OM PRAKASH AGARWAL, Jaipur V. ACIT, Jaipur

ITA 721/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4898 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 01-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJAN KUMAR
• Keywords: Unexplained cash credit; Salary income; Loose papers; Document seized; Peak credit; Source of fund; Documents seized
• Section: 153A; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NOS. 721 TO 726/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2005-06 TO 2010-11 OM PRAKASH AGARWAL, 2509, KANWATIYON KA KHURRA, RAMGANJ BAZAR, JAIPUR. CUKE VS. A.C.I.T., CENTRAL CIRCLE-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AATPA 4869 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RANJAN KUMAR (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 16/11/2016 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 24/11/2016 VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. ALL THESE APPEALS FILED BY THE ASSESSEE ARE AGAINS T THE TWO SEPARATE ORDERS DATED 23/07/2015 PASSED BY THE LD CIT(A), AL WAR FOR THE A.YS. 2005-06 TO 2010-11. GIVEN THAT THESE APPEALS CONTAI N IDENTICAL FACTS AND COMMON SET OF GROUNDS OF APPEAL, THE SAME WERE TAKE N UP FOR HEARING TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER. THE GROUNDS TAKEN BY THE ASSESSEE IN THE APPEAL OF A.Y. 2005-06 IS AS UNDER:- ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING AN ADDITION O F RS. 22,800/- ON ACCOUNT OF UNDISCLOSED DEBTORS ARBITRAR ILY BY COMPLETELY IGNORING THE FACT THAT WHILE MAKING THE ADDITION, THE LD. AO HAS CONSIDERED ONLY THE DEBTORS AND IGNO RED THE CREDITORS, THEREBY IGNORING THE SOURCE OF FUNDS IN THE HANDS OF ASSESSEE. THUS, THE ADDITION OF RS. 22,800/- DES ERVES TO BE DELETED. 1.1 THAT THE LD. AO HAS FURTHER ERRED IN NOT CONSID ERING THE AMOUNT OF CLOSING BALANCE OF DEBTORS AS OPENING BAL ANCE WHILE WORKING OUT THE ADDITIONAL DEBTORS CREATED DU RING THE YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE ADDITION OF RS. 50,000/- ON ACCOUNT OF UNDISCLOSED / UNEXPLAINED HO USE HOLD EXPENSES ARBITRARILY, WITHOUT CONSIDERING THE DRAWI NGS MADE BY THE ASSESSEE. HENCE THE ADDITION SO MADE BASED O N ESTIMATES DESERVES TO BE DELETED. 2.1 THAT THE ADDITION OF RS. 50,000/- HAS BEEN MADE BY MERELY ESTIMATING THE HOUSEHOLD EXPENSES OF THE ASSESSEE W ITHOUT ANY MATERIAL FOUND AS A RESULT OF SEARCH FOR THE YE AR UNDER APPEAL. SIMILAR GROUNDS OF APPEAL HAVE BEEN TAKEN BY THE AS SESSEE IN THE CASES OF ASSESSMENT YEARS 2006-07 TO 2010-11 WITH ONLY VA RIATION OF FIGURES IN RESPECTIVE YEARS. 2. THE BRIEF FACTS OF THE CASES ARE THAT A SEARCH A ND SEIZURE OPERATION U/S 132 OF INCOME TAX ACT, 1961(IN SHORT THE ACT) W AS CARRIED OUT ON ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 3 24.08.2009 AT THE BUSINESS AND RESIDENTIAL PREMISES OF SH. DAMODAR DAS AGARWAL, OF WHOM THE ASSESSEE IS ONE OF THE EMPLOYE ES AND DURING THE COURSE OF SEARCH, CERTAIN LOOSE PAPERS/DOCUMENTS WE RE FOUND AND SEIZED. THE ASSESSEES NAME WAS INCLUDED IN THE SEARCH WARR ANT AND WAS CONFRONTED WITH THESE LOOSE PAPERS/DOCUMENTS AND HE ADMITTED THAT THESE LOOSE PAPERS/DOCUMENTS BELONG TO HIM AND HE W AS INVOLVED IN MONEY LENDING BUSINESS. THEREAFTER, NOTICE U/S 142 (1) WAS ISSUED TO ASSESSEE ON 11.05.2011 IN RESPONSE TO WHICH RETURN OF INCOME WAS FILED WHEREIN CERTAIN ADDITIONAL INCOME IS OFFERED WHICH IS TABULATED AS UNDER: ASSESSMENT YEAR ADDITIONAL INCOME OFFERED 2005-06 1,68,400.00 2007-08 22,175.00 2008-09 1,95,400.00 2009-10 10,249.00 2010-11 11,658.00 TOTAL 4,07,882.00 THEREAFTER, THE ASSESSMENTS WERE COMPLETED U/S 143( 3) R.W.S. 153A OF THE ACT BY MAKING ADDITIONS TO THE TUNE OF RS. 45,4 3,730/- ON ACCOUNT OF UNDISCLOSED DEBTORS AND FURTHER ADDITION OF RS. 8,0 0,000/- WAS MADE ON ACCOUNT OF UNDISCLOSED/UNEXPLAINED HOUSE HOLD EXPEN SES. 2.1 THE 1 ST GROUND OF THE APPEAL FOR THE A.Y. 2005-06 IS AGAIN ST UPHOLDING THE ADDITION OF RS. 22,800/- ON ACCOUNT O F UNDISCLOSED DEBTORS. ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 4 THE ASSESSING OFFICER HAS OBSERVED THAT SINCE THE A MOUNT OF INCOME OFFERED ON THE BASIS OF THESE ENTRIES IN SEIZED PAP ERS WAS FOUND TO BE NOT CORRECT VIDE ORDER SHEET ENTRY DATED 20.10.2011, TH E A/R OF THE ASSESSEE WAS ASKED TO PREPARE PERSON WISE COPY OF ACCOUNT AN D TOTAL AMOUNT OF OUTSTANDING DEBTORS AT THE YEAR END SO AS TO EXACTL Y DETERMINED THE CORRECT AMOUNT OF UNDISCLOSED INVESTMENT IN DEBTORS . THE ASSESSEE THEREAFTER ON 25.11.2011 FILED COPIES OF PERSON WIS E ACCOUNTS AND ALSO DETAILS OF OUTSTANDING DEBTORS AT THE YEAR END. FOR THE YEAR UNDER CONSIDERATION, SUCH DEBTORS WERE WORKED OUT BY THE AO AMOUNTING TO RS 191,200. SINCE THE AMOUNT RECEIVED IN CASH FROM CRE DITORS REMAINED UNVERIFIED AND UNEXPLAINED AS THE ASSESSEE HAS FAIL ED TO DISCLOSE NAMES, ADDRESS AND OTHER IDENTITY, THE ENTIRE AMOUNT OF NE T OUTSTANDING BALANCE OF DEBTORS AT THE YEAR END WAS CONSIDERED AS UNDISC LOSED INVESTMENT OF THE ASSESSEE AND TAXED ACCORDINGLY. HERE IT MAY BE A POINT OF MENTION THAT ON SUCH ADVANCES ASSESSEE HAS ALSO EARNED INTE REST BUT THE INTEREST SO EARNED IS TREATED AS REINVESTED WHICH IS REFLECT ED IN OUTSTANDING DEBTORS AND THUS AMOUNT OF ADDITION MADE INCLUDED A S NEW DEBTORS DURING THE YEAR AND AMOUNT OF INTEREST EARNED DURIN G THE YEAR AS REINVESTED IN THE DEBTORS. FOR THE YEAR ENDING 31.3 .2005, SUCH AMOUNT OF DEBTORS IS OF RS 191,200 AS CALCULATED ABOVE AND TH E SAME IS ASSESSED AS ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 5 UNDISCLOSED DEBTORS AND ADDITION WAS MADE TO THE DE CLARED INCOME INSTEAD OF RS. 168,400 DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME U/S 153 A OF THE IT ACT. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WHO HAD P ARTLY ALLOWED THE APPEAL BY OBSERVING AS UNDER:- 4.7 HAVING CONSIDERED THE SUBMISSIONS MADE AND EVI DENCE PLACED ON RECORD, I FIND THAT THERE IS NO DISPUTE W ITH REGARD TO THE FACT THAT THE ENTRIES/TRANSACTIONS FOUND TO HAVE BEEN RECORDED IN EX-1 TO 3 OF AS-1 PERTAIN TO MONEY LEND ING TRANSACTIONS OF THE APPELLANT WHICH WERE NOT DISCLO SED IN THE BOOKS OF ACCOUNTS. THE APPELLANT HAS RECORDED THE A MOUNT OF MONEY GIVEN TO VARIOUS PERSONS AND THE AMOUNT OF INTEREST BEING CHARGED ON THESE LOANS AND ALSO THE AMOUNTS RETURNED BACK BY THE BORROWERS. ALL THESE TRANSACTI ONS WERE COLLATED BY THE APPELLANT AND A COMPUTERIZED CHART OF INFLOWS AND OUTFLOWS OF FUNDS, YEAR WISE HAS BEEN P REPARED. 4.8 THE ARGUMENT TAKEN BY THE APPELLANT IS THAT WHI LE CALCULATING THE PEAK, THE MAXIMUM OF DEBIT AND CRED IT AMOUNT IS TO BE CONSIDERED AS WHATEVER COMES INTO T HE BUSINESS IN CASH IS DULY AVAILABLE AND FROM THAT ON LY PAYMENT IS TO BE MADE. SO PEAK IS THE MAXIMUM OF WH AT COMES AND WHAT GOES AS IT SHOWS THE MAXIMUM OF ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 6 UNDISCLOSED AND UNACCOUNTED AMOUNT. IT IS TO BE NOT ED THAT THIS PROPOSITION CANNOT BE TREATED AS PROPOSITION O F LAW. THESE ARE ONLY THE INFERENCES WHICH CAN BE DRAWN BA SED UPON THE NORMAL PROBABILITIES. THESE INFERENCES CAN ALSO BE DISPLACED BY ANY MATERIAL ON RECORD WHICH MAY INDIC ATE TO THE CONTRARY. THE BASIC IDEA BEHIND THE PEAK CREDIT THEORY IS TO AVOID DOUBLE ADDITION AND TO BRING ONLY THE ACTU AL INCOME OF THE ASSESSEE TO SUFFER TAX, WHERE THERE ARE A LA RGE NUMBER OF UNEXPLAINED CREDIT AND DEBIT ENTRIES. HOW EVER, THIS THEORY WOULD APPLY ONLY IN THE CASE OF A UNDIS CLOSED BANK ACCOUNT, WHERE DEPOSITS OF CASH ARE FOUND ALON GWITH CASH WITHDRAWALS. THEREFORE, IT IS IMPORTANT TO UND ERSTAND THE FACTS OF EACH CASE BEFORE COMPUTING THE PEAK CR EDITS. THIS METHOD OF COMPUTING PEAK CREDIT IN MY OPINION WOULD NOT BE APPROPRIATE IN CASE OF A UNACCOUNTED MONEY L ENDING BUSINESS WHERE CASH PAYMENTS RECORDED ARE MEANT FOR GIVING FRESH LOANS/ADVANCES. THEREFORE, UNLIKE A BA NK ACCOUNT THE FUTURE CASH RECEIPTS CANNOT BE EXPLAINE D ON ACCOUNT OF EARLIER CASH WITHDRAWALS. 4.9 BASED ON A CAREFUL EXAMINATION OF THE SAME, I F IND THAT AO HAS BEEN REASONABLE & JUST IN ARRIVING AT THE CONCL USION THAT WHILE COMPUTING THE PEAK CREDITS, THE SAME METHODOL OGY AS IS ADOPTED IN THE CASE OF A UNDISCLOSED BANK ACCOUN T WHEREIN CASH DEPOSITS AND WITHDRAWALS HAVE BEEN MAD E CANNOT BE ADOPTED IN THIS CASE. FURTHER, IN THIS CA SE IT HAS BEEN CLEARLY ESTABLISHED BY THE AO THAT THE LOANS A ND ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 7 ADVANCES GIVEN TO VARIOUS PERSONS DURING THE YEAR AMOUNTING TO RS. 1,91,200, WHICH WERE OUTSTANDING A S ON 31-03-2005. THIS BALANCE OUTSTANDING AT THE END OF THE YEAR IS NOTHING BUT REPRESENTS THE PEAK BALANCE OF AN UNACCOUNTED ASSET. THEREFORE, THE QUESTION OF NOT CONSIDERING THE PEAK AMOUNT RAISED BY THE APPELLANT DOES NOT APPEAR TO BE LOGICAL AND RATIONAL. HOWEVER, ON THE GROUND RAISED BY THE APPELLANT REGARDING NOT GIVING CREDIT FOR THE AMOUNT DECLARED, I FIND THAT APPELLANT HAS ALREADY DECLARED AN INCOME OF RS. 1,68,400 IN THE RETURN FI LED IN PURSUANCE TO THE NOTICE ISSUED U/S 153 A OF THE IT ACT AS ADDITIONAL INCOME FOR THE YEAR UNDER CONSIDERATION. THEREFORE, CREDIT NEEDS TO BE GIVEN FOR AN AMOUNT O F RS. 1,68,400/- WHICH HAS ALREADY BEEN DECLARED. ACCORDI NGLY, I CONFIRM ONLY AN ADDITION OF RS. 22,800 MADE BY THE AO ON THIS GROUND. 4. SIMILAR FACTUAL MATRIX IS PRESENT AND IDENTICAL FINDINGS HAVE BEEN GIVEN BY THE LD. CIT(A) IN THE ORDERS OF A.YS. 2006 -07 TO 2010-11 AND THE ASSESSEE IS IN APPEAL BEFORE US IN RESPECT OF ALL T HESE YEARS. 5. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT UND ER THESE GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED THE ACTION O F LD. CIT(A) IN SUSTAINING THE ADDITION MADE BY LD. AO ON ACCOUNT O F UNDISCLOSED DEBTORS WITHOUT APPRECIATING THE FACT THAT DURING T HE YEAR UNDER APPEAL, ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 8 THERE WERE NO UNDISCLOSED DEBTORS. THE ADDITIONS SO SUSTAINED IN EVERY YEAR ARE TABULATED AS UNDER: A.Y. AMOUNT 2005-06 1,91,200.00 2006-07 1,70,625.00 2007-08 3,51,000.00 2008-09 12,30,600.00 2009-10 19,32,445.00 2010-11 6,67,860.00 TOTAL 45,43,730.00 BRIEF FACTS PERTAINING TO THESE GROUNDS OF APPEAL ARE THAT, DURING THE COURSE OF SEARCH AT RESIDENTIAL PREMISES OF SH. DAMODARDAS MODI AT D-32, SUBHASH MARG, C-SCHEME, JAIPUR, WHO IS ENGAGE D IN THE MONEY LENDING BUSINESS CONTAIN LOOSE PAPERS WERE FOUND AN D SEIZED WHICH WERE MARKED AS ANNEXURE AS-1, EXHIBIT 1 TO 3 CONTAININ G SOME TRANSACTIONS OF CREDIT AND DEBIT ENTRIES IN THE NAMES OF VARIOUS PERSONS WHICH THE ASSESSEE ADMITTED AS BELONGING TO HIS MONEY LENDING ACTIVITY. BASED ON THESE ENTRIES ASSESSEE HAS WORKED OUT ADDITIONAL UN DISCLOSED INCOME BY ARRANGING THE ENTRIES OF INCOMING OR OUTGOING FIGUR ES NOTED AND WHEREVER THERE WAS SHORTFALL OF CASH THE SAME WAS TAKEN AS U NEXPLAINED AND ACCORDINGLY RS. 4,07,882/- WAS OFFERED AS ADDITIONA L INCOME IN VARIOUS ASSESSMENT YEARS AS TABULATED ABOVE BASED ON THE EN TRIES FOUND NOTED IN THE SEIZED PAPERS. THE NECESSARY WORKING OF FUND FL OW AS SUBMITTED BY ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 9 ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S IS PLACED IN PAPER BOOK. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LD. AO ASKED THE ASSESSEE TO RECORD THE ENTRIES FOUND NOTED IN THE S EIZED PAPERS OF ALL THE DEBTORS AND CREDITORS AND SUBMIT THE YEAR-WISE CLOS ING BALANCES WHICH ARE SUBMITTED AND FIND PLACE IN THE PAPER BOOK. FR OM THE PERUSAL OF THE RESPECTIVE PAGES, THE HONBLE BENCH WOULD OBSERVE T HAT THESE PAPERS CONTAINED THE CLOSING BALANCES OF BOTH THE DEBTORS AND CREDITORS AND THE FINAL BALANCE OUTSTANDING IN THE SHAPE OF THE CLOSI NG BALANCES (IN ALL THE YEARS IT IS THE DEBIT) I.E. THE UNDISCLOSED FUNDS O F THE ASSESSEE INVOLVED IN MONEY LENDING BUSINESS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. HOWEVER, THE LD. AO DELIBERATELY AND INTENTIONALLY IGNORE THIS WORKING AND PICK THE BALANCES OF DEBTORS OUTSTANDING AT THE YEAR END AND BY MAKING HIS OWN THEORY ON WHIMS AND FANCIES HAS MADE THE ADDITIONS ON YEARLY BASIS BY ALLEGING THAT THE AMOUNTS ARE THE A DDITIONS TO THE UNDISCLOSED DEBTORS MADE BY THE ASSESSEE FOR RESPEC TIVE ASSESSMENT YEARS. WHILE DOING SO, HE HAS ALSO MADE A SERIOUS E RROR OF FACT THAT THE CREDIT OF THE OPENING BALANCE WAS GIVEN TO THE CLOS ING BALANCE BY IGNORING THE CLOSING BALANCE TAKEN IN PRECEDING ASS ESSMENT YEAR. ALL THIS ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 10 HAS BEEN TABULATED AND EXPLAINED BEFORE THE LD. CIT (A) WHO ALSO FAILED TO APPRECIATE THE SAME BEFORE CONFIRMING THE ADDITI ONS. THE PRECISE WORKING OF THE SAME AS SUBMITTED BEFOR E THE LD. CIT(A) IN THE WRITTEN SUBMISSIONS MADE IN ALL THE A SSESSMENT YEARS IS AS UNDER: A.Y. AS PER ASSESSING OFFICER AS PER BOOKS OF ACCOUNTS BALANCE AS ON 1ST DAY OF THE YEAR BALANCE AS ON LAST DAY OF THE YEAR BALANCE AS ON 1ST DAY OF THE YEAR BALANCE AS ON LAST DAY OF THE YEAR 2005 - 06 - 1,91,200.00 - 21,200.00 2006 - 07 1,91,200.00 3,61,825.00 21,200.00 36,425.00 2007 - 08 2,95,825.00 6,46,825.00 36,425.00 32,925.00 2008 - 09 5,51,825.00 17,82,425.00 32,925.00 97,875.00 2009 - 10 10,56,7 75.00 29,89,220.00 97,875.00 95,065.00 2010 - 11 27,31,620.00 33,99,480.00 95,065.00 79,680.00 FROM THE PERUSAL OF THE TABLE ABOVE, IT IS EVIDENT THAT LD. AO HAS ADOPTED PICK AND CHOOSE METHOD AS PER HIS SWEET WILL EVEN W ITHOUT TAKING THE PAIN OF CONSIDERING THE AMOUNT OF CLOSING BALANCE W HICH HAS BEEN MADE BASIS FOR MAKING ADDITION IN IMMEDIATELY PRECEDING ASSESSMENT YEAR. IT CAN BE SEEN THAT THE LD. AO HAS DENIED THE BENE FIT OF PEAK CREDIT THEORY TO ASSESSEE MERELY BY DISTINGUISHING THE CASE WHERE TRANSACTIONS ARE RELATED TO CASH CREDITORS/DEBTORS WITH THE CASE WHERE THE TRANSACTIONS OCCUR IN THE BANK ACCOUNT OF AN ASSESS EE AND HAS HELD THAT THE PEAK CREDIT THEORY CAN BE APPLIED ONLY IN THE L ATTER CASE AND NOT THE ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 11 PRIOR ONE. THE SAID OBSERVATION OF THE LD. AO HAS B EEN UPHELD BY THE LD. CIT(A) IN A MECHANICAL MANNER AND WITHOUT APPLICATI ON OF MIND TO THE SUBMISSIONS MADE BEFORE HIM. THE LD. CIT(A) HAS HEL D THAT THE PEAK CREDIT THEORY IS NOT A PROPOSITION OF LAW BUT IS ON LY AN INFERENCE DRAWN ON PROBABILITIES AND THEREFORE, THE PEAK CREDIT THEORY NEED NOT BE FOLLOWED. IN THIS REGARD IT IS SUBMITTED THAT THE PURPOSE OF PEAK CREDIT THEORY HAS BEEN COMPLETELY IGNORED BY THE LD. CIT(A), WHICH IS TO AVOID DOUBLE TAXATION OF THE SAME INCOME, INASMUCH AS THE SAME G OES BEYOND THE CHARGING SECTION OF THE ACT ITSELF. THEREFORE, BEFO RE ARRIVING AT THE TAXABLE INCOME, NECESSARY ADJUSTMENTS HAVE TO BE MADE SO AS TO ARRIVE AT THE CORRECT TAXABLE INCOME AND TO AVOID CONSIDERING SAM E INCOME TWICE FOR TAXATION. FURTHER, THE APPLICATION OF PEAK CREDIT T HEORY HAS BEEN UPHELD IN VARIOUS JUDICIAL PRONOUNCEMENTS. ACCORDINGLY THE AS SESSEE HAS PREPARED THE CASH FLOW STATEMENT OF THE DEBTORS AND CREDITOR S AND OFFERED THE MAXIMUM PEAK AMOUNT IN A PARTICULAR YEAR. IT IS WELL ESTABLISHED LAW IN THIS REGARD THAT WHE RE THE DEBIT AND CREDIT BOTH ARE UNEXPLAINED THE CREDIT AND DEBIT EN TRIES HAVE TO BE SET OFF AGAINST EACH OTHER TO THE EXTENT POSSIBLE AND ONLY THE PEAK OF CREDIT (NEGATIVE OR POSITIVE) CAN BE CONSIDERED AS UNDISCL OSED. PEAK CREDIT IS APPLICABLE WHERE COMPLETE RECORDS OF UNACCOUNTED TR ANSACTION WAS NOT ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 12 FOUND AND IT IS NOT POSSIBLE TO WORK OUT THE EXACT QUANTUM OF UNDISCLOSED INCOME. THUS, IF THE LD. AO ALLEGES THAT THE BENEFI T OF PEAK CREDIT THEORY CANNOT BE ALLOWED TO ASSESSEE, THEN HE HAD THE BURD EN TO PROVE THAT THE INFLOW OF CASH THROUGH VARIOUS CREDIT ENTRIES WAS A PPLIED ELSEWHERE AND WAS NOT UTILIZED FOR THE PURPOSE OF RE-INTRODUCTION . HOWEVER, THE LD. AO WITHOUT DISCHARGING THE ONUS LYING UPON HIM, HAS CR YPTICALLY OBSERVED THAT THE PEAK CREDIT THEORY CANNOT BE APPLIED TO TH E CASE OF ASSESSEE BY DRAWING A HYPOTHETICAL AND IMAGINATIVE DISTINCTION BETWEEN THE CASES OF CASH DEPOSIT / WITHDRAWAL IN BANK ACCOUNT AND THE C ASES OF ENTRIES OF CASH ADVANCES AND RECEIPT BACK, WHICH ACTION OF LD. AO IS COMPLETELY BASELESS, AGAINST LAW AND THUS DESERVES TO BE STRUC K DOWN. FURTHER, THE LD. AO HAS OBSERVED THAT THE IDENTITY OF THE CREDITORS IS NOT PROVED AND THAT, THE AMOUNT RECEIVED IN CASH FROM CREDITORS REMAINED UNVERIFIED AND UNEXPLAINED AS THE ASSESSEE HAS FAILED TO DISCLOSE NAMES, ADDRESS AND OTHER IDENTITY AND HAVI NG OBSERVED SO, HE HELD THE ENTIRE AMOUNT OF NET OUTSTANDING BALANCE O F DEBTORS AT THE YEAR END AS UNDISCLOSED INVESTMENT OF THE ASSESSEE WITHO UT GIVING CREDIT FOR THE CREDIT BALANCE AVAILABLE WITH ASSESSEE. IN THIS REGARD, IT IS SUBMITTED THAT THE LD. AO HAS CLEARLY TAKEN A DOUBLE STAND IN AS MUCH AS HE HAS ACCEPTED THE DEBTORS FOUND MENTIONED ON THE SEIZED PAPERS AS EXISTING ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 13 AND MADE OUT OF UNDISCLOSED INCOME OF ASSESSEE WHIL E ON THE OTHER HAND HE DOES NOT ACCEPT THE CREDITORS FOUND MENTIONED ON THE SAME PAPERS CLAIMED AS SOURCE BY ASSESSEE BEING WORKING AS MONE Y LENDER, MEANING THEREBY THAT THE LD. AO HAS CAPRICIOUSLY AND WITHOU T ANY BASIS ACCEPTED ONLY PART OF THE ENTRIES APPEARING ON THE SEIZED PA PERS WHICH SHOWED INVESTMENT IN DEBTORS AND ALLOWED HIM TO MAKE ILLEG ITIMATE ADDITIONS; AND HE HAS REJECTED THE OTHER PART OF THE ENTRIES A PPEARING ON THE SAME PAPERS WHICH CONSTITUTED SOURCE OF FUNDS FOR ASSESS EE. IN THIS REGARD, IT IS HUMBLY SUBMITTED THAT THE LD. AO HAS COMMITTED A GR OSS ERROR IN RELYING UPON THE SEIZED DOCUMENTS PARTIALLY, ACCEPTING ONLY THE DEBIT ENTRIES AND IGNORING THE CREDIT ENTRIES WITHOUT ANY BASIS IN VI EW OF THE WELL ESTABLISHED LAW THAT A SEIZED DOCUMENT HAS TO BE RE AD AS A WHOLE AND CANNOT BE BROKE INTO PARTS AS PER THE CONVENIENCE O R SWEET WILL OF THE ASSESSING OFFICER. IN THIS REGARD, RELIANCE IS PLAC ED ON THE FOLLOWING CASE LAWS: GLASS LINES EQUIPMENTS CO. LTD. V/S CIT 253 ITR 454 (GUJ.): INTERPRETATION OF DOCUMENTS - DOCUMENTS MUST BE REA D AS A WHOLE. IT IS A WELL SETTLED CANON OF INTERPRETATION THAT A DOCUM ENT HAS TO BE READ AS A WHOLE' IT IS NOT PERMISSIBLE TO ACCEPT A PART AND I GNORE THE REST OF THE DOCUMENT. ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 14 22 TW 684 HISSARIA BROTHERS V/S ACIT (JPR.): HELD THAT THE SEIZED DOCUMENT HAS TO BE READ IN ITS ENTIRETY AND THE PARTIES ARE NOT ALLOWED TO READ ONLY THAT PART WHIC H IS SUITABLE TO IT. 21 TAX WORLD 213 LAL CHAND AGARWAL V/S ACIT: IN NO CASE AO CAN BE ALLOWED TO CONSIDER A PART OF A PARTICULAR DOCUMENT AS TRUE BEING FAVOURABLE REVENUE AND OTHER PART OF THE VERY DOCUMENT AS FALSE SINCE THAT IS FAVOURABLE TO ASSESSEE - DUALI TY OF THE APPROACH OF AO IS NOT FAIR - THUS, IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT WH EN ON THE SEIZED PAPERS DEBTORS AS WELL AS CREDITORS BOTH WERE APPEA RING, THERE WAS NO JUSTIFICATION FOR THE AO TO ACCEPT ONLY THE DEBTORS AS GENUINE AND HOLDING THE CREDITORS AS NON-GENUINE, MORE PARTICULARLY WHE N THE DEBIT / CREDIT ENTRIES BOTH WERE BORNE OUT OF THE SEIZED PAPERS AN D NOT AS OUT OF THE DETAILS SUBMITTED BY ASSESSEE DURING ASSESSMENT PRO CEEDINGS. THUS, THE CREDIT ENTRIES COULD NOT HAVE BEEN DOUBTED IN ANY M ANNER AND THE CLOSING BALANCE OF ADVANCES AS REDUCED BY CREDITS RECEIVED DESERVES TO BE CONSIDERED FOR COMPUTING ADDITIONAL INCOME. FURTHER FROM THE PERUSAL OF TABLE AT PAGE 3 OF THI S WRITTEN SUBMISSION, THE HONBLE BENCH WOULD OBSERVE THAT IN CREASE IN THE VALUE OF CLOSING BALANCE OF ADVANCES (NET OF CREDITS) IS MUCH LOWER THAN BY THE AMOUNT OF ADDITIONAL UNDISCLOSED INVESTMENT IN DEBT ORS DECLARED BY ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 15 ASSESSEE IN THE RETURN OF INCOME, THUS NO SEPARATE ADDITION WAS CALLED FOR IN THIS REGARD. IN THE CIRCUMSTANCES IT IS SUBMITTED THAT COMPUTAT ION OF UNDISCLOSED INCOME BY FOLLOWING THE PEAK CREDIT THE ORY IS RECOGNIZED AND ACCEPTED METHOD WHERE PRECISE AND ACCURATE INFORMAT ION ARE NOT AVAILABLE AND ACCORDINGLY THE ADDITIONAL INCOME DEC LARED BY ASSESSEE DESERVES TO BE ACCEPTED AND THE ADDITIONS MADE IN V ARIOUS ASSESSMENT YEARS DESERVES TO BE DELETED. WITHOUT PREJUDICE TO ABOVE AND IN THE ALTERNATIVE IT IS SUBMITTED THAT WHILE COMPUTING THE ADDITIONAL UNDISCLOSED INC OME FOR RESPECTIVE ASSESSMENT YEARS ASSESSEE HAS CONSIDERED THE POSITI VE PEAK ONLY AND IGNORED THE NEGATIVE PEAK WHICH AT THE MOST COULD B E THE ADDITIONAL UNDISCLOSED FUNDS UTILIZED FOR MAKING FURTHER ADVAN CES. THE SAME HAS NOT BEEN OFFERED IN THE RETURN OF INCOME FILED FOR THE SOLE REASON THAT CERTAIN TRANSACTION RECORDED DO NOT CONTAIN ANY DATE AND TH EREFORE HAS TO BE CONSIDERED FOR PERTAINING TO YEAR OF SEARCH. THEREF ORE IF AT ALL ANY ADDITION IS TO BE MADE, THE SAME COULD NOT BE EXCEE DED BY THE AMOUNT OF NEGATIVE PEAK ON YEAR TO YEAR BASIS WHICH IS TAB ULATED AS UNDER: A.Y. NEGATIVE CUMULATIVE YEAR-WISE 2005-06 21,200.00 21,200.00 2006-07 36,425.00 15,225.00 ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 16 2007-08 58,425.00 22,000.00 2008-09 4,37,775.00 3,79,350.00 2009-10 88,624.00 - 2010-11 1,64,273.00 - 4,37,775.00 IN THE CIRCUMSTANCES IT IS SUBMITTED THAT IN THE E VENT THE HONBLE BENCH HAS PROCEEDED TO CONFIRM THE ADDITIONS BASED ON THE POSITIVE AND NEGATIVE PEAKS, THE ADDITION THAT COULD HAVE BEEN M ADE SHOULD BE RESTRICTED TO RS. 4,37,775/- FOR VARIOUS ASSESSMENT YEARS AS PER THE TABLE GIVEN HEREIN ABOVE. 6. AT THE OUTSET, THE LD. CIT DR HAS VEHEMENTLY SUP PORTED THE ORDER OF THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MONEY LENDIN G. IT IS ALSO NOT IN DISPUTE THAT THE ENTRIES/TRANSACTIONS IN EX.1 - 3 O F ANNEXURE AS-1 OF THE SEIZED DOCUMENTS FOUND DURING THE COURSE OF SEARCH PERTAINS TO MONEY LENDING TRANSACTIONS OF THE APPELLANT AND WHICH WER E NOT DISCLOSED EARLIER IN THE BOOKS OF ACCOUNTS AND OFFERED TO TAX. THESE ENTRIES/TRANSACTIONS RELATES TO MONEY ADVANCED TO VARIOUS PERSONS BY T HE ASSESSEE AND THE AMOUNT RETURNED BACK BY THE SAID BORROWERS OR AMOUN T BORROWED BY THE ASSESSEE FOR FURTHER LENDING TO ITS BORROWERS. THE SE SEIZED DOCUMENTS ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 17 CONTAIN THE NAME OF VARIOUS DEBTORS AND CREDITORS T O WHOM THE MONEY HAS BEEN ADVANCED AND TAKEN ON CREDIT BY THE ASSESS EE. THE ASSESSEE HAS PREPARED A CASH FLOW STATEMENT CONSIDERING THE ENTRIES RELATING TO THE DEBTORS AND CREDITORS AND OFFERED THE MAXIMUM P EAK AMOUNT AS WORKED OUT FOR RESPECTIVE YEARS IN ITS RETURN OF IN COME FILED SUBSEQUENT TO ISSUANCE OF NOTICE U/S 153A OF THE ACT. THE AO HAS CONSIDERED THE ENTIRE AMOUNT OF OUTSTANDING DEBTORS AT THE YEAR-EN D AS ASSESSEES UNDISCLOSED INVESTMENT IN THE FORM OF DEBTORS. THE AO HAS NOT GIVEN CREDIT FOR ENTRIES PERTAINING TO THE CREDITORS AND ALSO DISREGARDED THE PEAK AMOUNT OFFERED TO TAX BY THE ASSESSEE FOR THE RESPECTIVE ASSESSMENT YEARS. THE REASON FOR NOT GIVING APPROPR IATE CREDIT FOR THE ENTRIES RELATING TO THE CREDITORS AS STATED BY THE AO WAS THAT THE ASSESSEE HAS NOT PROVED THE IDENTITY OF THE CREDITO RS. THE AO THEREFORE ACCEPTED THE DEBTORS DETAILS AS MENTIONED IN THE SE IZED DOCUMENTS BUT AT THE SAME TIME, HAS NOT ACCEPTED THE CREDITORS DETAI LS ALSO FOUND MENTIONED IN THE SAME SET OF SEIZED DOCUMENTS. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GLASS LINES EQUIPMENT CO. LTD. VS. CIT (253 ITR 454) HAS HELD THAT IT IS A WELL SETTLED CANON OF INTERPRETATION OF DOCUMENTS THAT A DOCUMENT HAS TO BE READ AS A WHOL E AND IT IS NOT PERMISSIBLE TO ACCEPT A PART AND IGNORE THE REST OF THE DOCUMENT. IN ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 18 LIGHT OF THE SAME, IN THE INSTANT CASE, WE ARE OF T HE VIEW THAT THE AO WAS NOT CORRECT IN ACCEPTING ONLY THE DEBIT ENTRIES IN RESPECT OF THE DEBTORS AND IGNORING THE CREDIT ENTRIES IN RESPECT OF THE C REDITORS FOUND RECORDED IN THE SAME SET OF SEIZED DOCUMENTS ESPECIALLY WHEN THE PARTICULARS OF BOTH THE DEBTORS AS WELL AS CREDITORS ARE CLEARLY V ISIBLE ALONG WITH DATE AND AMOUNT IN THE SAID SEIZED DOCUMENTS. IN RESPEC T OF APPLICABILITY OF PEAK THEORY, IT IS NOTED THAT THERE IS NOTHING ON R ECORD WHICH CAN HELP DETERMINE THE REAL INCOME WHICH HAS ACCRUED TO THE ASSESSEE IN RESPECT OF HIS MONEY LENDING BUSINESS IN TERMS OF AGREEMENT S, CONTRACTS ETC. WITH THE BORROWERS AND LENDERS WHICH CAN THROW LIGHT ON THE RATE OF INTEREST CHARGED /PAID BY THE ASSESSEE, DURATION OF LOANS /A DVANCES, REPAYMENT, ETC. IN SUCH CIRCUMSTANCES, APPLICATION OF THE PEAK CREDIT THEORY IS THE MOST REASONABLE AND APPROPRIATE BASIS FOR DETERMINI NG THE REAL INCOME IN THE HANDS OF THE ASSESSEE. FROM PERUSAL OF THE VARI OUS ENTRIES FOUND RECORDED IN THE SEIZED DOCUMENTS AND THE CASH FLOW STATEMENTS PREPARED BY THE ASSESSEE, IT IS OBSERVED THAT IN TERMS OF AM OUNT ADVANCED TO VARIOUS DEBTORS, REPAYMENT THEREOF TO THE ASSESSEE, AMOUNT RECEIVED FROM THE CREDITORS AND ITS REPAYMENT BY THE ASSESSE E, THE ASSESSEE HAS TRIED TO ESTABLISH THE NECESSARY LINKAGE IN TERMS O F OUTFLOW AND INFLOW OF FUNDS. IT IS ALSO NOT THE CASE OF THE REVENUE THAT INFLOW OF FUNDS THROUGH ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 19 VARIOUS CREDIT ENTRIES WAS APPLIED ELSEWHERE BY THE ASSESSEE OTHER THAN HIS MONEY LENDING BUSINESS. ALSO, WHERE NECESSARY L INKAGE IN TERMS OF INFLOW AND OUTFLOW OF FUNDS ARE ESTABLISHED, IT IS IMMATERIAL WHETHER THESE TRANSACTIONS ARE HAPPENING IN PHYSICAL FORM O R ROUTED THROUGH THE BANKING CHANNEL. ACCORDINGLY, WE DO NOT SEE ANY IN FIRMITY IN APPLYING THE PEAK CREDIT THEORY IN THE FACTS OF THE PRESENT CASE . IN LIGHT OF THIS DISCUSSION, WE SET ASIDE THE MATTER TO THE FILE OF THE AO TO APPLY THE PEAK CREDIT THEORY AFTER TAKING INTO CONSIDERATION BOTH THE DEBTORS AND CREDITORS ENTRIES FOUND RECORDED IN THE SEIZED DOCU MENTS. SIMILARLY, GIVEN THAT FOR ALL THESE YEARS, THE FACTS ARE PARI-MATERI A, OUR ABOVE FINDINGS AND DIRECTIONS SHALL APPLY EQUALLY IN RESPECT OF REST A LL YEARS UNDER CONSIDERATION. THE GROUNDS OF APPEAL NO. 1 AND 1.1 FOR ALL THESE YEARS ARE THUS, ALLOWED FOR STATISTICAL PURPOSES. 8. THE 2 ND GROUND OF THE ASSESSEES APPEAL FOR THE A.Y. 2005- 06 IS AGAINST SUSTAINING THE ADDITION OF RS. 50,000/- ON ACCOUNT OF UNDISCLOSED/UNEXPLAINED HOUSE HOLD EXPENSES. THE AS SESSING OFFICER HAS OBSERVED THAT PAGE NOS.10,11,25,26,27,37,39,41,43,4 5,47,48,50,51, 53,55,57,59,61,63 OF EXHIBIT -1 OF ANNEXURE AS1 ALS O BELONGS TO HIM AND THESE PAPERS ARE RELATED WITH THE NORMAL HOUSE HOLD EXPENDITURE INCURRED BY HIM MONTH WISE. THE MONTH WISE TOTAL OF THE ABOV E TRANSACTION IS ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 20 GIVEN BELOW. PAGE NO 63 OUT OF THE ABOVE PAGES SHOW ING HOUSE HOLD EXPENSES OF JUNE-2009 IS SCANNED FOR CLARITY OF FAC TS. THE PAGE GIVES CLEAR ENTRIES OF MONTHLY EXPENDITURE AND SOURCE OF EXPENDITURE RELEVANT TO VARIOUS MONTHS OF FEB 2008 TO JUNE 2009. FOR FY 2008-09, TOTAL EXPENDITURE ACCORDING TO THIS ANNEXURE AS-1 EX 1 IS OF RS 191099. HOUSE HOLD DRAWINGS OF THE ASSESSEE ARE THEREFORE ESTIMAT ED ON THE BASIS OF THIS ANNEXURE AT RS 2 LACS IN AY 2009-10. ASSESSEE S FAMILY CONSISTED SIX MEMBERS INCLUDING TWO SCHOOL GOING CHILDREN AND THI S ESTIMATION IS QUITE REASONABLE AND SUPPORTED WITH THE ENTRIES IN SEIZED PAPERS. HE FURTHER OBSERVED THAT NO SUCH DETAILS ARE, HOWEVER, AVAILAB LE FOR THE YEAR UNDER CONSIDERATION. NO / BALANCE SHEET IS DRAWN/FURNISHE D NOR ANY CAPITAL ACCOUNT IS FURNISHED CLAIMING THAT / SUCH ACCOUNTS ARE NOT MAINTAINED BY THE ASSESSEE. TAKING HELP OF UNDISCLOSED HOUSE HOLD EXPENDITURE IN AY 2009-10 AT RS. 2 LACS, EXPENDITURE FOR THE YEAR UND ER CONSIDERATION IS ESTIMATED AT RS.50000 OVER AND ABOVE THE INCOME DIS CLOSED. ADDITION OF RS 50,000/- IS ACCORDINGLY MADE ON THIS COUNT. 9. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WHO HAD D ISMISSED THE APPEAL OF THE ASSESSEE ON THIS GROUND BY OBSERVING AS UNDER:- ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 21 5.3 I HAVE PERUSED THE ASSESSMENT ORDER AS WELL AS SUBMISSIONS MADE BY THE APPELLANT AND FIND THAT AN ADDITION OF RS. 50,000/- HAS BEEN MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED HOUSEHOLD EXPENSES. DURING T HE COURSE OF SEARCH CERTAIN INCRIMINATING DOCUMENTS WE RE FOUND PERTAINING TO THE HOUSEHOLD EXPENSES AND BASE D ON THAT EVIDENCE, A.O. HAS MADE THE ADDITION OF RS. 50 ,000/- ON ACCOUNT OF HOUSEHOLD EXPENSES. THE APPELLANT HAS STATED THAT AN AMOUNT OF RS. 1,30,000/-, WHICH IS T HE SALARY RECEIVED HAS BEEN USED FOR MEETING HOUSEHOLD EXPENS ES. CONSIDERING THE FACT THAT THE FAMILY CONSISTS OF HI S PARENTS, WIFE AND TWO CHILDREN, THE HOUSEHOLD EXPENSES HAVE BEEN REASONABLE ESTIMATED BY THE A.O. THEREFORE, ADDITIO N OF RS. 50,000/- MADE BY THE A.O. ON THIS ACCOUNT IS CONFIR MED. 10. NOW THE ASSESSEE IS IN APPEALS BEFORE US. THE L D AR OF THE ASSESSEE HAS SUBMITTED THAT THESE GROUNDS OF APPEAL RELATE TO THE ADDITION MADE BY LD. AO ON ACCOUNT OF UNDISCLOSED H OUSEHOLD EXPENSES ON ESTIMATE BASIS AS TABULATED BELOW: A.Y. AMOUNT 2005-06 50,000.00 2006 - 07 75,000.00 2007-08 1,00,000.00 2008-09 1,25,000.00 2009-10 2,00,000.00 2010-11 2,50,000.00 TOTAL 8,00,000.00 ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 22 BRIEF FACTS PERTAINING TO THESE GROUNDS OF APPEAL A RE THAT, DURING THE COURSE OF SEARCH CERTAIN PAPERS WERE SEIZED WHICH W ERE ALLEGED TO CONTAIN DETAILS OF NORMAL HOUSE HOLD EXPENDITURE IN CURRED BY ASSESSEE IN THE YEAR UNDER APPEAL, AS REPRODUCED AT PAGE 9 OF T HE ASSESSMENT ORDER, AND TOTAL EXPENDITURE RECORDED ON THE SAID PAGES WA S OF RS. 1,91,099/-, NONE OF WHICH RELATED TO THE YEAR UNDER APPEAL. THE LD. AO AFTER REFERRING TO THE SEIZED PAPERS ESTIMATED THE HOUSE HOLD EXPENDITURE FOR VARIOUS ASSESSMENT YEARS AND NO CREDIT WAS GIVEN TO THE DECLARED EXPENDITURE MADE THE ADDITION OF THE ENTIRE AMOUNT. IN THIS REGARD IT IS SUBMITTED THAT ASSESSEES FAM ILY CONSISTS OF HIMSELF, HIS WIFE, TWO CHILDREN AND PARENTS. ASSESS EES FATHER IS A RETIRED GOVERNMENT EMPLOYEE AND HAVING PENSION INCOME WHICH WAS UTILIZED FOR HOUSEHOLD PURPOSE. BESIDES, ASSESSEES MOTHER IS AL SO ASSESSED TO TAX AND HAVING MADE WITHDRAWAL. ASSESSEE HAS RECEIVED S ALARY WHICH WAS FULLY UTILIZED IN HOUSEHOLD EXPENSES WHICH FACT COU LD NOT BE IGNORED. THE DRAWINGS AS CLAIMED LOOKING TO THE FACT THAT ASSESS EES FAMILY IS PURE VEGETARIAN AND TEETOTALER AND LIVING IN THE SELF-OW NED HOUSE, ARE MOST REASONABLE AND SUFFICIENT TO MEET OUT DAY TO DAY FA MILY NEEDS. ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 23 THEREFORE, IN LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LIGHT OF THE SUBMISSIONS MADE ABOVE, IT IS HUMBL Y PRAYED THAT THE ADDITIONS MADE IN VARIOUS ASSESSMENT YEARS TOWARDS THE HOUSEHOLD EXPENSES AND SUSTAINED BY THE LD. CIT(A) ON ASSUMPT IONS AND PRESUMPTIONS DESERVES TO BE DELETED. 11. AT THE OUTSET, THE LD. CIT DR HAS VEHEMENTLY SU PPORTED THE ORDER OF THE ASSESSING OFFICER. 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. FIRS TLY, IT IS NOTED THAT AS PER DOCUMENTS SEIZED DURING THE SEARCH REFERRED AS EXHIBIT 1 OF ANNEXURE AS1 BELONGING TO THE APPELLANT, HOUSEHOLD EXPENDITURE OF RS 191,099 WAS INCURRED DURING THE FINANCIAL YEAR 2 008-09. BASED ON THE SAID SEIZED DOCUMENTS, THE AO ESTIMATED RS 2 LACS A S UNDISCLOSED HOUSEHOLD EXPENDITURE FOR AY 2009-10 AND FOR OTHER YEARS, AN ESTIMATION WAS MADE BY AO RANGING FROM RS 50,000 FOR AY 2005-0 6 TO RS 2,50,000 FOR AY 2010-11. THEREFORE, IT IS CLEAR THAT EXCEPT FOR AY 2009-10 IN RESPECT OF WHICH DOCUMENTS WERE FOUND DURING THE CO URSE OF SEARCH, NO DOCUMENTS ARE FOUND IN RESPECT OF ANY OF THE OTHER YEARS AND THE AO HAS ONLY MADE AN ESTIMATION WITHOUT ANY UNDERLYING DOCU MENTS. THE BASIS OF ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 24 ESTIMATION WHICH RANGES FROM RS 50,000 TO RS 2,50,0 00 IS ALSO NOT CLEAR FROM THE RECORDS. 13. FURTHER, THE ASSESSEE HAS CONTENDED THAT THE HO USEHOLD EXPENDITURE HAS BEEN INCURRED OUT OF HIS SALARY WIT HDRAWALS. THOUGH BOTH AO AND LD CIT(A) HAS TAKEN COGNIZANCE OF THE S AID CONTENTIONS OF THE ASSESSEE, HOWEVER NO CREDIT/SETOFF HAS BEEN GIV EN. AS AGAINST THE TOTAL ADDITION OF RS 8,00,000 MADE BY THE AO TOWARD S UNDISCLOSED HOUSEHOLD EXPENDITURE, THE ASSESSEE HAS REPORTED IN HIS RETURN OF INCOME, AN AMOUNT OF RS 8,92,000 AS SALARY INCOME FOR ALL THE RESPECTIVE YEARS TAKEN TOGETHER, BESIDES INCOME FROM OTHER SOU RCES. WE THEREFORE FIND FORCE IN THE SAID CONTENTION OF THE LD AR AND ARE OF THE VIEW THAT NECESSARY CREDIT SHOULD BE AVAILABLE IN RESPECT OF SALARY INCOME ALREADY OFFERED TO TAX AND NO ADDITION IS THUS CALLED FOR I N RESPECT OF UNDISCLOSED HOUSEHOLD EXPENDITURE. THE ENTIRE ADDITION IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF UNDISCLOSED HOUSEHOLD EXPENDITURE FOR AY 2005-06 AND ALL SUBSEQUENT YEARS UNDER APPEAL ARE HEREBY DELETED. GROUND NO. 2 AND 2.1 FOR ALL THE YEARS UNDER APPEAL ARE THUS ALLOWED . IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE FO R ALL THE YEARS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA 721 TO 726/JP/2014 OM PRAKASH AGARWAL VS ACIT 25 ORDER PRONOUNCED IN THE OPEN COURT ON 24/11/20 16 SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24TH NOVEMBER, 2016 * RANJAN VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI OM PRAKASH AGARWAL, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CENTRAL CIRCLE-1, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 721 TO 726/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR