The Income-tax Officer, Jammu V. Shri Amar Prasad Prop., Jammu

ITA 456/ASR/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95147 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 24-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K V K SINGH
• Assessee Lawyers: MOHIT KHANNA
• Keywords: Unexplained cash credit; Business income; Peak credit; Additional evidence; Speculation loss
• Section: 143(3); 131; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (JAMMU CAMP, JAMMU) BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S.KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A NOS. 207 & 456(ASR)/2015 ASSESSMENT YEARS: 2011-12 & 2012-13 INCOME TAX OFFICER, WARD-2(1), JAMMU. VS. SH. AMAR PRASAD PROP. M/S AMAR AUTO MOBILES, NEAR NAGBANI SCHOOL, AKHNOOR ROAD, JAMMU. PAN: AGGPP2142Q (APPELLANT) (RESPONDENT) APPELLANT BY: SH. K.V.K. SINGH (DR.) RESPONDENT BY: SH. JOGINDER SINGH & SH. MOHIT KHANNA (CA.) DATE OF HEARING: 03.12.2015 DATE OF PRONOUNCEM ENT: 31.12.2015 ORDER PER T.S.KAPOOR (A.M): THESE ARE TWO APPEALS FILED BY THE REVENUE AGAINS T THE ORDERS OF CIT(A), JAMMU, DATED 18.02.2015 AND 10.06.2015 FOR ASST. YE AR 2011-12 & 2012-13 RESPECTIVELY. THESE APPEALS WERE HEARD TOGETHER AND THEREFORE, FOR THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEIN G PASSED. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL IN ASST. YEAR 2011-12. (1) WHETHER THE LD. CIT(A), JAMMU WAS RIGHT IN DEL ETING THE ADDITION MADE BY THE AO ON ACCOUNT OF CASH DEPOSITS MADE IN THE SAVI NG ACCOUNT. (2) WHETHER THE LD. CIT(A), JAMMU WAS RIGHT IN ADMI TTING THE ADDITIONAL EVIDENCE REGARDING THE SUBMISSION OF MEDICAL CERTIFICATE AS ON COMPARISON OF THE ACTUAL STATEMENT MADE BY THE DOCTOR, IT HAS BEEN OBSERVED THAT THE ASSESSEE WAS NOT SO SERIOUS WHICH WOULD HAVE PREVENTED HIM TO ATTEND TH E INCOME TAX OFFICER. 2. ITA NO.20 7 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 (3) WHETHER THE LD. CIT(A), JAMMU WAS RIGHT IN APPL YING THE PEAK CREDIT THEORY, THE PEAK HAS TO BE WORKED OUT AFTER DATE WISE CONSO LIDATION OF ALL THE ACCOUNTS. THE ASSESSEE WAS NOT AVAILABLE TO PROVE BEFORE THE APPELLANT AUTHORITY THAT THE WITHDRAWALS HAD NOT BEEN UTILIZED FOR ANY OTHER PUR POSE AND THE AMOUNT WAS STILL AVAILABLE FOR RECYCLING. WHEREIN THE FOLLOWING GROUNDS OF APPEAL HAS BEEN TA KEN IN ASST. YEAR 2012-13. { (1) WHETHER THE LD CIT(A) WAS JUSTIFIED IN ALLOWIN G RELIEF ON ACCOUNT OF ADDITION MADE IN RESPECT OF UNEXPLAINED CASH CREDIT IN THE BANK ACCO UNTS WHICH WERE NOT DISCLOSED BY THE ASSESSEE WHILE FILING THE RETURN OF INCOME AND HAVE ONLY BEE N DEDUCTED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. (2) WHETHER THE LD. CIT(A) WAS JUSTIFIED IN ALLOWIN G RELIEF WHEN THE ASSESSING OFFICER HAD BROUGHT SUBSTANTIAL MATERIAL ON RECORD WITH REGARD TO NONDISCLOSURE OF BANK ACCOUNTS AND RELIED ONLY ON THE PURPORTED ACCOUNTS WHICH WERE FILED DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE CASH FLOW STATEMENT WHICH SUFFERED NUMEROUS DEF ECTS AND DULY POINTED OUT IN THE BODY OF ASSESSMENT ORDER BY THE ASSESSING OFFICER. (3) WHETHER THE LD CIT(A) WAS JUSTIFIED IN ALLOWING RELIEF MERELY ON THE STATEMENT OF THE ASSESSEE WITHOUT VERIFYING THE GENUINENESS OF SUCH DEPOSITS WHICH COULD NEITHER BE CONFIRMED NOR CROSS VERIFIED DURING THE COURSE OF ASSESSMENT PROCEEDING S. (4) WHETHER THE LD CIT(A) WAS JUSTIFIED IN ALLOWING RELIEF ON ACCOUNT OF ADDITION MADE IN RESPECT OF MONEY LENDING. (5)WHETHER THE LD CIT(A) WAS JUSTIFIED IN ALLOWING THE BENEFIT OF CARRY FORWARD OF LOSS WHICH WAS NOT CLAIMED WHILE FILING THE RETURN OF INCOME WITHO UT APPRECIATING THE PROVISIONS OF SECTION 80 OF THE ACT, WHEREIN IT HAS CLEARLY BEEN MENTIONED THAT NO LOSS WHICH HAS NOT BEEN DETERMINED IN PURSUANCE OF A RETURN SHALL BE CARRIED FORWARD. 2. THE BRIEF FACTS AS NOTED IN THE ASSESSMENT ORDE R ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S AMAR AUTO MOBILES, JAMMU. THE CAS ES OF THE ASSESSEE WERE SELECTED FOR SCRUTINY. DURING THE ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER IN ASST. YEAR 2011-12 OBSERVED THAT ON THE BASIS OF AIR INFORMATI ON THE ASSESSEE HAD DEPOSITED CASH AMOUNTING TO RS.75,62,500/- IN THE ACCOUNT WIT H THE CITIZEN CO-OPERATIVE BANK 3. ITA NO.20 7 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 LTD., AKHNOOR. THE ASSESSEE WAS CONFRONTED WITH THE INFORMATION AND IN RESPONSE TO THAT ASSESSEE VIDE LETTER DATED 17.1.2014 REPLY AS UNDER: APART FROM CARRYING THE SALE AND PURCHASE OF TWO W HEELERS OF TVS MAKE VEHICLES, THE ASSESSEE ALSO CARRIED OUT THE REAL ES TATE BUSINESS AS BROKER. THE AMOUNTS RECEIVED ON BEHALF OF OWNERS OF THE PRO PERTIES IN REAL ESTATE BUSINESS WERE DEPOSITED IN THE SAVING BANK ACCOUNT NO.3720 MAINTAINED WITH CITIZEN CO-OPERATIVE BANK LTD. AND THE PAYMENT S WERE MADE TO THE OWNERS OF THE SAID PROPERTIES AFTER WITHDRAWALS FRO M THE SAID ACCOUNT BY THE EMPLOYEES OF THE ASSESSEE. THE ASSESSEE HAS CHA RGED A COMMISSION OF AROUND 1% ON THE SAID REAL ESTATE TRANSACTIONS. THE RE ARE TOTAL CREDITS OF RS.75,62,500/- IN THE BANK MAINTAINED WITH CITIZEN CO-OPERATIVE BANK WHICH IS USED FOR DEPOSITS AND WITHDRAWALS FOR REAL ESTATE BROKERAGE BUSINESS CARRIED OUT BY THE ASSESSEE. AS THE INCOME FROM THIS BUSINESS HAS LEFT TO BE REFLECTED IN THE RETURN OF INCOME, I T IS OFFERED TO MAKE ON ADDITION OF RS.75,625/- BEING 1% OF CREDITS IN THE BANK ACCOUNT. THE COUNSEL FOR THE ASSESSEE WAS ASKED TO EXPLAIN A S TO WHY THE ENTIRE AMOUNT OF RS.75,62,500/- BE NOT TREATED AS INCOME, IN VIEW OF THE FACT THAT THERE WAS NO EVIDENCE WITH THE ASSESSEE THAT THE SAID AMOUNT REP RESENTED SALE PROCEEDS OF LAND RECEIVED BY HIM FROM BUYERS AND PASSED ON TO SELLER S. THE COUNSEL OF THE ASSESSEE SUBMITTED THAT HE HAD NO OTHER INFORMATION/DOCUMENT S TO SUPPORT THE ARGUMENTS AND REITERATED HIS REPLY. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY AND THE ENTIRE AMOUNT OF DEPOSITS WAS TREATED AS INCOME OF THE ASSESSEE. 3. IN ASST. YEAR 2012-13 THE A.O OBSERVED THAT IN T HE SAME BANK ACCOUNT THE ASSESSEE HAD DEPOSITED AN AMOUNT OF RS.39,57,700/- BOTH IN CASH AND THROUGH CHEQUES. THEREFORE, THE ASSESSEE WAS CONFRONTED WIT H THE INFORMATION. IN RESPONSE THE ASSESSEE VIDE REPLY DATED 21.1.2015 SUBMITTED AS UN DER: REGARDING THE BANK ACCOUNTS MAINTAINED WITH THE C ITIZEN CO-OPERATIVE BANK SAVING A/C 3720, AND PUNJAB NATIONAL BANK IT I S TO SUBMIT THAT 4. ITA NO.20 7 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 THESE ACCOUNTS ARE USED FOR THE BUSINESS OF COMMODI TY TRADING AND MONEY LENDING BUSINESS WHICH RESULTED IN A NET LOSS OF RS .15,73,387/-. SEPARATE SET OF BOOKS OF ACCOUNTS ARE MAINTAINED FOR THESE B USINESS AND INADVERTENTLY THE LOSS INCURRED DURING THE YEAR UND ER CONSIDERATION IS LEFT TO BE CLAIMED AS SET OFF FROM INCOME OF OTHER BUSIN ESS UNDER THE SAME HEAD. THE ASSESSING OFFICER, FURTHER REQUIRED ASSESSEE TO EXPLAIN RECEIPTS AND DEPOSITS AND WITHDRAWALS IN THE BANK ACCOUNT AND IN RESPONSE THE ASSESSEE FILED DETAILED REPLY EXPLAINING THE NATURE OF EACH AND EVERY DEPOSITS AND WITHDRAWALS WHICH HAS BEEN NOTED BY ASSESSING OFFIC ER AT PAGE 5 OF HIS ORDER. 3. SIMILARLY, THE ASSESSING OFFICER OBSERVED ON THE BASIS OF AIR INFORMATION THAT ASSESSEE HAD MADE DEPOSITS AS WELL AS WITHDRAW ALS IN THE AKHNOOR BRANCH OF PUNJAB NATIONAL BANK AND WHICH BANK ACCOUNT WAS NOT DISCLOSED IN THE RETURN OF INCOME. THE ASSESSING OFFICER, FURTHER OB SERVED THAT ON THE BASIS OF AIR INFORMATION THE ASSESSEE WAS DEALING IN BUSINES S OF COMMODITY TRADING AND MONEY LENDING BUSINESS FOR WHICH HUGE TRANSACTI ONS AMOUNTING TO RS. 1 CRORE WERE MADE BY ASSESSEE WHEREAS IN THE BALANCE SHEET AND TRADING ACCOUNT THERE IS NO MENTION OF SUCH BUSINESS ACTIVITIES. IN RESPONSE TO THESE ENQUIRES THE ASSESSEE SUBMITTED THAT HE CARRIED OUT BUSINESS OF COMMODITY TRADING AND FOR THAT PURPOSES HE WAS USING THE PUNJUAB NATIONAL BANK ACCOUNT NO. 0986000100535591. THE ASSESSEE FURTHER VIDE LETTER DATED 20.01.2015 SUBMITTED AS UNDER: .......IT IS TO SUBMIT THAT THESE ACCOUNTS ARE USE D FOR THE BUSINESS OF COMMODITY TRADING AND MONEY LENDING BUSINESS WHICH RESULTED IN A NET LOSS OF RS.15,73,387/-. SEPARATE SET OF BOOKS OF AC COUNTS ARE MAINTAINED FOR THESE BUSINESS AND INADVERTENTLY THE LOSS INCUR RED DURING THE YEAR 5. ITA NO.20 7 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 UNDER CONSIDERATION IS LEFT TO BE CLAIMED AS SET OF F FROM INCOME OF OTHER BUSINESS UNDER THE SAME HEAD. IT IS REQUESTED TO PR OVIDE THE SET OFF OF LOSSES UNDER THE PROVISIONS OF THE ACT. COPY OF THE BALANCE SHEET, PROFIT AND LOSS ACCOUNT, PROPRIETOR CAPITAL ACCOUNT, COPY OF LEDGER OF BANK ACCOUNT AND OTHER RELEVANT EXTRACTS OF FROM BOOKS O F ACCOUNTS INCLUDING THE ACCOUNTS WITH THE BONANZA COMMODITY SHOWING TRANSAC TION OF COMMODITY MARKET IS ENCLOSED. COPY OF STATEMENTS FROM BONANZA COMMODITY SHOWING FINANCIAL TRANSACTIONS AND PROFIT LOSS STATEMENT IS ALSO ENCLOSED. COPY OF BANK STATEMENTS ARE ALREADY PRODUCED BEFORE YOUR GO ODSELF. ALL THE CASH DEPOSITS IN THESE BANK ACCOUNTS ARE FROM DISCLOSED SOURCES AND ARE DULY REFLECTED IN THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER AFTER FURTHER EXAMINING THE A SSESSEE MADE THE ADDITIONS BY HOLDING AS UNDER: (I) IN RESPECT OF DEPOSITS IN CITIZEN CO-OPERATIVE BANK ACCOUNT 3720. TOTAL CREDIT THROUGH CHEQUE AMOUNTS TO RS.22,43,00 0/- AND BALANCE CREDIT DEPOSITED IN CASH AMOUNTS TO RS. 17,14,700/-. ON THE BASIS OF FACE VA LUE AS PER THE COPIES OF CONFIRMATION LETTERS FILED BY DIFFERENT PERSONS, IN RESPECT OF AMOUNTS D EPOSITED IN CASH, SHRI BACHAN LD'L HAS CONFIRMED TO HAVE REPAID CASH ON ACCOUNT OF REPAYME NT OF LOAN OF RS.2,00,000/- AND RS.40,000/- ON 20.06.2011 AND 12.12.2011, SHRI MANGAT RAM HAS R EPAID ON 22.06.2011 AMOUNTING TO RS.32,000/- SHRI PAWAN KUMAR HAS ADMITTED HAVING RE PAID BUT ONLY RS.20,000/- AND SHRI CHANDER POSH HAS ADMITTED IN HIS REPLY FILED ON 17. 03.2015 HAVING REPAID RS. 1,26,000/- AND RS.34,000/- ON 15.04.2011 AND 30.05.2011 RESPECTIVE LY, THEREFORE, BY ALLOWING THE BENEFIT OF THESE PAYMENTS ALSO RECEIVED BY THE ASSESSEE, STILL CASH OF RS. 12,62,700/- [1714700-452000] REMAINS UNEXPLAINED. AS SUCH, SAID AMOUNT OF RS.L2,62,700/-IS TREATED AS HIS INCOME AND CHARGED TO TAX ON THIS ACCOUNT. AS REGARDS THE SOURCE OF REPAYMENT THROUGH CHEQUES AMOUNTING TO RS.22,43,000/- AS WORKED OUT ABOVE, IT IS CLEAR THAT THE ASSESSEE IS DOING THE B USINESS OF MONEY LENDING AND THE AMOUNT REPRESENT THE LOAN ADVANCED BY HIM, THEREFORE, THE SAID AMOUNT ALONG WITH THE CASH DEPOSIT AMOUNT OF RS. 17,14,700/- TOTALING TO RS.39,57,700/ -AS DETAILED ABOVE ACTUALLY REPRESENT INVESTMENT MADE BY THE ASSESSEE IN THE MONEY LENDIN G BUSINESS AND THEREFORE, IT WOULD BE REASONABLE TO DETERMINE THE PROFIT EARNED ON SUCH I NVESTMENT BEING INTEREST OF 1.5% PER MONTH OR 18% PER ANNUM WHICH WORKS OUT TO RS.7,12,386/-. THUS TOTAL ADDITION UNDER THIS HEAD COMES TO RS.19,75,086/- {1262700+712386} AND THE SAME IS CHA RGED TO TAX. SINCE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME AS A LSO ADMITTED BY HIM IN THE EXPLANATION FILED, THEREFORE, THE PENALTY PROCEEDINGS U/S 271(L)(C) AR E ALSO INITIATED SEPARATELY. (II) IN RESPECT OF DEPOSITS WITH PUNJAB NATIONAL BANK. 6. ITA NO.20 7 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 THE PERUSAL OF THE BANK ACCOUNT COPY REVEALS THAT UPTO 06.08.2011, CASH ON VARIOUS DATES HAS BEEN DEPOSITED IN THE SAID ACCOUNT WHICH AMOUNTS TO RS.7,14,000/- AND ON PERUSAL OF THE REPLY OF THE ASSESSEE WITH REFERENCE TO THE BANK ACCOUNT, IT IS OBSERVED THAT ON 29.07.2011 AN AMOUNT OF RS.2,50,000/- HAS BEEN W ITHDRAWN THROUGH CHEQUE NO.265461 IN THE NAME OF SHRI AMAR PRASHAD FROM THE CITIZENS COOPERATIVE BANK A/C NO.3720 AND ON THE SAME DAY THERE IS A CASH DEPOSIT OF RS.2,50,000/- IN PNB ACCOUNT. THOUGH THERE IS NO DIRECT EVIDENCE THAT THE SAID CA SH WITHDRAWN FROM CCB HAS BEEN DEPOSITED IN PNB BUT EVEN IF IT IS PRESUMED AS SUCH , STILL THE BALANCE CASH DEPOSIT OF RS.4,64,000/- [714000- 250000) IS THE CASH DEPOSITE D FROM UNEXPLAINED SOURCES IN THIS ACCOUNT AND AS SUCH, SAME IS TAKEN AS AN INVESTMENT AND CHARGED TO TAX. ON 23.08.2011, THERE IS CREDIT ENTRY OF RS. 10,00,0 00/- WHICH HAS BEER EXPLAINED AS RECEIPT FROM COMMODITY TRADING TRANSACTION AND THER EAFTER, THE MONEY TRANSFERRED FROM THIS ACCOUNT CAN BE JUSTIFIED AS HAVING BEEN MADE O UT OF THE SAID AMOUNT AS NO OTHER MONEY HAS BEEN WITHDRAWN EXCEPT INVESTMENT MADE IN THE COMMODITY TRADING. FURTHER THERE IS TRANSFER ENTRY OF RS.3,00,000/- ON 20.09.2 011 WHICH QUALIFIES FOR DEDUCTION. HOWEVER, THE AMOUNT OF CASH DEPOSIT IN THE SAID ACC OUNT ON 23.09.2011- RS.2,00,000/-, 28.09.2011- RS. 1,50,000/-, 01.10.2011 RS.1,00,000/ -, 07.10.2011- RS. 1,50,000/-, 22.11.2011- RS. 1,50,000/- AND (VIII) RS.80,000/- TOTALING TO RS.8,30,000/- AGAIN REMAINED UNEXPLAINED. II HIS REPLY, THE COUNS EL OF THE ASSESSEE HAS STATED THAT AN AMOUNT OF RS. 1,50,000' AND RS.80,000/- WAS WITHDRA WN FROM CCB A/C NO.3720 ON 28.09.2011 AN THROUGH CHEQUE NOS.265470 AND 266810 RESPECTIVELY AND SAME AMOUR WAS DEPOSITED IN PNB. AFTER CONSIDERING THE REPLY O F THE ASSESSEE, IT IS OBSERVE' THAT THOUGH THERE WAS NO BUSINESS EXPEDIENCY TO WITHDRAW N CASH FROM ONE ACCOUNT AND DEPOSIT THE SAME IN ANOTHER ACCOUNT EVEN IF IT CAN BE SAID THAT ACTUALLY THERE WAS A BUSINESS EXPEDIENCY STILL THE AMOUNT COULD HAVE BEE N TRANSFERRED BY RTGS ON THE SAME DAY IN MUCH SAFER AND LESSER TIME, BUT HAVING SAID THAT, EVEN IF THE PLEA OF THE ASSESSEE IS ACCEPTED THAT SAME CASH HAS BEEN DEPOSITED EVEN THE N THE CASH DEPOSIT OF RS,6,00,000/- (830000-(150000+80000) REMAINS UNEXPLAINED. THUS TOTAL ADDITION UNDER THI S ACCOUNT WORKS OUT TO RS.10,64,000/- [464000+600000] AND ACCORDINGLY SAID ADDITION IS MADE. (II) REGARDING COMMODITY TRADING BUSINESS. THE MATTER WAS TAKEN UP WITH BONANZA COMMODITY BRO KERS PVT. LTD. WHO VIDE THEIR LETTER DATED 01.08.2014 FURNISHED THE REQUISI TE INFORMATION. AFTER DOWNLOADING THE RETURN OF INCOME FROM THE SYSTEM AN D FILING OF AUDITED BALANCE ' SHEET BY THE ASSESSEE, IT WAS NOTICED THAT NO SUCH, TRADING ACTIVITIES CARRIED OUT BY THE ASSESSEE HAS BEEN REFLECTED IN THE TRADING ACCOUNT/ BALANCE SHEET WHICH ONLY MENTIONS THE BUSINESS ACTIVITIES CARRIED OUT IN THE NAME OF M/S AMAR AUTOMOBILES. IT WAS FURTHER NOTICED THAT THE BANK ACCOUNT THROUGH WHICH SUCH AC TIVITIES WERE CARRIED OUT WAS NOT REFLECTED. ACCORDINGLY, THE ASSESSEE WAS CONFRONTED WITH THESE FACTS VIDE LETTER DATED 19.11.2014. IT WAS ONLY IN RESPONSE TO THESE QUERIE S; THE ASSESSEE CAME FORWARD AND ADMITTED HAVING UNDERTAKEN THE COMMODITY TRADING TH ROUGH BONANZA COMMODITY BROKERS PVT. LTD. 7. ITA NO.20 7 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 THE INVESTMENT MADE IN SUCH TRADING HAS BEEN TAKEN CARE OF SEPARATELY AS DISCUSSED ABOVE AND AS FAR AS TRADING IS CONCERNED, THERE IS NET LOSS ON TEST CHECK OF INFORMATION COLLECTED DIRECTLY FROM THE TRADING MEM BER. THE ASSESSEE IN HIS REPLY HAS CLAIMED THAT HE HAS SUFFERED NET LOSS OF RS. 15,73, 387/-FROM SUCH TRADING AND HAS REQUESTED FOR ITS SET OFF. THE SUBMISSION OF THE AS SESSEE HAS BEEN CONSIDERED IN THE LIGHT OF THE PROVISIONS OF SECTION 80 OF THE INCOME TAX A CT, 1961, WHICH IS REPRODUCED HEREUNDER:- SUBMISSION OF RETURN FOR LOSSES: SECTION 80: NOTWITHSTANDING CONTAINED ANYTHING CONTAINED IN THI S CHAPTER, NO LOSS WHICH HAS NOT BEEN DETERMINED IN PURSUANCE OF A RETURN FILED IN ACCORDANCE WITH THE PROVISIONS OF SUB- SECTION (3) OF SECTION 139] SHALL BE CARRIED FORWAR D AND SET OFF UNDER SUB-SECTION (1) OF SECTION 72 O R SUB SECTION (2) OF SECTION 73 OR SUB-SECTION (1) OR SUB-SECTION (3) OF SECTION 74 OR SUB SECTION (3) O F SECTION 74A. IN VIEW OF THESE FACTS, SINCE THE ASSESSEE WHILE FI LING THE RETURN OF INCOME HAS FAILED TO DECLARE SUCH BUSINESS ACTIVITIES HAVING B EEN CARRIED OUT BY HIM DURING THE RELEVANT PERIOD AND THE SAME WAS DETECTED DURING TH E COURSE OF ASSESSMENT PROCEEDINGS BY THE DEPARTMENT, - AS SUCH, THE LOSS NOW CLAIMED DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOT BEEN DETERMINED IN PURSUANCE OF A RETURN FILED, THEREFORE, THE ASSESSEE IS NOT ENTITLED TO ANY SUCH SET OFF AND AC CORDINGLY THE CLAIM OF THE ASSESSEE IS NOT ALLOWED. WHILE CARRYING OUT SUCH ACTIVITIES, THE TU RNOVER HAS CROSSED THE THRESHOLD LIMIT FOR COMPULSORY AUDIT U/S 44AB OF THE INCOME TAX ACT , 1961, BUT ASSESSEE FAILED TO DISCLOSE HAVING CARRY OUT SUCH BUSINESS ACTIVITIES AND MITTE D SO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NO AUDIT IN RESPECT OF THIS COMMODITY TRADING HAVING BEEN CARRIED OUT, THEREBY HAVE CONTRAVENED THE SAID PROVISIONS OF THE ACT AS SUCH IS LIABLE TO PENALTY U/S 27IB OF THE INCOME TAX ACT, 1961. ACCORDINGLY, THE PENALTY PROCEEDINGS U/S 271 B ARE IN THIS CASE. 4. AGGRIEVED WITH THE ABOVE ASSESSMENT ORDER THE AS SESSEE FILED VARIOUS SUBMISSIONS BEFORE LEARNED CIT(A) AND FOR ASST. YEA R 2011-12 ALSO FILED SOME ADDITIONAL EVIDENCE. THE LEARNED CIT(A) HAS ADMITTE D THAT THE ADDITIONAL EVIDENCE AND HAS PARTLY ALLOWED RELIEF TO THE ASSESSEE. THE LEA RNED CIT(A) AFTER OBTAINING THE REMAND REPORT FROM ASSESSING OFFICER PARTLY ALLOWED THE RELIEF BY HOLDING AS UNDER: GROUND OF APPEAL NO 1 & 2 RELATES TO THE ADDITION OF RS 75,62,500/- ON ACCOUNT OF DEPOSITS IN THE BANK ACCOUNT NOT DISCLOSED BY THE APPELLANT. THE AP PELLANT HAS ARGUED THAT THE AMOUNT OF RS 75,62,500/- DOES NOT REPRESENTS THE INCOME OF THE A PPELLANT. IT WAS SUBMITTED THAT THE TOTAL DEPOSITS IN THE SAVING BANK ACCOUNT MAINTAINED WITH CITIZEN COOPERATIVE BANK LTD ARE RS 65,62,500/- AND NOT RS 75,62,500/- AND THERE IS A C ALCULATION ERROR OF RS 10,00,000/-. FURTHER, IT WAS ARGUED THAT DEPOSITS OF RS 16,21,000/- WAS ON A CCOUNT OF MONEY RECEIVED FROM FOUR DIFFERENT PARTIES AND THIS REPRESENTS ADVANCES, LOANS ETC ON WHICH NO INCOME IN EARNED. THE APPELLANT PRODUCED AFFIDAVIT OF THESE PARTIES IN RESPECT OF T RANSACTIONS ENTERED WITH THEM. IN RESPECT OF BALANCE AMOUNT OF RS 49,14,500/- , THE APPELLANT HA S ARGUED THAT THE AMOUNT OF DEPOSITS AND WITHDRAWALS IN THE ACCOUNT REPRESENTS TRANSACTIONS IN RESPECT OF HIS PROPERTY BROKERAGE BUSINESS ON WHICH HE EARNS ONLY 1% COMMISSION THAT TOO WHEN THE DEAL IS FINALISED AND IF DEAL IS CANCELLED, NO COMMISSION IS RECEIVED. 8. ITA NO.20 7 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 THE SUBMISSION OF THE APPELLANT ALONG WITH THE DOCU MENTS RECEIVED UNDER RULE 46A AS ADDITIONAL EVIDENCE WERE FORWARDED TO THE AO FOR HIS COMMENTS THEREON. THE ADDITIONAL EVIDENCE WAS ACCEPTED UNDER RULE 46A AFTER GOING THROUGH THE APP LICATION OF THE APPELLANT ALONG WITH THE SUPPORTING DOCUMENTS. THE AO IN HIS REMAND REPORT O BJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE. HOWEVER, ON GOING THROUGH THE REMAND REPO RT, APPLICATION OF APPELLANT AND REJOINDER TO REMAND REPORT, IT IS OBSERVED THAT THE APPELLANT HA S ARGUED THAT HE WAS UNWELL AND COULD NOT PROVIDE THE NECESSARY DOCUMENTS AT THE TIME OF ASSE SSMENT AND PRODUCED THE CERTIFICATE OF DOCTOR ATTENDING THE APPELLANT. THE DOCTOR OF THE APPELLAN T PROVIDED A CERTIFICATE TO THE APPELLANT IN WHICH IT WAS MENTIONED THAT THE APPELLANT WAS ADVISED TO TAK E REST. DURING THE REMAND PROCEEDINGS, THE AO SERVED NOTICE TO THE DOCTOR IN RESPECT OF SUCH CERT IFICATE AND THE DOCTOR SEND A LETTER TO THE AO CONFIRMING THE ISSUANCE OF SUCH CERTIFICATE. HOWEVE R, THE DOCTOR WAS AGAIN SUMMONED BY THE AO REQUIRING HIM TO PERSONALLY ATTEND THE PROCEEDINGS. THE DOCTOR ATTENDED THE PROCEEDINGS AND GAVE A WRITTEN STATEMENT BEFORE THE AO IN WHICH HE AGAIN C ONFIRMED THE ISSUANCE OF CERTIFICATE AND ALSO CONFIRMED THAT HE ADVISED THE APPELLANT TO TAKE RES T. THE DOCTOR, HOWEVER, IN THIS STATEMENT MENTIONED THAT IF IT HAD BEEN TOLD TO HIM EARLIER T HAT HE WOULD BE CALLED BY INCOME TAX DEPARTMENT, HE WOULD NOT HAVE ISSUED THE CERTIFICATE. HE ALSO MENTION ED IN THIS STATEMENT THAT THE CONDITION OF THE APP ELLANT WAS NOT SUCH THAT IT WOULD HAVE PREVENTED HIM TO APPEAR BEFORE INCOME TAX. ON THE PERUSAL OF THIS LAST STATEMENT, IT APPEAR THAT THE DOCTOR UNDER PRESSURE REGRETTED TO HAVE ISSUED THE CERTIFICATE. AS IN THE BEGINNING OF THE LETTER HE HIMSELF JS ADMITTING THAT HE HAS ADVISED THAAPPPLLANT TO TAKE REST AND LATER MENTIONING THAT THE CONDITION OF THE APPELLANT WAS NOT SUCH AS TO PREVE NT HIM FROM APPEARING BEFORE INCOME TAX AUTHORITIES WHICH ARE SELF CONTRADICTORY. FURTHER, FROM_ HIS STATEMENT THAT HE WOULD NOT HAVE ISSUED THE CERTIFICATE IF HE WOULD HAVE KNOWN THAT HE WOULD BE CALLED UPON BY THE INCOME TAX AUTHORITIES, IT SPEAKS ENOUGH ABOUT THE PRESSURE DURING THE STATEME NT AND HARASSMENT OF TRAVELING FROM AKHNOOR. KEEPING IN VIEW, THE DOCUMENTS ON RECORD WHICH WAS THE FIRST PRESCRIPTION, I AM OF THE OPINION THAT UNDER PRESSURE THE DOCTOR IS TRYING TO REWRITE THE PRESCRIPTION. MOREOVER, THE STATEMENT OF THE DOCTOR WAS RECORDED AT THE BACK OF THE APPELLANT AND NOT C ONFRONTED TO THE APPELLANT. THEREFORE, GIVING CREDENCE TO THE ORIGINAL PRESCRIPTION THE ADDITIONA L EVIDENCE IS ADMISSIBLE UNDER RULE 46A OF THE INCOME TAX RULES IN THE INTEREST OF JUSTICE. FURTHER, IN THE REMAND REPORT OF THE AO , THE AO HA S HIMSELF ADMITTED THE ERROR OF RS 10 LAKHS IN CALCULATION OF TOTAL DEPOSITS IN THE UNDISCLOSED BA NK ACCOUNT. IN RESPECT OF AMOUNTS OF RS 4,20,000/- RECEIVED FRO M SIKANDER PAL SINGH, THE AO HAS RECORDED HIS STATEMENT WHEREIN HE HAS CONFIRMED OF MAKING PAYME NTS OF RS 4.20 LAKHS BY ACCOUNT PAYEE CHEQUE TO THE APPELLANT AS REPAYMENT OF ADVANCES TA KEN FROM HIM. THEREFORE, BOTH PAYER AND PAYEE HAVGO THE NATURE OF REPAYMENT OF ADVANCE AND THERE IS NOT HING ON RECORD TO SHOW THAT THE AMOUNT REPRESENT ANY TRANSACTION OTHER THAN THAT CONFIRMED BY PAYER AND PAYEE. FURTHER ,THE AO HAS INITIATED PENALTY U/S 269SS IN THE CASE OF SH SIKAN DER PAL SINGH, WHICH ALSO SHOWS THAT THE AO HAS ALSO PRESUMED THAT THE TRANSACTION IS IN THE NA TURE OF LOAN OR ADVANCE. THE AO HAS ALSO TAKEN CONFIRMATION FROM BANK IN RESPECT OF THESE DEPOSITS AND THE BANK AUTHORITIES CONFIRMED THAT THE AMOUNT HAS BEEN RECEIVED FROM SIKANDER PAL SINGH TH ROUGH CHEQUE. FURTHER, BOTH PAYER AND PAYEE HAS CONFIRMED THAT NO INTEREST IS PAID OR RECEIVED ON SUCH ADVANCE AND THERE IS NOTHING ON RECORD TO SHOW THAT ANY INTEREST IS PAID OR RECEIVED ON SUCH AMOUNT. THE AO HAS NOT BROUGHT ON RECORD ANY DOCUMENT OR FACT TO SHOW THAT THE AMOUNT OF RS 4,20 ,000/- REPRESENTS THE INCOME OF THE APPELLANT. IN MY OPINION, THE APPELLANT HAS DISCHARGED HIS ONU S BY PROVIDING THE NAME, ADDRESS, NATURE OF TRANSACTION AND CONFIRMATION BY THE PAYEE. THE ADDI TION CANNOT BE CONFIRMED MERELY ON THE BASIS OF DOUBTS OF THE AO WHEN THE SIKANDER PAL SINGH HAS CO NFIRMED THAT HE HAS PAID RS 4,20,000/- AS REPAYMENT OF ADVANCE TAKEN FROM THE APPELLANT. REGARDING THE AMOUNT OF RS 8,00,000/- RECEIVED FROM SH KULDEEP KUMAR, THE AO HAS RECORDED HIS STATEMENT WHEREIN HE HAS CONFIRMED OF MAKING PAYMEN TS OF RS 8.00 LAKHS PARTLY BY CHEQUE AND PARTLY BY CASH ( RS. 4 LAKHS EACH ) TO THE APPELLAN T AS REPAYMENT OF ADVANCES TAKEN FROM HIM IN RESPECT OF CANCELLATION OF DEAL FOR SALE OF AGRICUL TURAL LAND. THEREFORE, BOTH PAYER AND PAYEE HAVE CONFIRMED THAT THE AMOUNT UNDER CONSIDERATION IS IN THE NATURE OF REPAYMENT OF ADVANCE AND THERE 9. ITA NO.20 7 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 IS NOTHING ON RECORD TO SHOW THAT THE AMOUNT REPRES ENT ANY TRANSACTION OTHER THAN THAT CONFIRMED BY PAYER AND PAYEE. FURTHER ,THE AO HAS INITIATED P ENALTY U/S 269SS IN THE CASE OF SH KULDEEP KUMAR WHICH ALSO SHOWS THAT THE AO HAS ALSO PRESUME D THAT THE TRANSACTION IS IN THE NATURE OF LOAN OR ADVANCE. THE AO HAS ALSO TAKEN CONFIRMATION FROM BANK IN RESPECT OF THESE DEPOSITS AND THE BANK AUTHORITIES CONFIRMED THAT THE AMOUNT HAS BEEN RECEIVED FROM KULDEEP KUMAR WITH REGARD TO CHEQUE TRANSACTION. FURTHER, BOTH PAYER AND PAYEE H AS CONFIRMED THAT NO INTEREST IS PAID OR RECEIVED ON SUCH ADVANCE AND THERE IS NOTHING ON RE CORD TO SHOW THAT ANY INTEREST IS PAID OR RECEIVED ON SUCH AMOUNT. THE AO HAS NOT BROUGHT ON RECORD ANY DOCUMENT OR FACT TO SHOW THAT THE AMOUNT OF RS 8,00,000/- REPRESENTS THE INCOME OF TH E APPELLANT. IN MY OPINION, THE APPELLANT HAS DISCHARGED HIS ONUS BY PROVIDING THE NAME, ADDRESS, NATURE OF TRANSACTION AND CONFIRMATION BY THE PAYEE. THE ADDITION CANNOT BE CONFIRMED MERELY ON T HE BASIS OF DOUBTS OF THE AO WHEN THE KULDEEP KUMAR HAS CONFIRMED THAT HE HAS PAID RS 8,00,000/- AS REPAYMENT OF ADVANCE TAKEN>FROM THE APPELLANT. REGARDING THE AMOUNT OF RS 1,51,000/- RECEIVED FROM SH. CHANDER POSH, THE AO HAS REPORTED IN HIS REMAND REPORT THAT SH CHANDER POSH ATTENDED HIS OFF ICE IN RESPONSE TO THE SUMMON U/S 131 OF THE ACT. HOWEVER, WHEN HE WAS ASKED TO RECORD HIS STATE MENT, HE REQUESTED FOR A FUTURE DATE AND DIDN'T TURN UP THEREAFTER. IT IS OBSERVED THAT SH C HANDER POSH HAS GIVEN AN AFFIDAVIT EXPLAINING THAT THE AMOUNT OF RS 1,51,000/- WAS PAID TO THE APPELLA NT AS REPAYMENT OF ADVANCE TAKEN. ALL THE MONEY RECEIVED AND PAID BACK BY HIM THROUGH CHEQUES AND BANK TRANSFER WHICH CAN BE VERIFIED FROM THE BANK AS DONE BY THE AO IN OTHER CASES. THE PARTY ATTENDED THE PROCEEDINGS IN RESPONSE TO SUMMON ISSUED BY THE AO BUT HIS STATEMENT COULD NOT BE RECORDED. FURTHER, THE AO HAS NOT BROUGHT ON RECORD ANY DOCUMENT OR FACT WHICH SHOWS THAT THE NATURE OF TRANSACTION IS DIFFERENT FROM THE NATURE OF TRANSACTION EXPLAINED BY THE PAYEE AND CO NFIRMED BY THE PAYER BY WAY OF AN AFFIDAVIT. IN MY OPINION, THE APPELLANT HAS DISCHARGED HIS ONUS B Y PROVIDING THE NAME, ADDRESS, NATURE OF TRANSACTION AND CONFIRMATION BY THE PAYEE. THEREFOR E, THE AMOUNT OF RS 1,51,000/- RECEIVED BY THE APPELLANT CANNOT BE TERMED AS UNDISCLOSED RECEIPTS. IN RESPECT OF RS. 1,50,000/- RECEIVED FROM M/S POOJ A FINANCE & INVESTMENT CO , THE AO HAS REPORTED THAT THE DIRECTOR OF THE COMPANY HAS NOT R ESPONDED TO THE SUMMON ISSUED U/S 131 OF THE ACT. THE APPELLANT HAS PRODUCED A CERTIFICATE OF TH E COMPANY IS RESPECT OF THE TRANSACTION UNDER CONSIDERATION AND BOTH AMOUNT OF RS 1,50,000/- HAS BEEN RECEIVED THROUGH BANK TRANSFERS. THE APPELLANT HAS ARGUED THAT HE HAS PROVIDED NAME, ADD RESS OF THE PERSON, NATURE OF TRANSACTION AND CONFIRMATION OF THE PARTY. FURTHER, THE APPELLANT A RGUED THAT ALL THE TRANSACTIONS ARE MADE THROUGH PROPER BANKING CHANNEL. IN MY OPINION, THE APPELLAN T HAS DISCHARGED HIS ONUS BY PROVIDING THE NAME, ADDRESS, NATURE OF TRANSACTION AND CONFIRMATI ON BY THE PAYEE. IT IS THE DUTY OF THE AO TO TAKE NECESSARY ACTION AGAINST THE PAYER TO GET HIS STATE MENT RECORDED. FURTHER, THE AO COULD HAVE MADE ANY VERIFICATION FROM THE BANK AUTHORITY IN RESPECT OF THESE CREDITS AS THE SAME ARE APPEARING IN THE BANK STATEMENT SPECIALLY WHEN SUCH VERIFICATION FRO M BANK WERE MADE FOR OTHER CREDITS. SINCE THE APPELLANT HAS DISCHARGE HIS ONUS, THE AMOUNT OF RS 1,51,000/- RECEIVED BY THE APPELLANT CANNOT BE ADDED TO HIS INCOME. REGARDING THE BALANCE CREDITS OF RS 49,14,500/- IN THE UNDISCLOSED BANK ACCOUNT, THE /APPELLANT HAS ARGUED THAT THE SAME REPRESENTS TRANSACTIONS IN THE COURSE OF PROPERTY / BROKERAGE BUSINESS IN WHICH HE GETS A COMMISSION OF 1% ON TRANSACTION AMO UNT. HOWEVER, THE AO IN HIS REMAND REPORT PARA NO. 4.42, WHILE ANALYZING THE RECEIPTS AND PAY MENTS TO CHANDER POSH HAS MENTIONED THAT THE TRANSACTIONS CONFIRM THAT THE APPELLANT WAS DOING T HE BUSINESS OF MONEY LENDING THROUGH THIS BANK ACCOUNT NOT DISCLOSED TO THE DEPARTMENT. IN BOTH TH E CIRCUMSTANCES, SINCE THERE ARE REGULAR DEPOSITS AND WITHDRAWALS IN THE BANK ACCOUNT, IT CANNOT BE C ONCLUDED THAT ALL THE CREDITS IN THE BANK ACCOUNT REPRESENTS INCOME OF THE APPELLANT. ON GOIN G THROUGH THE SUBMISSION OF THE APPELLANT, ASSESSMENT ORDER, REMAND REPORT AND REJOINDER TO TH E REMAND REPORT, I AM OF THE OPINION THAT IN THE PRESENT CASE TWO ADDITIONS ARE INEVITABLE , FIRST O N ACCOUNT OF UNDISCLOSED INVESTMENT IN BUSINESS AND BEST METHOD IN THE CIRCUMSTANCES OF THE PRESENT CASE IS BY DETERMINING THE PEAK CREDIT IN THE BANK ACCOUNT. SECONDLY, ON ACCOUNT OF UNDISCLOSED I NCOME FROM THE BUSINESS. ALTHOUGH, THE NATURE OF BUSINESS IS NOT DETERMINED WITH CERTAINTY , BOTH THE APPELLANT AND THE AO HAS AGREED THAT THE TRANSACTIONS IN THE SAVING BANK ACCOUNT NO 3720 MAI NTAINED WITH CITIZEN COOPERATIVE BANK LTD REPRESENTS BUSINESS TRANSACTION. THE APPELLANT HAS CLAIMED THAT THE BANK ACCOUNT UNDER CONSIDERATION IS USED FOR PROPERTY BROKERAGE BUSINE SS WHEREAS THE AO HAS REPORTED THAT THE ACCOUNT WAS USED FOR MONEY LENDING BUSINESS. 10. ITA NO.2 07 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 FURTHER, WHILE ANALYSING THE DOCUMENTS ON RECORD, I T IS OBSERVED THAT THE APPELLANT HAS FAILED TO PROVIDE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM OF CARRYING OUT BUSINESS OF PROPERTY DEALER. THEREFORE, I WILL GO WITH THE FINDINGS OF T HE AO IN REMAND REPORT THAT THE BANK ACCOUNT WAS USED BY THE APPELLANT FOR CARRYING OUT BUSINESS OF MONEY LENDING. IT IS SEEN THAT THERE ARE REGULAR DEPOSITS AND WITHDRAWALS FROM THE SAID BANK ACCOUNT AND NOTHING IS BROUGHT ON RECORD BY THE AO TO SHOW THAT SUCH WITHDRAWALS WERE UTILISED FOR ANY OTHER PURPOSE OTHER THAN THE MONEY LENDING BUSINESS. FROM THE PERUSAL OF BANK ACCOUNT NO 3720 MAINTAINED WITH CITIZEN COOPERATIVE BANK LTD, IT IS OBSERVED THAT THE PEAK CREDIT BALANCE IN THE SAID B ANK ACCOUNT DURING THE YEAR UNDER CONSIDERATION WAS ON 17.04.2010 AND THE BALANCE WAS RS 13,24,862/ -. OUT OF THIS BALANCE OF RS 13,24,862/-, RS 7,47,362/- IS ON ACCOUNT OF OPENING BALANCE IN THE SAID BANK ACCOUNT AS ON 01.04.2010. THEREFORE, AN AMOUNT OF RS 5,77,500/- BEING THE PEAK CREDIT FO R THE YEAR UNDER CONSIDERATION AFTER DEDUCTING THE CLOSING BALANCE OF LAST YEAR SHOULD BE ADDED TO THE INCOME OF THE APPELLANT AS UNDISCLOSED INVESTMENT. ON THE PERUSAL OF BANK STATEMENT OF CITIZEN CO-OPER ATIVE BANK LTD, IT APPEARS THAT THE SAME MONEY IS BEING USED FOR MAKING ADVANCES TO DIFFERENT PART IES FOR SHORT PERIODS. THE MAXIMUM INVESTMENT MADE BY THE APPELLANT IN THE SAID BUSINESS WAS RS.1 3,24,862/- BEING PEEK CREDIT INCLUDING BALANCE CARRIED FORWARD FROM PREVIOUS YEAR. IN MY OPINION, IT WOULD BE REASONABLE TO DETERMINE THE PROFIT OF THE APPELLANT BEING INTEREST OF 1.5% PER MONTH OR 1 8% PER ANNUM ON INVESTMENT OF RS.13,24,862/- MADE BY THE APPELLANT AS DISCUSSED ABOVE. THEREFORE , IT IS DIRECTED TO ASSESS PROFIT FROM MONEY LENDING BUSINESS CARRIED OUT THROUGH SAVING BANK AC COUNT NO 3720 WITH CITIZEN CO-OPERATIVE BANK LTD. AT RS.2,38,475/-. THEREFORE, THESE GROUNDS OF APPEALS ARE PARTLY ALLO WED AND ADDITION OF RS.8,15,975/- (RS. 5,77,500/- PLUS RS. 2,38,475/-) ARE UPHELD AND A RE LIEF OF RS.67,46, 525/- IS ALLOWED. 6. IN RESPECT OF ASST. YEAR 2012-13, THE LEARNED CIT(A ) ALLOWED THE RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: 4.1 GROUND OF APPEAL NO 1 RELATES TO THE ADDITION OF RS 12,62,700/- BEING UNEXPLAINED CASH DEPOSITS * IN SAVING BANK ACCOUNT NO 3720 MAINTAINED WITH CIT IZEN COOPERATIVE BANK AND ADDITION OF RS 7,12,386/- BY APPLYING 18% INTEREST RATE ON I NVESTMENT IN MONEY LENDING BUSINESS. IN RESPECT OF UNEXPLAINED CASH DEPOSITS OF RS 12,62,700/-, THE APPELLANT HAS ARGUED THAT THE COMPLETE BOOKS OF ACCOUNTS OF THE MONEY LENDING AND COMMODITY TRAD ING BUSINESS WAS PRODUCED BEFORE THE AO AND CASH BOOK AND LEDGER OF BANK ACCOUNT WERE VERIFIED BY HIM DURING THE COURSE OF ASSESSMENT. THE APPELLANT HAS ARGUED THAT THE AO HAS NOT POINTED OU T ANY DEFECT IN SUCH BOOKS OF ACCOUNTS AND SUPPORTING DOCUMENTS PRODUCED BEFORE HIM. THE APPEL LANT SUBMITTED THAT THE CASH OF RS 19,80,000/- WAS WITHDRAWN FROM THE SAME ACCOUNT ON DIFFERENT DATES AND A PART OF IT CASH WAS DEPOSITED BACK IN THE BANK ACCOUNT WHEN REMAIN UNUT ILISED. FURTHER , CASH AMOUNTING TO RS 8,65,000/- WAS TAKEN FROM HIS PROPRIETARY CONCERN M /S AMAR AUTOMOBILES AND USED IN MONEY LENDING /COMMODITY TRADING BUSINESS AND RETURNED TH E SAME AS PER THE AVAILABILITY OF FUNDS. THE APPELLANT ALSO ARGUED THAT THE CONTENTION OF AO REG ARDING THE DIFFERENCE OF RS 3,00,000/- IN INTER BUSINESS TRANSFERS WITH AMAR AUTOMOBILE IS NOT CORR ECT AS THE AO HAS NOT CONSIDERED THE BANK TRANSFERS OF RS 3,00,000/- BETWEEN THE TWO CONCERNS OF THE APPELLANT. THE APPELLANT HAS SUBMITTED DOCUMENTARY EVIDENCES IN SUPPORT OF HIS CLAIM AT TH E TIME OF ASSESSMENT PROCEEDINGS AS WELL BEFORE --ME. ON THE PERUSAL OF SUBMISSION OF THE APPELLAN T, ASSESSMENT ORDER AND DOCUMENTS ON RECORD, IT IS OBSERVED THAT THE APPELLANT HAS PROVIDED COMPLETE C ASH FLOW/ CASH BOOK OF THE MONEY LENDING AND COMMODITY TRADING BUSINESS AND SOURCES OF CASH DEPOSITS MADE IN SAVING BANK ACCOUNT MAINTAINED WITH CITIZEN COOPERATIVE BANK OUT OF THE CASH BOOK ARE FULLY EXPLAINED THERE IN. THE AO HAS VERIFIED THE CASH BOOK OF THE APPELLANT AND THE RE IS NO DEFECT POINTED OUT BY THE AO IN THE SAID CASH BOOK NOR THE AO HAS BROUGHT OUT ANYTHING ON RE CORD TO SHOW THAT THE CASH TAKEN OUT FROM CASH BOOK OF MONEY LENDING BUSINESS TO DEPOSIT IN BANK A CCOUNT OR CASH TAKEN OUT FROM AMAR AUTOMOBILE FOR USE IN MONEY LENDING BUSINESS HAS BEEN DIVERTED OR USED ELSEWHERE. THE AO HAS ALSO TAKEN CONFIRMATIONS FROM PARTIES WITH WHOM MONEY LENDING TRANSACTIONS WERE MADE AND MOST OF THEM HAVE CONFIRMED THE TRANSACTIONS REFLECTED IN THE BO OKS OF ACCOUNTS MAINTAINED BY THE APPELLANT. THE 11. ITA NO.2 07 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT ONE O F THE PARTY HAS CLAIMED TO HAVE MADE CASH REPAYMENT OF RS 20,000/- AGAINST THE CASH RECEIPT O F RS 50,000/- CLAIMED BY THE APPELLANT. HOWEVER, THE APPELLANT HAS ARGUED THAT NO SUCH STAT EMENT HAS BEEN CONFRONTED TO HIM AND NO ADDITION CAN BE MADE ON AN EVIDENCE COLLECTED BY TH E AO AT THE BACK OF THE ASSESSEE WITHOUT CONFRONTING THE SAME TO THE APPELLANT. THE AO CANNO T BRUSH ASIDE THE BOOKS OF ACCOUNTS AND EVIDENCES PRODUCED BY THE APPELLANT UNLESS ANYTHING CONTRARY HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE CONTENTION OF THE APPELLANT IS NOT CORRECT . IT IS NOT OPEN TO THE AO TO MAKE ADDITION ON THE BASIS OF SUSPICIONS WHILE IGNORING THE DOCUMENTS PL ACED ON RECORD. FURTHER, THE PLEA OF THE APPELLANT IN CONTEXT OF RS 30,000/- REFERRED ABOVE THAT ADDITION CANNOT BE MADE ON THE BASIS OF AN EVIDENCE COLLECTED AT THE BACK OF THE APPELLANT WIT HOUT CONFRONTING THE SAME TO HIM IS ALSO ACCEPTED. THIS GROUND OF THE APPELLANT IS ACCEPTED AND A RELI EF OF RS 12,62,700/- IS ALLOWED. IN RESPECT OF ADDITION OF RS 7,12,386/- ON ACCOUNT OF ESTIMATED INTEREST ON INVESTMENT MADE IN MONEY LENDING & COMMODITY TRADING BUSINESS, IT IS O BSERVED THAT THE AO HAS TREATED THE CASH & CHEQUE DEPOSITS OF RS 39,57,000/- IN THE CITIZEN CO OPERATIVE BANK AS INVESTMENT AND APPLIED ESTIMATED INTEREST RATE OF 1.5% PER MONTH I.E 18% P ER ANNUM ON TOTAL AMOUNT AS INCOME OF THE APPELLANT. THE APPELLANT HAS ARGUED THAT HE HAS MAI NTAINED COMPLETE BOOKS OF ACCOUNT IN RESPECT OF MONEY LENDING BUSINESS AND INTEREST INCOME HAS BEEN BOOKED WHEREVER CHARGED BY HIM ON ACTUAL BASIS AND AS SUCH THERE IS NO QUESTION OF ADDITION ON ESTIMATED BASIS. FURTHER, THE APPELLANT HAS ARGUED THAT THE AO HAS NOT POINTED OUT ANY DEFECT I N THE BOOKS OF ACCOUNTS NOR REJECTED THE BOOKS RESULTS BY INVOKING THE PROVISIONS OF SECTION 145(3 ) OF THE ACT AND ACCORDINGLY ESTIMATION OF INCOME CANNOT BE MADE BY THE AO IN ASSESSMENT U/S 143(3) O F THE ACT. THE APPELLANT HAS ALSO ARGUED THAT THE CONTENTION OF THE AO THAT THE BOOKS OF ACCOUNTS O F MONEY LENDING .& COMMODITY TRADING BUSINESS WAS COOKED UP AFTER POINTED OUT BY HIM IS NOT CORRECT AS THE DETAILS OF MONEY LENDING & COMMODITY TRADING BUSINESS ALONG WITH THEIR FINANCI AL STATEMENTS WERE PRODUCED BEFORE THE AO IN RESPONSE TO HIS FIRST QUESTIONNAIRE WHICH DOES NOT CONTAIN ANY MENTION OF SUCH BUSINESS OR BANK ACCOUNTS BY THE AO. I HAVE GONE THROUGH THE SUBMISS ION OF APPELLANT, ASSESSMENT ORDER AND DOCUMENTS ON RECORD. IT IS OBSERVED THAT IN THE IMM EDIATELY PRECEDING YEAR, I HAD APPLIED AN INTEREST RATE OF 18% PER ANNUM ON THE INVESTMENT MA DE BY THE APPELLANT IN THE MONEY LENDING BUSINESS AS THERE WERE NO BOOKS OF ACCOUNTS MAINTAI NED FOR SUCH BUSINESS NOR THE DETAILS OF INTEREST CHARGED BY HIM WAS EXPLAINED EITHER DURING ASSESSMENT PROCEEDINGS OR BEFORE ME. HOWEVER, IN THE YEAR UNDER CONSIDERATION, COMPLETE BOOKS OF ACCOUNTS OF MONEY LENDING AND COMMODITY TRADING BUSINESS HAS BEEN MAINTAINED IN W HICH THE ACTUAL INTEREST CHARGED BY THE APPELLANT IS REFLECTED. THE AO HAS TAKEN CONFIRMATI ONS FROM PARTIES TO WHOM MONEY HAS BEEN LENT BY THE APPELLANT. WHEN THE BOOKS OF ACCOUNTS ARE MA INTAINED AND THE ACTUAL INCOME HAS BEEN BOOKED BY THE APPELLANT AND THE AO HAS NOT POINTED OUT ANY MATERIAL DEFECT IN THE SAID BOOKS, NO ADDITION ON ADHOC OR ESTIMATED BASIS IS CALLED FOR. FURTHER, THE AO CANNOT ESTIMATE THE INCOME OF THE APPELLANT U/S 143(3) OF THE ACT WITHOUT REJECTING T HE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. BEST JUDGMENT ASSESSMENT COULD BE MADE EITHER U/S 144 OF THE ACT OR U/S 143(3) READ WITH 145(3) OF THE ACT. THEREFORE, IT I S DIRECTED TO ASSESS THE INCOME FROM MONEY LENDING BUSINESS AT RS 149262/- AS PER THE BOOKS OF ACCOUNT S I.E INTEREST INCOME OF RS 171986/- LESS BANK CHARGES AND INSURANCE EXPENSES OF RS 22,724/- AND T HE ESTIMATED ADDITION MADE BY THE AO IS ILLEGAL AND ACCORDINGLY DELETED. THIS GROUND OF APP EAL IS ALLOWED AND A RELIEF OF RS 5,63,124/-IS ALLOWED. 4.2. GROUND OF APPEAL NO 2 RELATES TO THE ADDITION OF RS 10,64,000/- BEING UNEXPLAINED CASH DEPOSITS IN SAVING BANK ACCOUNT NO 535591 MAINTAINE D WITH PUNJAB NATIONAL BANK. IN RESPECT OF CASH DEPOSITS IN PUNJAB NATIONAL BANK , THE APPELLA NT HAS ARGUED THAT THE CASH WAS DEPOSITED OUT OF REGULAR BOOKS OF ACCOUNTS. THE APPELLANT HAS PUT FORTH SIMILAR ARGUMENTS WHICH HAVE BEEN DISCUSSED WHILE ADJUDICATING THE ADDITION OF CASH D EPOSITS IN CITIZEN COOPERATIVE BANK IN RESPECT OF TRANSFER OF CASH FROM M/S AMAR AUTOMOBILES AND WITH DRAWAL OF CASH FROM CITIZEN COOPERATIVE BANK AT DIFFERENT TIMES WHICH WAS AVAILABLE IN REGULAR B OOKS OF ACCOUNTS AND WHICH WAS USED FOR DEPOSIT IN CITIZEN COOPERATIVE BANK AND PUNJAB NATIONAL BAN K AS PER THE NEEDS OF THE BUSINESS. THE APPELLANT HAS ALSO THAT CASH OF RS 4,00,000/- HAS B EEN DEPOSITED IN PUNJAB NATIONAL BANK AFTER WITHDRAWING IS A TRANSFER OF RS.3,00,000/- FROM CITIZEN CO-OPER ATIVE BANK TO PUNJAB NATIONAL BANK. ON THE PERUSAL OF SUBMISSION OF SOURCES OF CASH DEP OSITS MADE IN SAVING BANK ACCOUNT MAINTAINED WITH PUNJAB NATIONAL BANK OUT OF THE CASH BOOK ARE FULLY EXPLAINED THERE IN. THE AO HAS VERIFIED THE CASH BOOK OF THE APPELLANT AND THERE IS NO DEFECT P OINTED OUT BY THE AO IN THE SAID CASH BOOK NOR THE AO HAS BROUGHT OUT ANYTHING ON RECORD TO SHOW T HAT THE CASH TAKEN OUT FROM CASH BOOK OF MONEY LENDING BUSINESS TO DEPOSIT IN BANK ACCOUNT O R CASH TAKEN OUT FROM AMAR AUTOMOBILE FOR USE 12. ITA NO.2 07 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 IN MONEY LENDING BUSINESS HAS BEEN DIVERTED OR USED ELSEWHERE. THE AO CANNOT BRUSH ASIDE THE BOOKS OF ACCOUNTS AND EVIDENCES PRODUCED BY TH E APPELLANT UNLESS ANYTHING CONTRARY HAS BEEN BROUGHT ON RECORD TO SHO W THAT THE CONTENTION OF THE APPELLANT IS NOT CORRECT. IT IS ALSO OBSERVED THAT OUT OF CASH TRANSFERS OF RS 4,00,000/- FROM ONE BANK ACCOUNT TO ANOTHER BANK ACCOUNT AS EXPLAINED B Y THE APPELLANT, THE AO HAS ACCEPTED THE TRANSFER IN CASH FOR RS 2,50,000/- ONLY AND MADE AD DITION IN RESPECT OF BALANCE RS 1,50,000/- AS UNEXPLAINED DEPOSITS WITHOUT ASSIGNING ANY REASON I N THE ASSESSMENT ORDER. IT IS NOT OPEN TO THE AO TO MAKE ADDITION ON THE BASIS OF SUSPICIONS & WI SHES WHILE IGNORING THE DOCUMENTS PLACED ON RECORD. THIS GROUND OF THE APPELLANT IS ACCEPTED AN D A RELIEF OF RS 10,64,000/- IS ALLOWED. 4.3.GROUND OF APPEAL NO 3 RELATES TO NON ALLOWANCE OF SET OFF OF LOSSES OF RS 17,22,649/- FROM MONEY LENDING AND COMMODITY MARKET TRADING BUSIN ESS. IT IS OBSERVED THAT THE APPELLANT WAS ENGAGED IN THETLBNTESSRMONEY LENDING AND COMMODIT Y MARKET TRADING FOR WHICH SEPARATE SET OF BOOKS WERE MAINTAINED. THERE WAS NET LOSS IN THE BU SINESS OF MONEY LENDING AND COMMODITY MARKET WHICH WAS LEFT TO BE CLAIMED IN THE RETURN O F INCOME. THE AO HAS DISALLOWED THE CLAIM OF THE APPELLANT BY RELYING ON THE PROVISIONS OF SECTION 8 0 OF THE ACT. THE PROVISION OF SECTION 80 ARE REPRODUCED AS UNDER: ' NOTWITHSTANDING ANYTHING CONTAINED IN THIS CHAPTE R, NO LOSS WHICH HAS NOT BEEN DETERMINED IN PURSUANCE OF A RETURN FILED [IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (3) OF SECTION 139 1. SHALL BE CARRIED FORWARD AND SET OFF UNDER SUB-S ECTION (1) OF SECTION 72 OR SUB-SECTION (2) OF SECTION 73 OR SUB-SECTION (1) [OR SUB-SECTION (3)] OF SECTION 74 [OR SUB-SECTION (3)] OR SUB- SECTION 74A 1.' SECTION 139(3)- IF ANY PERSON WHO HAS SUSTAINED A LOSS IN ANY PREVI OUS YEAR UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' OR UNDER THE H EAD 'CAPITAL GAINS' AND CLAIMS THAT THE LOSS OR ANY PART THEREOF SHOULD BE CARRIED FORWARD UNDER SUB-SECTION (1) OF SECTION 72, OR SUB-SECTION (2) OF SECT ION 73, OR SUB-SECTION (1) [OR SUB-SECTION (3)J OF S ECT ION 74 , [OR SUB-SECTION (3) OF SECTION 74A 1, HE MAY FURNISH, WITHIN THE TIME ALLOWED UNDER SUB-S ECTION (1), A RETURN OF LOSS IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND CONT AINING SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED, AND ALL THE PROVI SIONS OF THIS ACT SHALL APPLY AS IF IT WERE A RETURN UNDER SUB-SECTION (1). ON THE PERUSAL OF ABOVE SECTIONS, IT IS OBSERVED TH AT SECTION 80 OF THE ACT RESTRICTS THE CARRY FORWAR D AND SET OFF OF LOSSES IN SUBSEQUENT YEAR AS PER SEC TION 72(1), 72(2), 74(1), 74(3) OR SECTION 74A(3) O F THE ACT. THE SECTION NOWHERE IMPOSES ANY RESTRICTIO N ON SET OFF OF LOSSES U/S 70 & 71 IN THE YEAR OF LOSS ITSELF. FURTHER, THE PROVISIONS OF SECTION 139 (3) AS REFERRED IN SECTION 80 ALSO TALKS ABOUT CARR Y FORWARD OF LOSSES AND DOES NOT PUT ANY RESTRICTION ON SET OFF OF LOSSES IN THE CURRENT YEAR. FURTHER, THE ESSENCE OF SECTION 139(3) IS THAT THE RETURN MU ST BE FILLED BEFORE THE DUE DATE PRESCRIBED U/S 139(1) OF THE ACT. IN THE PRESENT CASE, THE APPELLA NT PRESCRIBED U/S 139(1) OR 139(3) OF THE ACT. THEREFORE, THE DENIAL OF SET OFF OF LOSS RELYING ON THE PROVISION OF SECTION 80 OF THE ACT IS NOT ACCEPTABLE AND THE PLEA OF THE APPELLANT IN THIS RE GARD IS ACCEPTABLE AS THE AO HAS RELIED ON THE WRONG PROVISIONS OF THE ACT. HOWEVER, IT IS OBSERVED THAT THE APPELLANT HAS INCU RRED A LOSS OF RS 17,22,649/- IN THE BUSINESS OF COMMODITY MARKET TRADING WITH RECOGNIZED STOCK EXCH ANGE. THIS TRANSACTION HAS BEEN TAKEN OUT OF THE PREVIEW OF 'SPECULATIVE TRANSACTION' BY AN AMEN DMENT IN FINANCE ACT 2013 W.E.F 01.4.2014 I.E ASSESSMENT YEAR 2014-15. THE TRANSACTION UNDER CONS IDERATION WAS CARRIED OUT IN A PERIOD PRIOR TO THE AMENDMENT AND ACCORDINGLY THE TRANSACTION IS TO BE CONSIDERED AS SPECULATIVE TRANSACTION. UNDER THE PROVISIONS OF SECTION 73 OF THE ACT, A SP ECULATIVE TRANSACTION CAN BE SET OFF ONLY AGAINST THE INCOME FROM ANOTHER SPECULATIVE BUSINESS AND NO T OTHERWISE. THEREFORE, STEPPING INTO THE SHOE OF AO AND USING MY COHERENT POWER , I THEREBY DIREC T TO DISALLOW THE SETTING OFF OF LOSS FROM SPECULATIVE BUSINESS OF COMMODITY MARKET TRADING AM OUNTING TO RS 17,22,649/-BY INVOKING THE PROVISIONS OF SECTION 73 OF THE ACT. HOWEVER, THE A PPELLANT IS ALLOWED TO CARRY FORWARD THIS LOSS TO B E SET OFF AGAINST INCOME FROM SPECULATIVE BUSINESS, I F ANY, IN SUBSEQUENT YEARS AS PER THE PROVISIONS OF SUB SECTION 2 SECTION 73 OF THE ACT. 13. ITA NO.2 07 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 7. AGGRIEVED WITH THE ORDERS OF LEARNED CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 8. AT THE OUTSET, THE LEARNED DR INVITED OUR ATTENT ION TO ASSESSMENT ORDERS FOR ASST. YEAR 2011-12 AND SUBMITTED THAT ASSESSEE HAD DEPOSITED HUGE AMOUNTS IN HIS SAVINGS BANK ACCOUNT WHICH HE HAD NO T DECLARED IN HIS RETURN OF INCOME AND IT IS ONLY AFTER THE SAME WAS DETECTE D BY ASSESSING OFFICER THAT ASSESSEE CAME UP WITH CERTAIN EXPLANATIONS AND ADDI TIONAL EVIDENCES WHICH THE CIT(A) HAS WRONGLY ADMITTED. HE FURTHER SUBMITTED T HAT ASSESSEE HAD FILED ADDITIONAL EVIDENCE AS HE HAD CLAIMED THAT THE NECE SSARY EVIDENCE COULD NOT BE FILED BEFORE THE ASSESSING OFFICER BECAUSE OF THE F ACT THAT ASSESSEE WAS SICK AND PRODUCED A MEDICAL CERTIFICATE OF A DOCTOR. HE SUBM ITTED THAT ASSESSING OFFICER HAD EXAMINED THE DOCTOR WHEREIN HE HAD AGREED THAT THE CONDITION OF ASSESSEE WAS NOT SO CRITICAL SO AS TO WARRANT NON ATTENDANCE AT INCOME TAX PROCEEDINGS. IN VIEW OF THESE FACTS, THE LEANED DR SUBMITTED THA T THE LEARNED CIT(A) SHOULD NOT HAVE ADMITTED ADDITIONAL EVIDENCES AS THESE ARE ALL AFTER THOUGHTS. 9. AS REGARDS MERITS OF THE CASE, THE LEARNED DR HE AVILY RELIED UPON THE ASSESSMENT ORDER. IN RESPECT OF ASST. YEAR 2012-13, THE LEARNED DR SUBMITTED THAT ASSESSEE HAD NOT DISCLOSED THE BANK ACCOUNTS I N WHICH HUGE DEPOSITS AND WITHDRAWALS WERE MADE AND WHICH WAS NOT DECLARED IN THE RETURN OF INCOME AND ASSESSEE CAME OUT WITH THE EXPLANATIONS ONLY WH EN ASSESSING OFFICER CORNERED HIM. THE LEARNED DR FURTHER SUBMITTED THAT THE ASSESSEE HAD NOT DISCLOSED THE BUSINESS OF COMMODITY TRADING AND THE REFORE, ITS LOSS WAS NOT ALLOWED TO BE CARRY FORWARD, IN VIEW OF THE PROVISI ONS OF SECTION 80. 14. ITA NO.2 07 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 10. THE LEARNED AR, ON THE OTHER HAND, INVITED OUR ATTENTION TO THE DETAIL FINDINGS OF LEARNED CIT(A) AS CONTAINED IN THE RESP ECTIVE ASST. YEARS AND ARGUED THAT LEARNED CIT(A) HAS AFTER CONSIDERING THE REMAN D REPORT AND AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES HAS ALLOWED RELIEF TO THE ASSESSEE WHICH IS AS PER THE PROVISIONS OF LAW AND HE HEAVILY PLACED HIS RELIANCE ON THE ORDER OF LEARNED CIT(A). 11. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIRST TAKE UP ASST. YEAR 2011- 12. WE FIND THAT THE ASSESSING OFFICER HAD DETECTED A TOTAL DEPOSITS OF RS. 75,62,500/- IN BANK ACCOUNT MAINTAINED WITH CITIZENS CO-OPERATIVE BANK AND IN RESPONSE TO THE QUERY BY ASSESSING OFFICER, THE ASSESSEE HAD ADMITT ED THAT WITHDRAWALS AND DEPOSITS REPRESENTED PROPERTY BUSINESS CARRIED ON B Y HIM AND HE OFFERED 1% AMOUNTING TO RS.75,625/- AS COMMISSION INCOME FROM SUCH DEPOSITS. HOWEVER, BEFORE THE LEARNED CIT(A), THE ASSESSEE EXPLAINED C ERTAIN AMOUNTS TO HAVE BEEN RECEIVED FROM FOUR PERSONS NAMELY SH. SIKANDER PAL SHARMA, SH. KULDEEP KUMAR, SH. CHANDER POSH AND M/S POOJA FINANCE AND I NVESTMENT COMPANY. THE ASSESSEE HAD EXPLAINED BEFORE THE LEARNED CIT(A ) THAT THE AMOUNTS WERE RECEIVED BACK FROM THESE PERSONS AS THESE WERE ADVA NCED TO THEM IN EARLIER YEARS. THE ASSESSING OFFICER DURING REMAND PROCEEDI NGS HAS EXAMINED THE ABOVE SAID PERSONS EXCEPT M/S POOJA FINANCE & INVES TMENT CO. AND THESE PERSONS HAD AGREED TO HAVE RECEIVED THE AMOUNTS IN EARLIER YEARS AND HAVE ALSO 15. ITA NO.2 07 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 AGREED TO HAVE REPAID THE AMOUNT TO THE ASSESSEE. I N FACT MOST OF THE TRANSACTIONS WERE THROUGH CHEQUES AND LEARNED CIT(A ) HAS CLEARLY RECORDED A FINDINGS OF FACT IN THIS REGARD. AS REGARDS M/S POO JA FINANCE & INVESTMENT CO. THROUGH THIS COMPANY DID NOT RESPOND TO SUMMONS U/S 131 BUT THE ASSESSEE FILED SUFFICIENT EVIDENCE OF HAVING PAID & RECEIVED THE AMOUNTS THROUGH CHEQUES. THE LEARNED CIT(A) HAS FURTHER OBSERVED TH AT ON THE BASIS OF SUBMISSIONS OF ASSESSEE THERE WAS A CALCULATION MIS TAKE OF RS.10 LACS IN THE ADDITIONS WORKED OUT BY ASSESSING OFFICER AND THERE FORE, IN ALL HE ALLOWED RELIEF TO THE EXTENT OF RS.25.21. LACS. 12. AS REGARDS REMAINING AMOUNT 49,14,500/- THE LEA RNED CIT(A) HAS OBSERVED THAT SINCE THERE WAS REGULAR DEPOSITS AND WITHDRAWALS IN THE BANK ACCOUNT AND ON THE BASIS OF EXAMINATION OF CERTAIN CUSTOMERS OF THE ASSESSEE HE HELD THAT THE ASSESSEE WAS INTO THE BUSINESS OF MONEY LENDING AND THEREFORE, HE HAS RIGHTLY APPLIED THE THEORY OF PEA K CREDIT. HE FURTHER OBSERVED THAT THE PERSONS HAD FILED AFFIDAVITS DURING REMAND PROCEEDINGS AND HAS ALSO ACCEPTED THE TRANSACTIONS. THEREFORE, HE RIGHTLY CA LCULATED THE AMOUNT RS.5,77,500/- AFTER REDUCING FROM THE PEAK CREDIT AMOUNT OF OPENING BALANCE AND FURTHER RIGHTLY APPLIED INTEREST @ 18% ON PEAK CREDIT AS HIS BUSINESS INCOME. 13. AS REGARDS THE GRIEVANCE OF REVENUE THAT THE LEARNED CIT(A) SHOULD NOT HAVE ACCEPTED ADDITIONAL EVIDENCE, IN VIEW OF THE F URTHER STATEMENT OF DOCTOR WE FIND THAT IN HIS STATEMENT HE HAS MENTIONED THAT HE WOULD NOT HAVE ISSUED 16. ITA NO.2 07 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 THE CERTIFICATE IF HE WAS AWARE OF THE FACT THAT HE WOULD BE CALLED TO THE INCOME TAX OFFICE FOR EXAMINATION. THE LEANED CIT(A) HAS R IGHTLY OBSERVED THAT THE FURTHER STATEMENT GIVEN BY DOCTOR ITSELF SPEAKS THA T HE WAS UNDER PRESSURE. STILL, THE FACT REMAINS THAT ASSESSEE WAS NOT KEEPI NG WELL AND MOREOVER, THE ADDITIONAL EVIDENCE GOES TO THE ROOT OF THE ADDITIO N, THEREFORE IN OUR OPINION HE RIGHTLY ADMITTED THE SAME. IN VIEW OF THE ABOVE FAC TS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) AND T HEREFORE, APPEAL FILED BY REVENUE IN ASST. YEAR 2011-12 IS DISMISSED. 14. NOW COMING TO THE ASST. YEAR 2012-13. IN THI S YEAR WE FIND THAT THE ASSESSEE HAD FILED COMPLETE CASH FLOW OF CASH OF TH E MONEY LENDING BUSINESS AND COMMODITY TRADING BUSINESS AND SOURCES OF CASH DEPOSITS MADE IN SAVING BANK ACCOUNT. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECT IN SUCH CASH FLOW STATEMENT. OUT OF TOTAL ADDITION OF RS.12 ,62,700/- MADE BY ASSESSING OFFICER ON ACCOUNT OF DEPOSITS IN BANK ACCOUNT, THE LEARNED CIT(A) HAS MADE A FINDING OF FACT THAT AN AMOUNT OF RS.86,5000/- WAS DEPOSITED IN THE BANK OUT OF EARLIER WITHDRAWALS OF RS.19,80,000/- AND FURTHE R A DEPOSIT OF RS.3,00,000/- WAS AN ACCOUNT OF BANK TRANSFER AND WAS NOT IN CASH . THESE FINDINGS OF LEARNED CIT(A) HAS NOT BEEN CONTROVERTED BY LEARNED DR. 15. AS REGARDS THE ADDITION OF RS.5,63,124/- WHICH THE ASSESSING OFFICER HAD MADE ON ACCOUNT OF ESTIMATED INTEREST INCOME FROM M ONEY LENDING BUSINESS, THE LEARNED CIT(A) HAS MADE A FINDING OF FACT THAT IN THIS YEAR INCOME CANNOT BE ESTIMATED AS THE ASSESSEE WAS MAINTAINING COMPLETE BOOKS OF ACCOUNTS AND 17. ITA NO.2 07 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 THEREFORE HE HAS RIGHTLY DIRECTED THE ASSESSING OFF ICER TO COMPUTE THE INCOME FROM MONEY LENDING BUSINESS ON THE BASIS OF BOOKS O F ACCOUNTS. 16. AS REGARDS ADDITION OF RS.10,64,000/- ON ACCOUN T OF UNEXPLAINED DEPOSITS IN PUNJAB NATIONAL BANK, WE FIND THAT LEAR NED CIT(A0 HAS RECORDED A FINDINGS OF FACT THAT ON TWO OCCASIONS RS,4,00,000/ - WAS DEPOSITED AFTER WITHDRAWAL FROM ANOTHER BANK ACCOUNT WITH CITIZEN C O-OPERATIVE BANK AND FURTHER AN AMOUNT OF RS.3,00,000/- WAS BANK TRANSFE R AND WAS NOT IN CASH. THESE CLEAR FINDINGS RECORDED BY LEARNED CIT(A) HAS NOT BEEN CONTROVERTED BY LEARNED DR AND THEREFORE, KEEPING IN VIEW ALL FACTS AND CIRCUMSTANCES WE DO SEE ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A). 17. IN VIEW OF THE ABOVE GROUND NO.1 TO 4 ARE DISMISSED. 18. AS REGARDS THE GROUND NO.5 REGARDING THE GRI EVANCE OF REVENUE THAT THE ASSESSEE WAS NOT ENTITLED TO CARRY FORWARD OF LOSS FROM COMMODITY TRADING BUSINESS AS HE HAD NOT FILED THE RETURN OF INCOME R ELATING TO COMMODITY BUSINESS, WE FIND THAT FINDINGS OF LEARNED CIT(A) T HAT ASSESSEE WAS ENTITLED TO CARRY FORWARD THE LOSS AS SPECULATIVE LOSS ARE NOT CORRECT AS IT IS UNDISPUTED FACT THAT ASSESSEE HAD NOT DECLARED THE LOSS FROM T RADING BUSINESS IN HIS RETURN OF INCOME AND THEREFORE, IT CANNOT BE SAID THAT LOS S WAS DETERMINED IN PURSUANCE OF RETURN FILED IN ACCORDANCE WITH THE PR OVISIONS OF SUB SECTION 3 OF SECTION 139. THE PROVISIONS OF SECTION 80 ARE VER Y CLEAR IN THIS RESPECT WHICH SAYS THAT IF A PERSON HAS SUFFERED LOSS IN ANY PREV IOUS YEAR UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION THE SAM E CAN BE ALLOWED TO BE CARRIED FORWARD IF THE ASSESSEE HAD FURNISHED A RET URN DECLARING LOSS AS PER 18. ITA NO.2 07 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 PROVISIONS OF SUB-SECTION 3 OF SECTION 139. THE PRO VISIONS OF SECTION 80 OVERRIDES THE PROVISIONS OF SECTION 72 AND SECTION 73. FOR THE SAKE OF COMPLETENESS THE PROVISIONS OF SECTION 80 ARE REPRO DUCED BELOW. NOTWITHSTANDING ANYTHING CONTAINED IN THIS CHAPTER , NO LOSS WHICH HAS NOT BEEN DETERMINED IN PURSUANCE OF A RETURN FILED [IN ACCOR DANCE WITH THE PROVISIONS OF SUB-SECTION (3) OF SECTION 139], SHALL BE CARRIED F ORWARD AND SET OFF UNDER SUB- SECTION (1) OF SECTION 72 OR SUB-SECTION (2) OF SEC TION 73 OR SUB-SECTION (1) [OR SUB- SECTION (3)] OF SECTION 74 [OR SUB-SECTION (3) OF S ECTION 74A]. IN VIEW OF THE ABOVE EXPRESS PROVISIONS OF SECTION 80 WHICH OVERRIDES THE PROVISIONS OF SECTION 72 AND SECTION 73 THE ASSESSE E IS NOT ENTITLED TO CARRY FORWARD THIS LOSS. THE FINDINGS OF LEARNED CIT(A) T HAT ASSESSEE HAD FURNISHED HIS RETURN OF INCOME WITHIN PRESCRIBED TIME IS THOU GH CORRECT BUT IT IS ALSO A FACT THAT ASSESSEE IN THAT RETURN HAD NOT DECLARED ANY LOSS FROM COMMODITY TRADING BUSINESS, THEREFORE, THE RETURN FILED BY AS SESSEE WITHOUT ANY CLAIM OF BUSINESS LOSS CANNOT BE SAID TO HAVE MET THE PROVIS IONS OF SECTION 80 AND HENCE THIS LOSS CANNOT BE SAID TO HAVE BEEN DETERMI NED IN PURSUANCE OF RETURN FILED. 19. IN VIEW OF THE ABOVE GROUND NO. 5 IS ALLOWED. 20. IN VIEW OF THE ABOVE GROUND NOS. 1 TO 4 ARE DIS MISSED WHEREAS GROUND NO. 5 IS ALLOWED. 21. IN NUTSHELL THE REVENUES APPEAL IN ASST. YEAR 2011-12 IS DISMISSED WHEREAS REVENUES APPEAL IN ASST. YEAR 2012-13 IS P ARTLY DISMISSED AND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DECEMBER, 2015. SD/- SD/- (A.D.JAIN) (T.S.KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31.12.2015 PK/PS 19. ITA NO.2 07 & 456(ASR)/2015 ASST. YEARS 2011 -12 & 2012 -2013 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.