DCIT, Ludhiana V. Sh. Parmod Kumar Jain, Ludhiana

ITA 517/CHANDI/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77043 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-03-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 12-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PS G
• Keywords: Peak credit; Accommodation entries; Onus to prove
• Section: 143(3); 133A; 153A; 68; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 517 TO 521/CHD/2011 A. Y : 2003-04 TO 2007-08 THE DY. COMMISSIONER OF VS SHRI PARMOD KUMAR JAIN , INCOME TAX, 408, INDUSTRIAL AREA A,. CENTRAL CIRCLE II, R/O H.NO. 160, LUDHIANA. ASHOK VIHAR, KVM COLONY, RISHI NAGAR, LUDHIANA. PAN : BBYPS8535G (APPELLANT) (RESPONDENT) APPELLANT BY : DR. AMARVEER SINGH RESPONDENT BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 01.04.2014 DATE OF PRONOUNCEMENT : 30.04.2014 O R D E R PER SUSHMA CHOWLA, JM THE BUNCH OF APPEALS BY THE SAME ASSESSEE ARE DIREC TED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), LUDHIANA DATED 11.02.2011 AGAINST THE ORDER PASSED UNDER SECTION 153A/143(3) OF THE INCOME-TAX ACT, 1961 ( 'THE A CT' FOR SHORT). 2. IN ALL THE APPEALS, THE ASSESSEE HAS RAISED IDEN TICAL GROUND OF APPEAL. THE GROUND OF APPEAL RAISED IN ITA NO. 517 /CHD/2011 READ AS UNDER : THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED BOTH IN LAW AND ON FACTS OF THE CASE IN DIRECTING T HE ASSESSING OFFICER TO ADOPT THE PEAK THEORY AS CLAIM ED BY THE ASSESSEE, WHICH WAS REJECTED BY THE ASSESSING OFFIC ER BECAUSE THE ASSESSEE HAD FAILED TO EXPLAIN THE SOUR CE OF CREDIT ENTRIES IN THE BANK ACCOUNT. 2 3. ALL THE FIVE APPEALS FILED BY THE REVENUE ON SIM ILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 4. THE APPEALS FILED BY THE REVENUE ARE RELATING TO ASSESSMENT YEARS 2003-04 TO 2007-08 AGAINST ORDER PASSED UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE SEARCH & SEIZURE OPERATIONS WERE CARRIED OUT AT THE RESIDENTIAL PREM ISES OF THE ASSESSEE AND HIS SON AT HOUSE NO. 160, ASHOK VIHAR, RISHI NAGAR, LUDHIANA ON 20.07.2007. DURING THE COURSE OF SEARC H, VARIOUS BOOKS OF ACCOUNT AND CERTAIN DOCUMENTS WERE SEIZED AS PER ANNEXURE A-1 82 PAGES. JEWELLERY AND SILVER UTENSI LS WORTH RS. 34,24,820/- AND CASH OF RS. 16,60,120/- WAS FOU ND, OUT OF WHICH JEWELLERY WORTH RS. 14,86,350/- AND CASH OF R S. 15,00,000/- WAS SEIZED DURING THE COURSE OF SEARCH. FURTHER JE WELLERY WAS FOUND FROM THE LOCKERS IN THE NAME OF THE ASSESSEE AND HIS WIFE OUT OF WHICH CERTAIN JEWELLERY WAS ALSO SEIZED. DURING THE COURSE OF SEARCH, STATEMENT OF THE ASSESSEE WAS RECORDED UNDE R SECTION 132(4) OF THE ACT. THE ASSESSING OFFICER, THEREAFT ER ISSUED NOTICE UNDER SECTION 153A OF THE ACT REQUISITIONED THE ASS ESSEE TO FURNISH RETURN OF INCOME FOR THE CAPTIONED ASSESSMENT YEAR S. IN RESPONSE THERETO, THE ASSESSEE FILED THE RETURN OF INCOME FO R EACH OF THE YEARS. THE ASSESSEE WAS A PARTNER IN THE PARTNERSH IP FIRM M/S BHARAT ENGINEERING AGENCIES, LUDHIANA AND IN ADDITI ON TO HIS ASSOCIATION WITH THE PARTNERSHIP CONCERN, WAS ALSO RECEIVING SALARY FROM M/S SUERYAA KNITWEARS LTD., LUDHIANA AND ALSO HAD DECLARED INTEREST INCOME. DURING THE COURSE OF SEARCH, ONE DEPOSIT SLIP OF 3 CITI BANK, LUDHIANA BEARING ACCOUNT NO. 0000498165 WAS FOUND. THE SAID ACCOUNT IN THE NAME OF THE ASSESSEE WAS OP ENED ON 14.05.2002 AND TOTAL DEPOSITS UPTO 19.07.2007 IN TH E SAID BANK ACCOUNT WERE TOTALING RS. 1,01,15,007/-. THE ASSESS EE HAD NOT DECLARED THE SAID BANK ACCOUNT IN HIS INCOME TAX RE TURNS AND THE SAME WAS FOUND TO BE UNACCOUNTED BANK ACCOUNT. THE ASSESSEE, DURING THE COURSE OF RECORDING OF STATEMENT UNDER S ECTION 132(4) OF THE ACT ON 24.08.2007 WAS CONFRONTED WITH THE SAID FACT OF NON- DISCLOSURE OF THE ENTRIES IN THE SAID BANK ACCOUNT AND WAS ALSO DIRECTED TO EXPLAIN THE NATURE OF THE ENTRIES OF BO TH THE DEPOSITS AND WITHDRAWALS FROM THE SAID ACCOUNT. THE ASSESSEE ADMITTED THAT HE WAS UNABLE TO EXPLAIN THE NATURE OF THE DEPOSIT AND CREDIT ENTRIES IN HIS BANK ACCOUNT. HE ADMITTED THAT THE SAID BANK ACCOUNT WAS NOT SHOWN IN HIS INCOME TAX RETURNS. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDING S CALCULATED THE YEAR-WISE DETAILS OF CHEQUES AND CASH DEPOSITED IN THE SAID BANK ACCOUNT TOTALING RS.1.01 CR AND THE SAME ARE INCORP ORATED UNDER PARA 5.1 OF THE ASSESSMENT ORDER. THE PLEA OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT IN RESPECT OF CERTAI N DEPOSITS, THERE WAS IMMEDIATE WITHDRAWALS FROM THE BANK ACCOUNT AND IT WAS EXPLAINED THAT THE AMOUNT WHICH WAS RECEIVED ON BEH ALF OF DIFFERENT PARTIES WAS IMMEDIATELY WITHDRAWN FOR PAY MENT TO SUPPLIERS AND THE ASSESSEE EARNED COMMISSION @ 2% T O 3% ONLY. THE ASSESSEE WAS ASKED TO FURNISH EVIDENCES TO SHOW THAT THE ENTRIES IN THE BANK ACCOUNT PERTAINED TO COMMISSION WORK AND ALSO TO EXPLAIN WHY THE TOTAL AMOUNT SHOULD NOT BE TREAT ED AS COMMISSION. IN REPLY THE ASSESSEE SUBMITTED THAT I F IT WAS HIS OWN INCOME, THEN THE AMOUNT SHOULD HAVE REMAINED IN THE BANK ACCOUNT ATLEAST FOR SOMETIME AND NOT TO BE WITHDRAWN IMMEDI ATELY. 4 FURTHER, DURING THE COURSE OF SEARCH, NO ASSETS WER E FOUND FROM THE POSSESSION OF THE ASSESSEE. IN THE ALTERNATE, THE ASSESSEE CLAIMED THAT WORKING OF PEAK WHICH COMES TO RS. 3,50,000/- FOR THE TOTAL PERIOD DURING WHICH THE BANK ACCOUNT WAS OPERATED, SHOULD BE TAKEN AS INCOME OF THE ASSESSEE. THE ASSESSING OFF ICER WAS NOT SATISFIED WITH THE EXPLANATION FILED BY THE ASSESSE E REGARDING THE SOURCE OF CREDIT ENTRIES AND THE TOTAL AMOUNT DEPOS ITED IN THE BANK ACCOUNT DURING THE RESPECTIVE PERIODS WAS TREATED A S INCOME OF THE ASSESSEE AS THE ASSESSEE HAD FAILED TO PROVE THAT T HE AMOUNT WITHDRAWN FROM THE BANK WAS AGAIN DEPOSITED IN THE ACCOUNT. CONSEQUENTLY, ADDITIONS OF THE RESPECTIVE AMOUNTS W ERE MADE IN THE RESPECTIVE ASSESSMENT YEARS. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVE D THAT AS THE ASSESSEE HAD ADMITTED THE OWNERSHIP OF THE SAID ACCOUNT, ONUS WAS UPON THE ASSESSEE TO EXPLAIN THE NATURE OF DEPO SITS IN THE SAID BANK ACCOUNT. HOWEVER, THE PLEA OF THE ASSESSEE TH AT HE WAS EARNING COMMISSION BY ARRANGING SUPPLY OF GOODS ON BEHALF OF VARIOUS PARTIES AND EARNING 3% COMMISSION THEREOF W AS REJECTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE ABS ENCE OF ANY PROOF BEING LED BY THE ASSESSEE. THE ALTERNATE PLEA RAISED BY THE ASSESSEE WAS WITH REGARD TO YEAR-WISE PEAK OF DEPOS ITS AND THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND MERIT IN THE SAID SUBMISSION MADE BY THE ASSESSEE. THE COMMISSIONER O F INCOME TAX (APPEALS) OBSERVED THAT THE ASSESSING OFFICER HAD N OT DOUBTED THE WORKING OF THE PEAK BUT HAD ONLY STATED THAT THE SO URCE OF CREDIT ENTRY HAD NOT BEEN EXPLAINED AND HENCE, ADDITION OF TOTAL DEPOSITS WERE MADE SEPARATELY IN EACH YEAR. THE COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THERE WERE CASH DEPOSITS A ND WITHDRAWALS 5 FROM THE SAME BANK ACCOUNT, THEREFORE PEAK AMOUNT Y EAR-WISE SHOULD BE APPLIED FOR THE PURPOSE OF DETERMINING IN COME OF THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) THUS, HELD THAT PEAK AMOUNT OF RS. 1,53,738/- WAS TO BE ADDED AS INCOME OF THE ASSESSEE IN ASSESSMENT YEAR 2003-04, RS. 1,35,2 80/- IN ASSESSMENT YEAR 2004-05 AND RS. 24,102/- IN ASSESSM ENT YEAR 2007- 08. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTH ER HELD THAT FOR ASSESSMENT YEARS 2005-06 AND 2006-07, SINCE THE PEAK CALCULATED WAS LESS THAN THE EARLIER YEARS PEAK, NO SEPARATE ADDITION OF PEAK WAS CALLED FOR. THE REVENUE IS IN APPEAL AGAINST THE SAID FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). 7. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE ASSESSEE BEFORE THE ASSESSING OFFICER HAD MADE A PLEA THAT H E WAS WORKING ON COMMISSION BASIS AND THE AMOUNT RECEIVED BY THE ASSESSEE IN- TURN WAS PAID TO THE SUPPLIERS. THE SAID ACCOUNT W ITH CITI BANK WAS NOT DISCLOSED BY THE ASSESSEE AND AS HE HAD FAI LED TO EXPLAIN THE DEPOSITS AND ALSO NOT DECLARED THE BANK ACCOUNT IN THE RETURN OF INCOME, THE BURDEN OF PROOF WAS UPON THE ASSESSEE T O EXPLAIN AS TO FROM WHERE THE CHEQUES AND THE CASH HAD BEEN DEPOSI TED. HE FURTHER SUBMITTED THAT THE ASSESSEE HAD FAILED TO D ISCHARGE HIS ONUS AND FURTHER NO EVIDENCE HAS BEEN FILED TO SHOW THAT THE CASH WITHDRAWAL HAD BEEN MADE AVAILABLE FOR ISSUE OF THE ALLEGED CHEQUES. THE LD. DR FOR THE REVENUE FURTHER STATED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD NOT HAV E ACCEPTED THE VERSION OF THE ASSESSEE AS THE ONUS CAST UNDER SECTION 68 AND 69 OF THE ACT HAD NOT BEEN DISCHARGED BY THE ASSESSEE. IT WAS FURTHER POINTED OUT BY THE LD. DR FOR THE REVENUE THAT THE COMMISSIONER OF INCOME TAX (APPEALS) IN ACCEPTING THE THEORY OF PEA K HAD 6 COMPLETELY MISGUIDED HIMSELF AND FURTHER HAD MADE N O ADDITION ON ACCOUNT OF PEAK IN TWO ASSESSMENT YEARS BECAUSE OF THE ADDITION IN THE EARLIER YEARS. IT WAS POINTED OUT BY THE LD. DR FOR THE REVENUE THAT ADDITION OF RS. 1,00,000/- I.E. THE AMOUNT DEP OSITED ON THE FIRST DAY OF OPENING THE BANK ACCOUNT SHOULD HAVE B EEN ADDED AS INCOME OF THE ASSESSEE AND IF THE THEORY OF PEAK HA D TO BE ACCEPTED, THEN THEREAFTER, PEAK OF EACH YEAR SHOULD HAVE BEEN CALCULATED. FURTHER PROFIT ELEMENT AFTER PEAK HAD TO BE ADDED IN THE HANDS OF THE ASSESSEE. RELIANCE FOR THIS PROPOS ITION WAS PLACED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN A NANTHARAM VEERASINGHAIAH & CO. VS CIT 123 ITR 457 (S.C) WHERE IN IT HAS BEEN LAID DOWN THAT IT WAS NOT A UNIVERSAL RULE THA T TELESCOPING PEAK WAS TO BE ALLOWED. THE LD. DR FOR THE REVENUE FURTHER SUBMITTED THAT IF ANY INTANGIBLE ADDITION HAD TO BE MADE IN THE EARLIER YEAR, THEN ONUS WAS UPON THE ASSESSEE TO SH OW THAT IT WAS AVAILABLE FOR NEXT YEAR. THE LD. DR FOR THE REVENU E STRESSED THAT THE ENTIRE CASH SHOULD BE ADDED IN THE HANDS OF THE ASSESSEE AND RELIANCE IN THIS REGARD WAS PLACED UPON JHAMATMAL T AKHATMAL KIRANA MERCHANTS VS CIT 152 CTR 311 (1999) (MP). FURTHER RELIANCE WAS PLACED UPON .BHAIYALAL SHAYAM BEHARI V S CIT 276 ITR 38 (ALL) AND CIT VS DURGA PRASAD MORE 82 ITR 540. 8. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THA T THERE WAS NO BAR THAT THE ASSESSEE COULD NOT SELL GOODS OF OTHER COMPANIES, IF ENGAGED IN SIMILAR LINE OF BUSINESS. THE PLEA OF T HE LD. AR FOR THE ASSESSEE WAS THAT THE ASSESSEE WAS A TRADER AND THE RE WERE BOTH CASH AND CHEQUE DEPOSITS IN THE BANK ACCOUNT AND IT WAS FAIRLY ADMITTED BY THE LD. AR FOR THE ASSESSEE THAT IN RES PECT OF THE CHEQUE DEPOSITS, THE THEORY OF PEAK ADDITION COULD NOT BE APPLIED. 7 HOWEVER, IN RESPECT OF THE CASH DEPOSITS AND WITHDR AWALS YEAR- WISE, PEAK HAD TO BE CALCULATED AND ADDED IN THE HA NDS OF THE ASSESSEE THE LD. AR FOR THE ASSESSEE FURTHER FILED LIST OF CHEQUE DEPOSITS AND ALSO FURNISHED ON RECORD THE PEAK OF C ASH DEPOSITS AND WITHDRAWAL IN EACH OF THE CAPTIONED YEARS BEFORE US . THE LD. AR FOR THE ASSESSEE FAIRLY ADMITTED THAT THE INITIAL D EPOSIT OF RS. 1 LAC WAS TO BE ASSESSED AS UNDISCLOSED INCOME IN THE HAN DS OF THE ASSESSEE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE SEARCH & SEIZURE OPERATIONS WERE CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 20.07.2007. DURING THE COURSE OF SE ARCH, THE INVESTIGATION TEAM FOUND ONE DEPOSIT SLIP OF SAVING ACCOUNT NO. 0000498165 OF CITI BANK, BRANCH LUDHIANA. THE SAID BANK ACCOUNT WAS IN THE NAME OF THE ASSESSEE AND THE FIRST DEPOS IT IN THE SAID BANK ACCOUNT WAS ON 14.05.2002 OF RS. 1,00,000/-. THE TOTAL DEPOSITS IN THE SAID BANK ACCOUNT TILL THE DATE OF SEARCH I.E. 19.07.2007 WERE RS. 101,15,007/-. THE ASSESSEE WAS FILING ITS RETURN OF INCOME FROM YEAR TO YEAR BUT THE SAID BAN K ACCOUNT WAS NOT DISCLOSED IN HIS PERSONAL RETURN OF INCOME. TH E STATEMENT OF THE ASSESSEE WAS RECORDED DURING THE COURSE OF SEAR CH PROCEEDINGS UNDER SECTION 132(4) OF THE ACT. THE EXPLANATION W AS SOUGHT FROM THE ASSESSEE AND HE WAS UNABLE TO EXPLAIN THE NATUR E OF THE ENTRIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS SHOW CAUSED TO EXPLAIN THE NATURE OF THE ENTRIES BO TH CREDIT AND CASH IN THE SAID BANK ACCOUNT. HOWEVER, THE ASSESS EE WAS UNABLE TO EXPLAIN THE SAME AND HE FAIRLY ADMITTED THAT THE SAID BANK ACCOUNT WAS NOT DISCLOSED TO THE INCOME TAX DEPARTM ENT. THE ASSESSING OFFICER HAS CALCULATED YEARWISE BREAK-UP OF THE CHEQUES 8 AND CASH DEPOSITS IN THE SAID BANK ACCOUNT WHICH AR E INCORPORATED UNDER PARA 5.1 AND RELATE TO FINANCIAL YEARS 2002-0 3 TO 2007-08. THE PLEA OF THE ASSESSEE THAT IT WAS EARNING 2% TO 3% COMMISSION ON THE SAID DEPOSITS WAS NOT BELIEVED UPON BECAUSE OF LACK OF EVIDENCE. THE ASSESSING OFFICER TREATED THE UNEXPL AINED DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE IN EACH OF THE CAPTIONED ASSESSMENT YEAR AS INCOME OF THE ASSESSEE AND ADDIT ION TO THAT EFFECT WAS MADE IN THE HANDS OF THE ASSESSEE. 10. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO, THE ASSESSEE WAS UNABLE TO EXPLAIN THE NATURE OF THE SA ID ENTRIES AND EVEN THE PLEA OF THE ASSESSEE OF HAVING EARNED COMM ISSION WAS NOT ACCEPTED BY THE COMMISSIONER OF INCOME TAX (APPEALS ). HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) APPLIED TH E PEAK THEORY IN RESPECT OF THE DEPOSITS AND WITHDRAWALS FROM THE BANK ACCOUNT AND REDUCED ADDITION IN THE HANDS OF THE ASSESSEE A GAINST WHICH THE REVENUE IS IN APPEAL FOR ALL THE CAPTIONED ASSESSME NT YEARS. 11. THE LD. DR FOR THE REVENUE BEFORE US HAS FILED ON RECORD COMPLETE BANK STATEMENTS AND THE PERUSAL OF THE ENT RIES REFLECT THAT CERTAIN AMOUNTS WERE DEPOSITED THROUGH CHEQUES AND CERTAIN AMOUNTS WERE DEPOSITED THROUGH CASH. THERE ARE DEPO SITS BY WAY OF CHEQUES OR CASH AND THERE ARE CASH WITHDRAWALS. DU RING THE COURSE OF SEARCH, ONE DEPOSIT SLIP OF THE SAID BANK ACCOUN T IN THE CITI BANK, LUDHIANA WAS FOUND FROM THE POSSESSION OF THE ASSESSEE AND THE COPY OF THE BANK ACCOUNT STATEMENT WAS THEN CON FRONTED TO THE ASSESSEE. IN VIEW OF THE PROVISIONS OF SECTION 132 (4)(A) OF THE ACT, THE PRESUMPTION IS THAT THE SAID ENTRIES IN THE SAI D DOCUMENT BELONG TO THE ASSESSEE. 9 12. THE LD. AR FOR THE ASSESSEE HAS ALSO ADMITTED T HAT HE WAS OPERATING THE SAID BANK ACCOUNT. THE ONUS WAS UPON THE ASSESSEE TO EXPLAIN EACH AND EVERY CREDIT ENTRY IN THE BANK ACCOUNT WHICH THE ASSESSEE HAS FAILED TO EXPLAIN. IN THE ABSENCE OF THE EXPLANATION BEING FILED BY THE ASSESSEE, THE SAID D EPOSITS IN THE BANK ACCOUNT ARE TO BE TREATED AS INCOME OF THE ASS ESSEE UNDER SECTION 68/69 OF THE INCOME TAX ACT. THE SOURCE OF THE CREDIT ENTRIES I.E. THROUGH CHEQUE HAS NOT BEEN EXPLAINED BY THE ASSESSEE. IN RESPECT OF THE CASH DEPOSITS, THE ASSESSEE EXPLA INED THAT THE SOURCE OF CASH DEPOSIT WAS THE CASH WITHDRAWAL MADE FROM THE SAID BANK ACCOUNT ITSELF. THE YEAR-WISE BREAK UP OR CHE QUE AND CASH DEPOSITED IN THE BANK ACCOUNT ARE AS UNDER : F.Y. 2002-03 RS. 7,95,298/- F.Y. 2003-04 RS. 17,38,470/- F.Y. 2004-05 RS. 23,81,488/- F.Y. 2005-06 RS. 14,04,134/- F.Y. 2006-07 RS. 32,02,891/- F.Y. 2007-08 RS. 5,92,726/- --------------------- TOTAL RS. 101,15,007/--- 13. THE FIRST ITEM OF ADDITION IN THE HANDS OF THE ASSESSEE IS ON ACCOUNT OF THE CHEQUE DEPOSITS IN THE SAID BANK ACC OUNT FOR THE CAPTIONED ASSESSMENT YEARS. WE FIND THAT SIMILAR I SSUE OF ADDITION ON ACCOUNT OF NON-EXPLANATION OF THE ENTRIES BY THE ASSESSEE IN THE BANK ACCOUNT RECEIVED THROUGH CHEQUE AROSE BEFORE T HE TRIBUNAL IN ITA NOS. 713/CHD/2010, ITA 963/CHD/2010, ITA 714/CH D/2010, ITA 764/CHD/2010, ITA 712/CHD/2010 AND ITA 962/CHD/ 2010 IN THE CASE OF SHRI SUDHIR KUMAR SHARMA VS ITO RELATI NG TO 10 ASSESSMENT YEAR 2007-08 AND VIDE ORDER DATED 27.06. 2013 WITH LEAD ORDER IN ITA NO. 713/CHD/2010 IT WAS HELD AS U NDER : 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE THE ASS ESSEE UNDER APPEAL IS FOR ASSESSMENT YEAR 2007-08 FOR THE PERIOD ENDING 31.3.2007. THE ASSESSEE DURING THE YEAR UND ER CONSIDERATION HAD FURNISHED RETURN OF INCOME DECLAR ING TOTAL INCOME OF RS.161,680/- FILED ON 01.11.2007. SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON THE PREMISES O F THE ASSESSEE ON 31.10.2007 AND THE STATEMENT OF THE ASS ESSEE WAS RECORDED ON 31.10.2007. THE COPY OF THE STATEM ENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SURVEY I S PLACED ON RECORD. A PERUSAL OF THE SAID STATEMENT REFLECT S THAT THE CLAIM OF THE ASSESSEE DURING SURVEY WAS THAT M/S SU PER FINVEST (P) LTD. WAS SUB-BROKER BY LSE SECURITIES L TD. AND ALSO WORKING AS SHARE BROKER. IN RESPECT OF M/S BI G BULL COMMODITIES P.LTD. AND M/S BEST BUY COMMODITIES P.L TD., THE ASSESSEE STATED THAT THESE WERE ENGAGED IN ACCOMMODATION ENTRIES; M/S SHUBH KRISHNA COMMODITIE S P.LTD. WAS STATED TO BE ENGAGED IN COMMODITY TRADIN G AND AS SUB-BROKER ON COMMISSION BASIS. IT WAS CLAIMED B Y THE ASSESSEE THAT IT WAS ENGAGED IN GIVING ACCOMMODATIO N ENTRIES. 17. THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRU TINY AND STATEMENT OF THE ASSESSEE WAS RECORDED ON 14.12 .2009. IN REPLY TO THE QUERIES RAISED BY THE ASSESSING OFF ICER WHILE RECORDING THE SAID STATEMENT, THE PLEA OF THE ASSESSEE WAS THAT IT HAD RECEIVED CASH FROM ITS CLIENTS AND THE DETAILS WERE AVAILABLE IN BOOKS OF ACCOUNT WHICH WO ULD BE PROVIDED TO THE ASSESSING OFFICER ON THE NEXT DATE OF HEARING. THE ASSESSING OFFICER REQUISITIONED THE AS SESSEE TO PRODUCE ATLEAST 10 PERSONS WHO HAD DEPOSITED RS. ONE LAC AND ABOVE IN THE BANK ACCOUNT. THE ASSESSEE RE PLIED THAT HE WOULD VERIFY THE RECORD AND INFORM THE STAT US. IN ANOTHER QUERY RAISED BY THE ASSESSING OFFICER THAT LET ME KNOW HOW THE ABOVE PERSONS DEPOSITED THE CASH IN YO UR BANK, THE REPLY OF THE ASSESSEE WAS CASH IS RECEI VED FROM CUSTOMERS AND THE SAME IS DEPOSITED IN BANK. IN V IEW OF THE COMMODITIES EXCHANGE, THE ASSESSEE EXPLAINED TH AT THE LUDHIANA COMMODITIES EXCHANGE CHARGE TRANSACTION CHARGES FROM THE ASSESSEE AT THE RATES DEPENDING ON TURNOVER. THE CONCERN M/S SHUBH KRISHNA, WHICH WAS THE PROPRIETOR CONCERN OF THE HUF OF THE ASSESSEE, WAS CLAIMED TO BE REGISTERED WITH LUDHIANA COMMODITIES EXCHANGE AND OTHER COMPANIES AND FIRMS OF WHICH HE WAS THE DIRECTOR/PROPRIETOR WERE CLAIMED TO BE BRANCHES/TRA DERS OF M/S SHUBH KRISHNA COMMODITIES. IN VIEW OF THE ENTR IES OF TRADING BEING CARRIED OUT ON BEHALF OF THE M/S SHUB H KRISHNA BY THE VARIOUS COMPANIES/PROPRIETORY CONCER NS OWNED BY THE ASSESSEE, IT WAS EXPLAINED THAT IN CAS E OF ONE OR TWO TRANSACTIONS, THE COMMODITY EXCHANGE ENTRY WAS THROUGH THE EXCHANGE AND THE BALANCE ENTRIES WERE C LIENT TO CLIENT, WHICH WERE PERMISSIBLE AS COMMERCIAL 11 TRANSACTION, AS PER PREVALENT MARKET TRENDS. THE A SSESSEE CLAIMED THAT SODA CONFIRMATION SLIP VOUCHERS IN RES PECT OF COMMODITIES TRANSACTION WERE BEING MAINTAINED BY TH E ASSESSEE, WHICH WOULD BE PROVIDED ON THE NEXT DATE OF HEARING. THE STATEMENTS WAS AGAIN CONTINUED ON 21.12.2009 AND THE PLEA OF THE ASSESSEE WAS THAT IT HAD NOT BROUGHT ANY RECORD OR ANY PERSONS TO BE PRODUCED ALONGWITH HIMSELF ON THE SAID DATE OF HEARING, AS H E HAD COME FOR RECORDING OF HIS STATEMENT. IN THE STATEM ENT SO RECORDED, IN RESPECT OF VARIOUS CASH CREDITS/DEPOSI TS IN THE BANK ACCOUNTS IN THE NAME OF DIFFERENT COMPANIES IN WHICH HE WAS THE DIRECTOR/PROPRIETOR, THE ASSESSEE WAS AS KED TO GIVE THE SOURCE OF THE SAID CASH DEPOSITS IN VARIOU S BANKS AND IT WAS STATED BY THE ASSESSEE THAT REPLY IS SA ME AS STATED ON 15.12.2009. HE FURTHER SUBMITTED THAT H E WOULD STATE FURTHER RELATING TO CASH DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 18. THE ASSESSING OFFICER FROM THE PERUSAL OF THE B ANK ACCOUNTS OF THE ASSESSEE WORKED OUT THE CASH CREDIT S IN THE SAID BANK ACCOUNTS TOTALING TO RS.126,66,000/- AS P ER DETAILS IN ANNEXURE-B TO THE ASSESSMENT ORDER. THE ASSESSING OFFICER FURTHER NOTED THAT WHILE RECORDIN G THE STATEMENT, THE ASSESSEE WAS ASKED TO PRODUCE 10 PER SONS FOR VERIFICATION AND THE ASSESSEE FAILED TO PRODUCE ANY PERSON FOR VERIFICATION NOR ANY CONFIRMATION WAS FI LED BY THE ASSESSEE. THE ASSESSEE HAD FAILED TO DISCHARGE THE INITIAL BURDEN CAST UPON HIM TO PROVE GENUINENESS O F THE AMOUNTS CREDITED IN HIS BOOKS OF ACCOUNT I.E. BY PR OVING THE IDENTITY OF THE PERSONS, WHO HANDED OVER THE CA SH TO THE ASSESSEE OR PRODUCTION OF THE RELEVANT BOOKS OF ACCOUNT WHERE NAME, ADDRESS AND TRANSACTIONS ENTERE D BY THEM WERE REFLECTED NOR FURNISHING ANY DETAILS OF S UCH PERSONS WHO HAD GIVEN HIM THE CASH AND EVEN CREDIT WORTHINESS OF THE PERSONS GIVING CASH COULD NOT BE PROVED. THE ASSESSEE HAD FAILED TO FILE THE REQUISITE DETAI LS DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER, THUS HELD THAT IN VIEW THEREOF, WHETHER THE CASH DEPOSIT S BELONG GENUINELY TO THE CUSTOMERS OR IT BELONGED TO THE AS SESSEE, COULD NOT BE ASCERTAINED, RESULTING IN THE GENUINEN ESS OF THE TRANSACTIONS BEING NOT PROVED. IT WAS ALSO A F INDING OF THE ASSESSING OFFICER, THAT ONLY CASH DEPOSITS WERE MADE IN THE BANK ACCOUNT AND THERE WERE NO CASH WITHDRAW ALS FROM THE SAID BANK. THE OUTGOINGS WERE ONLY CHEQUE S WHICH WERE UNVERIFIABLE. THE ASSESSEE HAD FAILED T O CORROBORATE THE CASH DEPOSIT WITH ANY EVIDENCE OF T HE IDENTITY OF THE DEPOSITOR OR ANY OTHER EVIDENCE. T HE ASSESSING OFFICER, THUS MADE ADDITION OF RS.126,66, 000/-. 19. THE PLEA BEFORE THE CIT(APPEALS) RAISED BY THE ASSESSEE WAS TWO-FOLD I.E. THE PROVISIONS OF SECTIO N 68 WERE NOT TO BE APPLIED AND IT BEST THE ADDITION COU LD BE RESTRICTED TO THE PEAK CREDITS. THE CIT(APPEALS) U PHELD THE PEAK CREDIT THEORY TO BE APPLIED TO THE FACTS O F THE CASE AND RESTRICTED THE ADDITION TO RS.10,55,260/-. THE CIT(APPEALS) HOWEVER, IN PRINCIPLE HELD THAT THE AS SESSING OFFICER WAS CORRECT IN HOLDING THAT THE ABOVESAID 12 ADDITIONS WERE MAINTAINABLE IN VIEW OF THE PROVISIO NS OF SECTION 68 OF THE ACT. 20. THE ASSESSEE IS IN APPEAL BEFORE US IN RESPECT OF BOTH THE INVOKING OF PROVISIONS OF SECTION 68 IN TH E PRESENT CASE AND ALSO AGAINST THE ADDITION OF RS.10,55,260/ -. THE REVENUE IS AGGRIEVED BY THE APPLICATION OF PEAK CRE DIT THEORY IN THE HANDS OF THE ASSESSEE AND SECOND, REL IEF ALLOWED TO THE ASSESSEE. 21. THE FIRST ISSUE TO BE ADDRESSED BY US IN THE PR ESENT FACTS AND CIRCUMSTANCES OF THE CASE IS WHETHER THE PROVISIONS OF SECTION 68 OF THE ACT ARE APPLICABLE TO THE FACTS OF THE PRESENT CASE. DURING THE COURSE OF SU RVEY CONDUCTED U/S 133A OF THE ACT ON 31.10.2007, IN THE STATEMENT RECORDED, THE ASSESSEE ADMITTED TO BE ENG AGED IN THE BUSINESS OF GIVING ACCOMMODATION ENTRIES. THE MODUS- OPERANDI EXPLAINED DURING THE COURSE OF SURVEY WAS THAT THE ASSESSEE WAS RECEIVING THE AMOUNT IN CASH AND T HE SAME WERE BEING RETURNED VIDE CHEQUES THROUGH BANK ACCOUNTS. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE STATEMENT OF THE ASSESSEE WAS AGAI N RECORDED WHEREIN WHEN CONFRONTED WITH THE BANK STAT EMENT OF M/S BIG BULL COMMODITIES PVT. LTD. WITH CENTURIA N BANK, PAKHOWAL ROAD, LUDHIANA IN WHICH HUGE CASH WA S DEPOSITED BY VARIOUS ENTRIES, THE ASSESSEE IN REPLY STATED THAT THE CASH WAS DEPOSITED AS PER BOOKS OF ACCOUNT ON BEHALF OF THE CLIENTS. VIDE QUERY NO.8, THE ASSESS EE WAS ASKED TO PROVIDE THE NAMES AND ADDRESSES OF THE CUSTOMERS/CLIENTS WHO HAD DEPOSITED THESE AMOUNTS. THE REPLY OF THE ASSESSEE IN THIS REGARD WAS, IF DETAI LS ARE THERE, I WILL CHECK FROM BOOKS OF ACCOUNT AND PROVI DE THE SAME. THE ASSESSEE, THEREAFTER WAS DIRECTED TO PR ODUCE ATLEAST 10 PERSONS WHO HAD DEPOSITED RS.1 LAC AND A BOVE IN THE BANK ACCOUNT. THE ASSESSEE EXPLAINED THAT H E WILL VERIFY FROM RECORD AND LET THE ASSESSING OFFICER KN OW ABOUT IT. IN REPLY TO QUERY NO.10, THE ASSESSEE CL AIMED THAT CASH IS RECEIVED FROM CUSTOMERS AND SAME IS DE POSITED IN BANK. THE PLEA OF THE ASSESSEE BEFORE THE ASSES SING OFFICER WAS THAT HE WAS ENGAGED IN THE BUSINESS OF COMMODITIES AND QUERY NO.12, 13 WERE RAISED IN RESP ECT OF THE COMMISSION RECEIVED FROM LUDHIANA COMMODITIES EXCHANGE. THE REPLY OF THE ASSESSEE TO QUERY NO.13 I.E. ARE YOU REGISTERED WITH LUDHIANA COMMODITY EXCHANG E WAS THAT ONLY M/S SHUBH KRISHNA OF WHICH HUF IS TH E PROPRIETOR AND I AM KARTA OF HUF IS REGISTERED WITH LCE AND OTHER COMPANIES AND FIRMS IN WHICH I AM DIRECTO R OR PROPRIETOR ARE BRANCHES/TRADERS OF M/S SHUBH KRISHN A COMMODITIES. THE QUERY NO.14 WAS WHETHER THE SAID COMPANIES/FIRMS WHO WERE THE TRADERS OF M/S SHUBH KRISHNA WERE PAYING ANY CHARGES TO M/S SHUBH KRISHN A THE REPLY OF THE ASSESSEE IN THIS REGARD WAS THAT HE WOULD LET THE ASSESSING OFFICER KNOW AFTER CHECKING THE SAME. QUERY NO. 16 TO 19 AND THEIR ANSWERS WERE AS UNDER : 13 Q:-16 IS THE TRANSACTION, MADE BY ABOVE STATED COMPANIES THROUGH RECOGNIZED COMMODITIES EXCHANGE OR NOT. ANS: T IS THROUGH EXCHANGE IN ONE OR TWO CASE S IS OTHER CASES IT MAY BE CLIENT TO CLIENT. M/S B.K COMMODITIES AND M/S M .K COMMODITIES ARE REGISTERED WITH LUDHIANA, COMMODITIES EXCHANGE OTHE RS ARE NOT. Q:-17 YOU HAVE STATED THAT IN SOME CONCERNS I R OUTED BUSINESS PRIVATELY NOT THROUGH MCX. IT MEANS YOU RUNNING A PARALLEL COMMODITIES EXCHANGE, PLEASE EXPLAIN THE SAME. ANS: T IS NOT CORRECT THAT WE ARE RUNNING PAR ALLEL RUNNING EXCHANGE HOWEVER CLIENT TO CLIENT DEALING AS PER PREVALENT M ARKET RATE ARE PERMISSIBLE AS COMMERCIAL TRANSACTIONS. Q-.-18 YOU ARE REQUESTED TO PROVIDE THE SODA BO OK MAINTAINED BY YOU FOR RUNNING THE BUSINESS. ANS: WHAT EVER IS AVAILABLE RELATING TO THESE TRANSACTIONS WILL BE PROVIDED ON THE NEXT DATE. Q:-19 WHICH TYPE DOCUMENTS YOU TAKE FROM THE CL IENT/CUSTOMER & WHEN YOU DO THE TRANSACTION FOR THEM. ANS: IT IS SODA CONFIRMATION SLIP VOUCHER CO MMODITIES BE PROVIDE TOMORROW. STATEMENT WILL BE CONTINUED ON 15 .12.2009. IN CONTINUATION TO THE ABOVE STATEMENT. 21.12.2009. 22. A BARE PERUSAL OF THE STATEMENT RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS REFLECT THAT THE C LAIM OF THE ASSESSEE TO HAVE CHANGED. THE ASSESSEE ADMITS THAT ONLY M/S SHUBH KRISHNA WAS REGISTERED WITH LUDHIANA COMMODIT IES EXCHANGE AND REST ALL THE CONCERNS WERE THE BRANCHE S OR TRADERS OF M/S SHUBH KRISHNA COMMODITIES. IN RESPEC T OF THE CASH DEPOSIT IN THE BANK ACCOUNT OF ONE OF THE CONC ERN, THE ASSESSEE STATED THAT IT HAD RECEIVED CASH FROM VARI OUS PARTIES AND THE SAME WAS AS PER THE BOOKS OF ACCOUNT. THE CASE OF THE ASSESSEE WAS THAT IT WAS RECEIVING CASH FROM ITS CL IENTS. BUT BEFORE THE ASSESSING OFFICER IT WAS NOT THE CASE OF THE ASSESSEE THAT IT WAS ENGAGED IN PROVIDING ACCOMMODATION ENT RIES. IN RESPECT OF THE ENTRIES NOT BEING THROUGH THE EXCHAN GE, THE ASSESSEE CLAIMED THAT CLIENT TO CLIENT TRANSACTIONS WERE PERMISSIBLE AS COMMERCIAL TRANSACTIONS. THE STATEM ENT WAS CONTINUED ON 21.12.2009 AND AS PER QUERY NO.24, THE RE WAS A SPECIFIC QUERY RAISED TO EXPLAIN VARIOUS CASH CREDI TS/DEPOSITS IN THE BANK ACCOUNTS OF DIFFERENT COMPANIES IN WHIC H THE ASSESSEE WAS THE DIRECTOR AND THE ASSESSEE WAS ALSO ASKED TO GIVE SOURCE OF CASH DEPOSITS IN VARIOUS ACCOUNTS. IN REPLY TO THE SAME, A SHORT REPLY WAS GIVEN BY THE ASSESSEE T HAT IT IS THE SAME AS WHAT IS STATED ON 15.12.2009. AT THE CONCL USION OF RECORDING OF THE STATEMENT, THE ASSESSEE STATED THA T HE WOULD FURTHER EXPLAIN RELATING TO THE CASH, DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. HOWEVER, THE ASSESSEE FAIL ED TO PRODUCE THE BOOKS OF ACCOUNT NOR GIVE ANY EXPLANATI ON VIS-- VIS THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT . IN THE ABSENCE OF ANY EXPLANATION OR ANY EVIDENCE BEING PR ODUCED BY THE ASSESSEE. THE ONUS CAST UPON THE ASSESSEE NOT B EING DISCHARGED, THE SAID CASH CREDITS ARE TO BE INCLUDE D AS INCOME 14 OF THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTIO N 68 OF THE ACT. 23. SECTION 68 OF THE ACT READS AS UNDER : 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF A N ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO E XPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HI M IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITE D MAY BE CHARGED TO INCOME- TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR : PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED), AND THE SUM S O CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESS EE-COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SU CH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATION AB OUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESS ING OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IF THE PERSON, IN WHOSE NAME THE SUM REFERRED TO THEREIN I S RECORDED, IS A VENTURE CAPITAL FUND OR A VENTURE CAPITAL COMPANY AS REFERR ED TO IN CLAUSE (23FB) OF SECTION 10 . 24. UNDER THE PROVISIONS OF SECTION 68 OF THE ACT, IT IS PROVIDED THAT WHERE THE ASSESSEE OFFERS NO EXPLANAT ION ABOUT THE NATURE AND SOURCE OF THE CREDITS IN THE BOOKS O F ACCOUNT, ALL THE AMOUNTS SO CREDITED OR WHERE THE EXPLANATIO N OFFERED BY THE ASSESSEE IS NOT SATISFACTORY IN RELATION TO THE SAME, THEN SUCH CREDITS MAY BE CHARGED TO TAX AS INCOME O F THE ASSESSEE FOR THAT PARTICULAR PREVIOUS YEAR. ADMITT EDLY, IN THE CASE OF THE ASSESSEE, VARIOUS AMOUNTS IN CASH A RE DEPOSITED IN THE BANK ACCOUNTS OF THE ASSESSEE AND THE ONUS WAS UPON THE ASSESSEE TO EXPLAIN NATURE AND ALSO TH E SOURCE OF THE SAID CASH DEPOSITS. THE ASSERTION OF THE AS SESSEE IN THIS REGARD WAS THAT IT WAS THE AMOUNT RECEIVED FRO M CLIENTS. HOWEVER, THE ASSESSEE FAILED TO GIVE THE LIST OF SU CH PERSONS WHO HAD ADVANCED THE SAID CASH TO THE ASSESSEE. TH E ASSESSEE EVEN FAILED TO BRING ON RECORD ANY EVIDENC E TO PROVE ITS STAND THAT IT WAS THE AMOUNT RECEIVED FRO M SUCH PERSONS WHO WERE HIS CLIENTS. THE ASSESSEE FAILED TO FILE ANY CONFIRMATION IN RESPECT OF THE SAID CASH CREDITS NO R ANY OF THE PERSONS WERE PRODUCED FOR EXAMINATION BEFORE TH E ASSESSING OFFICER, THOUGH SPECIFIC DIRECTION IN THI S REGARD WAS GIVEN BY THE ASSESSING OFFICER WITHIN THE COURS E OF RECORDING OF STATEMENT OF THE ASSESSEE, DURING ASSE SSMENT PROCEEDINGS. THE ASSESSEE EVEN FAILED TO PRODUCE T HE BOOKS OF ACCOUNT. IN THE ABSENCE OF THE ASSESSEE HAVING DISCHARGED HIS ONUS OF PROVING THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE CASH TRANSACTION OF THE 15 CASH CREDITS IN THE BANK ACCOUNT, WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE IN THIS REGARD AND DISMISS THE SAME. 25. ANOTHER PLEA RAISED BY THE LD. AR BEFORE US WAS THAT AS THE ASSESSEE WAS ENGAGED IN GIVING ACCOMMODATION ENTRIES, ONLY COMMISSION SHOULD BE INCLUDED AS INCO ME OF THE ASSESSEE. ADMITTEDLY, WHILE RECORDING THE STATEMEN T DURING THE COURSE OF SURVEY, THE ASSESSEE HAD STATED THAT IT WAS ENGAGED IN THE BUSINESS OF GIVING ACCOMMODATION EN TRIES. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSEE DID NOT RAISE ANY SUBMISSIONS IN THIS REGA RD AND ON THE OTHER HAND, THE ASSESSEE TIME AND AGAIN, IN THE COURSE OF STATEMENT RECORDED DURING THE ASSESSMENT PROCEEDING S, POINTED OUT THAT THE CASH DEPOSITED IN THE BANK ACC OUNT WAS AS PER ENTRIES IN THE BOOKS OF ACCOUNT AND THE SAME WOULD BE EXPLAINED FROM THE BOOKS OF ACCOUNT. THE PLEA OF ACCOMMODATION ENTRIES WAS NOT PUT TO THE ASSESSING OFFICER. HOWEVER, BEFORE CIT(APPEALS), A PLEA WAS RAISED THA T ONLY COMMISSION IS TO BE ADDED IN THE HANDS OF THE ASSES SEE IN VIEW OF VARIOUS JUDICIAL PRECEDENTS. A PERUSAL OF THE ORDER OF THE CIT(APPEALS) DOES NOT REFLECT ANY FINDINGS O N THIS ISSUE AND ISSUES ADDRESSED BY THE CIT(APPEALS) WERE WHETHER PROVISIONS OF SECTION 68 ARE APPLICABLE AND IN THE ALTERNATIVE, WHETHER PEAK-CREDIT IS TO BE APPLIED I N THE HANDS OF THE ASSESSEE. THE ASSESSEE IN THIS GROUND OF APPEAL RAISED BEFORE THE TRIBUNAL HAS NOT RAISED ANY SUCH ISSUE OF THE COMMISSION INCOME BEING INCLUDED IN HIS HANDS. ONLY TWO ISSUES HAVE BEEN RAISED; I.E. INVOKING OF PROVI SIONS OF SECTION 68 OF THE ACT AND CONFIRMATION OF ADDITION OF RS.1055,260/-. THE ISSUE OF WHETHER THE ASSESSEE I S ENGAGED IN GIVING ACCOMMODATION ENTRIES OR NOT IS A PURELY FACTUAL ISSUE WHICH HAS NOT BEEN RAISED BEFORE THE AUTHORIT IES BELOW I.E. DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR EVEN BEFORE THE CIT(APPEALS), THE SAID ISSUE HAS NOT BEE N ADJUDICATED. THE PLEA OF THE ASSESSEE OF ADMISSION OF SUCH NEW FACTUAL ISSUE IS NOT ADMISSIBLE AT THIS STAGE O F ADJUDICATING OF THE APPEAL IN THE CAPTIONED YEARS. WE FIND NO MERIT IN THE SAID PLEA OF THE ASSESSEE AND THE S AME IS REJECTED. 26. WE ARE IN CONFORMITY WITH THE ORDER OF CIT(APPE ALS) IN HOLDING THAT THE PROVISIONS OF SECTION 68 OF THE ACT IN THE PRESENT SET OF FACTS AND CIRCUMSTANCES OF THE CASE ARE APPLICABLE AND WE UPHOLD THE ORDER OF CIT(APPEALS) IN THIS REGARD. 27. THE RELIANCE PLACED UPON BY THE ASSESSEE ON VAR IOUS CASE LAWS HAS BEEN REFERRED TO AND COMMENTED UPON B Y THE CIT(APPEALS) AND WE ARE IN CONFORMITY WITH THE FIND INGS OF CIT(APPEALS) IN THIS REGARD. 28. THE NEXT ISSUE RAISED IN THE PRESENT APPEALS IS IN RELATION TO THE APPLICABILITY OF PEAK CREDIT THEORY . IN THE FACTS OF THE PRESENT CASE, THE SAID PEAK CREDIT THE ORY IS NOT APPLICABLE AS THE ASSESSEE HAD DEPOSITED CASH IN TH E BANK ACCOUNT AND THEREAFTER, CHEQUES WERE ISSUED TO DIFF ERENT PARTIES. IT IS NOT A CASE WHERE CASH WAS DEPOSITED ON 16 DIFFERENT DATES AND IN BETWEEN, THERE WERE CASH WIT HDRAWALS FROM THE BANK ACCOUNT. IT IS A CASE WHERE THERE AR E DEPOSITS IN CASH BUT AS AGAINST THE SAID CASH DEPOSITED, VAR IOUS CHEQUES WERE ISSUED AND THE ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCE OF CASH DEPOSITED IN HIS BANK ACCOUNT. REJECTING THE THEORY OF PEAK CREDITS APPLIED BY THE ASSESSING OFFICER, WE REVERSE THE FINDINGS OF CIT(APPEALS) IN THIS REG ARD AND RESTORE THE ADDITION MADE BY THE ASSESSING OFFICER AT RS. 1,26,66,000/-. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BLE ALLAHABAD HIGH COURT IN BHAIYA LAL SHYA M BEHARI V COMMISSIONER OF INCOME-TAX (SUPRA) WHEREIN THE COURT HELD AS UNDER : DURING THE ASSESSMENT YEAR IN QUESTION CERTAIN AMO UNT OF CASH CREDITS STANDING IN THE NAMES OF VARIOUS PERSONS WE RE ADDED IN THE INCOME OF THE APPLICANT BY INVOKING THE PROVISION O F SECTION 68 OF THE ACT. BEFORE THE TRIBUNAL THE ALTERNATIVE PLEA WAS T AKEN BY THE APPLICANT THAT IN THE EVENT DEPOSIT/CASH CREDITS AR E TREATED TO BE UNEXPLAINED THEN ONLY PEAK CREDIT IS TO BE ADDED. T HE SUBMISSION HAS BEEN NEGATIVED BY THE TRIBUNAL IN THE FOLLOWING WOR DS : '13. LET US SUPPOSE THAT IN THE ACCOUNT OF 'A', THE RE WAS SHOWN A DEPOSIT OF RS. 10,000 ON APRIL 1,1978, AND IN THE A CCOUNT OF 'B' THERE WAS A DEPOSIT OF RS. 10,000 ON DECEMBER 1, 1978. TH E ASSESSEE HAS NOT ESTABLISHED THE GENUINENESS OF THESE TWO DEPOSI TS. NOW ACCORDING TO THE ASSESSEE IN CASE THERE WAS A WITHDRAWAL OF R S. 10,000 IN THE ACCOUNT OF 'A' PRIOR TO THE DEPOSIT OF RS. 10,000 I N THE ACCOUNT OF 'B' THEN NO SEPARATE ADDITION SHOULD BE RESORTED TO ON ACCOUNT OF UNEXPLAINED DEPOSIT IN THE ACCOUNT OF 'B'. ACCORDIN G TO THE ASSESSEE, IT SHOULD BE PRESUMED THAT THE DEPOSIT IN THE ACCOUNT OF 'B' WAS MADE OUT OF THE FUNDS WHICH WERE AVAILABLE TO THE ASSESSEE A FTER THE WITHDRAWAL OF THE AMOUNT FROM THE ACCOUNT OF 'A'. WE CANNOT SU BSCRIBE TO THIS POINT OF VIEW. ACCORDING TO US, IF THE ASSESSEE IS NOT ABLE TO PROVE THE GENUINENESS OF THE DEPOSIT IN THE ACCOUNT OF 'B', A SEPARATE ADDITION IN RESPECT OF THAT WILL BE REQUIRED TO BE MADE. AS PER THE PROVISIONS OF SECTION 68, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABO UT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY, THE SUM SO CREDITED IS TO BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE. HENCE, IT IS FOR THE ASSESSEE TO ESTABLIS H THE SOURCE OF THE DEPOSIT IN THE ACCOUNT OF 'B'. IF THE ASSESSEE ADMI TS THAT THE ALLEGED DEPOSIT IN THE ACCOUNT OF 'A' WAS NOT GENUINE AND, IN FACT, IT WAS THE ASSESSEE'S OWN MONEY WHICH HAD BEEN INTRODUCED IN T HE BOOKS IN THE GARB OF A LOAN FROM 'A' AND HENCE WHEN THIS AMOUNT WAS AVAILABLE TO THE ASSESSEE FOR BEING INTRODUCED AS A FRESH DEPOSI T IN THE ACCOUNT OF 'B' THEN IT MAY BE POSSIBLE TO ACCEPT THE CONTENTIO N OF THE ASSESSEE. BUT IN CASE THE ASSESSEE ALL ALONG MAINTAINS THAT THE V ARIOUS LOANS ARE GENUINE THEN WE FAIL TO UNDERSTAND AS TO HOW THE AS SESSEE CAN PUT FORWARD THE CLAIM THAT SEPARATE ADDITIONS FOR THE U NEXPLAINED CASH CREDIT IN DIFFERENT ACCOUNTS SHOULD NOT BE MADE. WH EN THE ASSESSEE HIMSELF DOES NOT CONTEND THAT THE DEPOSIT MADE IN T HE ACCOUNT OF 'B' IS OUT OF PRIOR WITHDRAWAL MADE IN THE ACCOUNT OF 'A', HOW DOES THE ASSESSEE EXPECT THE DEPARTMENT TO SUBSCRIBE TO THIS POINT OF VIEW. WE HENCE REJECT THIS CONTENTION OF THE ASSESSEE.' HEARD SRI KRISHNA AGRAWAL, LEARNED COUNSEL FOR THE APPLICANT AND SRI SHAMBHU CHOPRA LEARNED STANDING COUNSEL FOR THE REV ENUE. 17 THE APPLICANT SUBMITTED THAT AS THE AMOUNT OF CASH CREDIT HAS BEEN TREATED TO TAX BY INVOKING THE PROVISIONS OF SECTIO N 68 OF THE ACT AND THE SAID AMOUNT HAVE BEEN TREATED AS INCOME FROM TH E UNEXPLAINED SOURCE, THE APPLICANT WAS ENTITLED TO TAKE UP A PLE A OF ADDITION OF THE AFORESAID PEAK CREDIT AS THE ENTIRE DEPOSITS HAVE B EEN TREATED TO BE INCOME OF THE APPLICANT. THE CONTENTION IS WHOLLY M ISCONCEIVED. FOR ADJUDICATING UPON THE PLEA OF PEAK CREDIT THE FACTU AL FOUNDATION HAS TO BE LAID BY THE ASSESSEE. HE HAS TO OWN ALL CASH CRE DIT ENTRIES IN THE BOOKS OF ACCOUNT AND ONLY THEREAFTER THE QUESTION O F PEAK CREDIT CAN BE RAISED. AS IN THE PRESENT CASE THE AMOUNT OF CAS H CREDITS WERE STANDING IN THE NAMES OF DIFFERENT PERSONS WHICH AL L ALONG THE APPLICANT HAD BEEN CLAIMING TO BE GENUINE DEPOSIT, WITHDRAWAL/PAYMENT OF THE AMOUNT TO DIFFERENT SET O F PERSONS DURING THE PREVIOUS YEARS WOULD NOT AT ALL ENTITLE THE APP LICANT TO CLAIM BENEFIT OF PEAK CREDIT. IN THIS VIEW OF THE MATTER WE DO NOT FIND ANY LEGAL INFIRMITY IN THE ORDER OF THE TRIBUNAL. WE ANSWER THE AFORESAID QUES TIONS REFERRED TO US IN THE NEGATIVE, I.E. IN FAVOUR OF THE REVENUE A ND AGAINST THE ASSESSEE. THERE WILL BE HOWEVER, NO ORDER AS TO COS TS. OTHER INFORMATION IN FAVOUR OF REVENUE 29. THE GROUNDS OF APPEAL NO. 1(A) TO 1(C) RAISED B Y THE ASSESSEE ARE, THUS DISMISSED AND THE GROUNDS OF APP EAL RAISED BY THE REVENUE ARE ALLOWED. 14. FOLLOWING THE PARITY OF REASONING AND THE FACTS BEING SIMILAR, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF THE CHEQUE DEPOSITS IN HIS BANK ACCOUNT, THE SAID AMOUNTS ARE TO BE TREATED AS INCOME FROM UNDISCLOSED SOURCE S IN THE HANDS OF THE ASSESSEE AND ADDITION TO THAT EFFECT IS TO B E MADE IN THE HANDS OF THE ASSESSEE. THE ASSESSEE BEFORE US HAS PLACED ON RECORD THE DETAILS OF CHEQUE DEPOSITS YEAR-WISE BUT THE SA ME NEEDS VERIFICATION AT THE LEVEL OF ASSESSING OFFICER. AC CORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE IN RESPECT OF THE CHEQUE DEPOSITS AND RESTRICT THE ADD ITION TO THE SAME YEAR-WISE IN EACH OF THE CAPTIONED ASSESSMENT YEAR. 18 15. NOW COMING TO THE SECOND ASPECT OF THE DEPOSITS IN THE BANK ACCOUNT, WHICH IS ON ACCOUNT OF CASH DEPOSITS. THE SAID BANK ACCOUNT WAS OPENED ON 14.05.2002 WITH THE INITIAL D EPOSIT OF RS. 1 LAC. AS THE ASSESSEE HAS FAILED TO EXPLAIN THE SOU RCE OF AVAILABILITY OF THE SAID CASH OF RS. 1 LAC, THE SAME IS TO BE TR EATED AS INCOME FROM UNDISCLOSED SOURCE IN THE HANDS OF THE ASSESSE E. 16. ANOTHER PLEA RAISED BY THE ASSESSEE IN RESPECT OF THE CASH DEPOSITS IS THAT AS CASH HAS BEEN WITHDRAWN FROM TH E BANK ACCOUNT ON REGULAR INTERVALS AND ALSO CASH HAS BEEN DEPOSIT ED ON REGULAR INTERVALS, THE PEAK THEORY MAY BE APPLIED TO DETERM INE THE INCOME IN THE HANDS OF THE ASSESSEE. WE FIND MERIT IN THE STAND OF THE ASSESSEE IN THIS REGARD. ACCORDINGLY, WE DIRECT TH E ASSESSING OFFICER TO CALCULATE THE PEAK ON ACCOUNT OF CASH DE POSIT AND CASH WITHDRAWAL IN EACH OF THE CAPTIONED ASSESSMENT YEAR AFTER DUE VERIFICATION FROM THE BANK ENTRIES AND ALSO FROM TH E BANK, IN ORDER TO WORK OUT THE INCOME FROM UNDISCLOSED SOURCE IN T HE HANDS OF THE ASSESSEE. WE FIND MERIT IN THE STAND OF THE COMMIS SIONER OF INCOME TAX (APPEALS) THAT IN CASE ANY ADDITION IS M ADE ON ACCOUNT OF PEAK IN THE PRECEDING YEARS, WHICH EXCEEDS THE P EAK IN THE SUCCEEDING YEAR, THEN NO ADDITION IS WARRANTED IN T HE SUCCEEDING YEAR. THE PEAK HAS TO BE CALCULATED FROM YEAR TO Y EAR AND TELESCOPING OF THE ADDITION MADE IN THE EARLIER YEA R IS TO BE ALLOWED IN THE SUCCEEDING YEAR AS THE ASSESSEE HAS AVAILABLE CASH IN HAND WHICH IS UTILIZED FOR MAKING THE CASH DEPOS ITS IN THE SUCCEEDING YEAR. THE ASSESSING OFFICER IS DIRECTED TO COMPUTE THE PEAK CREDIT ON ACCOUNT OF CASH FROM YEAR TO YEAR AN D TELESCOPE THE SAME AGAINST THE CASH DEPOSITS IN THE SUCCEEDING YE AR AND COMPUTE THE ADDITION IN THE HANDS OF THE ASSESSEE AFTER AFF ORDING REASONABLE 19 OPPORTUNITY OF HEARING TO THE ASSESSEE. HOWEVER, I N ASSESSMENT YEAR 2003-04, ANOTHER ADDITION IS MADE ON ACCOUNT O F THE INITIAL DEPOSIT OF RS. 1 LAC. WHICH IS NOT EXPLAINED BY THE ASSESSEE. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE IN ACCORDA NCE WITH OUR DIRECTIONS. THE GROUNDS OF APPEAL RAISED BY THE RE VENUE ARE THUS, ALLOWED FOR STATISTICAL PURPOSES. 17. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH APRIL,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITA T,CHD.