Sh. Sudhir Kumar Sharma (HUF), Ludhiana V. ITO, Ludhiana

ITA 714/CHANDI/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2438 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 28-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Unexplained cash credit; Peak credit; Accommodation entries
• Section: 143(3); 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 713/CHD/2010 ASSESSMENT YEAR:2007-08 SHRI SUDHIR KUMAR SHARMA, VS THE INCOME TAX OFFICE R, 70 NEW LAJPAT NAGAR, WARD VI(3), LUDHIANA. LUDHIANA. PAN NO. ADBPS-0503N & ITA NO. 963/CHD/2010 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER, VS SHRI SUDHIR KUMAR SHARM A WARD VI(3),. 70, NEW LAJPAT NAGAR, LUDHIANA LUDHIANA. & ITA NO. 714/CHD/2010 ASSESSMENT YEAR:200 7-08 SHRI SUDHIR KUMAR SHARMA,HUF VS THE INCOME TAX OFFI CER, 70 NEW LAJPAT NAGAR, WARD VI(3), LUDHIANA. LUDHIANA. PAN NO. AAKHS-0128R & ITA NO. 964/CHD/2010 ASSESSMENT YEAR : 2007-08 THE ITO, VS SHRI SUDHIR KUMAR SHARMA,HUF WARD VI(3), 70, NEW LAJPAT NAGAR LUDHIANA. LUDHIANA. & ITA NO. 712/CHD/2010 ASSESSMENT YEAR:2007-08 SMT.SHOBHA SHARMA, VS THE INCOME TAX OFFICER, 70, NEW LAJPAT NAGAR WARD VI(3), LUDHIANA. LUDHIANA. PAN NO. ACSPS-8828E 2 & ITA NO. 962/CHD/2010 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER VS SMT.SHOBHA SHARMA WARD VI(3), 70, NEW LAJPAT NAGAR, LUDHIANA. LUDHIANA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUDHIR SEHGAL DEPARTMENT BY: SHRI MANJIT SINGH DATE OF HEARING : 05.06.2013 DATE OF PRONOUNCEMENT : 27.06.2013 ORDER PER SUSHMA CHOWLA, JM OUT OF THESE SIX APPEALS, CROSS APPEALS ARE FILED B Y THREE DIFFERENT ASSESSEES AND REVENUE AGAINST SEPARATE OR DERS OF THE CIT(APPEALS) DATED 16.04.2010 RELATING TO ASSESSMEN T YEAR 2007-08 AGAINST ORDER PASSED U/S 143(3) OF THE IT ACT. 2. ALL THE SIX APPEALS RELATING TO EACH ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. COMMON GROUNDS OF APPEAL HAVE BEEN RAISED BY THE THREE DIFFERENT ASSESSEES IN ALL THE APPEALS, AND THE GRO UNDS OF APPEAL RAISED IN ITA NO. 713/CHD/2010 READ AS UNDER : 1. (A) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - II, LUDHIANA, ERRED IN UPHOLDING THE ASSESSING OFFICER' S ORDER IN INVOKING SECTION 68 OF INCOME TAX ACT IN PRESENT CASE WHICH IS PERVERSE ON FACTS OF CASE AND AGAINST RULE OF LAW. (B) THAT THE AMOUNT RECEIVED FROM CUSTOMERS AGAINST BUS INESS TRANSACTIONS IS NOT CASH CREDITS AND SECTION 68 CAN NOT BE ATTRACTED. 3 (C) THAT THE LEARNED COMMISSIONER OF INCOME TAX APPEAL ERRED IN CONFIRMING ADDITION OF RS. 10,55,260/- 2. THAT ASSESSMENT PROCEEDINGS ARE BARRED BY LIMITATIO N AS NOTICE U/S 143(2) OF INCOME TAX ACT HAS NOT BEEN SERVED ON APP ELLANT WITHIN STIPULATED PERIOD PROVIDED UNDER LAW. 3. THAT THE APPELLANT CRAVES TO AMEND, ALTER, DELETE O R SUPPLEMENT ANY GROUND OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD AND DISPOSED OFF. 4. THE REVENUE RAISED IDENTICAL GROUNDS OF APPEAL I N ALL THE THREE APPEALS AND THE GROUNDS OF APPEAL RAISED IN ITA 963 /CHD/2010 READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-II, LUDHIANA HAS ERRED IN ADOPTING PEAK DEPOSITS IN BAN K ACCOUNT EVEN WHEN THERE WAS NO CASH WITHDRAWAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-II, LUDHIANA HAS ERRED IN MAKING ADDITION OF RS. 17,66, 000/- ONLY EVEN WHEN HE ACCEPTED THAT THERE WAS UNEXPLAINED CASH CREDIT U/S 68 AMOUNTING TORS1,26,66,000/--. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-II, LUDHIANA HAS ERRED IN GIVING RELIEF OF RS.1,16,10,7 40/-- EVEN THOUGH THE ASSESSEE HAS NOT CLAIMED THAT THE SUM OF RS.1,26,66 ,000/- WAS HIS UNDISCLOSED INCOME. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-II, LUDHIANA HAS ERRED IN APPLYING PEAK CREDIT IN BANK ACCOUNT IN RESPECT OF UNEXPLAINED CASH CREDITS U/S 68 OF I.T. ACT, AS ACC EPTED BY CIT (A). 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-II, LUDHIANA HAS ERRED IN APPLYING PEAK CREDITS AS AGAI NST PEAK CASH CREDITS. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-II, LUDHIANA HAS ERRED IN RELYING ON THE DECISION OF HON'BLE ITAT, CHANDIGARH IN THE CASE OF ITO-1(2), LUDHIANA VS. SH RI PALWINDER SINGH FOR THE A.YRS. 1999-2000 TO 2004-2005 IN ITA NOS. 406 TO 411/CHANDI/2007, THE FACTS OF WHICH WERE ENTIRELY D IFFERENT FROM THE FACTS OF THIS CASE. IN THAT CASE ISSUE WAS CASH DEPOSITS AND CASH WITHDRAWALS WHICH IS NOT THE CASE OF THE ASSESSEE. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-II, LUDHIANA HAS ERRED IN TAKING A CONTRADICTOR Y STAND BY ACCEPTING UNEXPLAINED CASH CREDITS U/S 68 OF I.T. A CT BUT LIMITING THE ADDITION NOT BASED ON UNEXPLAINED CASH CREDITS. 8. THAT THE ORDER OF THE LD. CIT(A)-II BE SET ASIDE AN D THAT OF THE A.O. BE RESTORED. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL 4 BEFORE IT IS FINALLY DISPOSED OFF. 5. THE GROUND NO.2 RAISED BY THE ASSESSEE AGAINST L IMITATION IS NOT PRESSED AND HENCE THE SAME IS DISMISSED AS NOT PRES SED. 6. THE ISSUE RAISED BY WAY OF GROUND NO.1 BY THE ASSESSEE AND VARIOUS GROUNDS OF APPEAL BY THE REVENUE ARE IN RELATION TO THE ADDITION MADE BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTI ON 68 OF THE IT ACT. BOTH THE APPEALS OF THE ASSESSEE AND THE REVENUE RE LATES TO THE SAME ISSUE AND ARE BEING ADJUDICATED IN THE PARAS HEREUNDER. 7. THE BRIEF FACTS OF THE CASE IN ITA NO. 713/ CHD/2010 AND ITA NO. 963/CHD/2010 ARE THAT SURVEY U/S 133A OF THE ACT WA S CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 31.10.2007 AND STATEMEN T OF THE ASSESSEE WAS RECORDED. THE ASSESSEE HAD FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,61,680/-. THE CASE WAS SELECTED FOR SCRUTI NY AND THE ASSESSEE WAS ASKED TO PRODUCE COMPLETE BOOKS OF ACCOUNT AND ALSO TO PRODUCE SHRI S.K.SHARMA, KARTA OF HUF. THE ASSESSEE FAILED TO P RODUCE THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER. HOWEVER, STA TEMENT OF SHRI S.K.SHARMA WAS RECORDED AND THE SAME IS REPRODUCED AT PAGES 2 TO 4 OF THE ASSESSMENT ORDER. THE ASSESSEE WAS PROPRIETOR OF SOME CONCERNS AND DIRECTOR OF VARIOUS COMPANIES ALONGWITH HIS FAMILY MEMBERS. THE BUSINESS UNDERTAKEN BY M/S SUPER FINVEST AND M/S S. K.SHARMA & CO. WAS AS SHARE BROKER AND REST ALL THE COMPANIES AND FIRM S WERE CLAIMED TO BE WORKING AS BROKERS. THE WIFE OF THE ASSESSEE WAS A LSO DIRECTOR IN THE SAID COMPANIES AND THE SAME FIRMS WERE BEING CARRIED OUT BY THE KARTA OF HUF AS SOLE PROPRIETOR. THE ASSESSEE WAS CONFRONTED WI TH THE BANK STATEMENTS OF M/S BIG BILL COMMODITIES P.LTD. WITH CENTURIAL B ANK, PAKHOWAL ROAD, LUDHIANA IN WHICH HUGE CASH WAS DEPOSITED ON VARIOU S DATES. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF THE SAI D DEPOSITS. THE REPLY 5 OF THE ASSESSEE WAS THAT THE CASH DEPOSIT WAS ON BE HALF OF THE CLIENTS AS PER THE ENTRIES IN THE BOOKS OF ACCOUNT. HOWEVER, THE LIST OF NAMES AND ADDRESSES OF THE CUSTOMERS AND CLIENTS WERE NOT PRO VIDED. THE ASSESSEE WAS ALSO ASKED TO PRODUCE 10 PERSONS WHO HAD DEPOSI TED RS.1,00,000/- AND ABOVE IN THE BANK ACCOUNT. THE REPLY OF THE AS SESSEE IN THIS REGARD WAS THAT HE WOULD VERIFY THE RECORD AND LET THE ASS ESSING OFFICER KNOW. THE NEXT EXPLANATION OF THE ASSESSEE WAS THAT THE C OMPANIES/FIRMS WERE THE TRADERS OF M/S SHUBH KRISHNA AND IT WAS ALSO EX PLAINED THAT THE TRANSACTION IN ONE OR TWO CASES WERE THROUGH STOCK EXCHANGE AND IN OTHERS, IT WAS BETWEEN CLIENT TO CLIENT. THE ASSES SEE REPEATEDLY IN REPLY TO THE QUERIES RAISED BY THE ASSESSING OFFICER DURING THE COURSE OF RECORDING OF STATEMENT, STATED THAT THE DETAILS IN RESPECT OF THE VARIOUS TRANSACTIONS WOULD BE PROVIDED ON THE NEXT DATE OF HEARING. THE SAID STATEMENT WAS RECORDED ON 14.12.2009 AND WAS FURTHER RECORDED ON 21.12.2009. ON THE NEXT DATE OF HEARING, THE ASSESSEE SAID THAT HE HAD COME TO GIVE THE REPLY AND WOULD PRODUCE THE PERSONS AND THE OTHER REPLIES BY THE NEXT DATE. THE ASSESSEE, AT THE CLOSE OF THE RECORDING OF THE STAT EMENT STATED THAT HE WOULD GIVE THE EXPLANATION OF CASH DEPOSITS IN THE BANK ACCOUNTS OF THE VARIOUS CONCERNS, DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. THE ASSESSING OFFICER NOTED THAT THERE WERE CASH CREDIT S AMOUNTING TO RS.1,26,66,000/- IN THE BANK ACCOUNTS OF THE ASSES SEE I.E. IN THE CASE OF SHRI SUDHIR KUMAR SHARMA. THE DETAILS OF THE SAID CASH DEPOSITS WERE ANNEXED AS ANNEXURE-B TO THE ASSESSMENT ORDER. THE ASSESSEE FAILED TO PRODUCE 10 PERSONS FOR VERIFICATION NOR ANY FURTHER EXPLANATION WAS GIVEN IN RESPECT OF THE CASH DEPOSITS CLAIMED TO BE BELON GING TO CUSTOMERS. THE CREDITWORTHINESS OF THE PERSONS GIVING CASH TO THE ASSESSEE COULD NOT BE ESTABLISHED AS THE ASSESSEE FAILED TO PRODUCE THE R EQUISITE DETAILS OR EVEN PRODUCE SOME OF THE PERSONS. IN VIEW THEREOF, THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE FAILED TO PROVE THE SOURCE OF CASH DEPOSITS IN HIS BANK 6 ACCOUNTS AND ADDITION OF RS.1.26 CRORES WAS MADE U/ S 68 OF THE INCOME- TAX ACT. 8. BEFORE THE CIT(APPEALS), THE ASSESSEE FURNISHE D WRITTEN SUBMISSIONS WHICH ARE REPRODUCED UNDER PARA 2.3 AT PAGES 2 TO 6 OF THE APPELLATE ORDER. THE PLEA OF THE ASSESSEE BEFORE T HE CIT(APPEALS) WAS THAT THE ASSESSING OFFICER WAS BIASED AGAINST THE A SSESSEE AND WITHOUT CONDUCTING ANY ENQUIRY, HAD DECIDED THE ISSUE ADVER SELY AGAINST THE ASSESSEE. THE ASSESSEE CLAIMED TO BE SHARE AND COM MODITIES BROKER AND THE SAID FACTS WERE MENTIONED IN THE TAX AUDIT REPORT AND IT WAS THE PLEA OF THE ASSESSEE THAT THE PROVISIONS OF SEC TION 68 WERE NOT ATTRACTED. THE ALTERNATE PLEA OF THE ASSESSEE WAS THAT THE ASSESSING OFFICER HAD MADE THE AFORESAID ADDITIONS ON ACCOUN T OF CASH DEPOSIT IN THE BANK ACCOUNT WITHOUT ANY VERIFICATION AND AL SO WITHOUT CONSIDERING IF ANY CASH WAS WITHDRAWN AND RE-DEPOSI TED IN THE BANK. THE ASSESSEE SUBMITTED BEFORE THE CIT(APPEALS) THAT THE CREDITS IN THE BANK ACCOUNTS COULD NOT BE TREATED AS INCOME U/S 68 OF THE ACT. ANOTHER PLEA RAISED BY THE ASSESSEE BEFORE THE CIT( APPEALS) WAS THAT IT MAY BE BROUGHT TO YOUR KIND NOTICE THAT APPELLAN T IS A BROKER AND EXHAUSTIVE STATEMENT HAS BEEN RECORDED. THERE IS N O IMMOVABLE PROPERTY IN HIS NAME OR IN THE NAME OF HIS FAMILY M EMBERS. STRANGELY THE LD. AO HAS HELD WHAT IS APPEARING IN BANK ACCOU NT IS THE UNDISCLOSED INCOME OF APPELLANT. HAD THE AO TAKEN INTO ACCOUNT DEBITS IN BANK ACCOUNT, WHICH ARE CHEQUES ISSUED IN FAVOUR OF CLIENTS, THAT WOULD HAVE BEEN THE REAL INCOME OF APPELLANT O N COMMISSION BASIS. AS SUCH NO PROPER ENQUIRY HAS BEEN CONDUCTE D AND ASSESSMENT FRAMED IS WRONG AND BAD IN LAW AND HAS NO LEGS TO S TAND ON. 9. ANOTHER ALTERNATE PLEA WAS RAISED BY THE ASSESSE E THAT AT BEST, WHAT COULD BE ADDED IN THE HANDS OF THE ASSESSEE WA S PEAK CREDIT 7 WHICH AS PER THE WORKING OF THE ASSESSEE WAS RS.10, 55,260/- (RS.754,420/- + RS.300,840/- ). THE CIT(APPEALS) R EJECTED THE CLAIM OF THE ASSESSEE THAT THE PROVISIONS OF SECTION 68 O F THE ACT WERE NOT APPLICABLE TO THE DEPOSITS IN QUESTION AS THE ASSES SEE HAD FAILED TO PRODUCE THE BOOKS OF ACCOUNT AND NON-PRODUCTION OF EVEN ONE SINGLE CUSTOMER/CLIENT WHO ALLEGEDLY GAVE CASH TO THE ASSE SSEE FOR DEPOSIT IN QUESTION. THE ACTION OF ASSESSING OFFICER IN APPLY ING THE PROVISIONS OF SECTION 68 OF THE ACT WAS HELD TO BE JUSTIFIED. 10. THE NEXT CLAIM OF THE ASSESSEE OF NON GRANT OF PROPER OPPORTUNITY BY THE ASSESSING OFFICER WAS ALSO REJEC TED BY THE CIT(APPEALS) IN VIEW OF THE VARIOUS OPPORTUNITIES B EING GIVEN TO THE ASSESSEE FOR THE PRODUCTION OF BOOKS OF ACCOUNT. T HE RELIANCE PLACED BY THE LD. AR FOR THE ASSESSEE ON VARIOUS CASE-LAWS WAS DISTINGUISHED BY THE CIT(APPEALS) VIDE PARAS 3.2 TO 3.4 OF THE AP PELLATE ORDER. IN RESPECT OF THE QUANTUM OF ADDITION MADE IN THE HAND S OF THE ASSESSEE AND THE CLAIM OF ADDITION OF PEAK CREDIT IN THE HAN DS OF THE ASSESSEE AND VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE I N THIS REGARD WAS COUNTERED BY THE CIT(APPEALS) IN PARA 4.2 AND IT WA S HELD THAT, RATIO OF THIS DECISION OF THE HON'BLE JURISDICTIONAL BENC H COVERS THE CASE OF THE APPELLANT AGAINST IT, IN RESPECT OF ADDITION U/ S 68 OF THE ACT IN PRINCIPLE. AS FAR AS QUANTUM OF ADDITION IS CONCER NED, IT IS THE PEAK OF DEPOSITS WHICH COULD BE ADDED AS PER THIS DECISI ON. DURING APPEAL PROCEEDINGS THE LD. COUNSEL WAS REQUESTED TO FURNIS H NECESSARY DETAILS TO WORK OUT SUCH PEAK OF DEPOSITS. THESE DETAILS AR E AS PER ANNEXURE-A TO THIS ORDER. AS COULD BE SEEN FROM THESE DETAILS , THE PEAK CREDIT BALANCE IN RESPECT OF ING VYASA BANK ACCOUNT NO.557 011001677 COMES TO RS.7,54,420/- AS ON 15.2.2007. FURTHER TH E PEAK DEPOSIT IN BANK ACCOUNT NO. 557011009579 OF THE APPELLANT AS P ER THE SAME 8 DETAILS COME TO RS.300,840/-. THEREFORE, THE ADDIT ION ON THE BASIS OF PEAK DEPOSITS IN THIS CASE WOULD COME TO RS.10,55,2 60/-. 11. THE CIT(APPEALS) IN VIEW THEREOF UPHELD THE ADD ITION OF RS.10,55,260/- AND DELETED THE ADDITION OF RS.116,1 0,740/-. THE ASSESSEE IS IN APPEAL AGAINST THE ADDITION OF RS.10 ,55,260/- AND THE REVENUE IS IN APPEAL AGAINST THE DELETION OF ADDITI ON OF RS.1.16 CRORES. 12. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT SU RVEY AT THE PREMISES OF THE ASSESSEE WAS CARRIED OUT ON 31.10.2 007 UNDER WHICH NO DISCLOSURE WAS MADE BY THE ASSESSEE. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, STATEMENT WAS RECORDED B Y THE ASSESSING OFFICER. THE LD. AR FOR THE ASSESSEE STRE SSED THAT THE ASSESSEE WAS ENGAGED IN GIVING ACCOMMODATION ENTRIE S AGAINST WHICH CASH WAS DEPOSITED IN THE BANK ACCOUNTS ON BE HALF OF THE CLIENTS AND FURTHER CHEQUES WERE GIVEN FOR INVESTME NT IN SHARES. IT WAS FURTHER STRESSED BY THE LD. AR FOR THE ASSESSEE THAT IN THE STATEMENT RECORDED DURING SURVEY, THE ASSESSEE HAD ADMITTED THAT THE SOURCE OF CASH DEPOSITED IN THE BANK ACCOUNT WA S ACCOMMODATION ENTRIES. IT WAS THE CASE OF THE LD. AR FOR THE ASSESSEE THAT IN VIEW OF PROVIDING ACCOMMODATION EN TRIES IN WHICH COMMISSION WAS TO BE CHARGED IN THE HANDS OF THE AS SESSEE AS INCOME OF THE CORRESPONDING PERIOD, THERE WAS NO ME RIT IN THE ADDITION MADE BY THE ASSESSING OFFICER. FURTHER REL IANCE WAS PLACED ON THE OBSERVATIONS OF CIT(APPEALS) IN PARA 4.2 BY THE LD. AR FOR THE ASSESSEE. 13. DURING THE COURSE OF HEARING, THE LD. AR FOR TH E ASSESSEE WAS CONFRONTED WITH THE FACT OF NEW PLEAS BEING RAISED BEFORE THE TRIBUNAL I.E. THE INCLUSION OF ONLY COMMISSION ON T HE 9 ACCOMMODATION ENTRIES PROVIDED BY THE ASSESSEE. TH E LD. AR FOR THE ASSESSEE FAIRLY ADMITTED THAT IT WAS A NEW PLEA AND WAS A FACTUAL ASPECT, WHICH WAS NOT RAISED EITHER BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS OR BEFORE THE CIT(APPEALS) DURING THE APPELLATE PROCEEDINGS. THE LD. AR FOR THE ASSESSEE THOUGH PLACED RELIANCE ON THE ORDER OF CIT(APPEALS) IN RESTRICTING THE ADDITION TO PEAK CREDITS IN THE HANDS OF THE ASSESSEE. 14. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE ISSUE ARISING IN THE PRESENT APPEAL WAS IN RELATION TO THE UNEXPL AINED CREDITS IN THE BANK ACCOUNTS WHEREIN CASH WAS DEPOSITED BY THE ASSESSEE ON VARIOUS DATES AS AGAINST WHICH CHEQUES WERE ISSUED TO DIFFERENT ENTITIES AS THE ASSESSEE HAD FAILED TO ESTABLISH TH E IDENTITY AND CREDIT-WORTHINESS OF THE PERSONS WHO HAD ADVANCED T HE ALLEGED CASH TO THE ASSESSEE FOR THE ALLEGED ACCOMMODATION ENTRIES, THE PROVISIONS OF SECTION 68 OF THE INCOME-TAX ACT WERE SQUARELY APPLICABLE AND ADDITION OF THE TOTAL CASH CREDITS W AS TO BE MADE IN THE HANDS OF THE ASSESSEE. THE LD. DR FOR THE REVEN UE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE ALLA HABAD HIGH COURT IN BHAIYALAL SHYAM BEHARI V COMMISSIONER OF I NCOME-TAX REPORTED IN 276 ITR 38 (ALL). 15. IN REJOINDER, THE LD. AR FOR THE ASSESSEE ADMIT TED THAT THOUGH NO CASH WAS WITHDRAWN FROM THE BANK ACCOUNT, BUT TH E MONEY OF THE CLIENTS OF THE ASSESSEE WERE TREATED AS THE MON EY OF THE ASSESSEE AGAINST WHICH CHEQUES WERE ISSUED TO VARIO US PERSONS. THE LD. AR FOR THE ASSESSEE WAS CATEGORIC IN THE AD MISSION THAT CASH WAS DEPOSITED IN THE BANK ACCOUNT BUT NO CASH WAS WITHDRAWN FROM THE SAID BANK ACCOUNT AND ONLY CHEQUES WERE IS SUED TO 10 VARIOUS PARTIES. THE LD. AR FOR THE ASSESSEE PLACE D RELIANCE ON SHRI B.K.JAIN V ITO, LUDHIANA IN ITA NOS. 1094 TO 1096/CHD/2008 RELATING TO ASSESSMENT YEARS 2002-03 TO 2004-05 AND CROSS-APPEALS IN ITA NOS. 1087 TO 1089/CHD/2008 . 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE THE ASSESSEE UNDER APPEAL IS FOR ASSESSMENT YEAR 2007-08 FOR THE PERIOD ENDING 31.3. 2007. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD FU RNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.161,680/- FI LED ON 01.11.2007. SURVEY U/S 133A OF THE ACT WAS CONDUCT ED ON THE PREMISES OF THE ASSESSEE ON 31.10.2007 AND THE STAT EMENT OF THE ASSESSEE WAS RECORDED ON 31.10.2007. THE COPY OF T HE STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SURVE Y IS PLACED ON RECORD. A PERUSAL OF THE SAID STATEMENT REFLECTS T HAT THE CLAIM OF THE ASSESSEE DURING SURVEY WAS THAT M/S SUPER FINVE ST (P) LTD. WAS SUB-BROKER BY LSE SECURITIES LTD. AND ALSO WORK ING AS SHARE BROKER. IN RESPECT OF M/S BIG BULL COMMODITIES P.L TD. AND M/S BEST BUY COMMODITIES P.LTD., THE ASSESSEE STATED TH AT THESE WERE ENGAGED IN ACCOMMODATION ENTRIES; M/S SHUBH KRISHNA COMMODITIES P.LTD. WAS STATED TO BE ENGAGED IN COMM ODITY TRADING AND AS SUB-BROKER ON COMMISSION BASIS. IT W AS CLAIMED BY THE ASSESSEE THAT IT WAS ENGAGED IN GIVING ACCOMMOD ATION ENTRIES. 17. THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRU TINY AND STATEMENT OF THE ASSESSEE WAS RECORDED ON 14.12.200 9. IN REPLY TO THE QUERIES RAISED BY THE ASSESSING OFFICER WHILE R ECORDING THE SAID STATEMENT, THE PLEA OF THE ASSESSEE WAS THAT I T HAD RECEIVED CASH FROM ITS CLIENTS AND THE DETAILS WERE AVAILABL E IN BOOKS OF ACCOUNT WHICH WOULD BE PROVIDED TO THE ASSESSING OF FICER ON THE 11 NEXT DATE OF HEARING. THE ASSESSING OFFICER REQUISI TIONED THE ASSESSEE TO PRODUCE ATLEAST 10 PERSONS WHO HAD DEPO SITED RS. ONE LAC AND ABOVE IN THE BANK ACCOUNT. THE ASSESSEE RE PLIED THAT HE WOULD VERIFY THE RECORD AND INFORM THE STATUS. IN ANOTHER QUERY RAISED BY THE ASSESSING OFFICER THAT LET ME KNOW HOW THE ABOVE PERSONS DEPOSITED THE CASH IN YOUR BANK, THE REPLY OF THE ASSESSEE WAS CASH IS RECEIVED FROM CUSTOMERS AND THE SAME IS DEPOSITED IN BANK. IN VIEW OF THE COMMODITIES EXCHANGE, THE ASSESSEE EXPLAINED THAT THE LUDHIANA COMMODITIES EX CHANGE CHARGE TRANSACTION CHARGES FROM THE ASSESSEE AT THE RATES DEPENDING ON TURNOVER. THE CONCERN M/S SHUBH KRISH NA, WHICH WAS THE PROPRIETOR CONCERN OF THE HUF OF THE ASSESS EE, WAS CLAIMED TO BE REGISTERED WITH LUDHIANA COMMODITIES EXCHANGE AND OTHER COMPANIES AND FIRMS OF WHICH HE WAS THE DIREC TOR/PROPRIETOR WERE CLAIMED TO BE BRANCHES/TRADERS OF M/S SHUBH KR ISHNA COMMODITIES. IN VIEW OF THE ENTRIES OF TRADING BEI NG CARRIED OUT ON BEHALF OF THE M/S SHUBH KRISHNA BY THE VARIOUS COMPANIES/PROPRIETORY CONCERNS OWNED BY THE ASSESSE E, IT WAS EXPLAINED THAT IN CASE OF ONE OR TWO TRANSACTIONS, THE COMMODITY EXCHANGE ENTRY WAS THROUGH THE EXCHANGE AND THE BAL ANCE ENTRIES WERE CLIENT TO CLIENT, WHICH WERE PERMISSIBLE AS CO MMERCIAL TRANSACTION, AS PER PREVALENT MARKET TRENDS. THE A SSESSEE CLAIMED THAT SODA CONFIRMATION SLIP VOUCHERS IN RESPECT OF COMMODITIES TRANSACTION WERE BEING MAINTAINED BY THE ASSESSEE, WHICH WOULD BE PROVIDED ON THE NEXT DATE OF HEARING. THE STATEMEN TS WWAS AGAIN CONTINUED ON 21.12.2009 AND THE PLEA OF THE ASSESSE E WAS THAT IT HAD NOT BROUGHT ANY RECORD OR ANY PERSONS TO BE PRO DUCED ALONGWITH HIMSELF ON THE SAID DATE OF HEARING, AS H E HAD COME FOR RECORDING OF HIS STATEMENT. IN THE STATEMENT SO RE CORDED, IN 12 RESPECT OF VARIOUS CASH CREDITS/DEPOSITS IN THE BAN K ACCOUNTS IN THE NAME OF DIFFERENT COMPANIES IN WHICH HE WAS THE DIRECTOR/PROPRIETOR, THE ASSESSEE WAS ASKED TO GIVE THE SOURCE OF THE SAID CASH DEPOSITS IN VARIOUS BANKS AND IT WAS STATED BY THE ASSESSEE THAT REPLY IS SAME AS STATED ON 15.12.2009. HE FURTHER SUBMITTED THAT HE WOULD STATE FURTHER RELATING TO C ASH 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 CREDITS IN THE SAI D BANK ACCOUNTS TOTALING TO RS.126,66,000/- AS PER DETAILS IN ANNEX URE-B TO THE ASSESSMENT ORDER. THE ASSESSING OFFICER FURTHER NO TED THAT WHILE RECORDING THE STATEMENT, THE ASSESSEE WAS ASKED TO PRODUCE 10 PERSONS FOR VERIFICATION AND THE ASSESSEE FAILED TO PRODUCE ANY PERSON FOR VERIFICATION NOR ANY CONFIRMATION WAS FILED BY THE ASSESSEE. THE ASSESSEE HAD FAILED TO DISCHARGE THE INITIAL BURDEN CAST UPON HIM TO PROVE GENUINENESS OF THE AMOUNTS CREDITED IN HIS BO OKS OF ACCOUNT I.E. BY PROVING THE IDENTITY OF THE PERSONS, WHO HANDED OVER THE CASH TO THE ASSESSEE OR PRODUCTION OF THE RELEVANT BOOKS OF ACCOUNT WHERE NAME, ADDRESS AND TRANSACTIONS ENTERED BY THEM WERE REFLECTED NOR FURNISHING ANY DETAILS OF SUCH PERSONS WHO HAD GIVE N HIM THE CASH AND EVEN CREDIT WORTHINESS OF THE PERSONS GIVING CASH C OULD NOT BE PROVED. THE ASSESSEE HAD FAILED TO FILE THE REQUISITE DETAI LS DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER, THU S HELD THAT IN VIEW THEREOF, WHETHER THE CASH DEPOSITS BELONG GENUINELY TO THE CUSTOMERS OR IT BELONGED TO THE ASSESSEE, COULD NOT BE ASCERT AINED, RESULTING IN THE GENUINENESS OF THE TRANSACTIONS BEING NOT PROVE D. IT WAS ALSO A FINDING OF THE ASSESSING OFFICER, THAT ONLY CASH DE POSITS WERE MADE IN THE BANK ACCOUNT AND THERE WERE NO CASH WITHDRAWALS FROM THE SAID 13 BANK. THE OUTGOINGS WERE ONLY CHEQUES WHICH WERE U NVERIFIABLE. THE ASSESSEE HAD FAILED TO CORROBORATE THE CASH DEPOSIT WITH ANY EVIDENCE OF THE IDENTITY OF THE DEPOSITOR OR ANY OTHER EVIDE NCE. THE 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 SECTION 68 WERE NOT TO BE APPLIED AND IT BEST THE ADDITION COULD BE RESTRICTED TO THE PEAK C REDITS. THE CIT(APPEALS) UPHELD THE PEAK CREDIT THEORY TO BE AP PLIED TO THE FACTS OF 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 ADDITIONS WERE MAINTAINABLE IN VIEW OF THE PROVISIONS 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 THE PRESENT CASE AND ALSO AGAINST THE ADDITION OF RS.10,55,260/-. THE REVENU E IS AGGRIEVED BY THE APPLICATION OF PEAK CREDIT THEORY IN THE HANDS OF THE ASSESSEE AND SECOND, RELIEF 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 SURVEY CONDUCTED U/S 133A OF THE ACT ON 3 1.10.2007, IN THE STATEMENT RECORDED, THE ASSESSEE ADMITTED TO BE ENG AGED IN THE BUSINESS OF GIVING ACCOMMODATION ENTRIES. THE MODU S-OPERANDI EXPLAINED DURING THE COURSE OF SURVEY WAS THAT THE ASSESSEE WAS RECEIVING THE AMOUNT IN CASH AND THE SAME WERE BEIN G RETURNED VIDE CHEQUES THROUGH BANK ACCOUNTS. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE STATEMENT OF THE ASSESS EE WAS AGAIN 14 RECORDED WHEREIN WHEN CONFRONTED WITH THE BANK STAT EMENT OF M/S BIG BULL COMMODITIES PVT. LTD. WITH CENTURIAN BANK, PAK HOWAL ROAD, LUDHIANA IN WHICH HUGE CASH WAS DEPOSITED BY VARIOU S ENTRIES, THE ASSESSEE IN REPLY STATED THAT THE CASH WAS DEPOSITE D AS PER BOOKS OF ACCOUNT ON BEHALF OF THE CLIENTS. VIDE QUERY NO.8, THE ASSESSEE WAS ASKED TO PROVIDE THE NAMES AND ADDRESSES OF THE CUS TOMERS/CLIENTS WHO HAD DEPOSITED THESE AMOUNTS. THE REPLY OF THE ASSE SSEE IN THIS REGARD WAS, IF DETAILS ARE THERE, I WILL CHECK FROM BOOKS OF AC COUNT AND PROVIDE THE SAME. THE ASSESSEE, THEREAFTER WAS DIRECTED TO PRODUCE ATLEAST 10 PERSONS WHO HAD DEPOSITED RS.1 LAC AND A BOVE IN THE BANK ACCOUNT. THE ASSESSEE EXPLAINED THAT HE WILL VERIF Y FROM RECORD AND LET THE ASSESSING OFFICER KNOW ABOUT IT. IN REPLY TO QUERY NO.10, THE ASSESSEE CLAIMED THAT CASH IS RECEIVED FROM CUSTOME RS AND SAME IS DEPOSITED IN BANK. THE PLEA OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT HE WAS ENGAGED IN THE BUSINESS OF COMMODITIES AND QUERY NO.12, 13 WERE RAISED IN RESPECT OF THE COMMI SSION RECEIVED FROM LUDHIANA COMMODITIES EXCHANGE. THE REPLY OF T HE ASSESSEE TO QUERY NO.13 I.E. ARE YOU REGISTERED WITH LUDHIANA COMMODITY EXCHANGE WAS THAT ONLY M/S SHUBH KRISHNA OF WHICH HUF IS THE PROPRIETOR AND I AM KARTA OF HUF IS REGISTERED WITH LCE AND OTHER COMPANIES AND FIRMS IN WHICH I AM DIRECTOR OR PROPR IETOR ARE BRANCHES/TRADERS OF M/S SHUBH KRISHNA COMMODITIES. THE QUERY NO.14 WAS WHETHER THE SAID COMPANIES/FIRMS WHO WERE THE TRADE RS OF M/S SHUBH KRISHNA WERE PAYING ANY CHARGES TO M/S SH UBH KRISHNA 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 : Q:-16 IS THE TRANSACTION, MADE BY ABOVE STATED COMPANIES THROUGH RECOGNIZED COMMODITIES EXCHANGE OR NOT. 15 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 CLAIM OF TH E ASSESSEE TO HAVE CHANGED. THE ASSESSEE ADMITS THAT ONLY M/S SHUBH K RISHNA WAS REGISTERED WITH LUDHIANA COMMODITIES EXCHANGE AND R EST ALL THE CONCERNS WERE THE BRANCHES OR TRADERS OF M/S SHUBH KRISHNA COMMODITIES. IN RESPECT OF THE CASH DEPOSIT IN THE BANK ACCOUNT OF ONE OF THE CONCERN, THE ASSESSEE STATED THAT IT HAD REC EIVED CASH FROM VARIOUS PARTIES AND THE SAME WAS AS PER THE BOOKS O F ACCOUNT. THE CASE OF THE ASSESSEE WAS THAT IT WAS RECEIVING CASH FROM ITS CLIENTS. BUT BEFORE THE ASSESSING OFFICER IT WAS NOT THE CAS E OF THE ASSESSEE THAT IT WAS ENGAGED IN PROVIDING ACCOMMODATION ENT RIES. IN RESPECT OF THE ENTRIES NOT BEING THROUGH THE EXCHANGE, THE ASSESSEE CLAIMED THAT CLIENT TO CLIENT TRANSACTIONS WERE PERMISSIBLE AS COMMERCIAL TRANSACTIONS. THE STATEMENT WAS CONTINUED ON 21.12 .2009 AND AS PER QUERY NO.24, THERE WAS A SPECIFIC QUERY RAISED TO E XPLAIN VARIOUS CASH CREDITS/DEPOSITS IN THE BANK ACCOUNTS OF DIFFERENT COMPANIES IN WHICH 16 THE ASSESSEE WAS THE DIRECTOR AND THE ASSESSEE WAS ALSO ASKED TO GIVE SOURCE OF CASH DEPOSITS IN VARIOUS ACCOUNTS. IN RE PLY TO THE SAME, A SHORT REPLY WAS GIVEN BY THE ASSESSEE THAT IT IS TH E SAME AS WHAT IS STATED ON 15.12.2009. AT THE CONCLUSION OF RECORDI NG OF THE STATEMENT, THE ASSESSEE STATED THAT HE WOULD FURTHER EXPLAIN R ELATING TO THE CASH, DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEV ER, THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT NOR GIVE ANY EXPLANATION VIS-- VIS THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT . IN THE ABSENCE OF ANY EXPLANATION OR ANY EVIDENCE BEING PRODUCED BY T HE ASSESSEE. THE ONUS CAST UPON THE ASSESSEE NOT BEING DISCHARGED, T HE SAID CASH CREDITS ARE TO BE INCLUDED AS INCOME OF THE ASSESSEE IN VIE W OF THE PROVISIONS OF SECTION 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 EXPLA NATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM 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 SUCH C REDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATION ABOUT TH E NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND ( B ) SUCH EXPLANATION IN THE OPINION OF THE ASSESSING OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL A PPLY 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 REFERRED 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 EXPLANATION ABOUT THE NATURE AND SOURCE OF THE CREDITS IN THE BOOKS OF ACCOUNT, ALL THE AMOUNTS SO 17 CREDITED OR WHERE THE EXPLANATION OFFERED BY THE AS SESSEE IS NOT SATISFACTORY IN RELATION TO THE SAME, THEN SUCH CRE DITS MAY BE CHARGED TO TAX AS INCOME OF THE ASSESSEE FOR THAT P ARTICULAR PREVIOUS YEAR. ADMITTEDLY, IN THE CASE OF THE ASSE SSEE, VARIOUS AMOUNTS IN CASH ARE DEPOSITED IN THE BANK ACCOUNTS OF THE ASSESSEE AND THE ONUS WAS UPON THE ASSESSEE TO EXPLAIN NATUR E AND ALSO THE SOURCE OF THE SAID CASH DEPOSITS. THE ASSERTION OF THE ASSESSEE 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. THE AS SESSEE EVEN FAILED TO BRING ON RECORD ANY EVIDENCE TO PROVE ITS STAND THAT IT WAS THE AMOUNT RECEIVED FROM SUCH PERSONS WHO WERE HIS CLIENTS. THE ASSESSEE FAILED TO FILE ANY CONFIRMATION IN RES PECT OF THE SAID CASH CREDITS NOR ANY OF THE PERSONS WERE PRODUCED F OR EXAMINATION BEFORE THE ASSESSING OFFICER, THOUGH SPECIFIC DIREC TION IN THIS REGARD WAS GIVEN BY THE ASSESSING OFFICER WITHIN TH E COURSE 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 DIS CHARGED HIS ONUS OF PROVING THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE CASH TRANSACTION OF THE CASH CREDITS IN THE BAN K ACCOUNT, WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE IN THIS R EGARD AND DISMISS THE SAME. 25. ANOTHER PLEA RAISED BY THE LD. AR BEFORE US WAS THAT AS THE ASSESSEE WAS ENGAGED IN GIVING ACCOMMODATION ENTRIE S, ONLY COMMISSION SHOULD BE INCLUDED AS INCOME OF THE ASSE SSEE. ADMITTEDLY, WHILE RECORDING THE STATEMENT DURING TH E COURSE OF SURVEY, THE ASSESSEE HAD STATED THAT IT WAS ENGAGED IN THE BUSINESS 18 OF GIVING ACCOMMODATION ENTRIES. HOWEVER, DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT RAISE ANY SUBMISSIONS IN THIS REGARD AND ON THE OTHER HAND, THE ASSESSEE TIME AND AGAIN, IN THE COURSE OF STATEMENT RECORDED DURING THE ASSE SSMENT PROCEEDINGS, POINTED OUT THAT THE CASH DEPOSITED IN THE BANK ACCOUNT 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 ORDE R OF THE CIT(APPEALS) DOES NOT REFLECT ANY FINDINGS ON THIS ISSUE AND ISSUES ADDRESSED BY THE CIT(APPEALS) WERE WHETHER PROVISIO NS OF SECTION 68 ARE APPLICABLE AND IN THE ALTERNATIVE, WHETHER P EAK-CREDIT IS TO BE APPLIED IN THE HANDS OF THE ASSESSEE. THE ASSES SEE 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 PROVISIONS 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 FAC TUAL ISSUE WHICH HAS NOT BEEN RAISED BEFORE THE AUTHORITIES BE LOW I.E. DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR EVEN BEFORE THE CIT(APPEALS), THE SAID ISSUE HAS NOT BEEN ADJUDICAT ED. THE PLEA OF THE ASSESSEE OF ADMISSION OF SUCH NEW FACTUAL IS SUE IS NOT ADMISSIBLE AT THIS STAGE OF ADJUDICATING OF THE APP EAL IN THE CAPTIONED YEARS. WE FIND NO MERIT IN THE SAID PLEA OF THE ASSESSEE AND THE SAME IS REJECTED. 19 26. WE ARE IN CONFORMITY WITH THE ORDER OF CIT(APPE ALS) IN HOLDING THAT THE PROVISIONS OF SECTION 68 OF THE AC T IN THE PRESENT SET OF FACTS AND CIRCUMSTANCES OF THE CASE ARE APPL ICABLE 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 BY 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 O F THE PRESENT CASE, THE SAID PEAK CREDIT THEORY IS NOT APPLICABLE AS THE AS SESSEE HAD DEPOSITED CASH IN THE BANK ACCOUNT AND THEREAFTER, CHEQUES WE RE ISSUED TO DIFFERENT PARTIES. IT IS NOT A CASE WHERE CASH WAS DEPOSITED ON DIFFERENT DATES AND IN BETWEEN, THERE WERE CASH WIT HDRAWALS FROM THE BANK ACCOUNT. IT IS A CASE WHERE THERE ARE DEPOSIT S IN CASH BUT AS AGAINST THE SAID CASH DEPOSITED, VARIOUS CHEQUES WE RE ISSUED AND THE ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCE OF CASH D EPOSITED IN HIS BANK ACCOUNT. REJECTING THE THEORY OF PEAK CREDITS APPLIED BY THE ASSESSING OFFICER, WE REVERSE THE FINDINGS OF CIT(A PPEALS) IN THIS REGARD AND RESTORE THE ADDITION MADE BY THE ASSESSI NG 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 SHYAM BE HARI V COMMISSIONER OF INCOME-TAX (SUPRA) WHEREIN THE COUR T HELD AS UNDER : DURING THE ASSESSMENT YEAR IN QUESTION CERTAIN AMO UNT OF CASH CREDITS STANDING IN THE NAMES OF VARIOUS PERSONS WERE ADDED IN THE INCOME OF THE APPLICANT BY INVOKING THE PROVISION OF SECTION 68 OF THE ACT. BEFORE THE TRIBUNAL THE ALTERNATIVE PLEA WAS TAKEN BY THE APPLICANT THAT IN THE EVENT DEPOSIT/CASH CREDITS ARE TREATED TO BE UNEXPL AINED THEN ONLY PEAK CREDIT IS TO BE ADDED. THE SUBMISSION HAS BEEN NEGA TIVED BY THE TRIBUNAL IN THE FOLLOWING WORDS : 20 '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 ACCOUNT OF 'B' T HERE WAS A DEPOSIT OF RS. 10,000 ON DECEMBER 1, 1978. THE ASSESSEE HAS NOT ES TABLISHED THE GENUINENESS OF THESE TWO DEPOSITS. NOW ACCORDING TO THE ASSESSE E IN CASE THERE WAS A WITHDRAWAL OF RS. 10,000 IN THE ACCOUNT OF 'A' PRIO R TO THE DEPOSIT OF RS. 10,000 IN THE ACCOUNT OF 'B' THEN NO SEPARATE ADDITION SHO ULD BE RESORTED TO ON ACCOUNT OF UNEXPLAINED DEPOSIT IN THE ACCOUNT OF 'B'. ACCOR DING 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 AFTER TH E WITHDRAWAL OF THE AMOUNT FROM THE ACCOUNT OF 'A'. WE CANNOT SUBSCRIBE TO THI S POINT OF VIEW. ACCORDING TO US, IF THE ASSESSEE IS NOT ABLE TO PROVE THE GENUIN ENESS OF THE DEPOSIT IN THE ACCOUNT OF 'B', A SEPARATE ADDITION IN RESPECT OF T HAT WILL BE REQUIRED TO BE MADE. AS PER THE PROVISIONS OF SECTION 68, WHERE AN Y SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERE D 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 ADMITS THAT THE ALLEGED DEPOSIT IN THE ACCOUNT OF 'A' WAS NOT GENUINE AND, IN FACT, IT WAS THE ASS ESSEE'S OWN MONEY WHICH HAD BEEN INTRODUCED IN THE BOOKS IN THE GARB OF A LOAN FROM 'A' AND HENCE WHEN THIS AMOUNT WAS AVAILABLE TO THE ASSESSEE FOR BEING INTR ODUCED AS A FRESH DEPOSIT IN THE ACCOUNT OF 'B' THEN IT MAY BE POSSIBLE TO ACCEP T THE CONTENTION OF THE ASSESSEE. BUT IN CASE THE ASSESSEE ALL ALONG MAINTA INS THAT THE VARIOUS LOANS ARE GENUINE THEN WE FAIL TO UNDERSTAND AS TO HOW TH E ASSESSEE CAN PUT FORWARD THE CLAIM THAT SEPARATE ADDITIONS FOR THE UNEXPLAIN ED CASH CREDIT IN DIFFERENT ACCOUNTS SHOULD NOT BE MADE. WHEN THE ASSESSEE HIMS ELF DOES NOT CONTEND THAT THE DEPOSIT MADE IN THE ACCOUNT OF 'B' IS OUT OF PR IOR WITHDRAWAL MADE IN THE ACCOUNT OF 'A', HOW DOES THE ASSESSEE EXPECT THE DE PARTMENT 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. THE APPLICANT SUBMITTED THAT AS THE AMOUNT OF CASH CREDIT HAS BEEN TREATED TO TAX BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT AND THE SAID AMOUNT HAVE BEEN TREATED AS INCOME FROM THE UNEXPLAINED SO URCE, THE APPLICANT WAS ENTITLED TO TAKE UP A PLEA OF ADDITION OF THE AFORE SAID PEAK CREDIT AS THE ENTIRE DEPOSITS HAVE BEEN TREATED TO BE INCOME OF THE APPL ICANT. THE CONTENTION IS WHOLLY MISCONCEIVED. FOR ADJUDICATING UPON THE PLEA OF PEAK CREDIT THE FACTUAL FOUNDATION HAS TO BE LAID BY THE ASSESSEE. HE HAS T O OWN ALL CASH CREDIT ENTRIES IN THE BOOKS OF ACCOUNT AND ONLY THEREAFTER THE QUE STION OF PEAK CREDIT CAN BE RAISED. AS IN THE PRESENT CASE THE AMOUNT OF CASH C REDITS WERE STANDING IN THE NAMES OF DIFFERENT PERSONS WHICH ALL ALONG THE APPL ICANT HAD BEEN CLAIMING TO BE GENUINE DEPOSIT, WITHDRAWAL/PAYMENT OF THE AMOUN T TO DIFFERENT SET OF PERSONS DURING THE PREVIOUS YEARS WOULD NOT AT ALL ENTITLE THE APPLICANT 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 QUESTIONS REFERRE D TO US IN THE NEGATIVE, I.E. IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THERE WILL BE HOWEVER, NO ORDER AS TO COSTS. OTHER INFORMATION IN FAVOUR OF REVENUE 21 29. THE GROUNDS OF APPEAL NO. 1(A) TO 1(C) RAISED B Y THE ASSESSEE ARE, THUS DISMISSED AND THE GROUNDS OF APPEAL RAISE D BY THE REVENUE ARE ALLOWED. 30. AS THE FACTS AND CIRCUMSTANCES OF ITA NOS. 714/ CHD/2010 & 964/CHD/2010 AND ITA NOS. 712/CHD/2010 & ITA NO. 962/CHD/2010 ARE SIMILAR TO ITA NO. 713/CHD/2010 & 963/CHD/2010, THEREFORE THE DECISION GIVEN IN ITA N O. 713/CHD/2010 & 963/CHD/2010 WOULD APPLY MUTATIS-MUT ANDIS TO THESE APPEALS ALSO. 31. IN THE RESULT, ALL THE THREE APPEALS OF THE DIF FERENT ASSESSEES ARE DISMISSED AND THE THREE APPEALS OF THE REVENUE AGAINST DIFFERENT ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 27 TH DAY OF JUNE, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27 TH JUNE,2013 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH 22