DCIT-Central Circle-XI, Kolkata, Kolkata V. Shri Mayank Daga, Kolkata

ITA 2486/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1647 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 05-10-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 25-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GOUTEN HANGSHING
• Assessee Lawyers: MANISH TIWARI
• Keywords: Gift; Business income; Search and seizure; Peak credit; Corroborative evidences; Accommodation entries
• Section: 44AD; 143(3); 142(1); 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 2486 / KOL / 2013 ASSESSMENT YEAR :2011-12 DCIT, CENTRAL CIRCLE-XI, ROOM NO. 311, 3 RD FLOOR, AAYAKAR BHAWAN POORVA, 110, SHANTY PALLY, KOLKATA-107 V/S . SHRI MAYANK DAGA, 66/2 NIMTOLA GHAT STREET, KOLKATA-06 [ PAN NO.AFJPD 3170 L ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI GOUTEN HANGSHING, CIT-DR /BY RESPONDENT SHRI MANISH TIWARI, AR /DATE OF HEARING 18-04-2017 /DATE OF PRONOUNCEMENT 02-05-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, KOLKATA DAT ED 30.08.2013. ASSESSMENT WAS FRAMED BY DCIT, CENTRAL CIRCLE-XI, K OLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 25.03.2013 FOR ASSESSMENT YEAR 2011-12. SHRI GOUTEN HANGSHING, LD. DEPARTMENTAL REPRESENTAT IVE REPRESENTED ON BEHALF OF REVENUE AND SHRI MANISH TIWARI, LD. AUTHO RIZED REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE. ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 2 2. FIRST ISSUE RAISED BY REVENUE IN THIS APPEAL IN GROUND NO. 1 AND 2 IS THAT THAT LD. CIT(A) ERRED IN DELETING THE ADDITION S MADE BY THE ASSESSING OFFICER FOR 59,62,43,650/- ON ACCOUNT OF UNDISCLOSED MONEY U/S . 69 OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN IND IVIDUAL AND DERIVED HIS INCOME UNDER THE HEAD BUSINESS AND OTHER SOURCE. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED DATED 17.03.2011 IN THE CAS E OF MAYANK DAGA GROUP OF CASES UNDER SECTION 132 OF THE ACT AT THE BUSINESS PREMISES OF GROUP. IN THE COURSE OF SEARCH PROCEEDINGS A CASH O F 2.41 CRORES WAS FOUND AND OUT OF WHICH A SUM OF 2.40 CRORES WAS SEIZED. BESIDES THE CASH THERE WERE OTHER DOCUMENTS MARKED AS MD-1 AND MD-II WHICH WERE FOUND AND SEIZED. 4. DURING THE COURSE OF SEARCH PROCEEDING CERTAIN B ANK ACCOUNT WERE FOUND IN THE NAME OF DIFFERENT PERSONS AND THE DETA ILS OF THOSE ACCOUNTS STAND AS UNDER:- SL. NAME OF THE CONCERNS BANK ACCOUNT NOS. 1 EXCEL ENTERPRISES ICICI BANK, SHYAMBAZAR BR. 6277 05054268 2 SANJAY KUMAR -DO- 627705054262 3 LALIT SHARMA -DO- 627705054261 4 AJAY TRADING CO -DO- 627705054263 THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDING S HAS FILED AN AFFIDAVIT DATED 06.11.2012 DECLARING THAT ALL THE AFORESAID B ANK ACCOUNTS BELONGED TO HIM. THE ASSESSEE ALSO OWNED UP ALL THE CASH OF 2.41 CRORES FOUND AT THE TIME OF SEARCH U/S 132(1) OF THE ACT. THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS SUBMITTED THAT HE IS ENGAGED IN BUSINESS OF PROVIDING ACCOMMODATION ENTRIES IN LIEU OF CASH/CHE QUES. AS SUCH, HE CLAIMED TO BE AN ENTRY OPERATOR AND DEMONSTRATED THAT THE I MPUGNED CASH FOUND AT THE TIME OF SEARCH IS THE INCOME WHICH WAS EARNED BY WA Y OF COMMISSIONS FOR ACTING AS ENTRY OPERATOR. HOWEVER, AO OPINED THAT T HE ENTIRE CASH BELONGED TO ASSESSEE AS HE FAILED TO BRING ANYTHING ON RECORD S UGGESTING THAT THE CASH DEPOSITED IN THE BANK ACCOUNTS BELONG TO OTHER PERS ONS. THUS, THE AO HAS ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 3 TREATED THE ENTIRE IMPUGNED MONEY DEPOSITED IN THE AFORESAID BANK ACCOUNTS FOR 59,62,43,650/- AS INCOME OF THE ASSESSEE U/S 69 OF THE ACT AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT HE WAS EN GAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES AND EARNING COMMISS ION FROM SUCH ACTIVITIES. THE INCOME OF 2.41 CRORES ADMITTED IN THE COURSE OF SEARCH WAS SUFFICIENT TO COVER COMMISSION INCOME AS DISCUSSED ABOVE. NO BOOKS OF ACCOUNT WHATSOEVER WERE MAINTAINED BY HIM AND THERE FORE THE DETAILS OF THE PARTIES WHO HAVE GIVEN CASH TO ASSESSEE WERE NOT FU RNISHED AT THE TIME OF ASSESSMENT PROCEEDINGS. THE ASSESSEE ALSO SUBMITTED THAT THE ENTIRE DEPOSITS CANNOT BE TREATED AS INCOME WITHOUT GIVING THE BENEFIT OF WITHDRAWAL THAT THERE IS NO EVIDENCE AVAILABLE ON RECORD SUGGE STING THAT THE ASSESSEE HAS INVESTED SUCH MONEY OR USED FOR HIS PERSONAL BE NEFIT. THE ASSESSEE ALSO SUBMITTED THAT IN SUCH SITUATION AN AMOUNT OF 9601836.63 BEING PEAK CREDIT WAS REASONABLE ENOUGH TO COVER ALL THE DEPOSITS AS WELL AS WITHDRAWAL AS HIS INCOME. HOWEVER, ASSESSEE IN ORDER TO BUY PEACE OF MIND HAS ADMITTED THE INCOME OF 2.41 CRORES TO THE TUNE OF CASH FOUND AT THE TIME O F SEARCH. LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSE SSEE DELETED THE ADDITION IN PART MADE BY AO BY OBSERVING AS UNDER:- 13. I HAVE PERUSED THE ASSESSMENT ORDER. I HAVE AL SO CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND THE JUDICIAL DECISI ONS RELIED UPON BY HIM. THE AS HAS OWNED UP 4 BANK ACCOUNTS WHICH ARE ADMITTEDLY NOT DISCLOSED IN HIS INCOME TAX RETURN. THE LD. AR HAS ARGUED THAT THE ASSESSEE HAD EXPLAINED IN COURSE OF THE SEARCH AND ALSO AT THE ASSESSMENT STAGE THAT HE ACTED AS AN ENTRY OPERATOR FOR PROVIDING ACCOMMODATION ENTRIES IN RETURN OF COMMISSION. IN H IS RETURN OF INCOME, THE ASSESSEE DISCLOSED INCOME OF RS.2,41,10,500/- F OR THE RELEVANT YEAR. HOWEVER, THE ASSESSEE HAS ADMITTEDLY MAINTAIN ED NO BOOKS OF ACCOUNT FOR THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES; AND ALSO, THAT NO DETAIL OF BENEFICIARIES WAS FURNISHED BEFOR E THE AO. UNDER THE CIRCUMSTANCES, THE CONTENTIONS OF THE ASSESSEE THAT HE WAS ACTING ONLY AS AN ENTRY OPERATOR AND THAT THE INVESTMENT IN THE UNDISCLOSED BANK ACCOUNTS BELONGS TO THE BENEFICIARIES REMAINS UNSUB STANTIATED. THE AO WAS THEREFORE JUSTIFIED IN HOLDING THAT THE DEPOSIT S IN THE UNDISCLOSED BANK ACCOUNTS REPRESENT UNDISCLOSED INCOME OF THE A SSESSEE. ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 4 HOWEVER, THERE ARE REGULAR DEPOSITS AS WELL AS WITH DRAWALS IN THE BANK ACCOUNTS; AND SO, THE ADDITION OF THE AGGREGATE DEP OSITS WITHOUT ALLOWING THE BENEFIT OF WITHDRAWALS WAS NOT JUSTIFI ED. FOR, THE AMOUNT INVESTED AT ONE POINT OF TIME WAS WITHDRAWN SUBSEQU ENTLY AND WAS THUS AVAILING FOR FURTHER DEPOSITS; AND SO, CORRESPONDIN G CREDIT HAS TO BE ALLOWED AGAINST SUBSEQUENT DEPOSITS IN THE BANK ACC OUNTS THE AO HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT THE AMOU NTS WITHDRAWN HAD BEEN UTILIZED BY THE ASSESSEE ELSEWHERE FOR THE PUR POSES OF EXPENSES OR INVESTMENT OR OTHERWISE. IN THIS FACTUAL BACKGRO UND, THE COMBINED PEAK CREDIT OF THE BANK ACCOUNTS WOULD COVER THE TO TAL DEPOSITS AND WITHDRAWALS; AND, ACTUALLY REPRESENTS THE INVESTMEN T IN THE UNDISCLOSED BANK ACCOUNTS. THE VARIOUS DECISIONS OF THE JURISDI CTIONAL ITAT AS WELL AS THE JURISDICTIONAL HIGH COURT ALSO SUPPORT THE C ONTENTION OF THE ASSESSEE THAT ONLY THE COMBINED PEAK CREDIT ACTUALL Y REPRESENTS THE UNDISCLOSED INVESTMENT IN THE UNDISCLOSED BANK ACCO UNTS. IN VIEW OF THE ABOVE AND THE RATIO LAID DOWN BY THE JURISDICTIONAL COURTS, THE AO CAN ONLY ASSES THE COMBINED PEAK CREDIT OF THE BANK ACC OUNTS AS ASSESSEES UNDISCLOSED INVESTMENT. ALL THE BANK STA TEMENTS WERE AVAILABLE BEFORE THE AO AT THE ASSESSMENT STAGE. WH EN THE AO HELD THAT THE ENTIRE MONEY DEPOSITED IN THE BANK ACCOUNT S BELONGED TO THE ASSESSEE, THEN HE SHOULD HAVE ASSESSED THE COMBINED PEAK CREDIT OF THE SAID BANK ACCOUNTS A ASSESSEES UNDISCLOSED INV ESTMENT. I FIND FROM THE STATEMENT OF DEPOSITS AND WITHDRAWALS OF T HE BANK ACCOUNTS PLACED AT PAGE 8 TO 10 OF THE PAPER BOOK THAT THE P EAK CREDIT OF RS.96,01,836/- APPEARS ON 28-02-2011; AND SO, THE A DDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE SAID BANK ACCOUNT S HAS TO BE RESTRICTED TO RS.96,01,836/-. HOWEVER, THE ASSESSEE HAS ALREADY ADMITTED UNDISCLOSED INCOME OF RS.2,41,10,500/- FOR THE RELEVANT YEAR. AS THE COMBINED PEAK CREDIT APPEARS ON 28-02-2011, THE ASSESSEE SHOULD HAVE BY THEN EARNED INCOME OF RS.2,21,01,292 /- ON PROPORTIONATE BASIS WHICH IS MUCH MORE THAN THE COM BINED PEAK CREDIT OF RS.96,01,836/-; AND CONSEQUENTLY, NO SEPARATE AD DITION ON ACCOUNT OF PEAK CREDIT IS REQUIRED. HOWEVER, I FIND FROM T HE STATEMENT OF DEPOSITS AND WITHDRAWALS PLACED AT PAGE 8 TO 10 OF THE PAPER BOOK THAT THERE WAS COMBINED CREDIT BALANCE OF RS.11,422/- IN THE SAID BANK ACCOUNTS ON THE DATE OF THE SEARCH, THAT IS, 17-03- 2011. SINCE THE ENTIRE INCOME OF RS.2,41,10,500/- WAS RECOVERED IN THE SEA RCH IN THE FORM OF CASH, THE COMBINED CREDIT BALANCE OF RS.11,422/- IN THE SAID BANK ACCOUNTS IS ASSESSABLE SEPARATELY AS UNDISCLOSED IN VESTMENT. THE ADDITION OF RS.59,62,43,650/- IS THEREFORE RESTRICT ED TO RS.11,422/-. GROUND NO. 1 IS PARTLY ALLOWED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S ON THE FOLLOWING GROUND:- ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 5 1. THAT THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN LAW AS WELL AS IN FACT IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISC LOSED MONEY U/S. 69 OF THE IT ACT OF RS.59,62,43,650 INTO THE FOUR UNDI SCLOSED BANK ACCOUNTS OWNED-UP BY HIM, AND HE HAS NOT OFFERED AN Y EXPLANATION ABOUT THE NATURE AND SOURCE OF THE MONEY. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE CIT(APPEALS) HAS ERRED IN HOLDING THAT THE ASSESSEE CANNOT BE HELD TO BE THE OWNER OF THE AMOUNT OF RS.59,62,43.650 DEPOS IT INTO THE FOUR UNDISCLOSED BANK ACCOUNTS OWNED-UP BY HIM AND IN TH AT VIEW DELETING THE ADDITION OF RS.59,62,43,650 MADE AS ASSESSEES INCOME FROM THE UNDISCLOSED SOURCES. 6. BEFORE US BOTH PARTIES RELIED ON THE ORDER OF AU THORITIES BELOW AS FAVOURABLE TO THEM. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT THE ASSESSEE HAS CLAIMED TO BE THE OWNER OF 4 BANK ACCOUNTS BY W AY OF AFFIDAVIT. IN THESE BANK ACCOUNTS CASH OF RS. 59,62,43,650.00 WAS DEPOS ITED, THE SOURCE OF WHICH WAS NOT EXPLAINED AND NEVER REFLECTED IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. THUS THE AO TREATED THE ENTIRE DEPOSIT OF CASH AS INCOME UNDER SECTION 69 OF THE A CT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. HOWEVER THE LD CIT(A) DISAGREED WITH THE ACTION OF THE AO BY OBSERVING THAT THE ENTIRE CASH DEPOSIT WITHOUT CONSIDERING THE WIT HDRAWALS FROM THE BANK CANNOT BE TREATED AS INCOME OF THE ASSESSEE. THE AO HAS NOT BROUGHT ANYTHING ON RECORD ABOUT THE WITHDRAWALS MADE BY TH E ASSESSEE SUGGESTING ANY INVESTMENT, EXPENSE ETC. THUS THE LD. CIT(A) DE LETED ADDITION MADE BY THE AO. NOW THE QUESTION BEFORE US ARISE SO AS TO WHETHER T HE ENTIRE CASH DEPOSIT IN THE BANK ACCOUNT OF ASSESSEE AMOUNTS TO UNDISCLOSED INCOME. IN THIS REGARD WE FIND THAT ADMITTEDLY THE ASSESSEE WAS THE ENTRY OPERATOR AND ENGAGED IN PROVIDING ACCOMMODATION ENTRIES AND THIS FACT HAS N OT BEEN DISPUTED BY THE LOWER AUTHORITIES. THERE WERE REGULAR DEPOSITS AND WITHDRAWALS FROM THE BANK ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 6 ACCOUNT OF THE ASSESSEE. IT IS SEEN THAT EVERY DEPO SIT IS FOLLOWED BY SUBSEQUENTLY WITHDRAWAL. THE AMOUNT DEPOSITED AT ON E POINT OF TIME HAS BEEN WITHDRAWN SUBSEQUENTLY AND THERE WAS AGAIN DEPOSIT IN THE BANK ACCOUNT. IN SUCH SITUATIONS AND CIRCUMSTANCES THE PEAK AMOUNT C OVERS TOTAL DEPOSITS AND WITHDRAWALS MADE BY THE ASSESSEE IN THE BANK ACCOUN T. THUS THE ADDITION CANNOT BE MADE BY AGGREGATING ALL THE DEPOSITS IN T HE BANK WITHOUT GIVING THE BENEFIT OF WITHDRAWALS MADE BY THE ASSESSEE. IN TH E AFORESAID FACTS AND CIRCUMSTANCES, WE FIND THAT VARIOUS COURTS HAVE HEL D TO APPLY THE PEAK CREDIT THEORY TO TAX THE INCOME OF THE ASSESSEE. IN THIS R EGARD, WE RELY IN THE ORDER OF HON'BLE KOLKATA TRIBUNAL IN THE CASE OF BINOD KUMAR JHA VS. ITO WARD 25(2) IN ITA 577/KOL/2013 DATE OF ORDER 20.11.2015. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW. IN VIEW OF THE ABOVE STATEMENT THE ASSESSEE CLAIMED THAT HE IS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PARTIES ON COMMISSION BASIS AND THIS COMMISSION HAS ALL ALONG BEEN DISCLOSED BY HIM AS BUSINESS INCOME IN THE RETURNS OF INCOME PARTICU LARLY FOR AYS 2008-09, 2009-10 AND 2010-11. NOW BEFORE US ASSESSEE'S COUNS EL ARGUED THAT EVEN PEAK CREDIT CANNOT BE ADDED IN THE HANDS OF THE ASS ESSEE ONLY FINANCE COMMISSION EARNED BY HIM @ 0.25% TO 0.50% AT THE BE ST CAN BE ASSESSED. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAPER BOOK FILED BY ASSESSEE AND PARTICULARLY PAGES 1 TO 41, WHEREIN EX TRACT FROM BANK STATEMENT OF SIX UNDISCLOSED BANK ACCOUNTS OF AXIS BANK AND C ALCULATION SHOWING PEAK CREDIT AFTER CONSOLIDATION IS ENCLOSED. THERE IS NO DISPUTE ABOUT THE CASH DEPOSITED IN THESE SIX BANK ACCOUNTS MAINTAINED WIT H AXIS BANK LTD. WE FIND FROM THE ABOVE STATEMENT RECORDED BY THE AO OF THE ASSESSEE PARTICULARLY QUESTION NOS. 14 AND 15 THAT ASSESSEE IS ONLY A CON DUIT IN A BIG SYNDICATE OF ACCOMMODATION ENTRY PROVIDERS AND HE HAS EARNED ONL Y COMMISSION INCOME FOR PROVIDING ACCOMMODATION ENTRY. THE ASSESSEE USE D TO RECEIVE CASH AND DEPOSIT THE SAME IN ONE OF THESE SIX BANK ACCOUNTS AND ISSUED CHEQUE OF THE SAME AMOUNT AS CAN BE SEEN FROM THE EXTRACTS OF BAN K STATEMENTS OF THESE SIX BANK ACCOUNTS FILED BY ASSESSEE IN ITS PAPER BO OK. ON THE VERY DATE OF CASH DEPOSIT, CHEQUE IS ISSUED OF THE SIMILAR AMOUN T. THIS CLEARLY REVEALS THAT THE ASSESSEE IS BEING USED FOR PROVIDING ACCOMMODAT ION ENTRY ONLY. ALL THE DEPOSITS MADE IN THESE SIX BANK ACCOUNTS HAVE BEEN TRANSFERRED TO MAPLE ADVISORY SERVICES PVT. LTD. AND IN TURN MAPLE ADVIS ORY SERVICES PVT. LTD. HAS FURTHER TRANSFERRED THIS AMOUNT TO SIX PRIVATE LIMI TED COMPANIES NAMELY, GOKUL DISTRIBUTORS, INDIGO COMMOTRADE, JUPITER TRAD ELINK, NEW ERA COMMOTRADE, SWIFT DISTRIBUTORS AND ZENITH MANAGEMEN T AND ALL THESE PRIVATE LIMITED COMPANIES ARE HAVING THEIR BANK BINOD KUMAR JHA, AY 2009-10 ACCOUNTS IN THE SAME BANK BRANCH. THIS MODUS OPERAN DI CLEARLY REVEALS THAT THE ASSESSEE IS MERELY AN ACCOMMODATION ENTRY PROVI DER AND NOTHING ELSE. ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 7 6. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, TH E LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF COORDINATE BENCH IN THE CASE OF ITO VS. SHRI PIYUSH PODDAR IN ITA NO. 1050/KOL/2011 FOR AY 2006-07 DATED 07.09.2015, WHEREIN EXACTLY ON SIMILAR CIRCUMSTANCE S, THE TRIBUNAL HAS DIRECTED THE AO TO ASSESS THE PEAK CREDIT AND BY OB SERVING HELD AS UNDER: '10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT IS SEEN THAT THE ASSESSEE APART FROM HIS REGULAR INCOME HAD A BANK ACCOUNT WITH CENTRAL BANK OF INDIA WHICH WAS U SED BY HIM ONLY FOR THE LIMITED ITA NO.337/KOL/2014 A.Y.2011-12 AMIT AGARWA L VS. DCIT, CC-XXVII, KOL. PAGE 7 PURPOSE OF PROVIDING ACCOMMODATION ENTR IES TO VARIOUS PARTIES. INITIALLY THE ASSESSEE TOOK A STAND THAT HE WAS DER IVING FINANCE COMMISSION @.25% OF ALL THE TRANSACTIONS IN THE ACCOMMODATION ENTRY BUSINESS AND OFFERED THE SAME TO TAX., HOWEVER, HE SHIFTED HIS S TAND BY ACCEPTING THE PEAK CREDIT THEORY BEFORE THE LD. CIT(A). THIS IS EVIDEN T FROM THE FACT THAT HE HAD NOT PREFERRED FURTHER APPEAL BEFORE THE TRIBUNAL AGAINS T THE LD. CIT(A)'S ORDER. IN ACCORDANCE WITH THE DIRECTIONS OF THE HON'BLE CALCU TTA HIGH COURT, WE HAD EXAMINED THE VERACITY OF THE CLAIM OF PEAK CREDIT T HEORY MADE BY THE ASSESSEE IN RESPECT OF ALL THE TRANSACTIONS IN CENT RAL BANK OF INDIA. IT IS OBSERVED THAT THE ASSESSEE HAD ROTATED HIS OWN FUND S IN CENTRAL BANK OF INDIA FOR PROVIDING ACCOMMODATION ENTRIES TO VARIOU S PARTIES. IT IS NOT DISPUTED THAT THE GENUINENESS OF THE TRANSACTION COULD NOT B E PROVED BY THE ASSESSEE BY MENTIONING THE NAMES, ADDRESSES, PAN, CONFIRMATI ON OF THE PARTIES TO WHOM THE PAYMENTS WERE MADE AND FROM PAYMENTS WERE RECEIVED BY THE ASSESSEE. HENCE IT IS PROVED THAT TRANSACTIONS CONT AINED IN THE BANK ACCOUNT ARE NOT GENUINE. ONCE THE TRANSACTIONS IN THE BANK ACCOUNT ARE PROVED INGENUINE THEN IT IS AN ACCEPTED PRACTICE OF ADOPTI NG THE PEAK CREDIT THEORY FOR THE PURPOSE OF DETERMINATION OF UNDISCLOSED INCOME OF THE ASSESSEE. HENCE, RELIANCE PLACED BY THE LD. DR IN THE DECISION OF TH E HON'BLE ALLAHABAD HIGH COURT REPORTED IN 276 ITR 38 WHICH REJECTED THE CON CEPT OF PEAK CREDIT THEORY IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. IN THE CASE BEFORE THE HON'BLE ALLAHABAD HIGH COURT, THE ASSESSEE CLAIMED THAT THE CREDITS IN THE BANK ACCOUNT REPRESENTED GENUINE LOANS BORROWED AND THE CHARACTER OF THE LOAN TRANSACTIONS WERE NOT DISPUTED AND HENCE THEIR LORD SHIPS OF ALLAHABAD HIGH COURT HELD THAT THE PEAK CREDIT THEORY WOULD NOT BE APPLICABLE IN THAT CASE. BUT IN THE FACTS OF THE INSTANT CASE, THE ASSESSEE HAD CLEARLY OWNED UP THE TRANSACTIONS AND THAT HE IS ENGAGING HIMSELF IN ACC OMMODATION ENTRY BUSINESS WITH HIS OWN FUNDS AS WELL AS FUNDS RECEIV ED FROM PARTIES TO WHOM THE ACCOMMODATION ENTRIES ARE PROVIDED BY THE ASSES SEE AND THE NAMES AND ADDRESSES OF SUCH PARTIES COULD NOT BE PROVIDED BY HIM FOR WANT OF MAINTENANCE OF BOOKS AND DETAILS. THIS GOES TO PROV E THAT THE GENUINENESS OF THE TRANSACTIONS CONTAINED IN THE ACCOMMODATION ENT RY BUSINESS AS REFLECTED IN THE SAID BANK ACCOUNT COULD NOT BE PROVED BY THE ASSESSEE. THIS IS A DISTINCT AND CRUCIAL FACTOR WHICH DISTINGUISHES THE DECISION RENDERED BY THE HON'BLE ALLAHABAD HIGH COURT IN 276 ITR 38 WHICH WA S HEAVILY RELIED UPON BY THE REVENUE. 11. ON PERUSAL OF THE BANK ACCOUNT WITH CENTRAL BAN K OF INDIA, WE ARE SATISFIED THAT THE DEPOSITS AND WITHDRAWALS ARE CLO SELY LINKED WITH AND RELATED TO EACH OTHER ON DAY-TO- DAY BASIS. IT IS ALSO OBSE RVED THAT THE LD. AO HAD NOT ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 8 BROUGHT ANY MATERIAL OR EVIDENCE ON RECORD TO PROVE THAT THE WITHDRAWALS MADE BY THE ASSESSEE FROM THE SAID BANK ACCOUNT HAV ING UTILIZED FOR MAKING ANY OTHER INVESTMENTS OUTSIDE THE BOOKS OR MEANT FO R ANY OTHER PURPOSE OTHER THAN FOR ACCOMMODATION ENTRY BUSINESS. IT IS PERTIN ENT TO LOOK INTO THE DECISION RENDERED BY THE KOLKATA TRIBUNAL IN THE CASE OF MAH ESH KUMAR GUPTA IN IT(SS)A. NO.11/KOL/2014 DATED 0.2.2005 WHEREIN ITAT OBSERVED THAT THE CLAIM OF THE ASSESSEE WAS THAT THE CHEQUE WITHDRAWA LS WERE FOR GIVING LOAN FOR THE SHORT PERIOD. HELD AS FOLLOWS :- BINOD KUMA R JHA, AY 2009-10 'THE AO CANNOT REFUSE TO GRANT SET OFF FOR THE WITHDRAWAL M ADE BY CHEQUE WITHOUT BRINGING ON RECORD ANY MATERIALS SO THAT THE AMOUNT WITHDRAWN BY CHEQUE CANNOT HAVE BEEN RECEIVED BACK BY THE ASSESSEE AND UTILIZED BY HIM IN MAKING SUBSEQUENT DEPOSITS BY CHEQUE. TAKING ALL TH IS INTO CONSIDERATION, WE ARE OF THE CONSIDERED OPINION THAT AO SHOULD ADOPT PEAK CREDIT METHOD TO ARRIVE AT THE UNDISCLOSED INCOME OF THE ASSESSEE IN THE UNDISCLOSED BANK ACCOUNT NO.SB 6664 WITH THE SYNDICATE BANK.' REFERENCE MAY ALSO BE DRAWN TO THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS SMT. P.K.NOORJEHAN REPORTED IN 237 I TR 570(SC) WHEREIN THEIR LORDSHIPS HAVE HELD THAT MERE UNSATISFACTORINESS OF THE EXPLANATION OFFERED BY THE ASSESSEE, DOES NOT, AND NEED NOT, AUTOMATICALLY RESULT IN DEEMING THE VALUE OF INVESTMENT TO BE THE INCOME OF THE ASSESSE E. THAT IS STILL A MATTER WITHIN THE DISCRETION OF THE OFFICER ITA NO.337/KOL /2014 A.Y.2011-12 AMIT AGARWAL VS. DCIT, CC-XXVII, KOL. PAGE 8 AND, THEREF ORE, OF THE TRIBUNAL. IN OTHER WORDS, THE DISCRETION HAS BEEN CONFERRED ON T HE INCOME TAX OFFICER U/S 69 OF THE ACT TO TREAT THE SOURCE OF INVESTMENT AS THE INCOME OF THE ASSESSEE IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT F OUND SATISFACTORY AND THE SAID DISCRETION HAS TO BE EXERCISED KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PARTICULAR CASE. THE INCOME TA X OFFICER IS NOT OBLIGED TO TREAT THE VALUE OF INVESTMENT AS INCOME IN EVERY CA SE WHERE THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE UNSATISFACTO RY. 12. HENCE IT WOULD BE UNREASONABLE TO TAX ALL THE D EPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE. TO THIS EXTENT, WE DO NOT APPRECIA TE THE ACTION OF THE LD. AO IN TAXING THE ENTIRE CREDITS OF RS.6,30,89,413/- AS UNDISCLOSED INCOME OF THE ASSESSEE FOR A.Y.2006-07. TO PUT THIS ONGOING DISPU TE TO REST, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE DIRECT THE LD. AO TO A SSESS THE PEAK CREDIT IN THIS CASE IN RESPECT OF BOTH CASH AS WELL AS CHEQUE TRAN SACTION CONTAINED IN THE SAID BANK ACCOUNT BY VERIFYING THE VERACITY OF THE FIGURES WORKED OUT BY THE ASSESSEE AND BRING TO TAX THE SAME. WE DRAW SUPPORT FROM THE DECISION RENDERED BY 'C' BENCH OF KOLKATA ITAT IN ITA NO.206 9/KOL/2010 FOR A.Y.2007- 08 DATED 23.03.2012 IN THE CASE OF ITO VS SHRI GANGA PRASAD VYAS WHEREIN IT WAS HELD THAT ' WE FIND THAT THE ASSESSEE HAS FILED STATEMENT OF PE AK CREDIT I.E. DEPOSIT AND WITHDRAWALS FROM THE BANK ACCOUNT OF SB BJ WHEREIN THE PEAK CREDIT AS ON 24.01.2007 WAS AT RS.1,80,247/-. WE FU RTHER FIND THAT THE MONEY DEPOSITED IN THE BANK ACCOUNT WAS WITHDRAWN EITHER ON THE SAME DAY OR ON SUBSEQUENT DATES. IT IS SEEN THAT THE TOTAL ADDITIO N OF THE AGGREGATE DEPOSITS IN THE BANK ACCOUNT AFTER GIVING BENEFIT OF WITHDRA WALS IS THE PEAK AMOUNT AND IN THAT CASE PEAK AMOUNT IS TO BE ADDED. WE FIND TH AT THE ASSESSEE HAS MAINTAINED A BANK ACCOUNT WHICH IS ADMITTEDLY NOT D ISCLOSED TO THE REVENUE AND THERE IS NO DOUBT THAT THE DEPOSITS IN THIS BAN K ACCOUNT REPRESENTS ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 9 UNDISCLOSED INCOME OF THE ASSESSEE TO BE ASSESSED A S UNDISCLOSED INCOME BUT QUA ONLY THE PEAK AMOUNT. THE ASSESSEE HAS FILE D COMPLETE STATEMENT OF PEAK DEPOSIT AND WITHDRAWALS WHICH IS AT RS.1,87,24 7/- AND BEFORE CIT(A). WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DIRE CTED THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF PEAK AMOUNT AND WE CONFIR M THE SAME. THIS ISSUE OF REVENUE'S APPEAL IS DISMISSED .' 13. HOWEVER, WE WOULD LIKE TO MAKE IT CLEAR THAT TH IS DIRECTION TO THE LD. AO TO ASSESS THE PEAK CREDIT IN THIS CASE SHOULD NOT BE C ONSTRUED AS A CONCLUSIVE PROOF IN THE HANDS OF THE BENEFICIARY IN THE SAID B ANK ACCOUNT FOR EXPLAINING THEIR AMOUNTS. ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE FILE OF THE LD. AO TO COMPLETE THE ASSESSMENT IN ACCORDANCE WITH THE DIRE CTIONS MENTIONED HEREINABOVE.' 7. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE DIRECT THE AO TO ASSESS THE PEAK CREDIT BEING A SUM OF RS.1,01,40,000/- AS COMPUTED BY ASSESSEE ON THE BASIS OF DEPOSITS MADE IN THESE SIX BANK ACCOUN TS WITH AXIS BANK LTD. IN LIEU OF CASH DEPOSITS ADDED BY THE AO AT RS.83,48,1 6,130/-. ACCORDINGLY, THE AO WILL VERIFY THE PEAK AND WILL MAKE BINOD KUMAR J HA, AY 2009-10 ADDITION OF THE PEAK AMOUNT ONLY. ACCORDINGLY, THIS ISSUE OF ASSESSEE'S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES.' FROM THE ABOVE, WE CONCLUDE THAT ASSESSEE WAS ENGAG ED IN PROVIDING ACCOMMODATION ENTRIES IN LIEU OF COMMISSION. THERE WAS NO ACTUAL BUSINESS CARRIED OUT BY THE ASSESSEE AND THE AO HAS ALSO NOT BROUGHT ANYTHING ON RECORD SUGGESTING THAT THE ASSESSEE IS ENGAGED IN S OME BUSINESS OTHER THAN THE ACTIVITY OF ACCOMMODATION ENTRIES. THE LD. DR H AS ALSO NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE FINDING OF LD. C IT(A). WE ALSO FIND THAT THE CASH WAS IMMEDIATELY WITHDRAWN AFTER THE DEPOSIT OF THE CASH. THIS TRANSACTION SHOWS THAT THE MONEY DOES NOT BELONG TO THE ASSESSEE. IN VIEW OF ABOVE WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT( A). THUS THE GROUND OF REVENUE IS DISMISSED. 8. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS T HAT LD. CIT(A) ERRED IN ESTIMATING THE INCOME AT 6,06,444/- BEING 8% OF THE TOTAL TURNOVER. 9. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS SHOWN GROSS TURNOVER OF RS.75,80,550/- INCLUDING THE FEES FROM PROFESSIONAL SERVICES FOR 65 LAKH AGAINST THE IMPUGNED TURNOVER. THE ASSESSEE DECLARED THE PROFIT OF 3,27,872/-. THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS FAILED TO ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 10 PRODUCE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF INCO ME DECLARED BY HIM. THEREFORE, AO TREATED 8% WITH THE GROSS RECEIPT AS INCOME OF ASSESSEE AND THEREFORE A SUM OF 6,06,444/- WAS TREATED INCOME FROM THE BUSINESS. 10. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE PROFI T AND LOSS ACCOUNT AND BALANCE-SHEET WAS SUBMITTED AT THE TIME OF ASSESSME NT PROCEEDINGS. THE AO HAS NOT COMMENTED ANYTHING ON ALL THE EXPENSE CLAIM ED BY ASSESSEE WHETHER THEY ARE EXCESSIVE OR UNREASONABLE IN COMPARISON TO EARLIER YEARS BUT HE HAS RESORTED TO THE PROVISION OF SEC. 44AD OF THE ACT. THUS THE AO DETERMINED THE INCOME ACCORDINGLY. ALTHOUGH THE PROVISION OF SEC. 44AD ARE NOT APPLICABLE TO THE ASSESSEE, EVEN THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNT THEN ALSO THE INCOME CANNOT BE ESTIMATED IN ARBITRARY MA NNER. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- 17. I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSES SEE AND THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY HIM. IT IS AN ADMITTE D FACT THAT THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNT AN D THAT NO BILLS OR VOUCHERS WERE PRODUCED BEFORE THE AO. BUT THEN, THE STATUE DOES HAVE A PENAL PROVISION FOR NON-MAINTENANCE OF THE BOOKS OF ACCOUNT WHICH HAS ALREADY BEEN INVOKED BY THE AO. I FIND MERIT IN THE ARGUMENT THAT MERE NON-MAINTENANCE OF THE BOOKS OF ACCOUNT CANNOT BE MADE THE BASIS FOR REJECTING THE PROFIT AS SHOWN BY THE SE I N HIS PROFIT AND LOSS ACCOUNT. SECONDLY, IT CANNOT JUSTIFY THE ACTION OF THE AO TO ESTIMATE THE PROFIT AT AN ARBITRARY FIGURE WITHOUT ANY BASIS, AN D, WITHOUT BRINGING ANY MATERIAL OR EVIDENCE ON RECORD. FOR, THE AO DOES NO T POSSESS ABSOLUTE ARBITRARY AUTHORITY TO ASSESS ANY FIGU9RE HE LIKES. EVEN IF THE CIRCUMSTANCES OF THE CASE CALLED FOR RESORTING TO E STIMATING THE INCOME OF THE ASSESSEE, SUCH ESTIMATION CANNOT BE A WILD O NE, BUT, SHOULD BE MADE HONESTLY AND NOT ARBITRARILY; MOREOVER, IT SHO ULD HAVE A REASONABLE NEXUS WITH THE MATERIAL AVAILABLE ON REC ORD. WHILE ESTIMATING THE INCOME, THE AO MUST NOT ACT VINDICTI VELY OR CAPRICIOUSLY OR WITH VIEW TO PUNISH THE ASSESSEE FOR NON-MAINTEN ANCE OF THE BOOKS OF ACCOUNT. FOR, THE AO HAS TO BE GUIDED BY THE RUL ES OF JUSTICE, EQUITY AND GOD CONSCIENCE. THE AO HAS FOUND NO DEFECTS IN THE PROFIT AND LOSS ACCOUNT SUBMITTED BEFORE HIM. THE AO HAS FAILED TO BRING ANY MATERIAL OR EVIDENCE ON RECORD TO JUSTIFY HIS ESTIMATION OF INCOME AT RS.6,06,444/-. THE AO HAS ALSO FAILED TO CONSIDER T HE PAST RECORDS OF THE ASSESSEE. THERE IS NO FINDING OF THE AO THAT TH E CLAIM OF EXPENSES WAS EXCESSIVE OR UNREASONABLE AS COMPARED WITH THE PRECEDING YEARS. ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 11 THE RELIANCE PLACED BY THE AO ON SECTION 44AD IS AL SO MISCONCEIVED AS THE SAME WAS NOT APPLICABLE IN THE CASE OF THE ASSE SSEE WHICH HAS BEEN ADMITTED EVEN BY THE AO IN HIS ASSESSMENT ORDE R. THE ESTIMATION OF INCOME AS MADE BY THE AO IS ARBITRARY AND WITHOU T ANY BASIS; MOREOVER, IT IS NOT SUPPORTED BY ANY MATERIAL ON RE CORD. THE RATIO LAID DOWN BY THE APEX COURT AS WELL AS THE JURISDICTIONA L HIGH COURT IN 159 ITR 524 (SC)AND 207 ITR 979 (CAL) ALSO SUPPORT THE CASE OF THE ASSESSEE. IN VIEW OF THE ABOVE, THE ESTIMATION MADE BY THE AO IS NEITHER SUSTAINABLE IN LA NOR ON FACTS. GROUND NO 2 IS ALLOWED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S ON THE FOLLOWING GROUND:- 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN LAW AS WELL AS IN FACT BY NOT APPRECIATING THAT IN ABSENCE OF BOOKS OF ACCOUNT, TAX AUDIT REPORT U/ S. 44AB AND ANY MATERIAL ON RECORD, THE ASSESSING OFFICER HAS REASO NABLY ESTIMATED INCOME AT RS.6,06,444/- I.E., AT RATE OF @ 8% OF TH E TOTAL GROSS TURNOVER OF THE BUSINESS. 11. BEFORE US BOTH PARTIES RELIED ON THE ORDER OF A UTHORITIES BELOW AS FAVOURABLE TO THEM. 12. WE HAVE HEARD RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE BEFORE US THE AO HAS DETERMINED THE INCOME OF THE ASSESSEE AFTER APPLYIN G THE PROVISIONS OF SEC. 44AD OF THE ACT. ACCORDINGLY, THE AO WORKED OUT INC OME @ 8% OF THE GROSS TURNOVER. THE AO RESORTED TO THE PROVISION OF SEC. 44AD OF THE ACT TO DETERMINE THE TOTAL INCOME ON THE GROUND THAT ASSES SEE FAILED TO PRODUCE HIS BOOKS OF ACCOUNT. HOWEVER, LD. CIT(A) GRANTED RELIE F TO ASSESSEE ON THE GROUND THAT THE INCOME CANNOT BE ESTIMATED UNDER TH E PROVISION OF SEC. 44AD OF THE ACT MERELY ON ACCOUNT OF NON-SUBMISSION OF THE BOOKS OF ACCOUNT BY THE ASSESSEE. NOW, THE ISSUE BEFORE US ARISES FOR O UR ADJUDICATION SO AS TO WHETHER THE INCOME ESTIMATED BY THE AO IN THE ABSEN CE OF THE BOOKS OF ACCOUNT IS JUSTIFIABLE IN THE AFORESAID FACTS AND C IRCUMSTANCES OF THE CASE. IN THIS CONNECTION WE FIND THAT IT WAS THE DUTY OF THE ASSESSEE TO SUBMIT THE REQUISITE DOCUMENTS AS DESIRED BY THE AO. IN THE AB SENCE OF THE DOCUMENTS THE AO HAD TO RESORT TO ESTIMATE THE INCOME. INDEED THE PROVISIONS OF SECTION ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 12 44AD OF THE ACT ARE NOT APPLIED TO THE INSTANT CASE BUT THE AO HAS TAKEN THE GUIDANCE FOR DETERMINING THE INCOME ON ESTIMATED BA SIS FROM THE PROVISIONS OF SECTION 44AD OF THE ACT. INDEED THE AO BEFORE ESTIM ATING THE INCOME OF THE ASSESSEE SHOULD HAVE REFERRED TO THE INCOME OF THE ASSESSEE OF EARLIER YEARS WHICH HE FAILED TO DO SO. BUT IT IS ALSO UNDISPUTED FACT THAT THE LD. AR HAS ALSO NOT BROUGHT ANYTHING ON RECORD TO JUSTIFY HIS CLAIM ON THE GROUNDS OF APPEAL. THEREFORE IN THE ABSENCE OF ANY DOCUMENTARY EVIDENC E WE REVERSE THE ORDER OF LD. CIT(A) AND RESTORE THE ORDER OF THE AO. THUS THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 13. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR 1.50 LAKH ON ACCOUNT OF BOGUS GIFTS. 14. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HA S RECEIVED A GIFT OF RS.1.50 LAKH FROM SMT.CHANDRAKALA RATHI. THE ASSESS EE BEFORE THE AO FAILED TO SUBSTANTIATE THE CREDITWORTHINESS OF THE DONOR. THE AO ALSO OBSERVED THAT THE DONOR HAS FILED HER RETURN OF INCOME ONLY AT RS .1.87 LAKH. IN THE AFORESAID CIRCUMSTANCES, AO TREATED THE GIFT AS UNDISCLOSED I NCOME OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 15. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE NECES SARY DETAILS SUCH AS GIFT DEED, INCOME-TAX RETURN, BALANCE-SHEET AND BANK STA TEMENT WERE DULY SUBMITTED BEFORE AO AT THE TIME OF ASSESSMENT PROCE EDING IN RESPONSE TO THE NOTICE ISSUED U/S. 142(1) OF THE ACT VIDE DATED 17. 12.2012. THE DONOR IS A REGULAR INCOME TAX ASSESSEE AND THERE IS NO EVIDENC E AVAILABLE WITH THE AO TO PROVE THAT THE GIFT IS BOGUS. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE HAS DELETED THE ADDITION MADE BY AO BY OBS ERVING AS UNDER:- I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL PLACED ON RECORD. I FIND FROM THE REPLY FILED BY THE ASSES SEE (PAGE 96 OF THE PAPER-BOOK) THAT COPY OF THE GIFT DEED ALONG WITH I NCOME TAX RETURN, BALANCE SHEET AND BANK STATEMENT OF THE DONOR WAS S UBMITTED IN COURSE OF THE ASSESSMENT PROCEEDINGS. THE AO HAS NEITHER D ISPROVED NOR DISPUTED THE DOCUMENTS PRODUCED BEFORE HIM. UNDER T HE ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 13 CIRCUMSTANCES, THE AO WAS NOT JUSTIFIED IN HIS OBSE RVATION THAT THE ASSESSEE FAILED TO PRODUCE SUPPORTING DOCUMENTS IN TERMS OF THE NOTICE U/S. 142(1). IT WAS ARGUED BEFORE ME THAT THE COPY OF THE GIFT DEED WAS DULY SUBMITTED BEFORE THE ASSESSING OFFICER' THAT T HE GIFT IS DULY SHOWN IN THE ACCOUNTS OF THE DONOR WHO IS REGULARLY ASSES SED TO INCOME TAX; AND, THAT THE GIFT WAS RECEIVED THROUGH THE BANKING CHANNEL WHICH IS DULY REFLECTED IN THE BANK STATEMENT OF THE DONOR. I FIND MERIT IN THE SUBMISSION THAT, UNDER THE CIRCUMSTANCES, THE ASSES SEE HAS ESTABLISHED THE IDENTITY AND CREDITWORTHINESS OF TH E DONOR AND ALSO THE GENUINENESS OF THE TRANSACTIONS. ON THE OTHER HAND, THE AO HAS BROUGHT NO POSITIVE MATERIAL ON RECORD TO SHOW ANYT HING THAT COULD RAISE DOUBT OR SUSPICION ABOUT THE GENUINENESS OF THE GIF T. I ALSO FIND SUBSTANCE IN THE ARGUMENTS THAT THERE IS NO MATERIA L ON RECORD TO ESTABLISH THAT THE ASSESSEE WAS IN POSSESSION OF UN ACCOUNTED MONEY WHICH WAS PASSED ON TO THE DONOR AND THEN FLEW BACK IN THE FORM OF GIFT. THE ORDER OF THE AO IS NOT BASED ON PROPER FINDINGS . THE AO HAS SUMMARILY REJECTED THE EXPLANATION AND ALSO THE DOC UMENTS PRODUCED BEFORE HIM BY THE ASSESSEE MORE ON PRESUMPTION THAN ON FACTUAL GROUND. THE AO IS SUPPOSED TO MAKE ASSESSMENT ON TH E BASIS OF THE MATERIAL AVAILABLE ON RECORD. BUT, IN THE PRESENT C ASE, THE AO HAS MADE THE ADDITION PURELY ON THE BASIS OF PRESUMPTION AND ASSUMPTION. IN VIEW OF THE ABOVE, I AM OF THE OPINION THAT THE ADDITION ON ACCOUNT OF BOGUS GIFT IS NEITHER SUSTAINABLE IN LAW NOR ON FACT. GRO UND NO 3 IS ALLOWED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S ON THE FOLLOWING GROUND:- 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(APPEALS) HAS ERRED IN LAW AS WELL AS IN FACT IN DELETING THE ADDITION OF ACCOUNT OF BOGUS GIFT OF RS.1,50,000/-, WHERE TH E ASSESSEE HAS FAILED TO SUBSTANTIATE THE CREDITWORTHINESS OF THE ALLEGED DONOR. 16. BEFORE US BOTH PARTIES RELIED ON THE ORDER OF A UTHORITIES BELOW AS FAVOURABLE TO THEM. 17. WE HAVE HEARD RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT AO IN H IS ASSESSMENT ORDER HAS TREATED THE GIFT AS BOGUS ON THE GROUND THAT THE CR EDITWORTHINESS OF THE DONOR WAS NOT SUBSTANTIATED, HOWEVER ASSESSEE CLAIMED TO HAVE FILED ALL THE DETAILS IN RESPECT OF DONOR SUCH AS INCOME-TAX RETURN BANK STATEMENT, ETC. ADMITTEDLY, ITA NO.2486/KOL/2013 A.Y. 2011-12 DCIT, CC-XI, KOL. VS. SH MAYANK DAGA PAGE 14 THERE IS NO DISPUTE WITH REGARD TO THE GENUINENESS OF THE PARTY. THE DISPUTE BEFORE US ONLY RELATES TO THE CREDITWORTHINESS OF T HE DONOR. FROM THE PERUSAL OF THE ORDER OF AUTHORITIES BELOW, WE FIND THAT THE DO NOR HAS BEEN FILING HER INCOME TAX RETURN ON REGULAR BASIS. BESIDES THE ABO VE, WE ALSO FIND THE GIFT WAS PAID BY THE DONOR THROUGH BANKING CHANNEL AND G IFT WAS DULY SUPPORTED WITH THE GIFT DEED. UNDER SUCH CIRCUMSTANCES, WE FI ND THAT THE ASSESSEE HAS SUBMITTED THE NECESSARY DETAILS AND THE AO IS NOT A UTHORIZED TO VERIFY THE SOURCE OF SOURCE I.E. THE SOURCE OF MONEY IN THE HA NDS OF THE DONOR. THE GIFT RECEIVED BY ASSESSEE WAS THROUGH BANKING CHANNEL AN D THE ASSESSEE HAS FILED ALL THE NECESSARY SUPPORTING EVIDENCE. IN THI S VIEW OF THE MATTER, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). ACCORDINGLY, WE UPHOLD THE SAME. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 17. IN THE RESULT, REVENUES APPEAL STANDS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT 02 /06/2017 SD/- SD/- ( !') ( !') (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S $!% &- 02 / 06 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CENTRAL CIRCLE-XI, ROOM NO. 311, 3 RD FLOOR, AAYAKAR BHAWAN POORVA, 110, SHA NTY PALLY, KOLKATA-107 2. /RESPONDENT-SHRI MAYAAAAANK DAGA, 66/2 NIMTOLA GHAT STREET, KOLKATA-06 3. %.%/0 1 1 2 / CONCERNED CIT KOLKATA 4. 1 1 2- / CIT (A) KOLKATA 5. 567 /0, 1 /0 , / DR, ITAT, KOLKATA 6. 7:; <= / GUARD FILE. BY ORDER/ 1! , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 1 /0 ,