ITO, UDAIPUR V. Shri Sarafraj Ahmed, UDAIPUR

ITA 578/JODH/2013

• Counselvise Citation: 57823314 RSA 2013
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-08-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 23-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Unexplained investment; Gift; Income from undisclosed sources; Principle of natural justice; Peak credit; Additional evidence; Non compliance
• Section: 142(1); 12; 144

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 578 /JODH/2013 (A.Y. 20 1 0 - 11 ) ITO, WARD - 1(4), UDAIPUR. VS. SHRI SARFARAJ AH ME D , 117 - BUSINESS, CHETAK MARG, UDAIPUR (RAJ.) (APPELLANT) PAN NO. AFYPA 8123 R (RESPONDENT) ASSESSEE BY : SHRI SHRAWAN KUMAR GUPTA . DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 05 / 0 8 /201 4 . DATE OF PRONOUNCEMENT : 11 /0 9 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE D EPARTMENT AGAINST THE ORDER DATED 18 / 1 0/2013 OF L D . CIT(A), UDAIPUR . THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: - 1. RESTRICTING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE SAVINGS BANK ACCOUNT OF RS. 26,99,000/ - TO RS. 2 3,45,000/ - AFTER CONSIDERING THE PEAK CREDIT WHEREIN CASH WAS INCORRECTLY SHOWN TO BE TAKEN FROM THE FIRM THAT TOO THIS PLEA WAS TAKEN FOR THE FIRST TIME BEFORE THE LD. CIT(A). 2. RESTRICTING THE ADDITION BY ADMITTING THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BY IGNORING THE PROVISION OF RULE 46A(1) OF THE I.T. RULES AS NO COMPELLING CIRCUMSTANCES WERE PREVENTING HIM TO FILE EVIDENCE BEFORE THE A.O. AND ALSO WITHOUT GIVING ANY OPPORTUNITY TO THE A.O. TO REBUT THE ADDITIONAL EVIDENCE. THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DELETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2 FACTS RELATING TO THIS CASE , IN BRIEF, ARE THAT THE ASSESSEE FILED E RETURN OF INCOME ON 31/03/2011 DECLARING AN INCOME OF RS. 2,16,540/ - . LATER ON, THE CASE WAS SELECTED FOR SCRUTINY . SINCE THE ASSESSEE DID NOT COMPLY WITH THE VARIOUS NOTICES ISSUED U/S. 143(2) & 142(1) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) , THE ASSESSING OFFICER FRAMED THE ASSESSMENT U/S. 144 OF THE ACT. THE ASSESSING OFFICER MENTIONED THAT AS PER THE INFORMATION AVAILABLE, THE ASSESSEE DURING THE YEAR HAD MADE THE CASH DEPOSITS OF RS. 15,65,000/ - IN THE UNION BANK OF INDIA, NEW FATEHPURA , UDAIPUR AND RS. 11,34,000/ - IN THE KARNATAKA BANK LTD. , UDAIPUR BRANCH . THUS, TOTAL CASH DEPOSITS OF RS. 26,99,000/ - HAD BEEN MADE DURING THE YEAR , BUT NO EXPLANATION WHATSOEVER REGARDING SOURCE OF CASH DEPOSITS WAS GIVEN . THE ASSESSING OFFICER ADDED THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE . 3 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: - 2.1 THE ID. AO ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN MAKING THE ADDI TION OF RS. 26,99,000/ - ON ACCOUNT OF TREATING THE DEPOSITS IN SAVING BANK ACCOUNTS (RS.15,65,000/ - IN THE ACCOUNT OF UNION BANK OF INDIA AND RS.11,34,000/ - IN THE ACCOUNT OF KARNATAKA BANK LIMITED,) AS UNEXPLAINED DEPOSITS. THE ADDITION SO MADE BY THE LD. AO, BEING TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE, AGAINST THE MATERIAL AVAILABLE ON RECORDS AND PRINCIPLES OF NATURAL JUSTICE, HENCE THE SAME MAY KINDLY BE DELETED IN FULL. 2.2 THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN ASSE SSING ARBITRARY INCOME OF RS. 26,99,000/ - TREATING THE WHOLE DEPOSITS ON DIFFERENT DATES IN SAVING BANK ACCOUNTS ALLEGING THE DEPOSITS WERE FROM THE UNDISCLOSED INCOME JUST ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS ONLY WITHOUT MAKING ANY INDEPENDENT EN QUIRY TO BROUGHT ON RECORD ANY MATERIAL EVIDENCE RELAT ED TO ACTUAL SOURCE OF EARNING OF INCOME IF ANY DERIVED BY THE PETITIONER. THE ASSESSMENT OF INCOME IS NOT IN CONFORMITY WITH THE LAW, HENCE THE SAME MAY KINDLY BE DELETED IN FULL IN THE INTEREST OF EQU ITY AND JUSTICE. IN SUPPORT OF OUR SUBMISSION, WE HAVE TO BROUGHT BEFORE YOUR NOTICE THE FOLLOWING FACTS AND CIRCUMSTANCES OF THE CASE AND THE POSITION OF LAW IN THIS REGARD AS UNDER: T HAT THE LD. AO HAS NOT APPRECIATED THE TRUE AND CORRECT FACTS REGARDING DEPOSITS IN SAVING BANK ACCOUNT. HE HAS NOT CONSIDERED THE TRANSACTIONS RECORDED IN SB ACCOUNT ON DEBIT AS WELL AS CREDIT SIDE. HE HAS SIMPLY TOTALED THE TRANSACTIONS ON CREDIT SIDE IG NORING THE TRANSACTIONS ON DEBIT SIDE I.E. THE WITHDRAWALS WHICH WERE SOURCES FOR REDEPOSIT ON SUBSEQUENT OCCASION IN THE SAME ACCOUNT OR IN THE OTHER BANK ACCOUNT. THE PRINCIPAL OF NATURAL JUSTICE UNDER SUCH CIRCUMSTANCES REQUIRES CALCULATING THE PEAK DE POSITS INSTEAD OF TOTAL 4 DEPOSITS EVEN IF THE SOURCES WERE NOT TREATED TO BE EXPLAINED. FURTHER THE LD. AO HAS IGNORED THE WITHDRAWALS BY THE ASSESSEE FROM THE PARTNERSHIP FIRM IN ORDER TO DETERMINE THE UNEXPLAINED DEPOSITS IN BANK ACCOUNTS IF ANY WHICH WE RE VERIFIABLE FROM THE BOOKS OF FIRM AS WELL AS FROM THE BANK STATEMENT ITSELF. IN ORDER TO APPRECIATE THE CORRECT FACTS OF THE CASE COPY OF BOTH THE BANK ACCOUNTS(PB16 - 22) ALONGWITH COPY OF CAPITAL ACCOUNT OF THE ASSESSEE IN THE PARTNERSHIP FIRM(PB12 - 15) ENCLOSED. FROM THE COPY OF ABOVE DOCUMENTS IT APPEARS THAT THE POSITION OF DEPOSITS AND WITHDRAWALS IN THE YEAR UNDER CONSIDERATION WAS AS UNDER: DATE UNION BANK OF INDIA CASH DEPOSITED UNION BANK OF INDIA CASH WITHDRAWAL 6/5/2009 95,000/ - 8/5/2009 95,000/ - 9/5/2009 95,000/ - 11/5/2009 95,000/ - 12/5/2009 95,000/ - 14/5/2009 95,000/ - 15/5/2009 95,000/ - 16/5/2009 95,000/ - 26/5/2009 95,000/ - 30/7/2009 0 14,000/ - 30/7/2009 26,625/ - 17/8/2009 5,00,000/ - 25/8/2009 15,000/ - 27/8/2009 10,000/ - 23/10/2009 2,50,000/ - 7/11/2009 2,00,000/ - 10/11/2009 35,000/ - 16/11/2009 60,000/ - 17/11/2009 60,000/ - 26/11/2009 2,10,000/ - 26/11/2009 50,000/ - 5 1/12/2009 1,23,000/ - 25/1/2010 7,75,000/ - TOTAL 15,65,000/ - 16,18,625/ - DATE KARNATKA BANK LTD. CASH DEPOSITED KARNATKA BANK LIMITED CASH WITHDRAWAL 31/3/2010 1,000/ - 31/3/2010 11,33,000/ - TOTAL 11,34,000/ - T HE ASSESSEE WAS PARTNER OF M/S. SAYED IQBAL AND MOST OF THE DEPOSITS IN BANK WERE IN FACT WITHDRAWALS FROM THE ABOVE FIRM THROUGH HIS CAPITAL ACCOUNT. THE TRANSACTIONS OF PARTNERSHIP FIRM RELATED TO SECURITY ETC. WERE ROUTED THROUGH PARTNERS CAPITAL ACCOU NT AS THE GOVERNMENT DEPARTMENT ACCEPTED THE SECURITIES IN THE NAME OF INDIVIDUAL INSTEAD OF PARTNERSHIP FIRM. MOST OF THE WITHDRAWALS FROM FIRM WERE ULTIMATELY UTILIZED TO ACQUIRE DEPOSITS TO BE PLACED AS SECURITY WITH THE DEPARTMENT FROM WHOM THE CONTRA CTS WERE OBTAINED BY THE FIRM. THE FIRM HAS RECEIVED PAYMENT AGAINST WORKS EXECUTED FROM VARIOUS DEPARTMENTS AND SUCH PAYMENT WAS WITHDRAWN FROM THE BANK OF FIRM AS CASH AND KEPT WITH THE PARTNERS TIME TO TIME AS THE NATURE OF BUSINESS REQUIRES CASH AVAILA BILITY AFTER BANKING HOURS ALSO. IN ORDER TO EXPLAIN THE VARIOUS WITHDRAWALS BY THE PARTNERS IN THE YEAR UNDER CONSIDERATION THE COPY OF CAPITAL ACCOUNT OF THE ASSESSEE IN THE FIRM IS SELF EXPLANATORY AND THE ACCOUNTS OF THE FIRM M/S. SAYED IQBAL WAS DULY AUDITED UNDER SECTION 44 AB OF THE IT ACT AND THE RETURN OF INCOME WAS ALSO SUBMITTED IN TIME. T HE LD. AO HAS TREATED EACH AND EVERY DEPOSIT AS UNEXPLAINED WITHOUT APPRECIATING THE MATERIAL AVAILABLE IN THEIR TRUE PERSPECTIVES AND SENSE. THE BANK ACCOUNT S AVAILABLE ON RECORD CLEARLY SPEAKS ABOUT THE WITHDRAWALS ALSO. FROM THE BANK ACCOUNT AND FROM THE COPY OF ACCOUNT IN THE PARTNERSHIP FIRM THE CORRECT CASH FLOW POSITION OF ASSESSEE WAS PREPARED WHICH REFLECTS SOURCE OF DATE WISE DEPOSITS WITH EXPLANATION S AS UNDER: 6 DATE PARTICULARS RECEIPT PAYMENT BALANCE REMARKS OP. BAL. OF CASH 345000 345000 AVAILABILITY OF CASH ON OPENING DATE. 27.04.09 CASH RECEIVED FROM M/S SAYEED IQBAL 655000 995000 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 06.05.09 DEPOSITED IN UNION BANK 95000 995000 DEPOSITS FROM AVAILABLE CASH IN HAND. 08.05.09 DEPOSITED IN UNION BANK 95000 900000 DEPOSITS FROM AVAILABLE CASH IN HAND. 09.05.09 DEPOSITED IN UNION BANK 95000 805000 DEPOSITS FROM AVAILABLE CASH IN HAND. 11.05.09 DEPOSITED IN UNION BANK 95000 710000 DEPOSITS FROM AVAILABLE CASH IN HAND. 12.05.09 DEPOSITED IN UNION BANK 95000 615000 DEPOSITS FROM AVAILABLE CASH IN HAND. 14.05.09 DEPOSITED IN UNION BANK 95000 520000 DEPOSITS FROM AVAILABLE CASH IN HAND. 15.05.09 DEPOSITED IN UNION BANK 95000 425000 DEPOSITS FROM AVAILABLE CASH IN HAND. 16.05.09 DEPOSITED IN UNION BANK 95000 330000 DEPOSITS FROM AVAILABLE 7 CASH IN HAND. 26.05.09 DEPOSITED IN UNION BANK 95000 235000 DEPOSITS FROM AVAILABLE CASH IN HAND. 31.05.09 CASH RECEIVED FROM M/S SAYEED IQBAL 5000 140000 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 30.06.09 CASH RECEIVED FROM M/S SAYEED IQBAL 5000 145000 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 08.07.09 CASH RECEIVED FROM M/S SAYEED IQBAL 700000 150000 WITHDRAWAL VERIFIABLE FROM BOOKS OF FIRM. AMOUNT GIFTED BY FATHER & UNCLE TO HIM RS. 350000/ - BY EACH . 30.07.09 CASH WITHDRAWAL FROM UNION BANK 14000 850000 VERIFIABLE FROM BANK STATEMENTS. 30.07.09 CASH WITHDRAWAL FROM UNION BANK 26625 864000 VERIFIABLE FROM BANK STATEMENTS. 30.07.09 CASH DEPOSITS IN 40000 890625 DEPOSITS VERIFIABLE 8 M/S SAYEED IQBAL FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 31.07.09 CASH RECEIVED FROM M/S SAYEED IQBAL 5000 895625 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 17.08.09 CASH WITHDRAWAL FROM UNION BANK 500000 1395625 VERIFIABLE FROM BANK STATEMENTS. 18.08.09 CASH DEPOSITS IN M/S SAYEED IQBAL 650000 745625 DEPOSITS VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 25.08.09 CASH WITHDRAWAL FROM UNION BANK 15000 760625 VERIFIABLE FROM BANK STATEMENTS. 27.08.09 CASH WITHDRAWAL FROM UNION BANK 10000 770625 VERIFIABLE FROM BANK STATEMENTS. 31.08.09 CASH RECEIVED FROM M/S SAYEED IQBAL 5000 775625 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN 9 THE FIRM. 30.09.09 CASH RECEIVED FROM M/S SAYEED IQBAL 5000 780625 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 23.10.09 DEPOSITED IN UNION BANK 250000 530625 DEPOSITS FROM AVAILABLE CASH IN HAND. 31.10.09 CASH RECEIVED FROM M/S SAYEED IQBAL 5000 535625 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 07.11.09 DEPOSITED IN UNION BANK 200000 335625 DEPOSITS FROM AVAILABLE CASH IN HAND. 10.11.09 CASH WITHDRAWAL FROM UNION BANK 35000 370625 VERIFIABLE FROM BANK STATEMENTS. 16.11.09 CASH WITHDRAWAL FROM UNION BANK 60000 430625 VERIFIABLE FROM BANK STATEMENTS. 17.11.09 CASH WITHDRAWAL FROM UNION BANK 60000 490625 VERIFIABLE FROM BANK STATEMENTS. 17.11.09 CASH DEPOSITS IN M/S SAYEED 70000 420625 DEPOSITS VERIFIABLE FROM DETAILED COPY OF 10 IQBAL CAPITAL ACCOUNT IN THE FIRM. 26.11.09 DEPOSITED IN UNION BANK 210000 210625 DEPOSITS FROM AVAILABLE CASH IN HAND. 26.11.09 DEPOSITED IN UNION BANK 50000 160625 DEPOSITS FROM AVAILABLE CASH IN HAND. 30.11.09 CASH RECEIVED FROM M/S SAYEED IQBAL 5000 165625 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 1.12.09 CASH WITHDRAWAL FROM UNION BANK 123000 288625 VERIFIABLE FROM BANK STATEMENTS. 31.12.09 CASH RECEIVED FROM M/S SAYEED IQBAL 5000 293625 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 25.01.10 CASH WITHDRAWAL FROM UNION BANK 775000 1068625 VERIFIABLE FROM BANK STATEMENTS. 31.1.10 CASH RECEIVED FROM M/S SAYEED IQBAL 5000 1073625 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN 11 THE FIRM. 28.02.10 CASH RECEIVED FROM M/S SAYEED IQBAL 5000 1078625 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 30.03.10 CASH RECEIVED FROM M/S SAYEED IQBAL 70000 1148625 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 30.03.10 DEPOSITED IN KARNATAKA BANK 1133000 15625 DEPOSITS FROM AVAILABLE CASH IN HAND 31.03.10 CASH RECEIVED FROM M/S SAYEED IQBAL 5000 20625 WITHDRAWAL VERIFIABLE FROM DETAILED COPY OF CAPITAL ACCOUNT IN THE FIRM. 34,38,625 34,18,000 FROM THE ABOVE CASH FLOW STATEMENT IT IS VERY CRYSTAL CLEAR THAT NONE OF THE DEPOSITS IN BANK WERE FROM UNDISCLOSED SOURCES IF THE POSITION IS APPRECIATED IN ITS TRUE PERSPECTIVE. FURTHER, IN THIS RESPECT, WE HAVE TO SUBMIT THAT THE LD AO FAILED TO APPRE CIATE THE FACTS THAT THE PASS BOOK SUPPLIED BY THE BANK TO THE ASSESSEE OR TO THE LD.AO, CANNOT BE REGARDED AS THE BOOKS OF ACCOUNTS OF THE ASSESSEE I.E. A BOOK MAINTAINED BY THE ASSESSEE OR UNDER HIS INSTRUCTIONS. HENCE, CREDIT SHOWN IN PASS BOOK WITHOUT A CORRESPONDING ENTRY IN BOOKS OF ACCOUNTS DOES NOT FALL WITHIN THE 12 AMBIT OF SECTION 68/69 OF THE ACT. THE BOOKS OF ACCOUNTS HAVE TO BE THE BOOKS OF THE ASSESSEE HIMSELF AND NOT OF ANY OTHER ASSESSEE. KINDLY REFER CIT POONA V/S BHAI CHAND H GANDHI (1983) 141 ITR 67 (BOM). WHERE ACCOUNTS ARE NOT MAINTAINED, ADDITION MADE AS UNEXPLAINED INVESTMENT WOULD NOT BE SUSTAINABLE UNDER SECTION 69B ALSO. KINDLY REFER DR. PRAKASH TIWARI V/S CIT (1984) 148 ITR 474 (MP). IN THE PRESENT CASE THE LD. AO HAS NOT MENTION ED THE SECTION UNDER WHICH HE HAS ASSESSED THE INCOME TREATING THE DEPOSITS AS UNEXPLAINED AND OUT OF UNDISCLOSED SOURCE OF INCOME. THE ARBITRARY ADDITION WAS MADE JUST ON ASSUMPTIONS, PRESUMPTIONS AND SUSPICION IGNORING THE TRUE AND CORRECT FACTS OF THE C ASE AS WELL AS MATERIAL AVAILABLE ON RECORDS AND IT IS SETTLED PRINCIPLES THAT SUSPICION MAY BE STRONG BUT CANNOT TAKE THE PLACE OF REALITY, KINDLY REFER DHAKESHWARI COTTON MILLS 26 ITR 775 (SC), UMA CHARAN SHAW V/S CIT 37 ITR 271 (SC). THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL AVAILABLE ON RECORD. APPLICATION OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION CIT V/S C. MOHANAKALA (2007) 291 ITR 278 (SC). IN THE PRESENT CASE THERE WAS NEITHER BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE NOR REQUIRED TO BE MAINTAINED AS PER LAW. THE EXISTENCE OF BOOKS OF ACCOUNTS IS A CONDITION PRECEDENT FOR INVOKING THE POWER UNDER SECTION 68/69 AND DISCHARGING THE BURDEN IS A SUBSEQUENT CONDITION. HEN CE NO ADDITION CAN BE MADE UNDER SECTION 68/69 ON ACCOUNT OF CASH CREDIT/BANK DEPOSIT IF NO BOOKS OF ACCOUNTS ARE MAINTAINED. KINDLY REFER ANAND RAM RAITANI V/S CIT (1997) 223 ITR 544 (GAU). THAT THE LD. AO FURTHER ERRED IN NOT APPRECIATING THE POSITION OF LAW THAT BEFORE INVOKING THE POWER UNDER SECTION 68/69 OF THE ACT HE MUST BE SATISFIED THAT THERE ARE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AND THE CASH CREDIT/BANK DEPOSIT IS RECORDED IN THE SAID BOOKS OF ACCOUNTS. HENCE THE ARBITRARY ADDITION MADE BY THE LD.AO IS NOT JUSTIFIED IN THIS CASE AS THERE WERE NO BOOKS OF ACCOUNTS AT ALL AND THE SOURCES OF DEPOSITS WERE DULY EXPLAINABLE FROM THE CIRCUMSTANTIAL EVIDENCE AVAILABLE ON RECORD. THE ADDITION MADE ON THIS ACCOUNT DESERVES TO BE DELETED. WE REQUEST YOUR GOODSELF TO KINDLY DELETE THE SAME IN THE INTEREST OF E QUITY AND JUSTICE. ALTERNATIVELY WITHOUT PREJUDICE TO THE ABOVE WE HAD ARGUED BEFORE THE LD CIT(A) THAT THE LEARNED ASSESSING OFFICER HAS ERRED AT LAW AND 13 IS NOT JUSTIFIED IN HOLDING ONLY PART OF DOCUMENT AS CORRECT AND OTHER PART INCORRECT OR UNTRUE. THAT THE LEARNED ASSESSING OFFICER IS ALSO NOT JUSTIFIED IN MAKING ADDITION WITHOUT CONSIDERING THE DEBIT AND CREDIT ENTRIES IN THE BANK ACCOUNT AND THE WITHDR AWAL FROM THE PARTNERSHIP FIRM BEFORE HOLDING THE TOTAL DEPOSITS THROUGHOUT THE YEAR ON DIFFERENT DATES IN BANK AS OUT OF UNDISCLOSED SOURCES. WITHOUT DIRECT EVIDENCE THE ASSESSING OFFICER IS NOT EMPOWERED TO DRAW ANY PRESUMPTIONS AS TO THE EVIDENCE OF U NDISCLOSED INCOME. THE AO HAS NOT CONSIDERED THE SUBJECTED BANK ACCOUNT IN TOTO AND HAS ALSO NOT CONSIDERED THE CAPITAL ACCOUNT IN THE FIRM AND AT THE SAME TIME IGNORED THE PRINCIPLE OF PEAK DEPOSIT IN THE SAID ACCOUNT BEFORE COMPUTING THE UNDISCLOSED INCO ME ON THIS ACCOUNT IN THE ASSESSMENT. THE POSITION OF PEAK AMOUNT BALANCE IN THE YEAR UNDER CONSIDERATION IS VERIFIABLE FROM THE ABOVE CASH FLOW STATEMENT WHICH IS PREPARED FROM THE SAVING BANKS ACCOUNTS OF THE ASSESSEE AND CONSIDERING CAPITAL ACCOUNT OF T HE ASSESSEE IN THE BOOKS OF FIRM AT NIL. AT THE WORST , IF THE WHOLE OPENING BALANCE IS TREATED AS UNEXPLAINED THE PEAK UNDISCLOSED INCOME IS ARRIVED AT RS. 3,45,000/ - ONLY. THE LD. AO COULD HAVE BEEN ESTIMATED THE UNDISCLOSED INCOME TO THIS EXTENT ONLY IF ALL DEPOSITS AS WELL AS WITHDRAWALS HAVE BEEN TREATED AS UNEXPLAINED BECAUSE AS PER SECTION 144, THE ASSESSING OFFICER, AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH HE HAS GATHERED, IS UNDER AN OBLIGATION TO MAKE AN ASSESSMENT OF THE TOTAL INC OME OR LOSS TO THE BEST OF HIS JUDGMENT AND DETERMINE THE TAX PAYABLE BY THE ASSESSEE. BEST JUDGMENT ASSESSMENT SHOULD ACCORD WITH FAIR - PLAY AND JUSTICE. WHEN THE OFFICER MAKES ASSESSMENT TO THE BEST OF HIS JUDGMENT, HE MUST NOT ACT VINDICTIVELY OR CAPRI CIOUSLY OR WITH A VIEW TO PUNISH THE ASSESSEE FOR NON COMPLIANCE. IT IS NOW WELL SETTLED THAT THE ASSESSING OFFICER WHILE MAKING A BEST JUDGMENT ASSESSMENT SHOULD MAKE AN INTELLIGENT WELL GROUNDED ESTIMATE. SUCH ESTIMATE MUST BE BASED ON A ADEQUATE AND R ELEVANT MATERIAL. THE EXPRESSION TO THE BEST OF JUDGMENT MEANS ACCORDING TO RULES OF REASON AND JUSTICE, NOT ACCORDING TO PRIVATE OPINION, CONJECTURE OR SUSPICION. KINDLY REFER BALIAH (K) V CIT (1965) 56 ITR 182 (MYS). CONSIDERING THE OVERALL FACTS A ND CIRCUMSTANCES OF THE CASE THE ADDITION SO MADE BY THE A.O. IS NOT JUSTIFIED AND DESERVES TO BE DELETED IN THE INTEREST OF EQUITY AND JUSTICE. 14 4. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT ONCE IT IS A CASE OF THE ASSESSING OFFICER THAT THE DEPOSITS BELONG TO THE ASSESSEE, THEN THE BENEFIT OF PEAK CREDIT NEEDS TO BE ALLOWED. HE FURTHER OBSERVED THAT PEAK CREDIT PRINCIPLE IS APPLICA BLE IN A CASE WHERE SEVERAL CREDIT AND DEBIT ENTRIES WERE FOUND IN ONE ACCOUNT AND THE FUNDS OPERATED FORM SUCH ACCOUNT SHOULD BE TAKEN TO BE ONE AND HENCE TO AVOID MULTIPLE COUNTING OF THE SAME SUMS, ONLY HIGHEST OR PEAK OF THE AMOUNTS IN THAT ACCOUNT SHOULD BE TAKEN AS UNEXPLAINED INVESTMENT. THE LD. CIT(A) HELD THA T THE PEAK CREDIT IN THIS CASE WORKED OUT TO RS. 3,45,000/ - THE SAME WAS TREATED AS INCOME FROM UNDISCLOSED SOURCES AND THE ADDITION TO THAT EXTENT WAS SUSTAINED . NOW THE DEPARTMENT IS IN APPEAL. 5. LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND FURTHER SUBMITTED THAT THE ASSESSEE DID NOT FURNISH ANY EXPLANATION BEFORE THE ASSESSING OFFICER. THEREFORE, THE ADDITION WAS RIGHTLY MADE BY THE ASSESSING OFFICER. 6 . IN HIS RIVAL SUBMISSIONS, LE ARNED COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE HIM. IT WAS FURTHER STATED THAT THE 15 ASSESSING OFFICER HAD NOT APPRECIATED THE TRUE AND CORRECT FACTS REGARDING DEPOSI TS IN THE SAVING BANK ACCOUNT, HE HAS SIMPLY ADDED THE TRANSACTIONS ON CREDIT SIDE BUT IGNORED THE TRANSACTIONS ON DEBIT SIDE AND THE WITHDRAWALS WHICH WERE SOURCE FOR REDEPOSIT ON SUBSEQ U E N T OCCASIONS IN THE SAME ACCOUNT OR IN THE OTHER BANK ACCOUNT. THEREFORE, PRINCIPAL OF NATURAL JUSTICE UNDER SUCH CIRCUMSTANCES REQUIRES THE WORKING OF PE A K DEPOSITS INSTEAD OF TOTAL DEPOSITS. IT WAS FURTHER STATED THAT THE ASSESSING OFFICER ALSO IGNORED THE WITHDRAWALS OF THE ASSESSEE FORM THE PARTNERSHIP FIRM IN ORDER TO DETERMINE THE UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT. THEREFORE, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE RELIEF TO THE ASSESSEE . 7 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSING OFFICER TREATED THE DEPOSITS IN THE BANK ACCOUNT AS UNDISCLOSED INCOME OF TH E ASSESSEE WHILE DOING SO HE CONSIDERED ONLY THE CREDIT ENTRIES I.E. DEPOSITS IN THE BANK , BUT IGNORED THE WITHDRAW A LS WHICH WERE RE - DEPOSIT ED . HE ALSO IGNORED THE WITHDRAWALS MADE BY THE ASSESSEE FROM THE PARTNERSHIP FIRM WHICH WERE DEPOSITED IN THE BANK ACCOUNT. IN SUCH TYPE OF CASES, WHEN THE DEPOSITS ARE NOT VERIFIABLE, THE PEAK THEORY IS APPLICABLE WHICH REQUIRES THAT ONLY 16 HIGHEST OR PEAK OF THE AMOUNTS IN THE ACCOUNTS SHOULD BE TAKEN AS UNEXPLAINED INVESTMENT TO AVOID MULTIPLE COUNTING OF THE SAME S UMS. IN THE PRESENT CASE ALSO, THE LD. CIT(A) APPLIED THE PEAK CREDIT PRINCIPLE AND ALLOWED THE DUE BENEFIT OF THOSE ENTRIES WHICH WERE VERIFIABLE AND ACCORDINGLY SUSTAINED THE ADDITION OF RS. 3,45,000/ - . WE THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). 8 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED . ( ORDER PRONOUNCED IN THE COURT ON 11 TH SEPTEMBER , 201 4) . S D/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11 TH SEPTEMBER , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .