ITO, New Delhi V. M/s Salwan Developers & Promoters (P) Ltd., New Delhi

ITA 3535/DEL/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58880 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 06-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 11-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRANJAN KOULI
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Peak credit; Source of fund
• Section: 143(3); 69; 145; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.3849/DEL/2009 ASSESSMENT YEAR : 2006-07 SALWAN DEVELOPERS & PROMOTERS (P) LTD., A-4/181, SECTOR 17, ROHINI, DELHI. PAN : AAACS1320E VS. ITO, WARD 7(2), NEW DELHI. ITA NO.3535/DEL/2009 ASSESSMENT YEAR : 2006-07 ITO, WARD 7(2), NEW DELHI. VS. SALWAN DEVELOPERS & PROMOTERS (P) LTD., A-4/181, SECTOR 17, ROHINI, DELHI. PAN : AAACS1320E (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI NIRANJAN KOULI, CIT, DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THESE ARE CROSS APPEALS AND THEY ARE DIRECTED AGAINST T HE ORDER PASSED BY THE CIT (A) DATED 26 TH JUNE, 2009 FOR ASSESSMENT YEAR 2006- 07. THE GROUNDS OF APPEAL READ AS UNDER:- ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 2 ASSESSEES APPEAL 1. THAT THE CIT (A) WAS NOT JUSTIFIED IN SUSTAINING ADDI TION OF RS.30,72,737/- BY APPLYING NET PROFIT RATE OF 5% ON THE GROSS CONTRACT RECEIPTS. 2. THAT THE APPLICATION OF NET PROFIT RATE OF 5% IS HIGHL Y EXCESSIVE AND ARBITRARY CONSIDERING THAT NET PROFIT RATE OF 1.53% DECLARED WAS ACCEPTED WHILE COMPLETING THE ASSESSMENT U /S 143(3) FOR THE ASSESSMENT YEAR 1997-98. 3. THAT THE CIT (A) WAS WRONG IN CONFIRMING THE ADDITIO N OF RS.5,28,00,568/- U/S 68 OF THE IT ACT, 1961. 4. THAT THE CIT (A) WAS UNJUSTIFIED IN HOLDING THAT THEOR Y OF PEAK CREDIT CANNOT BE APPLIED TO THE CASE OF THE ASSESSEE. 5. THAT NO VALID AND REASONABLE BASIS HAD BEEN ADVAN CED BY CIT (A) IN REJECTING THE THEORY OF PEAK CREDITS. 6. THAT THE CIT (A) HAD NOT PROPERLY APPRECIATED THE FAC TS OF THE CASE WHILE REJECTING THE THEORY OF PEAK CREDITS. 7. THAT THE THEORY OF PEAK CREDITS IS APPLICABLE TO THE F ACTS OF THE CASE AS THERE ARE CREDITS AND CORRESPONDING DISBUR SEMENTS IN THE BANK ACCOUNT. 8. THAT THE PEAK CREDITS IN THIS CASE WERE WORKED OUT AT RS.30,03,024/- AS ON 05.08.2005. 9. THAT THE CIT (A) FAILED TO CONSIDER THE FACT THAT WHERE ASSESSMENT IS COMPLETED BY APPLYING NET PROFIT RATE NO F URTHER ADDITION OF UNEXPLAINED CREDITS IN THE BANK ACCOUNT IN AGAIN LOOKING TO BANK ENTRIES IS JUSTIFIABLE. 10. THAT THE CIT (A) FAILED TO CONSIDER THE VARIOUS JUD ICIAL DECISIONS IN SUPPORT OF THE ABOVE SAID CONTENTION. 11. THAT THE CIT (A) FAILED TO ALLOW THE NECESSARY SET O FF OF INTANGIBLE ADDITION AGAINST OTHER INCOME OF THE ASSESSEE IGNORING THE DECISION OF THE APEX COURT. 12. THAT NO INTEREST U/S 234A, 234B, 234 AND 234D IS L EVIABLE. IT IS PRAYED THAT NECESSARY RELIEF ADMISSIBLE MAY KIND LY BE ALLOWED. ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 3 REVENUES APPEAL 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-X, NEW DELHI ERRED IN LAW IN DELETING THE ADDITION OF RS.30 LAC MADE BY THE A.O. U/S 69 OF THE IT ACT, 1961. 2. LD. CIT (A) ERRED IN LAW AND ON THE FACTS AND CIRC UMSTANCES OF THE CASE IN REDUCING THE NET PROFIT OF THE ASSESSEE FROM 8% TO 5% OF GROSS CONTRACTUAL RECEIPTS. 2. THE ASSESSEE IS A CIVIL CONTRACTOR AND IT FILED ITS RE TURN OF INCOME AT A LOSS OF ` 1,66,971/- ON 29 TH DECEMBER, 2006. THE CASE WAS TAKEN UP FOR SCRUTINY AND VARIOUS NOTICES WERE ISSUED BY THE A SSESSING OFFICER WHICH REMAINED UNCOMPLIED WITH. THE BOOKS O F ACCOUNT WERE NOT PRODUCED, NO DETAILS WERE FILED. THE ASSESSING OFFI CER ALSO ISSUED NOTICES TO THE AUDITORS OF THE ASSESSEE COMPANY WHICH ALSO REMAINED UNCOMPLIED WITH. ULTIMATELY, ON 25 TH SEPTEMBER, 2008 THE ASSESSING OFFICER ISSUED FINAL NOTICE TO THE ASSESSEE TO SHOW CAUSE A S TO WHY: (I) THE BOOKS OF ACCOUNT SHOULD NOT BE REJECTED U/S 145 (3 ) OF THE ACT; (II) NET PROFIT SHOULD NOT BE TAKEN @ 8% OF THE CIVIL CON TRACTUAL RECEIPT OF ` 6,14,54,741/-; 100% OF THE MISCELLANEOUS RECEIPT SHOWN AT ` 2,11,451/- SHOULD NOT BE CONSIDERED TO BE INCOME; PERUSAL OF BANK ACCOUNT NO.CA 3460301111775 WITH THE BANK OF RAJASTHAN LTD., VIKAS PURI, SHOWING THE TOTAL CREDIT DURING THE RELEVANT FINANCIAL YEAR AT ` 11,44,66,760/- (` 4,18,01,760/- BY CHEQUE + ` 7,26,65,000/- BY CASH). AS AGAINST THAT THE CREDIT IN THE PROFIT & LOSS ACCOUNT IS ONLY A SUM O F ` 6,16,66,192/- (` 614,54,741/- CONTRACTUAL RECEIPT + ` 2,11,451/- AS MISCELLANEOUS INCOME). THEREFORE, WHY BALANCE AMOUNT OF ` 5,28,5 68/- SHOULD NOT BE ADDED BACK TO THE NET PROFIT IN VIEW OF PROVISIONS OF SECTION 68 OF THE ACT AND IN THE ABSENCE OF EXPLANATION AS TO THE SOURCE OF FUNDS FOR A SUM OF ` 30 LAC SUPPOSEDLY INCURRED FOR PURCHASE OF FRE SH SECURITIES SHOULD NOT BE TREATED AS UNEXPLAINED INVESTMENT AS PER PROVISIONS OF SECTION 69 OF THE ACT. THE SAID NOTICE OF THE ASSESSING OFFICER ALSO WENT UNCOMPLIED WITH AND THE ASSESSING OFFICER ACCORDIN GLY FRAMED THE ASSESSMENT FIRSTLY TAKING 8% OF THE GROSS CIVIL CONTRA CTUAL RECEIPT ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 4 AS NET PROFIT AND PROFIT ON THIS ACCOUNT HAS BEEN DETE RMINED AT ` 49,16,379; 100% OF THE MISCELLANEOUS INCOME ` 2,11,4 51; ` 5,28,00,568/- BEING UNEXPLAINED CREDIT IN THE BANK ACCOUNT AND ` 30 LAC BEING UNEXPLAINED INVESTMENT IN SECURITIES AND, IN THIS MANNER, LD. ASSESSING OFFICER HAS COMPUTED THE ASSESSABLE INCOME OF THE ASSESSEE AT ` 609,28,398/-. THE ASSESSING OFFICER HAS ALSO INITIA TED VARIOUS PENALTY PROCEEDINGS AND CHARGED INTEREST U/S 234A, 234 B, 234C AND 234D OF THE ACT. 3. AGGRIEVED BY THE AFOREMENTIONED ASSESSMENT ORDER, TH E ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). IN THE STA TEMENT OF FACTS FILED BEFORE THE CIT (A), THE ASSESSEE DID NOT EXPLAIN ANY REASON FOR NON-COMPLIANCE OF VARIOUS NOTICES ISSUED BY THE ASSESSING O FFICER. HOWEVER, THE ASSESSEE OBJECTED TO EACH AND EVERY ADDITI ON MADE BY THE ASSESSING OFFICER AND ALSO THE LEVY OF VARIOUS INTERE STS. BEFORE LEARNED CIT (A) THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED, HOWEVER, NO BOOKS OF ACCOUNT OR OTHER DETA ILS WERE FURNISHED. THE SUBMISSIONS WERE MADE WITH RESPECT TO EAC H GROUND. IN GROUND NO.1 AND 2 THE ASSESSEE HAD OBJECTED TO THE F RAMING OF ASSESSMENT WITHOUT GIVING PROPER OPPORTUNITY OF HEARING . ON THIS ISSUE LEARNED CIT (A) HAS RECORDED A FINDING THAT AS MANY A S MORE THAN FIVE OPPORTUNITIES WERE PROVIDED BY THE ASSESSING OFFICER TO THE ASSESSEE TO APPEAR BEFORE PASSING OF ORDER U/S 144. A FINAL SHO W CAUSE NOTICE ALSO WAS GIVEN PROPOSING THE ADDITIONS WHICH WAS SERVED U PON THE ASSESSEE AND, IN THIS MANNER, THE ASSESSEES CONTENTION THAT NO REASONABLE OPPORTUNITY OF HEARING WAS ACCORDED COULD NOT BE ACCEPTED. THEREFORE, HE REJECTED THESE GROUNDS OF TH E ASSESSEE. SO FAR AS IT RELATES TO THE APPLICATION OF 8% NET PROFIT RATE OF GROSS CONTRACT RECEIPTS, IT WAS THE CONTENTION OF THE ASSESSEE THAT IN E ARLIER YEARS THE PROFIT OF THE ASSESSEE WERE WITHIN THE RANGE OF 0.07% T O 0.29% AND A CHART WAS GIVEN IN RESPECT OF ASSESSMENT YEAR 2003-04 TO 2006-07. IT ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 5 WAS SUBMITTED THAT THE CONTRACT RECEIPT OF THE ASSESSEE B EING MORE THAN ` 40 LAC, THE PROVISIONS OF SECTION 44AB COULD NOT BE APPLIED. REFERENCE WAS MADE TO VARIOUS DECISIONS AND FINALLY IT WAS CONTENDED THAT IN THE ABSENCE OF BOOKS OF ACCOUNT, ETC. THE NET PROFIT RATE WAS REDUCED TO 5% FROM 8% IN OTHER CASES. ON THESE SUBMISSIO NS OF THE ASSESSEE LEARNED CIT (A) HAS RECORDED A FINDING THAT THE BOOKS OF ACCOUNT AND OTHER DETAILS WERE NEITHER PRODUCED BY T HE ASSESSEE BEFORE THE ASSESSING OFFICER OR BEFORE HIM. LEARNED CI T (A) HAS REFERRED TO ACTION PLAN FOR ASSESSMENT YEAR 2007-08 IN WHICH IT WAS MENTIONED THAT IN THE CASES OF CONTRACTORS WHOSE GROSS CO NTRACTUAL RECEIPTS EXCEED ` 2 CRORE AND IF THE TOTAL INCOME DE CLARED IS LESS THAN 5% OF THE GROSS CONTRACTUAL RECEIPT, THEN, THE CASE WA S TO BE PICKED UP FOR SCRUTINY. HE FOUND THAT IN THE PRESENT CASE THE C ONTRACT RECEIPTS WERE MORE THAN 6 CRORES AND GP RATE WAS LESS THAN 5% AN D RELYING ON ALL THESE THINGS AND THE CASE LAW CITED BY THE ASSESSEE IN THIS REGARD, LEARNED CIT (A) HAS HELD THAT THE ASSESSING OFFICER WAS R IGHT IN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. HOWEVER, HE HAS REDUCED THE NET PROFIT RATE FROM 8% TO 5% AND HAS CO ME TO THE CONCLUSION THAT THE PROFIT OF THE ASSESSEE FROM CONTRACT UAL RECEIPT SHOULD BE ESTIMATED AT ` 30,72,737/- IN PLACE OF THAT ESTIMATED BY THE ASSESSING OFFICER AT ` 49,16,379/- AND A RELIEF OF ` 28 ,43,642/- HAS BEEN GRANTED. 4. ON THE ISSUE OF ASSESSABILITY AS INCOME OF ENTIRE MISCEL LANEOUS RECEIPTS OF ` 2,11,451/-, LEARNED CIT (A) HAS OBSERVED THAT DESPITE HAVING PROVIDED ADEQUATE OPPORTUNITY TO THE ASSESSEE BY THE ASSESSING OFFICER AS WELL AS BY HIM, NO DETAILS HAVE BEEN FILED BY THE ASSESSEE OF EARNING THE MISCELLANEOUS INCOME AND, IN THIS MANNER, THE ACTION OF THE ASSESSING OFFICER ASSESSING THE SAID INCOME IS CONFIRMED. ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 6 5. SO FAR AS IT RELATES TO THE ADDITION OF ` 5,28,00, 568/-, IT WAS THE SUBMISSION OF THE ASSESSEE THAT THE ENTIRE DEPOSITS COULD NO T BE CONSIDERED TO BE INCOME OF THE ASSESSEE AND BENEFIT OF P EAK SHOULD BE GIVEN WHICH WAS CALCULATED BY THE ASSESSEE AT ` 30,03,02 4/- AS ON 5 TH AUGUST, 2005 AND IT WILL BE RELEVANT TO MENTION THE FOLLOWING PORTION OF THE ORDER OF LEARNED CIT (A). IT WILL CLEAR THE FA CTS OF THE CASE THAT WHY HE HAS REJECTED THE CONTENTION OF THE ASSESSEE REGARDING APPLICABILITY OF PEAK AND WHY HE HAS UPHELD THE ADDITION MADE BY T HE ASSESSING OFFICER IN THIS REGARD:- 7.4. VIDE THIS OFFICE LETTER NO.CIT(A)-X/A.NO.59/08 -09/119 DT. 18-06-09 THE ASSESSEE WAS ASKED TO FILE THE FOLLOWING INFORMATION: 'IT IS NOTICED THAT CURRENT A/C NO.3460301111775 WITH BANK OF RAJASTHAN, VIKAS PURI, NEW DELHI HAS BEEN MAINTAINED BY THE ASSESSEE COMPANY, A COPY OF WHICH WAS FILED VIDE REPLY DT. 02-062009. THE TOTAL CREDITS AS PER THIS ACCOUNT ARE RS.11,47,89,579/AND TOTAL DEBITS AT RS.11,44,54,288/-. 2. PLEASE CONFIRM WHETHER THIS IS THE ONLY BANK ACCOUNT MAINTAINED BY THE ASSESSEE AND ALSO CONFIRM WHETHER BOTH THE CONTRACTUAL RECEIPTS AS WELL AS OTHER RECEIPTS ARE DEPOSITED IN THIS BANK ACCOUNT. 3. IT IS NOTICED FROM THE ASSESSMENT ORDER THAT CONTRACT RECEIPTS HAVE BEEN SHOWN AT RS.6,14,54,741/-. IN THIS CONNECTION YOU ARE REQUESTED TO FILE COPY OF TRADING AND P & L A/C. 4. IT IS FURTHER NOTICED THAT AS PER ASSESSMENT ORDER CREDITS IN BANK ACCOUNT WAS APPROX. RS.11,44,66,760/- WHILE CREDIT IN THE P & L A/C WAS ONLY RS.6,16,65,192/- (RS. 6, 14,54, 741/- CONTRACTUAL RECEIPTS + RS. 2, 11,451/- AS MISC INCOME) I.E. BALANCE AMOUNT OF RS.5,28,00,568/- CREDIT IS NOT EXPLAINED WHICH WAS ADDED AS NET PROFIT U/S 68 OF THE I. T. ACT. IN THIS CONNECTION YO U ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 7 ARE REQUESTED TO SEGREGATE THE CONTRACT RECEIPTS FROM OTHER RECEIPTS IN THE BANK STATEMENT DATEWISE AS WELL AS TO SEGREGATE THE CREDITS AND DEBITS FOR 'OTHERS'. 5. PLEASE INDICATE THE NATURE OF 'OTHER' I. E. WHAT IS THE INCOME AND EXPENDITURE ASSOCIATED WITH THIS HEAD. 6. TO GIVE DETAILS OF DATEWISE PAYMENT OF TDS ALONGWITH PROOF. ' 7.5. VIDE REPLY DT. 25-06-2009 THE AR SUBMITTED AS UN DER: 'IT MAY BE MENTIONED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY WAS MAINTAINING A BANK ACCOUNT WITH BANK, OF RAJASTHAN LTD, VIKASPURI, DELHI BEARING A/C NO.346301111775 AND THIS WAS THE ONLY BANK ACCOUNT MAINTAINED BY THE ASSESSEE WHERE BOTH THE CONTRACTUAL AS WELL AS OTHER RECEIPTS WERE DEPOSITED. THAT COPY OF THE P & L A/C AND BALANCE SHEET IS ANNEXED HEREWITH. THE ENCLOSED BALANCE SHEET AND P & L A/C ARE THE SAME WHICH WERE FILED ALONGWITH RETURN OF INCOME FOR THE AY 2006-07. THAT AS REGARD SEGREGATION OF THE CONTRACT RECEIPTS FROM OTHER RECEIPTS IN THE BANK STATEMENT DATEWISE AS WELL AS SEGREGATION OF THE CREDITS AND DEBITS FOR OTHERS, IT MAY BE SUBMITTED THAT THE ASSESSEE COMPANY HAS TEMPORARILY SUSPENDED ITS BUSINESS ACTIVITIES AT PRESENT AND ALSO DUE TO CHANGE OF DIRECTORS, IT IS NOT POSSIBLE TO LAY HANDS ON THE BOOKS OF ACCOUNTS AND TDS CERTIFICATES. FURTHER THE CHARTERED ACCOUNTANT LOOKING AFTER INCOME TAX MATTERS OF THE ASSESSEE COMPANY HAD INFORMED THAT THE FILE CONTAINING THE TDS CERTIFICATES AND DETAILS OF PAYMENTS RECEIVED FROM VARIOUS PARTIES RELATING TO CONTRACT RECEIPTS/ SALES AND OTHER RELEVANT DETAILS APPEARS TO HAVE BEEN MISPLACED IN HIS OFFICE AND IN SPITE OF BEST EFFORTS, THE SAME COULD NOT BE LOCATED. THUS IN THESE CIRCUMSTANCES IT IS NOT POSSIBLE TO IDENTIFY THE CREDITS RELATING TO CONTRACT / SALE AND OTHER ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 8 RECEIPTS IN THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE COMPANY. SIMILARLY, IT IS NOT POSSIBLE TO SEGREGATE THE CREDITS AND DEBITS FOR OTHERS IN VIEW OF THE ABOVE SAID FACTS. THAT THE OTHER INCOME REPRESENTS COMMISSION EARNED ON ARRANGING FUNDS FROM OTHER TO VARIOUS PARTIES. THE EXPENSES INCURRED ON EARNING THIS INCOME ARE DEBITED TO THE COMBINED P & L ALE. IT HAD ALREADY BEEN MENTIONED THAT THE TDS CERTIFICATES ARE NOT AVAILABLE, THEREFORE, DETAILS OF DATEWISE PAYMENT OF TDS COULD NOT BE PREPARED. IT MAY HOWEVER BE MENTIONED THAT IN THE P & L A/C, THE ASSESSEE HAS SHOWN AMOUNT OF RS.6,14,54,741/- UNDER THE HEAD SALES WHICH ARE CONTRACT RECEIPTS. IT IS REITERATED THAT ONCE THE BOOKS OF ACCOUNTS ARE REJECTED AND THE INCOME IS WORKED OUT BY APPLYING NET PROFIT RATE, NO FURTHER ADDITIO N OF UNEXPLAINED CREDITS IN THE BANK ACCOUNT IS AGAIN LOOKING INTO BOOK ENTRIES IS JUSTIFIABLE AS WELL AS NO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT WOULD BE JUSTIFIED. 7.6.1. A PERUSAL OF THE REPLY DT. 25-06-2009 OF THE ASSESSEE INDICATES THE FOLLOWING: (I) ONLY ONE BANK ACCOUNT WAS BEING MAINTAINED BY THE ASSESSEE IN WHICH BOTH THE CONTRACTUAL AS WELL AS 'OTHER' RECEIPTS WERE DEPOSITED; (II) THERE WAS NO SEGREGATION OF CONTRACT RECEIPTS FROM OTHER RECEIPTS IN THE BANK STATEMENT DATEWISE AS WELL AS SEGREGATION OF CREDITS AND DEBITS FOR OTHERS; (III) THE ASSESSEE DID NOT PRODUCE TDS CERTIFICATES AND IT IS NOT POSSIBLE TO IDENTIFY THE CREDITS RELATING TO CONTRACTS/ SALE AND OTHER RECEIPTS IN THE BANK ACCOUNT; ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 9 (IV) THE ASSESSEE IS ADMITTING THAT HE HAS EARNED COMMISSION ON ARRANGING FUNDS FROM OTHER TO VARIOUS PARTIES. 7.6.2. THE ASSESSEE HAD DECLARED CONTRACTUAL RECEIPTS AT RS.6,14,54,741/- IN HIS RETURN VOLUNTARILY AND IN THE ABSENCE OF BOOKS OR ACCOUNTS AND OTHER DOCUMENTS NET PROFIT HAD TO BE ESTIMATED WHICH WAS ESTIMATED BY THE AO AT 8% AND REDUCED TO 5% VIDE PARA 5.3 ABOVE. THERE IS NO VALID EXPLANATION FOR CREDIT OF RS.5,28,00,568/- IN THE BANK ACCOUNT (TOTAL CREDIT RS.11,44,66, 760 - RS.6,14,54,7 41 CONTRACTUAL RECEIPT) AND THE THEORY OF PEAK CREDIT CANNOT BE APPLIED IN THIS CASE AS THERE IS ONLY ONE BANK ACCOU NT AND NO SEGREGATION HAS BEEN MADE BY THE ASSESSEE BETWEEN CONTRACTUAL RECEIPTS AND OTHER RECEIPTS DATEW ISE AND THERE IS NO WAY OF WORKING OUT THE EXACT CONTRAC TUAL RECEIPTS IN THE ABSENCE OF TDS CERTIFICATES. THE ASSESSEE HAS FLOATED THE THEORY OF EARNING COMMISSION ON ARRANG ING FUNDS FROM OTHER TO VARIOUS PARTIES WITHOUT FURNISHING ANY EVIDENCE / DETAILS OF THE PARTIES FROM WHOM MONEY WAS TAKEN / MONEY ADVANCED AND COMMISSION EARNED ONLY AS ON AFTERTHOUGHT TO EXPLAIN THE DEPOSITS OF RS.5,28,00, 568/- IN THE BANK ACCOUNT. IN THE ABSENCE OF ANY VALID EXPLANATION BACKED WITH VERIFIABLE DETAILS, THIS EXPL ANATION IS REJECTED AND AO'S ACTION OF ADDING RS.5,28,00,568/- U/S 68 OF THE IT ACT AS INCOME FROM UNDISCLOSED SOURCES IS CONFIRMED. 6. SO FAR AS IT RELATES TO ADDITION OF ` 30 LAC, LEAR NED CIT (A) HAS FOUND THAT EVEN THE BALANCE SHEET FILED BY THE ASSESSEE ALONG WITH THE RETURN AS COMPARED TO EARLIER YEARS BALANCE SHEET DID NOT REVEAL ANY FRESH INVESTMENT BY THE ASSESSEE AND, THUS, HE HAS ACCEPTED THIS CLAIM OF THE ASSESSEE AND HAS HELD THAT THIS ADDITION WAS MADE B Y THE ASSESSING OFFICER WITHOUT ANY SUBSTANCE. 7. SO FAR AS IT RELATES TO LEVIABILITY OF VARIOUS INTE REST AS MENTIONED ABOVE, LEARNED CIT (A) HAS OBSERVED THAT THESE ARE MAN DATORY IN NATURE AND HE HAS DIRECTED THE ASSESSING OFFICER TO RE-C OMPUTE THIS INTEREST AFTER GIVING EFFECT TO HIS APPELLATE ORDER. ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 10 8. IN THIS MANNER, LEARNED CIT (A) HAS GRANTED PART R ELIEF TO THE ASSESSEE. AGAINST THE RELIEF GRANTED BY THE CIT (A) THE DEPARTMENT HAS FILED THE AFOREMENTIONED APPEAL AND AGAINST THE ADDI TIONS SUSTAINED, THE ASSESSEE HAS FILED THE AFOREMENTIONED APPEAL. 9. NOTICE OF HEARING WAS DULY SENT TO THE ASSESSEE. HOW EVER, ON THE FIXED DATE OF HEARING NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. EARLIER ALSO THESE APPEALS WERE FIXED ON VARIOUS DATES A ND THE ASSESSEE WAS NEVER REPRESENTED. IN THIS VIEW OF THE SITUAT ION, WE PROCEEDED TO DECIDE THESE APPEALS EX PARTE QUA THE ASSE SSEE AFTER HEARING THE LEARNED DR AND AFTER CONSIDERING THE FAC TS AVAILABLE ON OUR RECORD. 10. REPRESENTING THE DEPARTMENTAL APPEAL, IT WAS SUBMI TTED BY THE LEARNED DR THAT LEARNED CIT (A) HAS WRONGLY DELETED THE ADDITION OF ` 30 LAC AND LEARNED CIT (A) HAS ALSO WRONGLY REDUCED T HE NET PROFIT RATE FROM 8% TO 5%. ON ASSESSEES APPEAL, IT WAS THE SUBMISSION OF THE LEARNED DR THAT LEARNED CIT (A) HAS RIGHTLY SUSTAINED THE ADDITIONS EXCEPT ON THE ISSUES WHERE PART DELETIONS HAVE BEEN MAD E. HE SUBMITTED THAT SO FAR AS IT RELATES TO DELETION OF ADDI TION THAT THAT THE DEPARTMENT HAS AGITATED, THESE GROUNDS IN DEPARTMENTAL APPEAL AND TO THE EXTENT ADDITIONS HAVE BEEN SUSTAINED, LEARNED CIT (A) WAS JUSTIFIED IN SUSTAINING THE ADDITION AND HIS ORDER ON THOSE ISSUES SH OULD BE UPHELD. 11. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LEARNED DR AND HAVE ALSO CAREFULLY GONE THROUGH THE ASSESSMENT ORDE R, THE ORDER PASSED BY THE CIT (A) AND THE STATEMENT OF FACTS FILED BY THE ASSESSEE BEFORE THE CIT (A). IT IS UNDISPUTED THAT THE ASSESSEE D ID NOT FILE ANY DETAILS EITHER BEFORE THE ASSESSING OFFICER OR CIT (A) A ND IT DID NOT PRODUCE BOOKS OF ACCOUNT ALSO. THE ASSESSEE ALSO HAS NOT F URNISHED ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 11 ANY EXPLANATION WHATSOEVER WITH REGARD TO THE DEPOSIT S MADE BY IT IN THE BANK ACCOUNT. THE ASSESSING OFFICER PROVIDED SPECIF IC OPPORTUNITIES TO THE ASSESSEE AND THE ASSESSEE IS NOT DENYING THE FACT THAT THESE OPPORTUNITIES WERE PROVIDED BY THE ASSESSING O FFICER. THEREFORE, IT IS A CASE WHERE THE ASSESSEE HAS NOT SUBSTANT IATED THE ENTRIES SHOWN BY IT IN THE ACCOUNTS ALLEGED TO BE MAIN TAINED BY IT. IN THIS VIEW OF THE SITUATION, WE HAVE TO ADJUDICATE THE APPEALS FILED BY BOTH THE PARTIES. 12. ONE GROUND COMMON IN BOTH THE APPEALS IS REGARDIN G APPLICATION OF NET PROFIT RATE WHICH WAS APPLIED BY THE ASSESSING OF FICER @ 8% AND SUSTAINED BY THE CIT (A) @ 5%. WE HAVE ALREADY OBSERV ED THAT THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT TO SUPPORT ITS CASE THAT ITS GROSS PROFIT WAS IN FACT AS PER PROFIT SHOWN IN THE BOOK S OF ACCOUNT. LEARNED CIT (A) HAS REFERRED TO THE VARIOUS MATERIAL ON THE BASIS OF WHICH HE HAS COME TO THE CONCLUSION THAT NET PROFIT R ATE OF 5% WAS JUSTIFIED. HE HAS REJECTED THE CONTENTION OF THE ASSESSE E FOR ESTIMATION OF PROFIT RATE ON THE BASIS OF EARLIER YEARS ON THE GR OUND THAT IN NONE OF THE EARLIER YEARS I.E., FROM 2002-03 TO 2005-06 THE ASSESSMENTS WERE FRAMED U/S 143(3) OF THE ACT. THE CASE OF THE ASSESSEE W AS UNSUPPORTED BY ANY EVIDENCE TO SHOW THAT ITS PROFIT WA S IN ANY MANNER LESS THAN 8%. THEREFORE, IN THE GROUNDS OF APPEAL FIL ED BEFORE US THE ASSESSEE HAS CONTENDED THAT FOR ASSESSMENT YEAR 1992-93 THE NET PROFIT RATE WAS ACCEPTED AT 1.53% BY ORDER U/S 143(3) . WE FIND NO FORCE IN SUCH CONTENTION AS ASSESSMENT YEAR 1997-98 IS ALM OST NINE YEARS BACK AND WHEN THE COMPARISON HAS TO BE MADE IT H AS TO BE MADE WITH THE LATEST YEARS AND LEARNED CIT (A) HAS GIV EN A FINDING THAT SINCE ASSESSMENT YEAR 2002-03 UPTO THE IMPUGNED ASSESSMENT Y EAR NONE OF THE ASSESSMENT OF THE ASSESSEE HAS BEEN FRAMED U/S 1 43(3) OF THE ACT. IN THIS VIEW OF THE SITUATION, WE ARE OF TH E OPINION THAT LEARNED CIT (A) WAS JUSTIFIED IN TAKING THE NET PROFIT RATE O F THE ASSESSEE ON ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 12 CONTRACTUAL RECEIPT AT 5% AND WE DECLINE TO INTERFE RE IN SUCH FINDING RECORDED BY CIT (A) AND THE GROUNDS OF BOTH THE PART IES IN THIS REGARD ARE DISMISSED. 13. NOW, COMING TO THE MAIN ADDITION OF ` 5,28,00,5 68/-, HERE ALSO IT WAS THE CASE OF THE ASSESSEE THAT INSTEAD OF ADDING THE EN TIRE CREDITS, THE ASSESSING OFFICER SHOULD HAVE ADOPTED PEAK CREDIT. LEARNED CIT (A), WHOSE FINDINGS HAVE ALREADY BEEN REPRODUCED ABOV E, HAS CATEGORICALLY STATED THAT THE DETAILS ASKED FOR BY HIM WERE NOT PRODUCED BY THE ASSESSEE. THUS, THE ASSESSEE ALSO COULD NOT ESTABLISH ITS CLAIM FOR APPLICATION OF PEAK THEORY. FOR APPLY ING PEAK THEORY, THE ASSESSEE HAS TO ESTABLISH THAT THE SAME FUND WERE ROTATED I N THE BANK ACCOUNT AND IN THE ABSENCE OF ANY SUCH EXPLANATION, W E UPHOLD FINDINGS OF LD. CIT (A) THAT BENEFIT OF PEAK CREDIT COULD NOT BE GIVEN TO THE ASSESSEE. WE ALSO DO NOT FIND ANY SUBSTANCE IN THE GR OUNDS OF APPEAL OF THE ASSESSEE THAT IN VIEW OF APPLICATION OF N ET PROFIT RATE NO FURTHER ADDITION ON ACCOUNT OF UNEXPLAINED CREDIT I N THE BANK ACCOUNT COULD BE MADE. THESE TWO ADDITIONS ARE SEPARATE ADDIT IONS UNDER THE PROVISIONS OF THE INCOME-TAX ACT. THE ENTRIES WHICH H AVE BEEN TREATED AS UNEXPLAINED BELONG TO THE ASSESSEE AND ARE FOUND CRED ITED IN THE BANK ACCOUNT OF THE ASSESSEE. THE CONTRACTUAL RECEIPTS CREDITED IN THE BANK ACCOUNT HAVE ALREADY BEEN CONSIDERED SEPARATELY AND THEY HAVE BEEN REDUCED FROM THE TOTAL CREDITS MADE IN BANK ACC OUNT. THEREFORE, THIS GROUND OF THE ASSESSEE HAS NO FORCE AS SEPARATE TREATM ENT HAS BEEN GIVEN TO TWO TYPES OF CREDITS EXISTING IN THE BAN K ACCOUNT OF THE ASSESSEE AND THIS GROUND OF THE ASSESSEE IS DISMISSED. 14. SO FAR AS IT RELATES TO ANOTHER ADDITION OF ` 2,1 1,451/-, PROBABLY THIS ADDITION IS CONTESTED BY THE ASSESSEE IN GROUND NO.11 , WHERE IT HAS BEEN CONTENDED THAT CIT (A) HAS FAILED TO ALLOW T HE NECESSARY SET OFF OF INTANGIBLE ADDITION AGAINST OTHER INCOME OF T HE ASSESSEE, WE FIND THAT ADDITION OF ` 2,11,451/- SHOULD BE CONSIDERED FO R SET OFF AGAINST ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 13 THE INCOME DETERMINED FROM CONTRACTUAL RECEIPTS, THE REFORE, THE SAID ADDITION IS DELETED AND GROUND NO.11 OF THE ASSESSEES AP PEAL IS ALLOWED. 15. SO FAR AS IT RELATES TO GROUNDS AGAINST LEVY OF INT EREST U/S 234A, 234B, 234C AND 234D, WE ARE OF THE OPINION THAT LEA RNED CIT (A) IS RIGHT IN HOLDING THAT THE LEVY OF THESE INTERESTS IS MA NDATORY AND, THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO RECOMPUT E THESE INTERESTS AFTER GIVING EFFECT TO HIS ORDER. ACCORDING LY, WE HOLD THAT THESE INTERESTS ARE MANDATORY IN NATURE AND THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THIS INTEREST AFTER GIVING EFFE CT TO THIS APPELLATE ORDER. 16. SO FAR AS IT RELATES TO THE REMAINING GROUND OF T HE REVENUE REGARDING DELETION OF ` 30 LAC, AFTER CONSIDERING TH E FACTS OF THE CASE AND SUBMISSIONS OF THE LEARNED DR, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) VIDE WHICH THE IMPUGNED ADDITION HAS BEE N DELETED. LEARNED CIT (A) HAS FOUND FROM BOTH THE BALANCE SHEET THAT NO FRESH INVESTMENT IN THE SECURITIES HAS BEEN MADE BY THE ASSESSEE. THEREFORE, WE DECLINE TO INTERFERE IN SUCH DELETION AND THIS GROUND OF THE REVENUE IS DISMISSED. 17. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN THE MA NNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.03.20 12. SD/- SD/- [T.S. KAPOOR] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 16.03.2012. DK ITA NO.3849/DEL/2009 ITA NO.3535/DEL/2009 14 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES