ACIT, New Delhi V. M/s. Amit Goods & Suppliers Pvt. Ltd., Kolkata

ITA 3810/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3749 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Search and seizure; Peak credit; Question of law; Accommodation entries
• Section: 131; 68; 132

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3810/DEL/2013 (ASSESSMENT YEAR: 2008 - 09 ) ACIT, CENTRAL CIRCLE - 5, ROOM NO. 361, 3 RD FLOOR, ARA CENTRE, E - 2, JHANDEWALAN EXTENSION, NEW DELHI VS. AMIT GOODS & SUPPLIERS PVT. LTD, 41, SHIBTOLLA STREET, KOLKATA, PAN:AACCA1198E (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ARUN KUMAR YADAV, SR. DR ASSESSEE BY: NONE DATE OF HEARING 15/11 /2017 DATE OF PRONOUNCEMENT 0 7 / 0 2 / 2018 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEALS ), DATED 10/2/2011 WHEREIN THE ADDITION OF RS. 52110091/ IN RESPECT OF ADDITION MADE BY THE ASSESSING OFFICER AS UNEXPLAINED INCOME WAS DELETED AND CONSEQUENTLY ADDITION OF RS. 1042201/ OF COMMISSION INCOME WAS DELETED. THE REVENUE HAS RAISED FOLLOWING GROU NDS OF APPEAL. 1. THE ORDER OF THE LD CIT ( A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LD CIT ( A) ERRED IN ALLOWING THE RELIEF OF RS. 52110091/ - IN RESPECT OF ADDITION MADE BY THE ASSESS ING OFFICER TREATING IT AS UNEXPLAINED INCOME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LD CIT(A) ERRED IN ALLOWING THE RELIEF OF RS. 1042201/ - IN RESPECT OF ADDITION MADE BY THE ASSESSING OFFICER TREATING IT AS COMMISSION INCOME. PAGE | 2 2. ASSESSEE IS A COMPANY WHO FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008 09 ON 13/9/2008 DECLARING INCOME OF RS. 12584/ . THE LD. ASSESSING OFFICER HAS NOTED THE FACTS OF THE CASE THAT INVESTIGATIONS WERE CARRIED OUT BY THE DIRE CTORATE OF INCOME TAX (INVESTIGATION), AGAINST CERTAIN ACCOMMODATION ENTRY OPERATORS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS COMPANIES BASED AT MUMBAI W HO IN TURN USED THE SAID FUNDS FOR PAYMENTS TO MADHAVPURA MERCANTILE CO - OPERATIVE BANK AT MUMBAI WHICH IS SAID TO BE CONTROLLED BY SH. KETAN PAREKH. SUBSEQUENTLY THE STATEMENTS OF DIRECTORS OF THE COMPANIES, WHICH ARE BASED IN CALCUTTA, WERE RECORDED UNDER SECTION 131 OF THE ACT . THE DIRECTORS STATED THAT THE TRANSACTIONS WITH MUMBAI - BASED COM PANIES WERE ONLY ACCOMMODATION ENTRY ORIENTED TRANSACTIONS. THE STATEMENT OF THE DIRECTOR OF THE COMPANY SH. RAJESH JAIN WAS ENQUIRED ABOUT THE NATURE OF TRANSACTIONS WITH THE MUMBAI - BASED COMPANIES AND HE SUBMITTED ON OATH ON 19/4/2007 THAT HE HAS CASH OF EQUIVALENT AMOUNT FROM THE COMPANIES AND AGAINST THE SAME CHEQUES HAVE BEEN ISSUED. HE ALSO GAVE DETAILED LIST OF CHEQUES ISSUED TO VARIOUS MUMBAI - BASED COMPANIES OF KETAN PAREKH GROUP STATING THEIR BANK ACCOUNT NUMBERS ETC AGAINST WHICH CASH HAS BEEN REC EIVED BY HIM. THEREFORE, ACCORDINGLY THE CASE OF THE ASSESSEE WAS CENTRALIZED . AS PER THE STATEMENT OF SH. JAIN HUGE AMOUNT WAS INVESTED BY THE ASSESSEE COMPANY IN THE SHARE CAPITAL OF MUMBAI - BASED COMPANIES. LATER ON SHRI RAJESH JAIN SUBMITTED AN AFFIDAVI T RETRACTING HIS STATEMENT. HOWEVER, THE LD. ASSESSING OFFICER DID NOT ACCEPT THE SAME. 3. THE LD. ASSESSING OFFICER FOUND FROM THE BANK ACCOUNT OF THE ASSESSEE COMPANY WITH THE STATE BANK OF PATIALA, ABN AMRO AND IDBI BANK THAT THE ASSESSEE COMPANY ISSUED CHEQUES AFTER DEPOSITING MONEY OF RS. 52110091/ TO VARIOUS ENTITIES. THEREFORE , THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE COMPANY HAS GIVEN ACCOMMODATION ENTRIES OF THE SAME AMOUNT TO PAGE | 3 VARIOUS PARTIES. THEREFORE, THE LD. ASSESSING OFFICER MADE AN ADDITION OF RS. 5211091/ - IN THE HANDS OF THE ASSESSEE COMPANY. 4. FURTHER, THE INCOME TAX OFFICER NOTED THAT THE SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT WAS CONDUCTED IN CASE OF SHRI PRAVEEN AGGARWAL, AN ENTRY OPERATOR I N HIS BUSINESS AND RESIDENTIAL PREMISES ON 27/7/1999 AND WAS COMPLETED ON 23/9/1999. SHRI PRAVEEN AGGARWAL IN HIS STATEMENT SUBMITTED YEAR WISE BREAKUP OF THE BALANCE AND COMMISSION INCOME AT THE RATE OF 2% FOR ENTRY PROVIDED BY HIM. THEREFORE THE LD. ASSE SSING OFFICER ALSO ESTIMATED THE INCOME AT THE RATE OF 2% OF RS. 52110091/ AMOUNTING TO RS. 1042201/ AS INCOME BY WAY OF COMMISSION FOR PROVIDING ACCOMMODATION ENTRIES IN THE HANDS OF THE ASSESSEE . 5. CONSEQUENTLY , THE LD. ASSESSING OFFICER PASSED ASSESSMEN T ORDER UNDER SECTION 143 (3) ON 28/12/2010 DETERMINING TOTAL INCOME OF THE ASSESSEE OF RS. 53164880/ AGAINST THE RETURNED INCOME OF RS. 12584/ . 6. ASSESSEE AGGRIEVED WITH THE ORDER OF THE LD. ASSESSING OFFICER PREFERRED AN APPEAL BEFORE THE LD. CIT (A) WHO DELETED THE ADDITION . AS THE LD. CIT (A) TR IED TO ASCERTAIN ABOUT THE CASES WHERE SUBSTANTIVE ADDITIONS WERE MADE CORRESPONDING TO THE PROTECTIVE ADDITION IN THE PRESENT CASE AND ALSO ABOUT THE FATE OF APPEALS IN THOSE CASES. HOWEVER DESPITE THE DELAY OF 17 MONTHS THE LD. ASSESSING OFFICER COULD NOT SUBMIT THE INFORMATION , THEREFORE THE LD. CIT (A) DELETED THE ADDITION BASED ON THE ORDER OF HIS PREDECESSOR IN ASSESSEES OWN CASE FOR EARLIER YEARS AS WELL AS THE DECISION OF THE COORDINATE BENCHES. THEREFORE , REVENUE AGGRIEVED WITH THE ORDER OF THE LD. CIT (A) HAS PREFERRED AN APPEAL BEFORE US. 7. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUBMITTED THAT THE ADDITION HAS BEEN MADE BY THE LD. ASSESSING OFFICER NOT ON THE PROTECTIVE BASIS BUT ON SUBSTANTIVE BA SIS IN THE HANDS OF THE ASSESSEE AS THE MONEY HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AND ASSESSEE HAS FAILED TO GIVE ANY EXPLANATION ABOUT PAGE | 4 THE SAME . HE THEREFORE SUBMITTED THAT THE LD. CIT (A) HAS ERRED IN INTERPRETING THAT ADDITION HAS BEE N MADE BY THE LD. ASSESSING OFFICER ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER VEHEMENTLY STATED THAT THE CIT (A) HAS DELETED THE ADDITION MERELY RELYING ON THE DECISION OF THE COORDINATE BENCH IN CASE OF THE ASSESSEES OWN CASE HOWEVER NOW THE HONBLE DELHI HIGH COURT HAS DECIDED THE ISSUE IN CASE OF MR D K GARG [84 TAXMAN.COM 257] WHICH CLEARLY SHOWS THAT THE ADDITION IS REQUIRED TO BE MADE IN THE HANDS OF THE ENTRY OPERATOR UNLESS THE DETAILS OF THE BENE FICIARIES ARE NOT GIVEN. HE THEREFORE SUBMITTED THAT THE ADDITION HAS RIGHTLY BEEN MADE BY THE LD. ASSESSING OFFICER AND THE LD. CIT (A) HAS WRONGLY DELETED THE ADDITION. 8. DESPITE NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THEREFORE THE ISSUE IS DE CIDED ON THE MERITS OF THE CASE BASED ON THE FACTS AVAILABLE BEFORE US. WE HAVE ALSO PERUSED THE PROCEEDINGS IN THE PRESENT APPEAL WHEREIN IT IS APPARENT THAT SINCE THE DATE OF FILING OF THE APPEAL , NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. HENCE, WE DO NOT HAVE ANY OPTION BUT TO DECIDE THE ISSUE ON THE MERITS OF THE CASE AS PER INFORMATION AVAILABLE ON RECORD. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE LD. ASSESSING OFFICER HAS NOTED THAT THE A SSESSEE IS AN ENTRY OPERATOR WHO IS PROVIDING ACCOMMODATION ENTRIES TO OTHER COMPANIES. THIS FACT HAS BEEN CONFIRMED BY THE DIRECTOR OF THE ASSESSEE BEFORE THE INVESTIGATION WING. SUBSEQUENTLY THOUGH DIRECTOR HAS RETRACTED HIS STATEMENT, IT DOES NOT ABSOLV E THE COMPANY FROM EXPLAINING THE AMOUNT CREDITED IN ITS BANK ACCOUNT. THE ASSESSEE HAS MISERABLY FAILED TO PROVE SO. BEFORE THE LD. CIT (A) ASSESSEE SUBMITTED THAT ASSESSING OFFICER HAS NOT GIVEN ANY DETAILS OF THE CHEQUE AMOUNTING TO RS. 52110091/ TO WH OM THIS CHEQUES WERE ISSUED AND QUANTUM OF AMOUNT BEING RECEIVED IN CASH BY EACH SUCH COMPANY. THE LD. PAGE | 5 CIT(A) HAS ASKED THE DETAIL OF THIS FROM THE ASSESSING OFFICER AND WAITED FOR ALMOST 17 MONTHS. NO DETAILS CAME FROM THE LD. ASSESSING OFFICER ABOUT THE ACCOMMODATION ENTRIES PROVIDED BY THE ASSESSEE TO THE OTHER COMPANIES AND THEREFORE THE LD. CIT (A) HAS FOLLO WED THE DECISION OF THE COORDINATE BENCH AND DELETED THE ADDITION. WE DO NOT APPROVE THE ORDER OF THE LD. CIT (A) BY ASKING THE DETAILS FROM THE ASSESSING OFFICER WHEN THE ASSESSEE IS IN POSSESSION OF ALL THESE DETAILS AS BANK ACCOUNT BELONG ED TO THE ASSES SEE, AND THE ASSESSEE IS IN INFORMATION OF THE PARTIES TO WHOM THE ACCOMMODATION ENTRIES WERE GIVEN. THEREFORE THE LD. CIT(A) HAS PUT UNNECESSARY BURDEN ON THE ASSESSING OFFICER WHEN THE DIRECTORS OF THE ASSESSEE HAS GIVEN A STATEMENT ASSESSEE IS AN ENTRY OPERATOR AND PROVIDED THE ACCOMMODATION ENTRIES BY USING NAME OF THE COMPANY. IN FACT, THE LD. CIT (A) SHOULD HAVE ASKED THE ASSESSEE TO PROVE THE AMOUNT OF SUMS CREDITED IN ITS BOOKS OF ACCOUNTS AND THE DETAILS OF ADVANCES OR LOANS OR ACCOMMODATION ENTRIE S GIVEN TO THE OTHER PARTIES. NO SUCH ENQUIRY BEING CONDUCTED BY THE LD. CIT(A) HIMSELF AND NO INFORMATION WAS PROVIDED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. WHILE ALLOWING THE APPEAL OF THE ASSESSEE , THE LD. CIT (A) HAS FOLLOWED THE DECISION OF TH E COORDINATE BENCH IN ITA NO. 63 64/K OL//2011. WE HAVE CAREFULLY PER USED THE IMPUGNED ORDER OF THE COORDINATE BENCH AND NOTE THAT THE FACTS OF THAT PARTICULAR CASE WAS DIFFERENT THEN THE PRESENT CASE AS IN THAT PARTICULAR CASE THE ADDITION WAS MADE ON THE PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE AND ON SUBSTANTIVE BASES IN BENEFICIARIES, WHEREAS IN THE PRESENT CASE THE ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE ON SUBSTANTIVE BASIS. FURTHERMORE NOW THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT VERSUS DK GARG (SUPRA) WHEREIN IT HAS BEEN HELD BY DEALING WITH THE ISSUE OF ACCOMMODATION ENTRY PROVIDERS AS UNDER: - PAGE | 6 ANALYSIS AND REASONS 13. THERE HAVE BEEN NUMEROUS CASES BEFORE THE AO, CIT (A), THE ITAT AND FOR THAT MATTER EVEN BEFORE THIS COURT, WHERE THE QUESTION INVOLVED CONCERNS THE TREATMENT OF 'ACCOMMODATION ENTRIES'. BASICALLY, WHAT AN ACCOMMODATION ENTRY PROVIDER DOES IS TO ACCEPT CA SH FROM AN ASSESSEE AND ARRANGES TO HAVE A CHEQUE ISSUED FROM HIS OWN ACCOUNT OR SOME OTHER ACCOUNT, USUALLY OF 'PAPER' OR FAKE ENTITIES, TO MAKE IT APPEAR TO BE A LOAN OR AN INVESTMENT IN SHARE CAPITAL. THE ACCOMMODATION ENTRY PROVIDER USUALLY CHARGES A C OMMISSION WHICH IS DEDUCTED UPFRONT. WHERE THE ASSESSEE IS UNABLE TO EXPLAIN THE SOURCE OF SUCH CREDIT IN HIS ACCOUNT - I.E. BY DEMONSTRATING THE IDENTITY OF THE PROVIDER OF THE CREDIT, THE CREDITWORTHINESS OF SUCH ENTITY, AND THE GENUINENESS OF THE TRANSA CTION - THE CREDIT ENTRY IS TREATED AS UNEXPLAINED AND THE INCOME IS TREATED UNDER SECTION 68 OF THE ACT AS THE INCOME OF THE ASSESSEE. 14. IN CASES WHERE THE ASSESSEE DISCHARGES THE INITIAL ONUS OF ESTABLISHING THE IDENTITY AND CREDITWORTHINESS OF THE CRE DIT PROVIDER AND THE GENUINENESS OF THE TRANSACTION, BE IT ONE OF LOAN OR SUBSCRIBING TO SHARE CAPITAL, THE ONUS SHIFTS TO THE REVENUE TO SHOW THE CONTRARY. WHERE, FOR INSTANCE, AN ASSESSEE FURNISHES THE COMPLETE DETAILS OF THE ENTITY LIKE ITS CERTIFICATE OF INCORPORATION, PAN NUMBER, INCOME TAX RETURNS, BANK ACCOUNTS, NAMES AND ADDRESSES OF THE DIRECTORS AND SO ON, THE COURTS HAVE INSISTED ON THE AO TO MAKE A PROPER ENQUIRY TO EXAMINE THE IDENTITY AND CREDITWORTHINESS OF SUCH COMPANIES AND THE GENUINENESS OF THE TRANSACTIONS IN QUESTION. WHERE THE AO FAILS TO MAKE SUCH AN ENQUIRY, A COURT MIGHT DELETE THE ADDITIONS MADE BY THE AO. 15. THE PRESENT CASE, HOWEVER, IS OF A DIFFERENT NATURE. HERE, WE ARE DEALING WITH AN ASSESSEE WHO DOES NOT DENY THAT HE IS AN A CCOMMODATION ENTRY PROVIDER. HE, IN FACT, MAKES NO BONES OF THE FACT THAT HE EITHER OWNED OR FLOATED 'PAPER COMPANIES' ONLY FOR THAT PURPOSE. HE ALSO DOES NOT DISPUTE THE FACT THAT HE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF ALL THE DEPOSITS IN HIS ACCOU NTS OR THE ULTIMATE DESTINATION OF ALL THE OUTGO FROM HIS ACCOUNTS. 16. THE ASSESSEE'S PLEA THAT HE SHOULD BE TAXED ONLY ON A COMPOSITE 'PEAK CREDIT' IS BASED ENTIRELY ON PRINCIPLES OF ACCOUNTANCY. HE QUESTIONS THE LOGIC BEHIND ALLOWING PEAK CREDITS FOR SO ME OF THE CREDIT ENTRIES BY WAY OF CHEQUES AND DENYING IT FOR THE OTHER ENTRIES IN CASH. HE PAGE | 7 ALSO QUESTIONS THE PRACTICE OF WORKING OUT SEPARATE PEAK CREDITS FOR CHEQUE AND CASH TRANSACTIONS. 17. THE PREMISE UNDERLYING THE CONCEPT OF PEAK CREDIT IS THE SQUARING UP OF THE DEPOSITS IN THE ACCOUNT WITH THE CORRESPONDING PAYMENTS OUT OF THE ACCOUNT TO THE SAME PERSON. IN BHAIYALAL SHYAM BIHARI CASE ( SUPRA ), THE ALLAHABAD HIGH COURT EXPLAINED THAT BENE FIT OF PEAK CAN BE GIVEN ONLY WHEN THE ASSESSEE OWNS UP ALL THE CASH CREDITS IN THE BOOKS OF ACCOUNTS. IT WAS FURTHER HELD: 'FOR ADJUDICATING UPON THE PLEA OF PEAK CREDIT THE FACTUAL FOUNDATION HAS TO BE LAID BY THE ASSESSEE. HE HAS TO OWN ALL CASH CREDIT ENTRIES IN THE BOOKS OF ACCOUNT AND ONLY THEREAFTER CAN THE QUESTION OF PEAK CREDIT BE RAISED.' 18. IN THAT CASE, IT WAS HELD THAT AS THE AMOUNT OF CASH CREDITS STOOD IN THE NAMES OF DIFFERENT PERSONS WHICH THE ASSESSEE HAD ALL ALONG BEEN CLAIMING TO BE GE NUINE DEPOSITS, WITHDRAWALS/PAYMENTS TO DIFFERENT PERSONS DURING THE PREVIOUS YEARS, THE ASSESSEE WAS, THEREFORE, NOT ENTITLED TO CLAIM THE BENEFIT OF PEAK CREDIT. LATER IN VIJAY AGRICULTURAL INDUSTRIES CASE ( SUPRA ), IT WAS REITERATED THAT: 'THE PRINCIPLE OF PEAK CREDIT IS NOT APPLICABLE IN CASE WHERE THE DEPOSITS REMAINED UNEXPLAINED UNDER SECTION 68 OF THE ACT. IT CANNOT APPLY IN A CASE OF DIFFERENT DEPOSITORS WHERE THERE HAS BEEN NO TRANSACTION OF DEPOSITS AND REPAYMENT BETWEEN A PARTICULAR DEPOSITOR AND THE ASSESSEE.' ON THE FACTS OF THAT CASE IT WAS HELD THAT PEAK CREDIT COULD BE APPLIED ONLY IN THE CASE OF SQUARED UP ACCOUNTS. IN OTHER WORDS, WHERE AN ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCES OF DEPOSITS AND THE CORRESPONDING PAYMENTS THEN HE WOULD NO T GET THE BENEFIT OF 'PEAK CREDIT'. 19. THE LEGAL POSITION IN RESPECT OF AN ACCOMMODATION ENTRY PROVIDER SEEKING THE BENEFIT OF 'PEAK CREDIT' APPEARS TO HAVE BEEN TOTALLY OVERLOOKED BY THE ITAT IN THE PRESENT CASE. INDEED, IF THE ASSESSEE AS A SELF - CONFESS ED ACCOMMODATION ENTRY PROVIDER WANTED TO AVAIL THE BENEFIT OF THE 'PEAK CREDIT', HE HAD TO MAKE A CLEAN BREAST OF ALL THE FACTS WITHIN HIS KNOWLEDGE CONCERNING THE CREDIT ENTRIES IN THE ACCOUNTS. HE HAS TO EXPLAIN WITH SUFFICIENT DETAIL THE SOURCE OF ALL THE DEPOSITS IN HIS ACCOUNTS AS WELL AS THE CORRESPONDING DESTINATION OF ALL PAYMENTS FROM THE ACCOUNTS. THE ASSESSEE SHOULD BE ABLE TO SHOW THAT MONEY HAS BEEN TRANSFERRED THROUGH BANKING CHANNELS FROM THE BANK ACCOUNT OF CREDITORS TO THE BANK ACCOUNT OF THE ASSESSEE, THE IDENTITY OF THE PAGE | 8 CREDITORS AND THAT THE MONEY PAID FROM THE ACCOUNTS OF THE ASSESSEE HAS RETURNED TO THE BANK ACCOUNTS OF THE CREDITORS. THE ASSESSEE HAS TO DISCHARGE THE PRIMARY ONUS OF DISCLOSURE IN THIS REGARD. 20. WHILE THE AO IN THE P RESENT CASE DID NOT QUESTION THE WORKING OUT OF THE PEAK CREDIT BY THE ASSESSEE, HE, AT THE SAME TIME, INSISTED THAT THE ADDITIONS MADE BY HIM TO THE RETURNED INCOME OF THE ASSESSEE SHOULD BE SUSTAINED. THE PEAK CREDIT WORKED OUT BY THE ASSESSEE WAS ON THE BASIS THAT THE PRINCIPLE OF PEAK CREDIT WOULD APPLY, NOTWITHSTANDING THE FAILURE OF THE ASSESSEE TO EXPLAIN EACH OF THE SOURCES OF THE DEPOSITS AND THE CORRESPONDING DESTINATION OF THE PAYMENT WITHOUT SQUARING THEM OFF. THAT IS NOT PERMISSIBLE IN LAW AS E XPLAINED BY THE ALLAHABAD HIGH COURT IN THE AFOREMENTIONED DECISIONS WHICH, THIS COURT CONCURS WITH. CONCLUSION 21. AS ALREADY NOTED, THE ITAT WENT MERELY ON THE BASIS OF ACCOUNTANCY, OVERLOOKING THE SETTLED LEGAL POSITION THAT PEAK CREDIT IS NOT APPLICAB LE WHERE DEPOSITS REMAIN UNEXPLAINED UNDER SECTION 68 OF THE ACT. THE QUESTION OF LAW FRAMED BY THIS COURT, IS ACCORDINGLY, ANSWERED IN THE NEGATIVE I.E. IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THE IMPUGNED ORDER OF ITAT IS, ACCORDINGLY, SET ASI DE AND THE ORDER OF THE AO IS RESTORED TO FILE. [UNDERLINE SUPPLIED BY US] 10. IN THE PRESENT CASE THERE IS NO INFORMATION AVAILABLE WITH THE LD AO WHETHER THE ADDITION HAS BEEN MADE IN THE HANDS OF THE BENEFICIARIES ON SUBSTANTIVE BASIS OR NOT. FURTHER, THE MODUS OPERANDI OF ASSESSEE SHOWS THAT MONEY CREDITED IN BANK ACCOUNT OF ASSESSEE AND IN WHISHKER GIVEN TO BENEFICIARIES. THEREFORE, THE WHOLE TRANSACTION IS REQUIRED TO BE JUSTIFIED AS GENUINENESS. ASSESSEE IS DUTY BOUND TO SHOW THE GENUINENESS OF WHOLE BUSINESS OPERATION. 11. IN VIEW OF THE ABOVE FACTS WE SET ASIDE THE WHOLE ISSUE BACK TO THE FILE OF THE LD. ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO PROVE THAT ABOVE SUM OF RS. 52110091/ INTRODUCED IN THE BANK ACCOUNT OF THE ASSESSEE COMPANY AS A GENUINE PAGE | 9 TRANSACTION BY SHOWING THE NAME, ADDRESS AND GENUINENESS OF THE TRANSACTIONS FROM WHOM MONEY HAS BEEN RECEIVED. FURTHER, THE ASSESSEE IS ALSO DIRECTED TO SHOW TO WHOM THESE CHEQUES WERE ISSUED AND THEY ARE NOT FICTITIOUS. ON FURNISHING OF SUCH INFORMATION, THE LD. ASSESSING OFFICER EXAMINE THE SAME BY MAKING A DETAILED ENQUIRY AND HE MAY IF DEEMS FIT, MAY EXAMINE THE DIRECT OR OF THE ASSESSEE COMPANY AND THE DIRECTORS OF THE COMPANY WERE BENEFICIARIES AND THEN DECIDE THE ISSUE AFFAIRS. FURTHER THE LD. ASSESSING OFFICER SHOULD ALSO NOT BE INFLUENCED BY THE STATEMENT MADE BY THE DIRECTOR OF THE COMPANY AS WELL AS THATS RETRACT ION BUT BASED ON THE ABOVE SUM CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE PURELY ON THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT. IN VIEW OF THIS, WE SET ASIDE GROUND NO. 2 AND 3 OF THE APPEAL OF THE REVENUE BACK TO THE FILE OF THE LD. ASSESSING OF FICER TO DECIDE IT AFRESH. THAT THE LD. ASSESSING OFFICER WILL GIVE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE AFTER THE ASSESSEE SUBMITS ALL THESE DETAILS AS MENTIONED IN THIS ORDER. THE LD. ASSESSING OFFICER IS ALSO DIRECTED FURTHER TO CONSIDER AND DECIDE THE ISSUE IN THE LIGHT OF THE DECISION OF THE HONBLE DELHI HIGH COURT HAS STATED ABOVE. FURTHER, IN CASE ASSESSEE DOES NOT REMAIN PRESENT BEFORE THE LD AO AS IT HAS AVOIDED REPRESENTATION BEFORE US, THE LD AO MAY PASS ORDER AS HE DEEMS FIT AND MAY ALSO INVOKE IMMEDIATELY PROVISION OF SECTION 226(3) OF THE ACT AS BENEFICIARY MAY BE MADE GARNISHEE DEFAULTERS. 12. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 0 7 / 0 2 / 2018 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 7 / 02 / 2018 PAGE | 10 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI