RL Exports International, New Delhi V. DCIT, New Delhi

ITA 2195/DEL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7031 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 16-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 13-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL SENIOR
• Assessee Lawyers: ADITYA KUMAR CAS
• Keywords: Peak credit
• Section: 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC-I : NEW DELHI) BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.2195/DEL./2015 (ASSESSMENT YEAR : 2005-06) M/S. RL EXPORTS INTERNATIONAL, VS. DCIT, CENTRAL CIRCLE 7, 118, ANSAL BHAWAN, K.G. MARG, NEW DELHI. NEW DELHI 110 001. (PAN : AAAFR7212B) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI ASHWANI KUMAR & ADITYA KUMAR, CAS REVENUE BY : SHRI ROBIN RAWAL, SENIOR DR DATE OF HEARING : 16.02.2016 DATE OF PRONOUNCEMENT : 17.02.2016 O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (APPEALS) DATED 16.02.2015. 2. SINCE THE GROUND NO.2 WAS NOT PRESSED BY THE ASS ESSEE, THEREFORE, THE ONLY ISSUE INVOLVED IN GROUND NO.1 REMAINS FOR MY ADJUDI CATION IS THE SUSTENANCE OF THE ADDITION OF RS.8,80,000/- BY THE CIT (A) WHICH WAS MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTION 68 OF THE INCOME -TAX ACT, 1961 (HEREINAFTER THE ACT). 3. THE BRIEF FACTS OF THE CASE ARE THAT A PEN DRIVE WAS RECOVERED BY PUNJAB VIGILANCE BUREAU FROM THE POSSESSION OF THE PARTNER OF THE ASSESSEE, SHRI CHETAN GUPTA WHICH WAS PASSED OVER TO THE INCOME-TAX DEPAR TMENT AND CONSEQUENTLY, ITA NO.2195/DEL./2015 2 PROCEEDINGS U/S 148 WERE INITIATED AGAINST THE ASSE SSEE. THE AO WAS OF THE VIEW THAT THERE WERE CERTAIN TRANSACTIONS IN THE SAID PE N DRIVE AND THESE TRANSACTIONS RELATE TO THE ASSESSEE AND ACCORDINGLY, HE MADE THE ADDITION U/S 68 OF THE ACT FOR RS.8,80,000/- FOR THE IMPUGNED ASSESSMENT YEAR. WH EN THE MATTER WENT BEFORE THE CIT (A) THE CIT (A) CONFIRMED THE SAID ADDITION . THE ADDITION U/S 68 HAS BEEN MADE BY WORKING OUT THE PEAK CREDIT. 4. I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONS IDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. I HA VE ALSO GONE THROUGH THE DECISION OF THE BENCH B OF THE TRIBUNAL IN THE CA SE OF CHETAN GUPTA VS. DCIT 144 ITD 344 AND UNDER PARA 6.2 OF THIS DECISION, I NOTED THAT THE TRIBUNAL HAS GIVEN A FINDING ABOUT PEN DRIVE CONTAINS TRANSACTIO NS OF CHETAN GUPTA AND ULTIMATELY, IN THE SUBSEQUENT PARAGRAPHS OF THIS OR DER, THE ADDITION SON THE BASIS OF THE PEAK CREDIT WORKED OUT BY THE ASSESSEE WERE ACCEPTED IN THE HAND OF THE ASSESSEE AS ITS INCOME. THE TRANSACTION RECORDED O N THE BASIS OF WHICH PEAK CREDITS WERE WORKED OUT WERE ACCEPTED TO BE BELONGI NG TO CHETAN GUPTA. ON THIS BASIS ITSELF, THE ADDITION IS BOUND TO BE DELE TED, IN MY VIEW, IN THE HANDS OF THE FIRM. FROM THE ORDER OF THE TRIBUNAL, IT IS PR OVED THAT THE PEN DRIVE BELONGS TO CHETAN GUPTA. EVEN OTHERWISE, I NOTED THAT SECT ION 68 LAYS DOWN AS UNDER :- 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS O F AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANAT ION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATIS FACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. ITA NO.2195/DEL./2015 3 SECTION 68, IN MY OPINION, LAYS DOWN A RULE OF LAW. FROM THE PERUSAL OF THE SECTION, IT IS APPARENT THAT THIS IS DEEMING PROVIS ION AND THE ADDITION UNDER THIS SECTION CAN BE MADE IF THE FOLLOWING CONDITIONS ARE SATISFIED:- (I) THERE MUST BE SUM FOUND CREDITED IN THE BOOKS OF AS SESSEE; (II) THE BOOKS MUST BE MAINTAINED BY THE ASSESSEE FOR TH E PREVIOUS YEAR; (III) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM; OR (IV) THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT SATI SFACTORY IN THE OPINION OF THE AO. THUS, BEFORE MAKING ANY ADDITION U/S 68, IT IS NECE SSARY TO PROVE ON THE PART OF THE REVENUE THAT THERE IS A SUM FOUND CREDITED IN T HE BOOKS OF THE ASSESSEE. THE PEN DRIVE FOUND FROM CHETAN GUPTA CANNOT BE REGARDE D TO BE THE BOOKS MAINTAINED BY THE ASSESSEE. IN VIEW OF SUM NOT BEI NG FOUND CREDITED IN THE BOOKS OF THE ASSESSEE, I AM OF THE VIEW THAT PROVIS IONS OF SECTION 68 CANNOT BE APPLIED IN THIS CASE. BOOK WILL ALWAYS MEAN SYSTEM ATIC RECORDING OF THE FINANCIAL DATA FROM WHICH FINANCIAL ACCOUNTS I.E. P ROFIT & LOSS ACCOUNT AND BALANCE SHEET CAN BE MADE AT THE CLOSE OF THE PERIO D FOR WHICH THESE BOOKS ARE MAINTAINED. I, THEREFORE, SET ASIDE THE ORDER OF T HE CIT (A) AND DELETE THE ADDITION MADE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 17 TH DAY OF FEBRUARY, 2016. SD/- (P.K. BANSAL) ACCOUNTANT MEMBER DATED THE 17 TH DAY OF FEBRUARY, 2016 TS ITA NO.2195/DEL./2015 4 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-3, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.