Sh. Sunil Gupta, Chandigarh V. DCIT, Chandigarh

ITA 402/CHANDI/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95576 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: ASHWANI KUMAR
• Keywords: Peak credit
• Section: 131; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 402 TO 404/CHD/2013 A.YS: 2008-09 TO 2010-11 SHRI SUNIL GUPTA, VS THE DCIT, 3, INDUSTRIAL AREA, CENTRAL CIRCLE 1, PHASE 1, CHANDIGARH. CHANDIGARH. PAN: ACSPG7280J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 22.09.2015 DATE OF PRONOUNCEMENT : 29.09.2015 O R D E R PER BHAVNESH SAINI,JM ALL THE APPEALS BY ASSESSEE ARE DIRECTED AGAINST COMMON ORDER OF LD. CIT(APPEALS) (CENTRAL) GURGAON DATED 14.03.2013 FOR ASSESSMENT YEARS 2008-09, 2009 - 10 AND 2010-11, CHALLENGING THE ADDITION OF RS. 22.43,850/-, RS. 4307,500/- AND RS. 21,75,000/- ON ACCOUNT OF PEAK INVESTMENTS IN ALL THE ASSESSMENT Y EARS RESPECTIVELY. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT A SEARCH UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED ON M/S BHUS HAN GROUP OF CASES ON 04.03.2010 BY INVESTIGATION WING (INCOME TAX) NEW DELHI, JURISDICTION OVER THE CASE OF ASSESSEE WAS TRANSFERRED TO DCIT CENTRAL CIRCLE-I, 2 CHANDIGARH BY CIT-I CHANDIGARH. DURING THE COURSE OF SEARCH & SEIZURE OPERATION IN THE PREMISES OF M/S B HUSHAN POWER & STEEL LTD. AT 3, INDUSTRIAL ESTATE, PHASE-1 , CHANDIGARH, A DIARY MARKED AS A-7 WAS FOUND AND SE IZED. IT CONTAINS 8 WRITTEN PAGES DEPICTING CERTAIN TRANS ACTIONS. ON THE TOP RIGHT CORNER OF EACH WRITTEN PAGE, THE A LPHABET L IS WRITTEN. DURING THE COURSE OF SEARCH & SEIZ URE OPERATION, IT WAS STATED THAT THIS DIARY WAS THE PE RSONAL DIARY OF THE ASSESSEE, AN EMPLOYEE OF M/S BHUSHAN P OWER & STEEL LTD. AND HE ONLY COULD EXPLAIN ITS CONTENTS . THE ASSESSEE WAS SUMMONED UNDER SECTION 131 OF THE ACT AND HIS STATEMENT WAS RECORDED ON THIS ISSUE. IN HIS STATEMENT, ASSESSEE ADMITTED THAT THE DIARY BELONG TO HIM AND HE OWNED THE ENTRIES MENTIONED IN THE DIARY. H E FURTHER STATED THAT THE ALPHABET L STOOD FOR LAK H. HE ALSO STATED THAT ENTRIES IN THAT DIARY WERE REGARDI NG THE INCOME EARNED BY HIM BY FORWARD TRADING. THE NOTIC E UNDER SECTION 153C OF THE ACT WAS ISSUED. THE ASSE SSEE FURNISHED RETURN OF INCOME FOR ASSESSMENT YEAR 2008 -09 AT RS. 14,02,310/- INCLUDING INCOME OF RS. 10,15,880/- FROM PROFITS & GAINS. THE ASSESSEE AS REGARDS THE DETAI LS OF INCOME OF RS. 10,15,880/- SUBMITTED THAT IT WAS DER IVED FROM FORWARDING TRADING TRANSACTION AND THE SAID IN COME WAS NOT DISCLOSED WHILE FILING THE ORIGINAL RETURN OF INCOME. THE INCOME IS STATED TO BE RECORDED IN THE DIARY ANNEXURE A-7 FOUND IN SEARCH. THE ASSESSING OFFICE R REPRODUCED CONTENTS OF DIARY IN THE ASSESSMENT ORDE R WHICH CONTAINED (-) (MINUS) FIGURE ALSO. THE ASSES SING 3 OFFICER NOTED THAT THE ASSESSEE CLAIMED THAT THESE INCOMES ARE FROM FORWARD TRANSACTIONS FOR WHICH NO DOCUMENT ARY EVIDENCE WAS PRODUCED BY THE ASSESSEE IN RESPECT OF CLAIM THAT THESE INCOMES ARE FROM FORWARD TRADING. 2(I) IT WAS FURTHER SUBMITTED THAT MINUS SIGN S HOWN AGAINST ENTRIES WERE LOSSES FROM THESE TRANSACTIONS . THE ASSESSING OFFICER NOTED THE FIGURES IN THE ASSESSME NT ORDER AND FOUND THAT ASSESSEE HAS SHOWN INCOME OF RS. 10,45,880/-. HOWEVER, AS PER THE PROFIT & LOSS ACC OUNT NOTED IN THE ASSESSMENT ORDER, INCOME OF THE ASSESS EE FOR THIS YEAR WAS RS. 12,36,850/-, THEREFORE, A SUM OF RS. 1,90,970/- WAS ADDED. THE ASSESSING OFFICER FURTHE R FROM THE SEIZED PAPER AND THE CHART REPRODUCED IN THE ASSESSMENT ORDER NOTED THAT ASSESSEE HAS UNDISCLOSE D INCOME DURING THIS PERIOD AND ASKED THE ASSESSEE AS TO WHY THE BENEFIT OF PEAK SHOULD NOT BE ALLOWED TO HI M AS HE HAS NOT EXPLAINED THE ENTRIES. IT IS FOR THE ASSES SEE TO PROVE THE PAYMENTS MADE TO DIFFERENT PARTIES OR EXP ENSES RECORDED IN THESE DOCUMENTS AGAIN BECOME AVAILABLE IN THE FORM OF RECEIPTS RECORDED IN THESE DOCUMENTS. THE ASSESSEE SUBMITTED THAT THE DIARY BELONG TO HIM AND THE SAME INCOME WAS EARNED BY HIM BY FORWARD TRADING. IT CONTAINS POSITIVE AND NEGATIVE FIGURES REPRESENTED THE LOSS, THEREFORE, PEAK CANNOT BE CALCULATED ON THE SAME. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT CONTENTI ON OF THE ASSESSEE AND NOTED THAT THERE IS A COMPONENT OF UNDISCLOSED INVESTMENT OF THE ASSESSEE AND ACCORDIN GLY 4 MADE ADDITION OF RS. 22,43,850/- UNDER SECTION 69 O F THE ACT IN ASSESSMENT YEAR 2008-09. 3. IN ASSESSMENT YEAR 2009-10, ASSESSING OFFICER RECORDED THE SAME FACTS AND NOTED THAT AS PER PROFI T & LOSS ACCOUNT CALCULATED IN THE ASSESSMENT ORDER, INCOME IS RS. 1,17,500/- AGAINST AN INCOME OF RS. 2,10,410/- SHOW N BY THE ASSESSEE. THE ASSESSING OFFICER SIMILARLY MADE ADDITION OF THE PEAK AMOUNT OF RS. 43,07,500/- UNDE R SECTION 69 OF THE ACT. 3(I) IN ASSESSMENT YEAR 2010-11, ASSESSING OFFICER NOTED THE SAME FACTS AND NOTED THAT AS PER THE PROFIT & L OSS ACCOUNT, INCOME IS RS. 9,000/- AGAINST AN INCOME OF RS. 6,30,770/- SHOWN BY THE ASSESSEE. SEPARATE ADDITIO N OF PEAK AMOUNT WAS MADE OF RS. 21,75,000/-. THUS, IN ASSESSMENT YEAR 2009-10 AND 2010-11, NO SEPARATE ADDITION HAS BEEN MADE OF UNDISCLOSED INCOME AS WAS MADE IN ASSESSMENT YEAR 2008-09 AND IN BOTH YEARS. A.O. REDUCED EXCESS INCOME SURRENDERED FROM COMPUTATION OF INCOME. 4. THE ASSESSEE CHALLENGED THE ADDITIONS BEFORE LD. CIT(APPEALS) AND WRITTEN SUBMISSION OF THE ASSESSEE IS QUOTED IN THE IMPUGNED ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT THE ABOVE ADDITIONS HAVE BEEN MERELY ON ASSUMPTIONS THAT THERE WAS A COMPONENT OF UNDISCLOS ED INVESTMENT IN RESPECT OF THE SAID TRANSACTIONS. IT WAS SUBMITTED THAT SEIZED DIARY REFLECTED PROFIT AND LO SS FROM 5 CERTAIN FORWARD TRANSACTIONS AND DID NOT REPRESENT THE INFLOW OR OUTFLOW OF THE FUNDS. THE WORKING OF THE PEAK IS WHOLLY UNJUSTIFIED. SECTION 69 OF THE ACT WOULD NO T APPLY IN THIS CASE BECAUSE THERE IS NO EVIDENCE OF UNEXPL AINED INVESTMENTS. THE ADDITION OF RS. 1,90,970/- DESERV ES TO BE DELETED IN ASSESSMENT YEAR 2008-09. IT WAS, THEREF ORE, SUBMITTED THAT ALL ADDITIONS MAY BE DELETED. 5. THE LD. CIT(APPEALS), CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND MATERIAL ON RECORD, DELETED THE AD DITION OF RS. 1,90,970/- IN ASSESSMENT YEAR 2008-09, HOWEV ER, CONFIRMED THE ADDITIONS OF PEAK. THE FINDINGS OF L D. CIT(APPEALS) IN PARA 6.2 TO 7 OF THE APPELLATE ORDE R ARE REPRODUCED AS UNDER : 6.2. THE ABOVE GROUNDS OF APPEAL ARE DISPOSED CONSOLID ATEDLY AS THEY ARISE FROM THE DIARY CONTAINING 8 WRITTEN P AGES SEIZED IN THE COURSE OF SEARCH FROM THE OFFICE PREMISES OF BH USHAN STEEL. THE DIARY MARKED A-7 HAS BEEN OWNED UP BY THE ASSESS EE SO THE CONTENTS AND THE FIGURES CONTAINED THEREIN ARE NOT IN DISPUTE. THE CASE OF THE ASSESSEE IS THAT THE TRANSACTIONS E LUCIDATED IN THE DIARY CANNOT BE TREATED AS PROFITS AS WELL AS INV ESTMENTS, ON THE LATTER THE AO HAD PROCEEDED TO CALCULATE THE PEAK CR EDIT. CERTAIN UNDISPUTED FACTS HAVE BEEN BROUGHT OUT CLE ARLY IN THE IMPUGNED ORDER. THE ASSEESEE'S KNOWN SOURCE OF INCOME AND AS DECLARED IN HIS PREVIOUS RETURNS OF INCOME IS THAT OF SALARY ONLY. IT WAS ONLY AFTER THE SEARCH OPERATION AND THE SEIZU RE OF THE DIARY THAT THE ASSESSEE CONSEQUENTLY FILED RETURNS DECLARING INCOME FOR THE FIRST TIME AS INCOME FROM FORWARD-TRADING. HOWEVE R, NO DOCUMENTARY EVIDENCE OF THE CLAIM OF INDULGING IN FORW ARD-TRADING IN COMMODITIES ETC WAS FURNISHED BY THE ASSESSEE BEF ORE THE AO, 6 NOR IN THE APPELLATE SUBMISSIONS. NEITHER WAS ANY S UCH RELATED DOCUMENTS FOUND IN THE COURSE OF SEARCH THE DIARY CONTAIN CERTAIN TRANSACTIONS WITH VARIOUS PER SONS MENTIONING PERIOD OF TRANSACTIONS SPANNING 3 ASSESSMENT YEARS [AY 2008-09; AY 2009-10 AND AY 2010-11]. THE FIGURES MENTIONED THEREIN HAVE BEEN ACCEPTED TO BE IN LAKHS. THESE PAGES OF THE DIARY HAVE BEEN ANNEXED BY THE ASSESSEE ALONG WITH HIS WRITTEN SUBMISSIONS. ON A CLOSE PERUSAL OF T HE PAGES IT IS SEEN THAT THE ACCOUNTS HAVE BEEN MAINTAINED NAME-W ISE. FOR INSTANCE, THE NAME 'BABU' HAS 'COMM.' WRITTEN NEXT T O IT AND BELOW WHICH 1/12/09 IS WRITTEN WITH AMOUNT 1.08/- L. AGAIN, BABU (INTT.) IS MENTIONED WITH DATE 1/10/07 AND AMO UNT .30/- L. THE DETAILS SHOW O/BAL AS ON 1/12/07 AS 1.88/- AN D THEN THE PERIODICAL ENTRIES EG. 1/12/07 TO 20/12/07; 22/1 2 TO 31/12/07;.... 16/2/08 TO 15/4/08;.... 3/11/08 TO 20/ 2/09 AND SO ON WITH AMOUNTS WRITTEN CORRESPONDING TO THE PER IODS. AGAINST THE NAMES SNM (NEW A/C), PAREKH, SAROGI, TH E COMMISSION PAYABLE AS ON 8/12/07 HAVE BEEN MENTIONED. BANGALORE IS WRITTEN AGAINST THE NAME SHAHRUKH MISTRI ; BBY AGAINST SMN; DELHI AGAINST SAROGI. THERE ARE ALSO TWO E NTRIES MENTIONING JAMSHEDPUR (LAND) DATED 2/5/08 AND 1/61, B ESIDES RAIGARH LAND DATED 31/5/07 AND 7/8/07 WITH .35/- AND .30/- WRITTEN. THUS THE NATURE OF THE ENTRIES IN THE ACCOU NTS REQUIRED TO BE EXPLAINED AND IF THEY ARE TO BE RELATED TO PR OFITS/LOSS ON ACCOUNT OF FORWARD-TRANSACTIONS AS CLAIMED BY THE A SSESSEE, THEN IN WHAT SUBSTANCE OF FORWARD TRADING HE IS ENG AGED HAVE TO BE CATEGORICALLY SPECIFIED. MERELY STATING FORWARD TR ADING IN COMMODITIES ETC IS NOT SUFFICIENT. IMPORTANTLY, NO DOC UMENTS IN SUPPORT OF THE FORWARD-TRADING, HAVE BEEN FURNISHED THOUGH ASSESSEE HAS CLAIMED THE SAME IN HIS RETURN OF INCOME . THE AO, NO DOUBT, HAD PROCEEDED TO ADD THE PROFITS AS ARISIN G FROM FORWARD-TRADING WHILE ALSO WORKING OUT THE PEAK CRED IT KEEPING IN MIND THE ELEMENT OF UNDISCLOSED INVESTMENT IN RESPECT OF THE TRANSACTIONS. 7 FROM THE FACTS OF THE CASE, AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, I AM OF THE CONSIDERED VIEW THAT THE ASSESSEE IS NOT AT ALL INDULGING IN FORWARD-TRADING AS CLAIMED. THE ASSESSEE IS STATED, ON QUERY IN APPEAL, TO BE T HE VICE PRESIDENT, MARKETING, WHO HAS BEEN WORKING IN THE C OMPANY FOR 25 YEARS ODD. THIS IS THE FIRST TIME HE IS SHOWING IN COME OTHER THAN SALARY. SUCH INCOME DECLARED IS ALSO NOT NOMINAL AMOUNTS. IT CANNOT BE THEREFORE DISREGARDED THAT A CLAIM HAS BEEN MADE AND ASSESSEE HAS DECLARED SUBSTANTIAL INCOME ARISING FROM FORWARD-TRADING IN HIS RETURNS BUT THE SAME IS WITHO UT ANY CORROBORATING EVIDENCE. IN ANY CASE, THE ENTRIES IN T HE SEIZED DIARY VIZ. INTT, LAND AT RAIGARH AND JAMSHEDPUR CANNOT BE SAID TO BE RELATED TO FORWARD-TRADING, IN THE ABSENCE OF ANY CLARIFICATION AS TO THE COMMODITIES INDULGED IN. THE SEIZED MATERIALS WERE CONFRONTED TO THE ASSESSEE. IT WAS T HEREFORE INCUMBENT UPON THE ASSESSEE TO FAMISH ALL PRIMARY FACTS TO ENABLE DRAWING UP OF PROPER INFERENCES. THE ASSESSEE HAS MISERABLY FAILED TO DISCHARGE THE ONUS CAST UPON HIM. NO IOTA OF EVIDENCE HAS BEEN FURNISHED BY THE ASSESSEE. 6.3. THEREFORE AS REGARDS THE ADDITION MADE BY THE AO OF RS. 1,90,970/- FOR AY 2008-09 AS UNDISCLOSED PROFITS FROM FO RWARD TRADING, OVER AND ABOVE DECLARED BY THE ASSESSEE IN HIS RETURN, THE SAME IS DIRECTED TO BE DELETED. 6.4. THE OTHER ISSUE IS THE ADDITION IN ALL THE THRE E YEARS ON ACCOUNT OF PEAK CREDIT AS UNDISCLOSED INVESTMENT U/S 69. THOUGH I AGREE WITH THE CONTENTION OF THE ASSESSEE AS REGARD S THE PROVISIONS OF SECTION 69, HOWEVER, THE PEAK WORKED OUT BY THE AO IS ABSOLUTELY CORRECT AS THE NATURE OF THE ENTRI ES HAVE NOT BEEN EXPLAINED NOR EVIDENCED. THE WORKING OUT OF THE PEAK BY THE AO AS PER THE ENTRIES IN THE SEIZED PAPERS OF THE DIARI ES, IN THE ABSENCE OF ANY THING FORTH COMING ON THE PART OF TH E ASSESSEE, IS CONFIRMED TO BE THE UNDISCLOSED INCOME OF THE ASS ESSEE. THE BENEFIT OF THE INCOME DECLARED IS ALSO NOT BEING GIVE N AS THE ASSESSEE HAS NOT FURNISHED ANY WORKING AS TO HOW TH E SAME WAS 8 CALCULATED AND HOW IT IS CO-RELATED TO THE ENTRIES IN T HE SEIZED DAIRY. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR AY 2008-09, WHILE THE APPEALS FOR AY 2009-10 AND AY 2 010-11 ARE DISMISSED. 6. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES, LD. AR AND HAVE MAINLY RELIED UPON THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND LD. D R ON THE ORDERS OF AUTHORITIES BELOW. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION FOR T HE AUTHORITIES BELOW FOR MAKING ADDITIONS ON ACCOUNT O F PEAK INVESTMENTS IN ALL THE ASSESSMENT YEARS UNDER APPEA LS. IT IS A CASE OF SEARCH IN WHICH DIARY MARKED A-7 WAS F OUND AND SEIZED. THE ASSESSEE ADMITTED THE CONTENTS OF THE DIARY AND EXPLAINED THAT THE ENTRIES IN THE SAID DI ARY WERE REGARDING THE INCOME EARNED BY HIM BY FORWARD TRADI NG. THE ASSESSING OFFICER REPRODUCED CONTENTS OF THE DI ARY IN THE ASSESSMENT ORDER AND NOTED THAT ASSESSEE HAS NO T FILED ANY DOCUMENTARY EVIDENCE IN RESPECT OF THE CLAIM TH AT THESE ARE INCOME FROM FORWARD TRADING. IT IS NOT I N DISPUTE THAT THE CONTENTS OF THE DIARY SHOW SOME POSITIVE A ND NEGATIVE FIGURES I.E. PROFIT OR LOSS. THE ASSESSEE IN HIS STATEMENT, AFTER GOING THROUGH THE CONTENTS OF THE DIARY HAS EXPLAINED THAT THESE WERE GAINS FROM SPECULATIV E TRANSACTIONS AS WELL AS LOSS FROM THE SPECULATIVE TRANSACTIONS FOR WHICH ASSESSEE HAS ALSO DECLARED T HE INCOME IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE 9 UNDER SECTION 153C OF THE ACT WHICH WERE NOT DISCLO SED WHILE FILING THE ORIGINAL RETURN OF INCOME. THE AS SESSING OFFICER, AFTER REPRODUCING THE CONTENTS OF DIARY NO TED THAT ASSESSEE HAS SHOWN INCOME OF RS. 10,45,880/-, HOWEV ER, AS PER THE PROFIT & LOSS ACCOUNT, REPRODUCED IN THE ASSESSMENT ORDER, THE INCOME OF ASSESSEE FOR ASSESS MENT YEAR 2008-09 COMES TO RS. 12,36,850/- AND THEREFORE , FURTHER ADDITION OF RS. 1,90,970/- WAS MADE, THE ASSESSING OFFICER CONSIDERED THE SIMILAR ISSUE IN O THER YEARS BUT NO ADDITIONS ON ACCOUNT OF UNDISCLOSED IN COME WAS MADE BECAUSE THE ASSESSEE HAS SHOWN THE HIGHER INCOME IN THE RETURN OF INCOME AS AGAINST CALCULATI ON MADE BY THE ASSESSING OFFICER. IT WOULD, THEREFORE, SHO W THAT THE ASSESSING OFFICER ON ONE HAND HAS CONSIDERED TH E PROFIT & LOSS ACCOUNT OF ASSESSEE FOR THE PURPOSE O F CONSIDERING TAXABLE INCOME IN THE HANDS OF THE ASSE SSEE AND MADE ADDITION OF RS. 1,90,970/- IN ASSESSMENT Y EAR 2008-09 AND IN OTHER YEARS, INCOME DECLARED HIGHER BY THE ASSESSEE WAS ACCEPTED. THEREFORE, ASSESSING OFFICE R BELIEVED AND CONSIDERED THE FIGURES OF CREDIT AND D EBIT IN THE PROFIT & LOSS ACCOUNT/SEIZED PAPER TO BE THE IN COME OF ASSESSEE FROM FORWARD TRADING AND HAS ACCEPTED THE RETURNED INCOME. IN ASSESSMENT YEAR 2008-09, LD. CIT(APPEALS), HOWEVER, DELETED THE ADDITION OF RS. 1,90,970/- ON WHICH REVENUE IS NOT IN APPEAL BEFORE US, THEREFORE, WHERE IS THE QUESTION OF CONSIDERING THE SAME TO BE UNDISCLOSED INVESTMENT OF ASSESSEE ON THE BASIS OF PEAK OF INVESTMENT DURING ALL THE ASSESSMENT YEARS UNDER 10 APPEAL. DURING THE COURSE OF SEARCH, NO EVIDENCE O R MATERIAL WAS FOUND AGAINST ASSESSEE IF ASSESSEE MAD E ANY UNDISCLOSED INVESTMENTS IN ANY FORWARD TRADING BUSI NESS. THERE IS NO MATERIAL AVAILABLE ON RECORD TO INDICAT E THAT ASSESSEE MADE INVESTMENTS OUTSIDE HIS KNOWN SOURCES . HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V V IJAY AGRICULTURAL INDUSTRIES 294 ITR 610 WITH REGARD TO PEAK CREDITS HELD AS UNDER : THE PRINCIPLE OF PEAK CREDIT COULD NOT APPLY IN CA SE OF DIFFERENT DEPOSITORS WHERE THERE HAD BEEN NO TRANSA CTION OF DEPOSITS AND REPAYMENT BETWEEN A PARTICULAR DEPO SITOR AND THE ASSESSEE. THE TRIBUNAL WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO TAKE THE PEAK CR EDIT FOR THE PURPOSES OF SECTION 68 OF THE ACT. 7. HON'BLE GUJRAT HIGH COURT IN THE CASE OF CIT V PRESIDENT INDUSTRIES 258 ITR 654 HELD AS UNDER : IN THE COURSE OF SURVEY CONDUCTED IN THE PREMISES O F THE ASSESSEE, EXCISE RECORDS WERE FOUND WHICH DISCLOSED GODOWN SALES NOT DISCLOSED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSING OFFICER MADE ADDITION OF UNDISCLOSED INCOME OF THE ENTIRE SALE PROCEEDS THER EOF. THE COMMISSIONER (APPEALS) AFFIRMED THE ADDITION BUT THE APPELLATE TRIBUNAL FOUND THAT THERE WAS NO MATERIAL TO INDICATE THAT THE ASSESSEE MADE INVESTMENT OUTSIDE THE BOOKS OF ACCOUNT TO MAKE THE ALLEGED SALES AND HELD THAT THE ENTIRE SALE PROCEEDS COULD NOT HAVE BEEN ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE BUT THE ADDITION COULD BE ONLY OF THE PROFITS EMBEDDED IN THE SALES. THE T RIBUNAL HAVING DEC1INED TO STATE A CASE, THE DEPARTMENT APP LIED TO THE HIGH COURT FOR AN ORDER CALLING FOR A REFERENCE : 11 HELD, DISMISSING THE APPLICATION FOR REFERENCE, THAT THE AMOUNT OF SALES COULD NOT REPRESENT THE INCOME OF T HE ASSESSEE WHO HAD NOT DISCLOSED THE SALES. THE SALES ONLY REPRESENTED THE PRICE RECEIVED BY THE SELLER OF THE GOODS; ONLY THE REALISATION OF THE EXCESS OVER THE COST IN CURRED COULD FORM PART OF THE PROFIT INCLUDED IN THE CONSI DERATION FOR THE SALES. SINCE THERE WAS NO FINDING TO THE EF FECT THAT INVESTMENT BY WAY OF INCURRING THE COST IN ACQUIRIN G THE GOODS WHICH WERE SOLD HAD BEEN MADE BY THE ASSESSEE AND THAT THAT INVESTMENT WAS ALSO NOT DISCLOSED, ONLY THE EXCESS OVER THE COST INCURRED COULD BE TREATED AS P ROFIT. 8. HON'BLE GUJRAT HIGH COURT FOLLOWED THE SAME JUDGEMENT IN ITS SUBSEQUENT DECISION IN THE CASE OF SAMEER SYNTHETIC MILLS 326 ITR 410. THEREFORE, THERE WAS NO JUSTIFICATION FOR THE AUTHORITIES BELOW TO CONSIDER IT TO BE A CASE OF PEAK OF UNDISCLOSED INVESTMENT MADE BY ASSE SSEE. THE LD. CIT(APPEALS) IN HIS FINDINGS HELD THAT ASSE SSEE WAS NOT AT ALL INDULGING IN FORWARDING TRADING AS CLAIM ED. THE LD. CIT(APPEALS) ALSO HELD THAT SUCH INCOME DECLARED IS ALSO NOT NOMINAL AMOUNTS. IT CANNOT BE, THEREFORE DISREGARDED THAT A CLAIM HAS BEEN MADE AND ASSESSEE HAS DECLARED SUBSTANTIAL INCOME ARISING FROM FORWARD TR ADING IN HIS RETURN BUT THE SAME IS WITHOUT ANY CORROBORATIV E EVIDENCE. THESE FINDINGS OF LD. CIT(APPEALS) HAVE NOT BEEN CHALLENGED BY THE REVENUE. WHEN ASSESSEE WAS N OT DOING ANY FORWARD TRADING AS PER FINDINGS OF AUTHOR ITIES BELOW AND ASSESSEE HAS NO OTHER SOURCE OF INCOME EX CEPT SALARY AND INCOME FROM HOUSE PROPERTY, WHERE IS THE QUESTION OF ASSESSEE MAKING ANY UNDISCLOSED INVESTM ENT IN ANY OTHER ACTIVITIES. THE ASSESSING OFFICER AS PER THE 12 SEIZED PAPER ENTRIES CONFIRMED THAT ASSESSEE HAS EA RNED UNDISCLOSED INCOME, THE ASSESSEE ALSO EXPLAINED THA T THE SEIZED PAPER CONTAINED THE INCOME FROM FORWARD TRAD ING AND LOSSES FROM THESE TRANSACTIONS. THE SUBMISSION S OF THE ASSESSEE AND FINDINGS OF THE ASSESSING OFFICER THUS, WOULD CLEARLY SHOW THAT THERE WAS NO TRANSACTION OF DEPOSIT AND REPAYMENT CONDUCTED BY ASSESSEE WITH AN Y PARTICULAR PERSON OR DEPOSITOR. THEREFORE, THEORY O F PEAK CREDIT WOULD NOT APPLY IN THE CASE OF THE ASSESSEE. THE SEIZED MATERIAL ITSELF SUPPORT THE CASE OF THE ASSE SSEE THAT ADDITION ON ACCOUNT OF PEAK UNDISCLOSED INVESTMENT IS WHOLLY UNJUSTIFIED IN THE CASE OF THE ASSESSEE. 9. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR TH AT NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO SHOW THAT AS SESSEE HAS MADE ANY UNDISCLOSED INVESTMENT. THE ADDITIONS MADE BY THE AUTHORITIES BELOW ARE MERELY ON PRESUMPTIONS THAT THERE IS A COMPONENT OF UNDISCLOSED INVESTMENTS IN THESE TRANSACTIONS. THE TRANSACTIONS DID NOT REPRESENT A NY INFLOW OR OUTFLOW OF THE FUNDS. THEREFORE, WORKING OF THE PEAK MADE BY THE ASSESSING OFFICER AND CONFIRMED BY LD. CIT(APPEALS) IS WHOLLY UNJUSTIFIED AND ARE LIABLE T O BE DELETED. 10. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE T HE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITIO NS OF RS. 13 22,43,850/-, RS. 43,07,500/- AND RS. 21,75,000/- IN ALL THE ASSESSMENT YEARS. 11. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA MEHROTRA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH SEPT., 2015. FIT FOR PUBLICATION (ANNAPURNA MEHROTRA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER