE FORE, THE OPENING FIGURE FLOWING FROM THE QUASHED REASSESSMEN T CANNOT BE VERIFIED. SUBJECT TO THESE OBSERVATIONS THE PEAK CR EDIT AS WORKED OUT BY THE ASSESSEE AT RS. 36,89,310/- IS HELD AS U NDISCLOSED INCOME FOR THIS YEAR. III. FOR A.Y. 2003-04: ON THE SAME METHODOLOGY THE PEAK CREDIT WORKED OUT BY THE ASSESSEE AT RS. 46,16,387/- IS HE LD TO BE THE PEAK CREDIT FOR THIS YEAR. HOWEVER, THIS PEAK CREDI T IS TO BE TELESCOPED WITH THE INCOME OF AY 2002-03 AS THE SAM E WAS AVAILABLE WITH THE ASSESSEE FOR UTILIZATION. CONSEQ UENTLY, THE TAXABLE INCOME FOR A.Y. 2003-04 IS WORKED OUT AS UN DER: I) PEAK CREDIT FOR AY 2003-04 RS. 46,16,387/- II) LESS: PEAK CREDIT FOR AY 02-03 RS. 36,89,310/- TAXABLE INCOME FOR AY 03-04 RS. 9,27,077/- 7. THUS, THE UNDISCLOSED INCOME TO BE INCLUDED IN THE ASSESSEES INCOME IS DETERMINED AT RS. 36,89,310/- FOR A.Y. 2002-03 AND RS. 9,27,077/- FOR A.Y. 2003-04. THESE GROUNDS ARE ACCORDINGLY PARTLY ALLOWED. 8. APROPOS THE REMAINING GROUND FOR AY 2002-03 IN RESPECT OF ADDITION OF RS. 9,21.200/- BEING ALLEGED UNACCOUNTED PAYMENT OF US $ 20,000 TRANSFERRED TO P ARK YOUNG TAE, IT IS PLEADED THAT HIS STATEMENT BEFORE ENFORCEMENT DIRECTORATE WAS TAKEN BEHIND HIS BACK. ASSESSEE WAS NEITHER A PARTY TO ED PROCEEDINGS NOR THE 21 ITA NOS. 1788 & 2389/DEL/2016 STATEMENT WAS TAKEN IN HIS PRESENCE. ONLY ON THE BA SIS OF A THIRD PARTY STATEMENT BEFORE SOME OTHER AGENCY ASSE SSING OFFICER HAS MADE THE ADDITION WITHOUT GIVING OPPORT UNITY TO CROSS EXAMINE MR. YOUNG. THIS CLEARLY VIOLATES THE PRINCIPLES OF NATURAL JUSTICE EMBODIED IN THE MAXIM AUDI ALTE RAM PARTEM WE FIND MERIT IN THE ARGUMENT OF ID. COUNSEL . THE IMPUGNED ADDITION CANNOT BE MADE IN THE HANDS OF TH E ASSESSEE UNLESS PROPER OPPORTUNITY TO DEFEND HIMSEL F AGAINST THE ALLEGATION INCLUDING THE CROSS-EXAMINATION OF M R. YOUNG AND THE RESULT OFPROCEEDINGS BEFORE THE E.D. AUTHOR ITIES ARE TO BE CONSIDERED. THIS GROUND IS SET SIDE RESTORED BAC K TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME AFRESH IN A CCORDANCE WITH LAW. 8. RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORD INATE BENCH IN THE ASSESSEES OWN CASE, WHERE ASSESSMENT WAS REOPENED ON THE SIMILAR REASONS AND SAME MATERIAL I.E. CREDIT ENTRIES PERTA INING TO THOSE YEARS HAVE BEEN CONSIDERED, WE ARE OF VIEW THAT THERE IS NO DISPARITY ON FACTS, AND, THEREFORE, APPEAL OF ASSESSEE DESERVE T O BE ALLOWED FOR STATISTICAL PURPOSES, WE ACCORDINGLY ALLOW THE APPE AL OF ASSESSEE AND DIRECT THE LD. AO TO VERIFY THE ACCOUNTS AND WORKED OUT THE PEAK CREDIT IN ACCORDANCE WITH THE WORKING MADE BY THE TRIBUNAL IN AY 2002-03 AND 2003-04. 13.1 THE ASSESSEE HAS FILED STATEMENT OF PEAK IN TH E PAPER BOOK FROM PAGES 15 TO 75 OF THE PAPER BOOK. THE PE AK AS ON 10.04.2004 IS CALCULATED AT RS. 1,82,59,248/-. IT IS NOT IN DISPUTE THAT WORKING OF THE PEAK FOR THIS YEAR IS S AME AS HAVE BEEN COMPUTED BY THE ASSESSE IN PRECEDING AY 2001-0 2 TO 2004-05. 14. THE LD. CIT (DR), HOWEVER, CONTENDED THAT IN TH IS YEAR THE AO RECOMPUTED THE PEAK AND FILED THE REMAND REP ORT IN WHICH IT IS STATED THAT THE DEBIT ENTRIES ON ACCOUN T OF EXPENSES 22 ITA NOS. 1788 & 2389/DEL/2016 MAY BE EXCLUDED. HOWEVER, THERE IS NOTHING IN THE ORDER OF THE TRIBUNAL FOR EARLIER YEARS TO EXCLUDE THE DEBITS OF THE PEAK. IT IS NOT IN DISPUTE THAT PEAK IS WORKED OUT IN ALL PR ECEDING ASSESSMENT YEARS AND IN ASSESSMENT YEAR UNDER APPEA L ON THE BASIS OF ENTRIES FOUND IN THE PEN DRIVE RECOVERED F ROM THE POSSESSION OF THE ASSESSEE. THE PRINT OUT FROM THE PEN DRIVE HAVE BEEN BROUGHT ON RECORD, THEREFORE, ALL THE ENT RIES CONTAINED IN THE SEIZED PEN DRIVE SHALL HAVE TO BE TAKEN INTO CONSIDERATION FOR WORKING OUT THE PEAK. THE PROCES S AND METHODOLOGY ADOPTED BY THE ASSESSEE IN EARLIER YEAR S HAVE BEEN ACCEPTED BY THE ITAT IN TWO ORDERS FOR ASSESSM ENT YEARS 2001-02 TO 2004-05. THEREFORE, THE AUTHORITIES BEL OW ARE BOUND TO FOLLOW THE ORDERS OF THE TRIBUNAL AND SHOU LD NOT HAVE REWORKED OUT THE PEAK IN THEIR OWN WAY. SINCE THE PEAK CREDIT STATEMENT IS PREPARED BY THE ASSESSEE ON THE BASIS OF THE ENTRIES FOUND IN THE PEN DRIVE AND ACCEPTED BY THE TRIBUNAL IN EARLIER YEARS, THEREFORE, SAME METHOD SHALL HAVE TO BE FOLLOWED IN ASSESSMENT YEAR UNDER APPEAL. THEREFORE, THERE WAS NO JUSTIFICATION FOR THE AO TO SUBSTITUTE THE PEAK FOR ASSESSMENT YEAR UNDER APPEAL FROM RS. 1,82,59,248/- TO RS. 23 ITA NOS. 1788 & 2389/DEL/2016 5,10,51,972/-. THE ASSESSES COUNSEL HAS ALSO RIGH TLY CONTENDED THAT THE TRIBUNAL HAS GIVEN BENEFIT OF OP ENING BALANCE OF THE EARLIER YEARS AND THAT ASSESSEE HAD PAID TAX ON THE PEAK CREDIT FOR AY 2003-04 OF RS. 46,16,387/-. THEREFORE, SUCH AMOUNT SHALL HAVE TO BE REDUCED FROM THE PEAK CALCULATED BY THE ASSESSEE AND BENEFIT OF THE SAME SHALL HAVE TO BE GRANTED TO THE ASSESSEE. THEREFORE, AS PER T HE DECISIONS OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE REPRODU CED ABOVE, THE NET ADDITION SHALL HAVE TO BE MADE AGAINST THE ASSESSEE IN A SUM OF RS. 1,36,42,861. THE ISSUE OF THE PEAK IS , THEREFORE, FULLY COVERED BY THE EARLIER YEARS ORDERS OF THE TR IBUNAL. IN THOSE ORDERS ALSO THE TRIBUNAL HAS DISMISSED THE GR OUND OF APPEAL OF THE ASSESSEE AS REGARDS REOPENING OF THE ASSESSMENT U/S 148 OF THE ACT. THEREFORE, THESE GROUNDS OF AP PEAL OF THE ASSESSEE ARE DISMISSED. 15. CONSIDERING THE ABOVE DISCUSSION AND FOLLOWING THE REASONS FOR DECISIONS OF ITAT IN THE CASE OF THE SA ME ASSESSEE FOR ASSESSMENT YEARS 2001-02 TO 2004-05, WE SET ASI DE THE 24 ITA NOS. 1788 & 2389/DEL/2016 ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE AO T O MAKE AN ADDITION OF RS. 1,36,42,861/- ON ACCOUNT OF PEAK CR EDIT. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.06.2018 SD/- SD/- (L.P. SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07.06.2018 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 01.06.2018 DRAFT PLACED BEFORE AUTHOR 04.06.2018 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 07.06.2018 KEPT FOR PRONOUNCEMENT ON 07.06.2018 FILE SENT TO THE BENCH CLERK 07.06.2018 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER. 25 ITA NOS. 1788 & 2389/DEL/2016
Mehul