VIVEK KEDIA, MUMBAI V. ITO 19(1)-2, MUMBAI

ITA 4714/MUM/2010

• Counselvise Citation: 471419914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 06-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBHCHAN RAM
• Assessee Lawyers: REEPAL G TRALSHAWALA
• Keywords: Unexplained cash credit; Opportunity of cross examination; Peak credit; Accommodation entries; Onus to prove
• Section: 131; 68; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AN D SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 4714/MUM./2010 (ASSESSMENT YEAR : 2006-07 ) MR. VIVEK KEDIA JAMUNA NIVAS, 2 ND FLOOR 32A, JAI BHARAT SOCIETY 3 RD ROAD, KHAR (WEST) MUMBAI 400 052 PAN AFBPK7827D .. APPELLANT V/S INCOME TAX OFFICER WARD-19(1)(2), R.NO.131 PIRAMAL CHAMBERS, LALBAUG MUMBAI 400 012 .... RESPONDENT ASSESSEE BY : MR. REEPAL G. TRALSHAWALA REVENUE BY : MR. SUBHCHAN RAM DATE OF HEARING 06.09.2011 DATE OF ORDER 23.09.2011 O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 28 TH JANUARY 2009, PASSED BY THE COMMISSIONER (APPEALS)-XXX, MUMBAI, FOR ASSESSMENT YEAR 2006-07. THE GROUNDS RAISED BY THE ASSESSEE, READ AS FOLLOWS:- A) ADDITION ULS.68 RS.2,41.41,523/- THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE OF RS.2,41,41,523/- U/S.68 OF THE ACT BY ADDING THE EN TIRE CREDITS IN THE MR. VIVEK KEDIA ITA NO.4714/M./2010 2 VARIOUS BANK ACCOUNTS AS UNEXPLAINED CREDITS WITHOU T APPRECIATING THAT THE APPELLANT WAS NOT OPERATING THE BANK ACCOUNTS E VEN THOUGH IN HIS NAME AND DETAILED EXPLANATION FURNISHED IN THIS REG ARD AND HENCE, THE ADDITION MADE ULS.68 OF THE ACT OF RS.2,41,41,523/- IS UNJUSTIFIED AND MAY BE DELETED. 2. WITHOUT PREJUDICE TO THE ABOVE AND WITHOUT ACCEP TING/ADMITTING, THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE PE RSON OPERATING THE BANK ACCOUNTS SHRI BHARAT MEHTA APPEARED TO BE GIVI NG ACCOMMODATION ENTRIES FROM THE NATURE OF TRANSACTIO NS IN THE BANK ACCOUNT AND HENCE, THE ADDITION, IF ANY, OUGHT TO H AVE BEEN RESTRICTED AT 1% AS COMMISSION EARNED FROM SUCH ACCOMMODATION ENTRIES AND HENCE, THE HUGE ADDITION MADE OF RS.2,41,41,523/- U /S.68 OF THE ACT IS UNJUSTIFIED AND MAY BE DELETED. 3. WITHOUT PREJUDICE TO THE ABOVE AND WITHOUT ACCEP TING/ADMITTING, THE LEARNED CIT(A) FAILED TO APPRECIATE THAT IF THE ADDITIONS WERE TO BE MADE MERELY ON THE BASIS OF THE BANK STATEMENT, THE N THE SAME OUGHT TO BE MADE APPLYING PEAK ADDITION THEORY AND HENCE, THE HUGE ADDITION MADE OF RS.2,41,41,523/- ULS.68 OF THE ACT IS WITHOUT ANY JUSTIFICATION AND LIABLE TO BE DELETED. B) ADDITION OF INTEREST OF RS.525.47O/- THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF INTEREST EARNED OF RS.5,25,470/- FROM M/S. R.K. BUILDERS ON THE BASIS OF AIR INFORMATION WITHOUT APPRECIATING THAT THE APPELLANT HAD NO CONN ECTION WITH THE SAID PARTY AND THAT THE BANK ACCOUNTS WERE OPERATED BY S HRI BHARAT MEHTA AND HENCE, THE ADDITION CONFIRMED ON ACCOUNT OF INT EREST INCOME EARNED IS UNJUSTIFIED AND MAY BE DELETED. 5. WITHOUT PREJUDICE TO THE ABOVE AND WITHOUT ACCEP TING/ADMITTING, THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE AP PELLANT WAS FOLLOWING CASH SYSTEM OF ACCOUNTING AND SINCE NO SUCH INTERES T INCOME WAS ACTUALLY RECEIVED DURING THE YEAR, THE ADDITION MAD E IS WITHOUT ANY JUSTIFICATION AND LIABLE TO BE DELETED. 6. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT( A) FAILED TO APPRECIATE THAT IF THE INTEREST INCOME IS TO BE TAX ED IN THE HANDS OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION, THE AO BE DIRECTED TO GIVE THE CREDIT FOR THE AMOUNT OF TDS DEDUCTED ON THE SA ID AMOUNTS AND HENCE, THE APPROPRIATE RELIED OUGHT TO BE GIVEN TO THE APPELLANT FROM THE TOTAL DEMAND RAISED. 7. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ALL OR ANY OF THE AFORESAID GROUNDS OF APPEAL. 2. THE FACTS, AS BROUGHT OUT IN THE IMPUGNED ORDER PAS SED BY THE COMMISSIONER (APPEALS), VIDE PARA-3.1, ARE EXTRACTE D BELOW FOR READY REFERENCE:- MR. VIVEK KEDIA ITA NO.4714/M./2010 3 3.1 THE FACTS IN BRIEF OF THE CASE ARE AS UNDER:- THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS TO VE RIFY THE INTEREST OTHER THAN INTEREST ON SECURITIES RECEIVED BY THE A PPELLANT DURING THE YEAR IN QUESTION, THE ANNUAL INFORMATION REPORT(AIR ) OF THE APPELLANT IS AS UNDER:- SL.NO. NAME OF THE PARTY MAKING THE PAYMENT TO THE ASSESSEE NAME OF RECEIPT DATE AMOUNT 1 R.K. BUILDERS INTEREST OTHER THAN INTEREST ON SECURITIES 31.3.2006 ` 5,25,470 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE APPELLANT TO SUBMIT COPIES OF BANK ACCOUNTS MAINTAI NED, INVESTMENTS MADE, LOANS TAKEN ETC. LETTER SEEKING INFORMATION U LS.133(6) WAS ISSUED TO M/S.R.K. BUILDERS, THE PARTY AS PER AIR W HO HAD GIVEN INTEREST RESPECTIVELY TO THE APPELLANT. IN REPLY, M /S, R.K. BUILDERS GAVE DETAILS. IN VIEW OF THE REPLY RECEIVED, THE AP PELLANT WAS ONCE AGAIN ASKED TO GIVE DETAILS OF LOANS ADVANCED VIDE ISSUE OF SHOW CAUSE NOTICE, WHICH WAS REPRODUCED IN THE BODY OF T HE ORDER. IN RESPONSE, THE APPELLANT MADE SUBMISSION VIDE LETTER DTD.8.1O.08, RELEVANT PORTION OF WHICH IS REPRODUCED AS UNDER: ASSESSEE ALSO NOT RECEIVED ANY INTEREST FROM RK. B UILDERS THE AO RECORDED THE APPELLANTS STATEMENT U/S.131 O N 19.12.08, RELEVANT PORTION OF WHICH WAS REPRODUCED IN THE BOD Y OF THE ORDER. IN THE ASSESSMENT ORDER, THE AO ACCORDINGLY NOTED A S UNDER:- THE ASSESSEE HAS MERELY SUBMITTED THAT NO AMOUNTS HAVE BEEN RECEIVED FROM THE ABOVE MENTIONED PARTIES. IT IS WO RTH MENTIONING THAT THE ADDRESS OF M/S VV TRADING CO., AS MENTIONE D IN THE A/C NO.10990200081206 MAINTAINED WITH FEDERAL BANK LTD. , FORT WHICH IS ALSO MENTIONED IN THE ANSWER TO QUESTION NO.8 IN TH E STATEMENT RECORDED U/S 131. FURTHER, THE M/S R. K. BUILDERS F URNISHED THE DETAILS OF BANKS FROM WHERE THE ASSESSEE HAD ISSUED IN ORDE R TO GIVE LOANS TO THIS PARTY. THE RELEVANT BANK STATEMENT WERE OBTAIN ED VIDE ISSUE OF NOTICES U/S 133(6) AND PLACED ON RECORD. THE ASSESS EE HAS BEEN MAINTAINING BANK ACCOUNTS IN M/S NEW INDIA CO-OP BA NK, FORT BRANCH AND AT PUNJAB & MAHARASHTRA CO-OP BANK. FROM THE PERUSAL OF BANK ACCOUNTS NO.CA14344 IN M/S NEW INDIA CO- OP BANK LTD, ACCOUNT NO. CN1 0990200081206 IN M/S F EDERAL BANK, FORT AND ACCOUNT NO.CA/002612 IN M/S PUNJAB & MAHAR ASHTRA BANK, CARNAC BUNDER BRANCH. IT WAS ALSO SEEN THAT THERE W ERE MANY CREDITS IN THE SAID BANK ACCOUNTS OF THE ASSESSEE. APART FR OM THAT, THERE WERE MANY OTHER TERM DEPOSITS MAINTAINED IN THE SAID BAN KS AS WELL AS MR. VIVEK KEDIA ITA NO.4714/M./2010 4 SEVERAL OTHER ACCOUNTS WHICH WERE SUBSEQUENTLY CLOS ED DOWN, IN VIEW OF THIS, THE STATEMENT OF THE ASSESSEE UNDER OATH W AS RECORDED ON 19- 12-2008. IN THE SAID STATEMENT, THE ASSESSEE DENIED OWNING ANY SUCH ACCOUNTS IN EITHER OF THE BANKS EXCEPT THE FOLLOWIN G TERM DEPOSIT ACCOUNTS MAINTAINED IN PUNJAB & MAHARASHTRA BANK, C ARNAC BUNDER. 1. TD A/C 2015/244 (BELONGS TO ME) OTHER THAN THE ABOVE, THE ASSESSEE STATED THAT THE ACCOUNTS AS LISTED IN THE QUESTION NO.8 TO THE SAID STATEMENT, NONE HA VE BEEN OPERATED BY HIM. THE ASSESSEE ACCEPTED THAT THE ACCOUNTS STA TED IN THE ANSWER TO THE Q NO. 11 THAT THE SAID ACCOUNTS WERE AN ARRA NGEMENT BETWEEN SHRI BAHRAT MEHTA AND THE ASSESSEES FATHER USED TO GET RS. 1,000/- PER WEEK FOR THE ACCOUNT OPERATED IN THE NAME OF OM TRADERS, V V TRADING COMPANY, VIVEK ENTERPRISE AND KEDIA INVESTM ENTS. AS PER THE ASSESSEE, THE SAID ARRANGEMENT WAS ORAL. FURTHER, T HE ASSESSEE COULD NOT FURNISH ANY EVIDENCE REGARDING THIS SAID ARRANG EMENT WITH SHRI BHARAT MEHTA. SUBSEQUENTLY, SUMMONS WERE ISSUED TO SHRI BHARAT ME HTA AND HIS STATEMENT ON OATH WAS RECORDED ON 23-12-2008 U/S 13 1 OF THE THE ACT. SHRI BHARAT MEHTA DENIED THAT THERE WAS ANY SU CH ARRANGEMENT WITH. THE ASSESSEE WITH HIM. IN VIEW OF THIS, OPPOR TUNITY OF ACROSS EXAMINATION OF SHRI BHARAT MEHTA WAS GIVEN TO THE A SSESSEE ON 24-12- 2008, A FACT WHICH IS DULY RECORDED IN THE ORDER SH EET. IN VIEW OF THE ABOVE, THE ASSESSEE HAS NOT BEEN SUF FICIENTLY EXPLAINED THE SAID CREDIT APPEARING IN HIS BANK ACCOUNTS MAIN TAINED IN M/S PMC BANK, CARNAC BUNDER AND M/S NEW INDIA CO-OP BANK, F ORT. EVERY OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE TO EXPLA IN THE SAID CREDITS BUT ALL HE HAS STATED IS THAT HE IS NOT OPERATING T HE SAID ACCOUNTS. HOWEVER, THE ASSESSEE HAS HIMSELF OPENED THESE BANK ACCOUNTS, HE HAS SIGNED THE OPENING FORM AND THE SUBSEQUEST CHEQ UES THAT WERE ISSUED FORM THOSE BANKS. JUST CLAIMING THAT THROUGH AN ORAL ARRANGEMENT, THE BANKS WERE OPERATED BY SOME OTHER PERSON DOES NOT ABSOLVE THE ASSESSEE FROM HIS RESPONSIBILITY TOWARD S THE TRANSACTIONS SHOWN IN THESE ACCOUNTS. THE ASSESSEE HAS NOT BEEN ABLE TO GIVE AN IOTA OF EVIDENCE THAT SHRI BHARAT MEHTA WAS IN ANYW AY RELATED TO THE SAID ACCOUNTS. THERE IS NO MATERIAL ON RECORDS WHIC H CAN EVEN PARTIALLY SUBSTANTIATE THE CLAIMS OF THE ASSESSEE. TOTAL DISALLOWANCE IN THIS REGARD IS HEREBY COMPUTE D AS UNDER: SL.NO. NAME OF THE PARTY MAKING THE PAYMENT TO THE ASSESSEE NAME OF RECEIPT DATE AMOUNT 1) TD AC- 2015/244 PMC BANK, CARNAC BUNDER VIVEK KEDIA ` 2,875 MR. VIVEK KEDIA ITA NO.4714/M./2010 5 2) TD AC- 1101/3183 PMC BANK, CARNAC BUNDER V.V. TRADING CO. ` 42,43,468 3) TD AC-4236 NEW INDIA CO. OP. BANK, BUNBOW STREET V.V. TRADING CO. ` 1,98,77,180 ` 2,41,41,523 IN VIEW OF THIS, SINCE THERE IS.,NO MATERIAL TO DE DUCE OTHERWISE, THE CREDITS AMOUNTING TO RS. 2,41,41,523/- APPEARING IN THE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE IN VARIOUS BANKS AS MENT IONED ABOVE ARE HEREBY ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. 3. THE ASSESSING OFFICER FURTHER MADE ADDITION OF ` 5,25,470 ON THE GROUND THAT THE ASSESSEE RECEIVED INTEREST INCOME F ROM R.K. BUILDERS ON THE LOAN RECEIVED AND HAS NOT OFFERED THE SAME TO TAX. 4. ON APPEAL, THE FIRST APPELLATE AUTHORITY CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS I N APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US, LEARNED COUNSEL, MR. DEEPAK TRALSHAWALA, ON BEHALF OF THE ASSESSEE, REITERATING THE CONTENTIONS MADE BEFORE T HE LOWER AUTHORITIES. HE SUBMITTED THAT THE BANK ACCOUNTS WERE OPERATED BY O NE MR. BHARAT MEHTA AND THAT THIS CAN BE INFERRED FROM AN ANALYSIS OF T HE ENTRIES IN THE BANK TRANSACTIONS. HE ARGUES THAT FROM THE FACT THAT CHE QUES WERE ISSUED TO THE PARTIES WHO ARE IN STEEL BUSINESS, IT CAN BE INFERR ED THAT THE TRANSACTIONS DO NOT BELONG TO THE ASSESSEE. HE FURTHER SUBMITTED TH AT (I) MR. BHARAT MEHTA, HAS NOT DENIED THE FACT OF KNOWING THE ASSESSEE AND HIS FATHER SINCE LAST 20 YEARS; (II) THE BANK STATEMENTS REVEAL THAT THE TRA NSACTIONS RELATE TO THE PARTIES THAT ARE HAVING DIRECT CONNECTION WITH STEE L MARKET AND THAT ON 24 TH MARCH 2005, THERE IS A CASH WITHDRAWAL BY MR. BHARA T MEHTA FOR ` 2,52,900; (III) THOUGH THE BANK ACCOUNTS WERE IN THE NAME OF THE ASSESSEE, THE SAME WERE OPERATED BY MR. BHARAT MEHTA, FOR UNDERTAKING HIS OWN BUSINESS TRANSACTIONS AFTER OBTAINING BLANK CHEQUES FROM THE ASSESSEE; (IV) THE ASSESSEE WAS IN FINANCIAL DISTRESS AND WAS IN NEED OF FUNDS AND, HENCE, ALLOWED HIS BANK ACCOUNTS TO BE OPERATED BY MR. BHA RAT MEHTA. ALTERNATIVELY, MR. VIVEK KEDIA ITA NO.4714/M./2010 6 HE SUBMITTED THAT THE ENTIRE TRANSACTIONS WERE IN T HE NATURE OF ACCOMMODATION ENTRIES AND, AT BEST, ONE PERCENT OF THE TRANSACTION VALUE SHOULD BE TREATED AS INCOME OF THE ASSESSEE. FINALL Y, LEARNED COUNSEL SUBMITTED THAT THE ENTIRE VOLUME OF DEPOSITS CANNOT BE TAXED AND ONLY THE PEAK DEPOSIT HAS TO BE TAXED. OUR ATTENTION WAS DRA WN TO PAGE-38 OF THE ASSESSEES PAPER BOOK WHICH CONTAINS ASSESSEES SUB MISSIONS DATED 2 ND FEBRUARY 2010, SUBMITTED BEFORE THE COMMISSIONER (A PPEALS) AND IT WAS POINTED OUT THAT THIS CONTENTION WAS NOT DEALT WITH . HE SUBMITTED THAT, AT PARA-22, THE WORKING OF PEAK CREDIT IS ALSO GIVEN. HE RELIED ON THE FOLLOWING CASE LAWS:- CHANDER MOHAN MEHTA VS. ASSISTANT COMMISSIONER OF I NCOME TAX (INVESTIGATION) (1999) 71 ITD 245 (PUNE); AND GLASS LINES EQUIPMENTS CO. LTD. VS. COMMISSIONER OF INCOME TAX (2002) 253 ITR 454 (GUJ); AND _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ , 66 TTJ 508 (ALL.) 6. GROUND NO.4, DISPUTES THE ADDITION OF INTEREST ACCR UED FROM R.K. BUILDERS. LEARNED COUNSEL SUBMITS THAT THE ASSESSEE FOLLOWS CASH BASIS METHOD OF ACCOUNTING AND THIS AMOUNT CANNOT BE BROU GHT TO TAX DURING THE YEAR. 7. LEARNED DEPARTMENTAL REPRESENTATIVE, MR. SUBHCHAN R AM, ON BEHALF OF THE REVENUE, POINTED OUT THAT THE ASSESSEE CONCE ALED THE FACT THAT IT MAINTAINED AND OPERATED VARIOUS BANK ACCOUNTS IN DI FFERENT NAMES AND ARGUED THAT IT WAS ONLY DUE TO INTELLIGENCE GATHERE D BY THE DEPARTMENT THAT THE INFORMATION HAS COME TO LIGHT. WHEN THE BANK AC COUNTS WERE FOUND, THE ASSESSEE WAS ASKED QUESTIONS BY THE ASSESSING OFFIC ER BUT THERE WAS NO REPLY. HE SUBMITTED THAT THE ONUS IS ON THE ASSESSE E TO EXPLAIN THE TRANSACTIONS REFLECTED IN THE VARIOUS BANK ACCOUNTS AND THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS. HE FOUND FAULT WI TH THE ARGUMENTS OF THE ASSESSEE THAT THE ASSESSING OFFICER SHOULD HAVE SUM MONED THE PERSONS WHO HAVE RECEIVED CHEQUES FROM HIS BANK ACCOUNTS AND SU BMITTED THAT THE ASSESSEES CASE CANNOT BE PROVED BY THE ASSESSING O FFICER BY INVESTIGATION. HE SUBMITTED THAT THE FATHER OF THE ASSESSEE WAS IN STEEL BUSINESS AND THIS MR. VIVEK KEDIA ITA NO.4714/M./2010 7 EXPLAINS SOME OF THE CHEQUES ISSUED TO PARTIES WHO ARE IN STEEL BUSINESS. HE RELIED ON THE ORDER OF THE COMMISSIONER (APPEALS) A ND PRAYED FOR UPHOLDING THE SAME. REFERRING TO THE ALTERNATIVE ARGUMENTS OF THE ASSESSEE, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT NO SUCH GROUND WAS TAKEN BEFORE THE COMMISSIONER (APPEALS). EVEN OTHER WISE, HE SUBMITTED THAT IT CANNOT BE INFERRED THAT THE ENTIRE TRANSACTIONS IN THE BANK ACCOUNT ARE FOR GIVING ACCOMMODATION ENTRIES, ETC., AS SOUGHT BY TH E LEARNED COUNSEL FOR THE ASSESSEE. ON THE REQUEST FOR BENEFIT OF PEAK CREDIT , HE SUBMITTED THAT THE ASSESSEE HAS NOT FILED ANY EVIDENCE TO PROVE THAT T HE SAME MONEY WAS ROTATED AGAIN-AND-AGAIN AND IN THE ABSENCE OF SUCH EVIDENCE, BENEFIT OF PEAK CREDIT CANNOT BE GRANTED. 8. ON THE ISSUE OF INTEREST INCOME, THE LEARNED DEPART MENTAL REPRESENTATIVE POINTED OUT THAT THESE FIGURES WERE DETECTED BY THE ASSESSING OFFICER AND NOW THE THEORY OF CASH BASIS METHOD OF ACCOUNTING IS BEING RAISED. 9. IN REPLY, THE LEARNED COUNSEL SUBMITTED THAT THE CO MMISSIONER (APPEALS) AS WELL AS THE ASSESSING OFFICER DID NOT CONSIDER THE ALTERNATIVE PLEA OF THE ASSESSEE FOR TAXING THE PEAK CREDIT THO UGH CALCULATIONS WERE GIVEN. 10. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF PAPERS O N RECORD AS WELL AS THE CASE LAWS CITED BEFORE US, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS NOT DISCHARGED THE BURDEN OF PROOF THAT LAY ON HIM, THAT THE BANK ACCOUNTS IN QUESTION WERE IN FACT BELONGING TO MR. BHARAT MEHTA, AND THAT MR MEHTA, HAD OPERATED THESE BANK ACCOUNTS. THE UNDISP UTED FACT IS THAT, THE BANK ACCOUNTS IN THE NAME OF VIVEK ENTERPRISES AND V.V. TRADING CO., WERE IN THE NAME OF THE ASSESSEE AND THEY WERE OPENED BY HIM AND OPERATED AS A SOLE PROPRIETOR OF THESE CONCERNS. THE A.O. HAS REC ORDED A STATEMENT FROM MR. MEHTA, AND MR. MEHTA, DENIED ANY ARRANGEMENT BE TWEEN HIM AND THE ASSESSEE. OPPORTUNITY OF CROSS EXAMINATION OF MR. M EHTA, WAS ALLOWED BUT THE SAME WAS NOT AVAILED BY THE ASSESSEE. THE ARGUM ENT OF THE LEARNED MR. VIVEK KEDIA ITA NO.4714/M./2010 8 COUNSEL THAT INFERENCES HAVE TO BE DRAWN BY THIS BE NCH THAT THE BANK ACCOUNT BELONGS TO MR. BHARAT MEHTA, FOR THE REASON THAT SOME OF THE CHEQUES WERE ISSUED TO PERSONS IN STEEL BUSINESS, I S DEVOID OF MERITS. UNDER THESE CIRCUMSTANCES, WE UPHOLD THE FINDINGS OF THE COMMISSIONER (APPEALS), WHICH ARE AS FOLLOWS:- THE APPELLANT IN HIS STATEMENT STATED THAT THOUGH T HE ACCOUNTS ARE HELD IN THE NAME OF V.V. TRADING CO. AND OM TRADERS A CONCERN BELONGING TO VIVEK KEDIA, HUE BUT HE USED TO ONLY S IGN THE BLANK CHEQUE BOOKS AND GIVE IT TO HIS FATHER WHO USED TO HAND IT OVER TO SHRI BHARAT MEHTA. THE CONTENTION OF THE APPELLANT IS TH AT THERE WAS AN ARRANGEMENT BETWEEN HIM AND ONE SHRI BHARAT J MEHTA , ADDRESS: NEAR JAM DERASAR, OPP BORIVALI(W), HAVING OFFICE AT LATI F HOUSE, CARNAK BUNDER TO THE EFFECT THAT HE ALLOWED MR. BHARAT MEH TA TO MAINTAIN AND OPERATE HIS VARIOUS BANK ACCOUNTS. HE USED TO SIGN ALL THE CHEQUE BOOKS FOR ALL THESE ACCOUNTS [BOTH SIDE OF CHEQUES] AND USED TO HAND OVER THE SAME TO HIM OR HIS MAN. IN LIEU OF SUCH AR RANGEMENT, HIS FATHER USED TO GET RS.1000/- PER WEEK FOR ALL FOUR ACCOUNTS I.E. ACCOUNTS HELD IN THE NAME OF OM TRADERS, V.V. TRADI NG CO., VIVEK ENTERPRISE AND KEDIA INVESTMENTS IN VARIOUS BANKS I .E. PMC, NEW INDIA CO.OP BANK LTD AND THE FEDERAL BANK LTD, FORT BRANC H; MUMBAI. THIS ARRANGEMENT WITH MR. BHARAT MEHTA WAS STARTD SOMEWH ERE IN THE YEAR 2000. THE AD THEN RECORDED THE STATEMENT OF MR. BHA RAT MEHTA. BUT HE DENIED THAT THERE WAS ANY SUCH ARRANGEMENT BETWE EN HIM AND THE APPELLANT. THE AO HAD ALSO ALLOWED THE APPELLANT TH E OPPORTUNITY OF CROSS-EXAMINATION OF MR.BHARAT MEHTA. IN RESPONSE T O A QUESTION BY THE AD WAS THERE ANY WRITTEN AGREEMENT WITH MR. BH ARAT MEHTA AND THE APPELLANT FOR SUCH AN ARRANGEMENT AS GIVEN IN ANSWER TO QN.NO.12 OF THE STATEMENT OF THE APPELLANT, THE APP ELLANT DENIED OF HAVING ANY WRITTEN AGREEMENT WITH MR. BHARAT MEHTA. THE APPELLANT ALSO COULD NOT PRODUCE ANY EVIDENCE BEFORE THE AO T HAT SUCH AN ARRANGEMENT WAS MADE BETWEEN MR. BHARAT MEHTA AND T HE APPELLANT. IN VIEW OF THE ABOVE FACTS, THE AO ADDED RS.2,41,41 ,523/- AS INCOME OF THE APPELLANT ULS.68 OF THE ACT BEING UNEXPLAINE D CASH CREDIT APPEARING IN THE BANK ACCOUNTS MAINTAINED BY THE AP PELLANT. THE CONTENTION OF THE APPELLANT THAT HE HAS NOT OPERATE D ANY OF THE BANK ACCOUNTS AND THEREFORE, THE CREDITS DO NOT BELONG T O HIM IS DEVOID OF ANY MERIT AS ACCOUNTS ARE APPEARING IN THE NAMES OF THE CONCERNS OF THE APPELLANT. FURTHER, MR.BHARAT MEHTA HAS DENIED THAT HE WAS OPERATING THESE ACCOUNTS AND THE APPELLANT COULD NO T PRODUCE ANY EVIDENCE TO THE EFFECT THAT THE SAME WERE NOT OPERA TED BY HIM BUT BY MR. BHARAT MEHTA. IN THIS REGARD, IT IS NOTEWORTHY THAT ONUS IS CAST ON THE APPELLANT TO PROVE AND EXPLAIN THE CREDIT ENTRI ES APPEARING IN THE BANK ACCOUNTS OF THE APPELLANT. THIS ONUS HAS NOT B EEN DISCHARGED BY THE APPELLANT. SIMPLY STATING THAT THE BANK ACCOUNT S WERE OPERATED BY SOME OTHER PERSON AND NOT BY THE APPELLANT WITHOUT ANY DOCUMENTARY EVIDENCE DOES NOT PROVE THE CONTENTION OF THE APPEL LANT. SIMPLY SAYING THAT MR. BHARAT MEHTA IN HIS STATEMENT HAS STATED T HAT HE KNOWS THE APPELLANT AND HIS FATHER DOES NOT IPSO FACTO PROVE THAT BHARAT MEHTA WAS OPERATING THE BANK ACCOUNTS. THE CASE LAWS CITE D BY THE APPELLANT WERE FOUND TO BE DISTINGUISHABLE. IN VIEW OF THE AB OVE DISCUSSION, I AM MR. VIVEK KEDIA ITA NO.4714/M./2010 9 OF THE CONSIDERED VIEW THAT THE AO IS FULLY JUSTIFI ED IN ARRIVING AT THE CONCLUSION THAT THE CREDIT ENTRIES APPEARING IN THE VARIOUS BANK ACCOUNTS OF THE APPELLANT AS MENTIONED IN THE ASSES SMENT ORDER ARE THE UNEXPLAINED CASH CREDITS U!S.68 OF THE ACT. THE REFORE, THE ADDITION MADE BY THE AO OF RS.2,41,41,523 U/S 68 OF THE I.T. ACT IS ACCORDINGLY CONFIRMED, THE GROUNDS OF APPEAL ARE DISMISSED. 11. COMING TO THE ALTERNATIVE PLEA OF THE ASSESSEE THAT THE TRANSACTIONS APPEARING IN THE BANK ACCOUNTS HAVE TO BE TREATED A S ACCOMMODATION TRANSACTIONS AND ONE PERCENT OF THE SAME BE TREATED AS INCOME, WE FIND THAT THIS PLEA IS WITHOUT ANY EVIDENCE OR BASIS AND, THU S, DEVOID OF MERIT. CONSEQUENTLY, THIS GROUND IS DISMISSED. 12. COMING TO THE CLAIM OF ADDITION OF PEAK CREDIT, WE FIND THAT THE ASSESSEE HAD MADE THE CLAIM BEFORE THE COMMISSIONER (APPEALS) IN HIS WRITTEN SUBMISSIONS. THE CUTTACK BENCH OF THE TRIBU NAL IN ACIT V/S TRITAN HAPPY HOME LTD., 94 TTJ 628 (CUTTACK), HELD THAT TH E COMMISSIONER (APPEALS), IN THAT CASE, HAD RIGHTLY CONSIDERED THE PEAK CREDITS FOR MAKING THE ADDITIONS AND NOT THE ENTIRE TURNOVER. THE ASSE SSEE HAS GIVEN HIS CALCULATIONS OF PEAK CREDIT BEFORE THE COMMISSIONER (APPEALS). KEEPING THESE FACTS IN VIEW, WE ARE OF THE OPINION THAT THE COMMI SSIONER (APPEALS) OUGHT TO HAVE DEALT WITH THIS ISSUE. CONSEQUENTLY, WE UPH OLD THE ADDITION UNDER SECTION 68 OF THE ACT MADE BY THE ASSESSING OFFICER IN PRINCIPLE BUT AS REGARDS THE QUANTUM OF ADDITION, WE RESTORE THE ISS UE BACK TO THE FILE OF COMMISSIONER (APPEALS) FOR ADJUDICATION AFRESH. THE ASSESSEE SHALL FURNISH HIS CALCULATIONS OF PEAK CREDIT AND THE COMMISSIONE R (APPEALS) SHALL, AFTER OBTAINING REMAND REPORT FROM THE ASSESSING OFFICER, ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW AND AFTER PROVIDING ADEQUATE OP PORTUNITY OF BEING HEARD TO THE ASSESSEE. 2. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER 2011 SD/- V. DURGA RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 23 RD SEPTEM BER 2011 MR. VIVEK KEDIA ITA NO.4714/M./2010 10 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, F BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI DATE INITIAL 1. DRAFT DICTATED ON 13.9.2011 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 14- 16.9.2011 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 19.9.2011 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 19.9.2011 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 19.9.2011 SR.PS 6. DATE OF PRONOUNCEMENT 23.9.2011 SR.PS 7. FILE SENT TO THE BENCH CLERK 23.9.2011 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER