Amit Agarwal, Kolkata V. DCIT,C C-XXVII, KOLKATA, Kolkata

ITA 337/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4433 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 24-02-2014
• Court: TRIBUNAL
• Department Lawyers: RAJAT KUMAR KUREEL JCITSRDR
• Assessee Lawyers: S L KOCHAR
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Peak credit; Accommodation entries
• Section: 143(3); 131; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.337/KOL/2014 ASSESSMENT YEARS:2011-12 AMIT AGARWAL SHREE KRISHNA TRADE LINK, 40/5, STRAND ROAD,,6 TH FLOOR, ROOM NO. 38, KOLKTA-700 001 [ PAN NO.ACGPA 7486 E ] / V/S . DCIT, CENTRAL CIRCLE- XXVII, KOLKATA /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI S.L.KOCHAR, ADVOCATE & SHRI ANIL KOCHAR, ADVOCATE /BY RESPONDENT SHRI RAJAT KUMAR KUREEL, JCIT-SR-DR /DATE OF HEARING 26-07-2016 /DATE OF PRONOUNCEMENT 09-09-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-CENTRAL-II, KOLKATA DATED 28.01.2014. ASSESSMENT WAS FRAMED BY DCIT, CENTRAL CIRCLE-XXVII, KOLKATA U/S 143(3) OF T HE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 28.08.2013 FOR ASSESSMENT YEAR 2011-12. SHRI S.L.KOCHAR AND SHRI ANIL KOCHAR, LD. ADVOCATES APPEARED ON BEHALF OF ASSESSEE AND SHRI RAJAT KUMAR KUREEL, LD. SENIOR DR, REPRESE NTED ON BEHALF OF REVENUE. ITA NO.337/KOL/2014 A.Y.2 011-12 AMIT AGARWAL VS. DCIT, CC-XXVII, KOL . PAGE 2 2. SOLE ISSUE RAISED BY ASSESSEE IN HIS APPEAL IS T HAT LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER BY SUSTA INING THE ADDITION OF RS.1,09,50,000/- ON ACCOUNT OF UNEXPLAINED CASH CR EDIT. 3. FACTS IN BRIEF AS HAVE BEEN BROUGHT ON RECORD, A SSESSEE, AN INDIVIDUAL ENGAGED IN THE BUSINESS OF IRON AND STEEL PRODUCTS. FOR THE YEAR UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME O F RS. 2,51,820/-ON 28.09.2011. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY AND A CCORDINGLY, NOTICE U/S. 143(2) OF THE ACT WAS ISSUED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT SAVINGS BANK A/C NO. 0032010000846 6 WITH BANK OF BARODA, M.G. ROAD KOLKATA WAS NOT DISCLOSED IN THE IT RETURN. ON SCRUTINY OF THE BANK STATEMENT IT WAS NOTED THAT FOR THE YEAR UNDER CONSIDERATION A S UM OF 1,09,50,000/- WAS DEPOSITED BY WAY OF CASH IN THE SAID SB A/C ON DIFFERENT DATE S AS DETAILED BELOW:- TRANSACTION DATE DEPOSIT ( ) 07.03.2011 5,00,000/- 08.03.2011 9,00,000/- 10.03.2011 5,00,000/- 11.03.2011 9,00,000/- 12.03.2011 9,00,000/- 15.03.2011 9,00,000/- 16.03.2011 9,00,000/- 18.03.2011 7,00,000/- 21.03.2011 5,50,000/- 22.03.2011 9,00,000/- 23.03.2011 8,50,000/- 26.03.2011 9,00,000/- 29.03.2011 4,00,000/- 30.03.2011 9,50,000 TOTAL 1,09,50,000/- ASSESSEE WAS CALLED BY ISSUING SUMMONS U/S. 131 OF THE ACT AND ACCORDINGLY STATEMENT U/S. 131 OF THE ACT WAS RECORDED ON OATH WHEREIN ASSESSEE ACCEPTED THAT HE ITA NO.337/KOL/2014 A.Y.2 011-12 AMIT AGARWAL VS. DCIT, CC-XXVII, KOL . PAGE 3 WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN L IEU OF CASH. HOWEVER, HE WAS NOT AWARE ABOUT THE NAME OF THE BENEFICIARIES AS THE AS SESSEE FAILED TO PROVIDE THE IDENTITY OF THE PERSONS FROM WHOM THE CASH WAS ACCEPTED AND CHEQUES WERE ISSUED TO THEM. IT WAS HELD THAT CASH DEPOSITED IN HIS BANK A/C BELONG ED TO ASSESSEE AND THIS IS HIS UNEXPLAINED INCOME. ACCORDINGLY, AO TREATED THE ENT IRE AMOUNT OF CASH DEPOSITED IN HIS BANK A/C AS UNDISCLOSED INCOME AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHEREAS ASSESSEE SUBMITTED THAT HE HAS ISSUED CHEQUES TO THIRD PARTI ES IN LIEU OF CASH SO CASH DEPOSITED WITH HIS BANK ACCOUNT DOES NOT BELONG TO HIM. THERE FORE NO ADDITION CAN BE MADE. BEFORE LD. CIT(A) ASSESSEE ALSO CONSENTED WITHOUT P REJUDICE TO ABOVE THAT ENTIRE CASH DEPOSIT CANNOT BE TREATED AS INCOME OF ASSESSEE. BE FORE LD. CIT(A) ASSESSEE SUBMITTED THAT AO SHOULD HAVE APPLIED THE PEAK CRED IT THEORY TO ARRIVE AT THE UNDISCLOSED INCOME AS THERE WERE DEPOSIT AND WITHDR AWALS IN THE BANK A/C OF ASSESSEE. IT IS WELL SETTLED THAT UNDISCLOSED INCOME OF ASSES SEE SHOULD BE DETERMINED ON THE BASIS OF PEAK CREDIT METHOD. THE ASSESSEE, ACCORDIN GLY, OFFERED AN AMOUNT OF 9.20 LAKH BEING PEAK CREDIT BALANCE AS ON 15.03.2011 FOR TAXES. HOWEVER, LD. CIT(A) DISREGARDED THE PLEA OF ASSESSEE BY OBSERVING AS UN DER:- 5. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE BANK STATEMENT OF THE SAVINGS BANK ACCOUNT NO. 00320100008466 WITH BANK OF BARODA , M.G. ROAD, KOLKATA. I HAVE ALSO CONSIDERED THE DECISIONS OF THE JURISDI CTIONAL ITAT RELIED UPON BY THE APPELLANT. ON CAREFUL CONSIDERATION OF THE FACT S, I AM OF THE OPINION THAT THERE IS NO DISPUTE ON THE FACT THAT THE APPELLANT S BANK ACCOUNT UNDER REFERENCE WITH BANK OF BARODA WAS AN UNDISCLOSED BA NK ACCOUNT. ON PERUSAL OF THE BANK STAT AND NATURE OF ENTRIES OF DEBITS AN D CREDITS, IT IS OBSERVED THAT THE CASH WAS DEPOSITED BY THE APPELLANT ON VARIOUS DATES AND IMMEDIATELY THEREAFTER CHEQUES WERE ISSUED AND THE AMOUNT OF CA SH DEPOSITED WAS WITHDRAWN. IT IS OBSERVED THAT IN THE COURSE OF ASS ESSMENT PROCEEDINGS THE AO ALLOWED SEVERAL OPPORTUNITIES TO THE APPELLANT TO E XPLAIN THE SOURCE OF CASH DEPOSIT IN THE UNDISCLOSED BANK ACCOUNT. HOWEVER, N O COMPLIANCE WAS MADE BEFORE HIM. THE APPELLANT HAD ONLY STATED BEFORE TH E AO THAT THE CASH WAS RECEIVED BY HIM FROM THE PARTIES BUT HE NEITHER DIS CLOSED THE NAMES AND ADDRESSES OF SUCH PARTIES NOR EXPLAINED THE SOURCE OF CASH DEPOSIT. THUS, THE APPELLANT HAS FAILED TO DISCHARGE THE ONUS CASH ON HIM. THE CASH WAS FOUND CREDITED IN THE UNDISCLOSED BANK ACCOUNT OF THE APP ELLANT AND THEREFORE THE ONUS WAS ON HIM TO EXPLAIN THE SOURCE CASH AND IF T HE SAME WAS RECEIVED FROM THE PARTIES, EVEN THEN THE ONUS WAS HIM TO DISCLOSE THE IDENTITY OF SUCH PARTIES AND THEIR CREDITWORTHINESS. HOWEVER, THE APPELLANT KEPT HIS SILENCE AND DID NOT ITA NO.337/KOL/2014 A.Y.2 011-12 AMIT AGARWAL VS. DCIT, CC-XXVII, KOL . PAGE 4 DISCLOSE AND EXPLAIN ANYTHING. UNDER THE CIRCUMSTAN CES, I AM OF THE OPINION THAT THE AO WAS JUSTIFIED IN MAKING ADDITION U/S. 6 8 OF THE ACT ON ACCOUNT OF UNEXPLAINED CASH CREDIT. I AM OF THE OPINION THAT EVEN THE ALTERNATIVE CLAIM OF THE APPELLANT THAT THE ENTIRE CASH DEPOSITED IN THE UNDISCLOSED BANK CANNO T BE HIS INCOME AND THAT THE AO OUGHT TO HAVE APPLIED PEAK CREDIT THEORY IN RESP ECT OF THE CASH DEPOSITS; IS NOT ACCEPTABLE BECAUSE IN THE SAID BANK ACCOUNT THE RE ARE DEPOSITS OF CASH ON VARIOUS DATES AND THEREAFTER THE WITHDRAWAL WAS MAD E BY CHEQUES. THEREFORE WAS NO CASH WITHDRAWAL AT ALL FROM THE SAID BANK AC COUNT. THE PEAK CREDIT THEORY IS APPLICABLE IN SUCH CASES WHERE THERE IS C ASH DEPOSIT AND CASH WITHDRAWAL AND IN SUCH A SITUATION THE PRESUMPTION IS THAT THE CASH WITHDRAWN WAS AVAILABLE FOR RE-DEPOSIT IN THE BANK ACCOUNT, I F THERE IS NO EVIDENCE THAT THE CASH WITHDRAWN WAS EXPENDED OR INVESTED. HOWEVER, I N THE CASE OF APPELLANT THERE IS NO CASH WITHDRAWAL AT ALL FROM THE UNDISCL OSED BANK ACCOUNT AND THE ENTIRE MONEY WAS GONE AWAY BY WITHDRAWING THROUGH C HEQUES. THERE IS NO EVIDENCE THAT THE MONEY WITHDRAWN WAS AVAILABLE FOR ROTATION AND RE-DEPOSIT IN THE BANK ACCOUNT. THUS, THIN THE CASE OF APPELLANT THERE CANNOT BE PRESUMPTION THAT THE MONEY WITHDRAWN WAS AVAILABLE WITH THE APP ELLANT FOR RE-DEPOSIT AND HENCE IN HIS CASE PEAK CREDIT THEORY IS NOT APPLICA BLE. IN THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT HAS RELIED ON C ERTAIN DECISIONS OF THE ITAT, KOLKATA WHEREIN PEAK CREDIT THEORY WAS APPLIED AND UPHELD BY THE TRIBUNAL. HOWEVER, ALL THESE DECISIONS ARE DISTINGUISHABLE ON FACTS BECAUSE IN THOSE CASES THERE WERE BOTH CASH AND CHEQUES DEPOSITED AN D WITHDRAWALS. HOWEVER, IN THE CASE OF APPELLANT, AS MENTIONED ABOVE, THERE WAS NO CASH WITHDRAWAL AT ALL FROM THE BANK ACCOUNT. THERE WAS 100% DEPOSITED OF CASH AND 100% WITHDRAWAL THROUGH CHEQUES OF EQUAL AMOUNT. THUS, N O WITHDRAWN AMOUNT WAS AVAILABLE WITH THE APPELLANT TO RE-DEPOSIT THE SAME IN THE UNDISCLOSED BANK ACCOUNT. THE APE HAS ALSO NOT CLAIMED THAT HE WAS E NGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. IT MEANS, HE HIMSE LF HAD DEPOSITED HIS UNACCOUNTED CASH IN THE UNDISCLOSED BANK ACCOUNT AN D ISSUE CHEQUES TO PARTIES, MAY BE FOR PURCHASE OF IRON AND STEEL PROD UCTS IN WHICH HE DEALS OR TO MAKE SOME OTHER INVESTMENTS. BUT, THE FACT REMAINS THAT NEITHER IN THE COURSE OF ASSESSMENT PROCEEDINGS NOR IN THE COURSE OF APPELLA TE PROCEEDINGS, THE APPELLANT DISCLOSED THE NAME AND ADDRESSES OF THE P ARTIES FROM WHOM CASH WAS CLAIMED TO HAVE BEEN RECEIVED NOR HE EXPLAINED THE SOURCE OF CASH DEPOSITS. BY KEEPING SILENCE AND NOT DISCLOSING THE CORRECT FACT S, THE APPELLANT CANNOT AVAIL THE BENEFIT OF THE PEAK CREDIT THEORY BY SAYING THA T THE ENTIRE CASH DEPOSIT CANNOT BE HIS INCOME. IN VIEW OF ABOVE, IT IS HELD THAT THE AO WAS JUSTIFIED IN MAKING ADDITION OF RS.1,09,50,000/- U/S. 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED CASH CREDITS IN THE UNDISCLOSED BANK AC COUNT AND THAT, THE PEAK CREDIT THEORY IS NOT APPLICABLE IN THE CASE OF APPE LLANT. THE ADDITION MADE BY THE AO IS CONFIRMED. TE GROUND NO. 1 AND 2 ARE DISM ISSED. BEING AGGRIEVED, BY THIS ORDER OF LD. CIT(A) ASSESS EE CAME IN SECOND APPEAL BEFORE US. ITA NO.337/KOL/2014 A.Y.2 011-12 AMIT AGARWAL VS. DCIT, CC-XXVII, KOL . PAGE 5 5. BEFORE US LD. AR SUBMITTED THAT THE PEAK CREDIT THEORY SHOULD BE APPLIED IN THE INSTANT CASE, AS ASSESSEE WAS ENGAGED IN PROVIDING THE ACCOMMODATION ENTRIES TO VARIOUS PARTIES AND CASH DEPOSITED IN THE BANK ACCO UNT OF ASSESSEE DO NOT BELONG TO HIM. HE AGAIN STATED THAT ASSESSEE WAS ACTING JUST AS A CONDUIT IN CONVERTING THE UNACCOUNTED MONEY INTO ACCOUNTING FORM THROUGH VARI OUS PARTIES AND INCOME OF ASSESSEE OUT OF THE TRANSACTION WAS IN THE FORM OF COMMISSION WHICH IS OF NEGLIGIBLE VALUE. ON THE OTHER HAND, LD. DR SUBMITTED THAT ASSESSEE E NGAGED IN THE TRADING BUSINESS OF IRON AND STEEL PRODUCTS AND IN THE INSTANT CASE CAS H WAS DEPOSITED AND WITHDRAWN BY ISSUING CHEQUES TO VARIOUS PARTIES SO THE PEAK CRED IT THEORY CANNOT BE APPLIED. HAD THERE BEEN CASH DEPOSIT AND CASH WITHDRAWAL THEN ON LY PEAK CREDIT THEORY SHOULD BE APPLIED. SINCE THE MONEY HAS BEEN WITHDRAWN FROM TH E BANK IN THE FORM OF CHEQUE THEN ASSESSEE MUST BE AWARE OF THOSE PARTIES TO WHO M CHEQUES HAD BEEN ISSUED. IN THE ABSENCE OF ANY INFORMATION ABOUT THE PARTIES THE EN TIRE AMOUNT OF CASH DEPOSITED SHOULD BE TREATED AS UNDISCLOSED INCOME IN THE HAND S OF ASSESSEE. LD. DR RELIED ON THE ORDER OF AUTHORITIES BELOW AND PRAYED BEFORE THE BE NCH TO CONFIRM THE SAME. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT AUTHORITIES BELOW HAVE TREATED THE ENTIRE CASH DEPOSITS WITH THE BANK ACCOUNT OF ASSES SEE AS UNDISCLOSED INCOME ON THE PREMISE THAT ASSESSEE FAILED TO PRODUCE THE PARTIES TO WHOM THE CHEQUES WERE ISSUED. AUTHORITIES BELOW HAS ALSO DENIED THE ARGUMENTS MAD E BY ASSESSEE THAT HE WAS ENGAGED IN THE BUSINESS OF ACCOMMODATING ENTRIES PR OVIDED TO VARIOUS PARTIES. NOW THE QUESTION BEFORE US ARISE SO AS TO WHETHER THE C ASH DEPOSIT IN THE BANK ACCOUNT OF ASSESSEE AMOUNTS TO UNDISCLOSED INCOME. IN THE AFOR ESAID FACTS AND CIRCUMSTANCES, WE FIND THAT VARIOUS COURTS HAVE HELD TO APPLY THE PEA K CREDIT THEORY AND IN THIS REGARD, WE RELY IN THE ORDER OF HONBLE KOLKATA TRIBUNAL IN TH E 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. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE FACTS OF THE CASE THAT T HE ASSESSEE HAS DEPOSITED CASH AMOUNTING TO RS.83,48,16,130/- IN SIX UNDISCLOSED B ANK ACCOUNT MAINTAINED WITH AXIS BANK LTD. THE ASSESSEE BEFORE AO FILED WORKING OF PEAK CREDIT IN RELATION TO ITA NO.337/KOL/2014 A.Y.2 011-12 AMIT AGARWAL VS. DCIT, CC-XXVII, KOL . PAGE 6 CASH DEPOSITS MADE IN THESE SIX BANK ACCOUNTS AND R EQUESTED THE AO TO ASSESS THE PEAK CREDIT AMOUNTING TO RS.1,01,40,000/-. THE ASSE SSEE CLAIMED TO HAVE COMPUTED THE PEAK CREDIT OF THESE SIX BANK ACCOUNTS TAKING A LL THE DEPOSITS AND WITHDRAWALS. THE AO WHILE FRAMING ASSESSMENT TREATED THE UNEXPLA INED CASH CREDIT/UNEXPLAINED INVESTMENT IN BANK I.E. CASH DEPOSITS MADE IN THESE SIX BANK ACCOUNTS AND ADDED TO THE RETURNED INCOME OF THE ASSESSEE IN TOTAL. THE A SSESSEE NOW BEFORE US CLAIMED THAT HE IS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMOD ATION ENTRIES AND FOR THIS HE PLACED RELIANCE ON THE STATEMENT RECORDED BY THE AO U/S. 131 OF THE ACT ON 13.12.2011 WHEREIN HE EXPLAINED THE MODUS OPERANDI OF HIS BUSI NESS. THE RELEVANT STATEMENT READS AS UNDER: BINOD KUMAR JHA, AY 2009-10 BINOD KUMAR JHA, AY 200 9-10 BINOD KUMAR JHA, AY 2009-10 BINOD KUMAR JHA, AY 2009-10 IN VIEW OF T HE 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 RET URNS OF INCOME PARTICULARLY FOR AYS 2008-09, 2009-10 AND 2010-11. NOW BEFORE US ASS ESSEE'S COUNSEL ARGUED THAT EVEN PEAK CREDIT CANNOT BE ADDED IN THE HANDS OF TH E ASSESSEE 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 PAPE R BOOK FILED BY ASSESSEE AND PARTICULARLY PAGES 1 TO 41, WHEREIN EXTRACT FROM BA NK STATEMENT OF SIX UNDISCLOSED BANK ACCOUNTS OF AXIS BANK AND CALCULATION SHOWING PEAK CREDIT AFTER CONSOLIDATION IS ENCLOSED. THERE IS NO DISPUTE ABOUT THE CASH DEP OSITED IN THESE SIX BANK ACCOUNTS MAINTAINED WITH AXIS BANK LTD. WE FIND FROM THE ABO VE STATEMENT RECORDED BY THE AO OF THE ASSESSEE PARTICULARLY QUESTION NOS. 14 AN D 15 THAT ASSESSEE IS ONLY A CONDUIT IN A BIG SYNDICATE OF ACCOMMODATION ENTRY P ROVIDERS AND HE HAS EARNED ONLY COMMISSION INCOME FOR PROVIDING ACCOMMODATION ENTRY. THE ASSESSEE USED TO RECEIVE CASH AND DEPOSIT THE SAME IN ONE OF THESE S IX BANK ACCOUNTS AND ISSUED CHEQUE OF THE SAME AMOUNT AS CAN BE SEEN FROM THE E XTRACTS OF BANK STATEMENTS OF THESE SIX BANK ACCOUNTS FILED BY ASSESSEE IN ITS PA PER BOOK. ON THE VERY DATE OF CASH DEPOSIT, CHEQUE IS ISSUED OF THE SIMILAR AMOUNT. TH IS CLEARLY REVEALS THAT THE ASSESSEE IS BEING USED FOR PROVIDING ACCOMMODATION ENTRY ONL Y. ALL THE DEPOSITS MADE IN THESE SIX BANK ACCOUNTS HAVE BEEN TRANSFERRED TO MA PLE ADVISORY SERVICES PVT. LTD. AND IN TURN MAPLE ADVISORY SERVICES PVT. LTD. HAS F URTHER TRANSFERRED THIS AMOUNT TO SIX PRIVATE LIMITED COMPANIES NAMELY, GOKUL DIST RIBUTORS, INDIGO COMMOTRADE, JUPITER TRADELINK, NEW ERA COMMOTRADE, SWIFT DISTRI BUTORS AND ZENITH MANAGEMENT AND ALL THESE PRIVATE LIMITED COMPANIES ARE HAVING THEIR BANK BINOD KUMAR JHA, AY 2009-10 ACCOUNTS IN THE SAME BANK BRA NCH. THIS MODUS OPERANDI CLEARLY REVEALS THAT THE ASSESSEE IS MERELY AN ACCO MMODATION ENTRY PROVIDER AND NOTHING ELSE. 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 C ASE OF ITO VS. SHRI PIYUSH PODDAR IN ITA NO. 1050/KOL/2011 FOR AY 2006-07 DATED 07.0 9.2015, WHEREIN EXACTLY ON SIMILAR CIRCUMSTANCES, THE TRIBUNAL HAS DIRECTED THE AO TO ASSESS THE PEAK CREDIT AND BY OBSERVING 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 USED B Y HIM ONLY FOR THE LIMITED ITA NO.337/KOL/2014 A.Y.2 011-12 AMIT AGARWAL VS. DCIT, CC-XXVII, KOL . PAGE 7 PURPOSE OF PROVIDING ACCOMMODATION ENTRIES TO VARIO US PARTIES. INITIALLY THE ASSESSEE TOOK A STAND THAT HE WAS DERIVING FINANCE COMMISSION @.25% OF ALL THE TRANSACTIONS IN THE ACCOMMODATION ENTRY BUSINESS AN D OFFERED THE SAME TO TAX., HOWEVER, HE SHIFTED HIS STAND BY ACCEPTING THE PEAK CREDIT THEORY BEFORE THE LD. CIT(A). THIS IS EVIDENT FROM THE FACT THAT HE HAD N OT PREFERRED FURTHER APPEAL BEFORE THE TRIBUNAL AGAINST THE LD. CIT(A)'S ORDER. IN ACC ORDANCE WITH THE DIRECTIONS OF THE HON'BLE CALCUTTA HIGH COURT, WE HAD EXAMINED THE VE RACITY OF THE CLAIM OF PEAK CREDIT THEORY MADE BY THE ASSESSEE IN RESPECT OF AL L THE TRANSACTIONS IN CENTRAL BANK OF INDIA. IT IS OBSERVED THAT THE ASSESSEE HAD ROTA TED HIS OWN FUNDS IN CENTRAL BANK OF INDIA FOR PROVIDING ACCOMMODATION ENTRIES TO VAR IOUS 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, CONFIRMATION OF THE PARTIES TO WHOM THE PAYMENTS WERE MADE AND FROM PAYMENTS WERE RECEIVED BY THE ASSESSEE. HENCE IT IS PROVED THAT TRANSACTIONS CONTAINED IN THE BANK ACCO UNT ARE NOT GENUINE. ONCE THE TRANSACTIONS IN THE BANK ACCOUNT ARE PROVED INGENUI NE THEN IT IS AN ACCEPTED PRACTICE OF ADOPTING 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 THE HON'BLE ALLAHABAD HIGH COURT REPORT ED IN 276 ITR 38 WHICH REJECTED THE CONCEPT OF PEAK CREDIT THEORY IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. IN THE CASE BEFORE THE HON'BLE ALLAHABAD HIGH COURT, T HE ASSESSEE CLAIMED THAT THE CREDITS IN THE BANK ACCOUNT REPRESENTED GENUINE LOA NS BORROWED AND THE CHARACTER OF THE LOAN TRANSACTIONS WERE NOT DISPUTED AND HENC E THEIR LORDSHIPS OF ALLAHABAD HIGH COURT HELD THAT THE PEAK CREDIT THEORY WOULD N OT 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 ACCOMMODATION EN TRY BUSINESS WITH HIS OWN FUNDS AS WELL AS FUNDS RECEIVED FROM PARTIES TO WHO M THE ACCOMMODATION ENTRIES ARE PROVIDED BY THE ASSESSEE AND THE NAMES AND ADDR ESSES OF SUCH PARTIES COULD NOT BE PROVIDED BY HIM FOR WANT OF MAINTENANCE OF BOOKS AND DETAILS. THIS GOES TO PROVE THAT THE GENUINENESS OF THE TRANSACTIONS CONTAINED IN THE ACCOMMODATION ENTRY BUSINESS AS REFLECTED IN THE SAID BANK ACCOUNT COUL D NOT BE PROVED BY THE ASSESSEE. THIS IS A DISTINCT AND CRUCIAL FACTOR WHICH DISTING UISHES 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 CLOSELY LINKED WIT H AND RELATED TO EACH OTHER ON DAY-TO- DAY BASIS. IT IS ALSO OBSERVED THAT THE LD. AO HAD NOT BROUGHT ANY MATERIAL OR EVIDENCE ON RECORD TO PROVE THAT THE WITHDRAWALS MADE BY THE ASSESSEE FROM THE SAID BANK ACCOUNT HAVING UTILIZED FOR MAKING ANY OT HER INVESTMENTS OUTSIDE THE BOOKS OR MEANT FOR ANY OTHER PURPOSE OTHER THAN FOR ACCOMMODATION ENTRY BUSINESS. IT IS PERTINENT TO LOOK INTO THE DECISION RENDERED BY THE KOLKATA TRIBUNAL IN THE CASE OF MAHESH KUMAR GUPTA IN IT(SS)A. NO.11/KO L/2014 DATED 0.2.2005 WHEREIN ITAT OBSERVED THAT THE CLAIM OF THE ASSESSE E WAS THAT THE CHEQUE WITHDRAWALS WERE FOR GIVING LOAN FOR THE SHORT PERI OD. HELD AS FOLLOWS :- BINOD KUMAR JHA, AY 2009-10 'THE AO CANNOT REFUSE T O GRANT SET OFF FOR THE WITHDRAWAL MADE BY CHEQUE WITHOUT BRINGING ON RECOR D ANY MATERIALS SO THAT THE AMOUNT WITHDRAWN BY CHEQUE CANNOT HAVE BEEN RECEIVE D BACK BY THE ASSESSEE AND UTILIZED BY HIM IN MAKING SUBSEQUENT DEPOSITS BY CH EQUE. TAKING ALL THIS INTO CONSIDERATION, WE ARE OF THE CONSIDERED OPINION THA T AO SHOULD ADOPT PEAK CREDIT METHOD TO ARRIVE AT THE UNDISCLOSED INCOME OF THE A SSESSEE 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 ITR 570(SC) WHEREIN THEIR LORDSHIP S HAVE HELD THAT MERE UNSATISFACTORINESS OF THE EXPLA NATION OFFERED BY THE ASSESSEE, DOES NOT, AND NEED NOT, AUTOMATICALLY RESULT IN DEE MING THE VALUE OF INVESTMENT TO BE THE INCOME OF THE ASSESSEE. THAT IS STILL A MATT ER WITHIN THE DISCRETION OF THE OFFICER ITA NO.337/KOL/2014 A.Y.2 011-12 AMIT AGARWAL VS. DCIT, CC-XXVII, KOL . PAGE 8 AND, THEREFORE, OF THE TRIBUNAL. IN OTHER WORDS, TH E DISCRETION HAS BEEN CONFERRED ON THE INCOME TAX OFFICER U/S 69 OF THE ACT TO TREAT T HE SOURCE OF INVESTMENT AS THE INCOME OF THE ASSESSEE IF THE EXPLANATION OFFERED B Y THE ASSESSEE IS NOT FOUND SATISFACTORY AND THE SAID DISCRETION HAS TO BE EXER CISED 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 CASE WHE RE THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE UNSATISFACTORY. 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 APPRECIATE THE ACTION OF THE LD. AO IN TAXING THE ENTIRE CREDITS OF RS.6,30,89,413/- AS UNDISCLOSED I NCOME OF THE ASSESSEE FOR A.Y.2006-07. TO PUT THIS ONGOING DISPUTE TO REST, I N THE INTEREST OF JUSTICE AND FAIR PLAY, WE DIRECT THE LD. AO TO ASSESS THE PEAK CREDI T IN THIS CASE IN RESPECT OF BOTH CASH AS WELL AS CHEQUE TRANSACTION CONTAINED IN THE SAID BANK ACCOUNT BY VERIFYING THE VERACITY OF THE FIGURES WORKED OUT BY THE ASSESSE A ND BRING TO TAX THE SAME. WE DRAW SUPPORT FROM THE DECISION RENDERED BY 'C' BENC H OF KOLKATA ITAT IN ITA NO.2069/KOL/2010 FOR A.Y.2007-08 DATED 23.03.2012 I N THE CASE OF ITO VS SHRI GANGA PRASAD VYAS WHEREIN IT WAS HELD THAT 'WE FIND THAT THE ASSESSE E HAS FILED STATEMENT OF PEAK CREDIT I.E. DEPOSIT AND WITHDRAWA LS FROM THE BANK ACCOUNT OF SBBJ WHEREIN THE PEAK CREDIT AS ON 24.01.2007 WAS A T RS.1,80,247/-. WE FURTHER FIND THAT THE MONEY DEPOSITED IN THE BANK ACCOUNT W AS WITHDRAWN EITHER ON THE SAME DAY OR ON SUBSEQUENT DATES. IT IS SEEN THAT TH E TOTAL ADDITION OF THE AGGREGATE DEPOSITS IN THE BANK ACCOUNT AFTER GIVING BENEFIT O F WITHDRAWALS IS THE PEAK AMOUNT AND IN THAT CASE PEAK AMOUNT IS TO BE ADDED. WE FIN D THAT 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 BANK AC COUNT REPRESENTS UNDISCLOSED INCOME OF THE ASSESSEE TO BE ASSESSED AS UNDISCLOSE D INCOME BUT QUA ONLY THE PEAK AMOUNT. THE ASSESSEE HAS FILED COMPLETE STATEMENT O F PEAK DEPOSIT AND WITHDRAWALS WHICH IS AT RS.1,87,247/- AND BEFORE CIT(A). WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DIRECTED THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF PEAK AMOUNT AND WE CONFIRM 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 CONSTRUE D AS A CONCLUSIVE PROOF IN THE HANDS OF THE BENEFICIARY IN THE SAID BANK ACCOUNT F OR EXPLAINING THEIR AMOUNTS. ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE FILE OF THE LD. AO TO COMPLETE THE ASSESSMENT IN ACCORDANCE WITH THE DIRECTIONS MENTIONED HEREINA BOVE.' 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 ACCOUNTS WITH AXIS BANK LTD. IN LIEU OF CASH DEPOSITS ADDED BY THE AO AT RS.83,48,16,130/-. ACCORDINGLY, THE AO WILL VERIFY THE PEAK AND WILL MAKE BINOD KUMAR JHA, AY 2009-10 ADDITION OF T HE PEAK AMOUNT ONLY. ACCORDINGLY, THIS ISSUE OF ASSESSEE'S APPEAL IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. FROM THE ABOVE, WE CONCLUDE THAT ASSESSEE HAS FURNI SHED HIS STATEMENT ON OATH STATING THAT HE IS ENGAGED IN PROVIDING ACCOMMODATING ENTRI ES TO VARIOUS PARTIES AND FOR THIS ACT EARNED NOMINAL AMOUNT OF COMMISSION INCOME. FRO M THE PERUSAL OF BANK STATEMENT, WE FIND THAT CASH WAS DEPOSITED AND IMME DIATELY IT WAS TRANSFERRED TO THE ACCOUNT OF THE PARTY LEAVING NEGLIGENT AMOUNT OF BA LANCE IN THE BANK ACCOUNT OF ASSESSEE. IN OUR CONSIDERED VIEW, WE CONCLUDE THAT ASSESSEE IS ENGAGED IN PROVIDING ITA NO.337/KOL/2014 A.Y.2 011-12 AMIT AGARWAL VS. DCIT, CC-XXVII, KOL . PAGE 9 ACCOMMODATED ENTRIES TO THE PARTIES. HAD THERE BEEN THE BUSINESS OF THE IRON AND STEEL OF THE ASSESSEE THEN THE LOWER AUTHORITIES SHOULD H AVE BROUGHT ON RECORD THE EVIDENCE OF THE BUSINESS BUT THE LD. DR FAILED TO BRING THE SAME. 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 THE ABSEN CE OF ANY INFORMATION ABOUT THE IRON & STEEL BUSINESS OF THE ASSESSEE, WE ARE ACCOR DINGLY INCLINED TO APPLY THE PEAK CREDIT THEORY TO TAX THE UNDISCLOSED INCOME OF ASSE SSEE. WE REVERSE THE ORDER OF AUTHORITIES BELOW. AO IS DIRECTED ACCORDINGLY. THIS GROUND OF ASSESSEE IS ALLOWED IN TERMS OF ABOVE. 7. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 09 /09/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP - 09 /09/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-AMIT AGARWAL, SHREE KRISHNA TRADE LINK, 40/5, STRAND ROAD, (6 TH FLOOR), ROOM NO38, KOLKATA700 001 2. /RESPONDENT-DCIT, CENTRAL CIRCLE-XXVII, KOLKATA 3. ' % / CONCERNED CIT 4. % - / CIT (A) 5. & ))' , ' / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORD ER/ , / ',