MANOJ KUMAR GUPTA V. PRINCIPAL COMMISSIONER OF INCOME TAX, AGRA AND ANOTHER

IAPL/137/2018

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The case involves Manoj Kumar Gupta, the appellant, contesting an income tax assessment order which added a significant amount to his income based on peak credits in his bank accounts. The Assessing Officer had estimated these peak credits as income from undeclared sources, which was upheld by the Appellate Tribunal. The main legal question was whether the Appellate Tribunal was justified in upholding this estimation without rejecting the books of accounts. The Tribunal found that the appellant failed to provide satisfactory evidence to explain the nature and source of the credited sums, thus confirming the lower authorities' decision.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 753845 (HC-AGRA)
• Appeal Type: Others
• Pronouncement Date: 13-01-2020
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: MANU GHILDYAL
• Assessee Lawyers: SUYASH AGARWAL
• Keywords: Assessment Order; Books of Accounts; Estimation; Income Tax; Peak credit; Undeclared Sources
• Section: 271(1)(c); 234B; 234A; 234C

Judgement Text

"(1) Court No. - 7 Case :- INCOME TAX APPEAL No. - 137 of 2018 Appellant :- Manoj Kumar Gupta Respondent :- Principal Commissioner Of Income Tax, Agra And Another Counsel for Appellant :- Suyash Agarwal Counsel for Respondent :-Manu Ghildyal Hon'ble Biswanath Somadder,J. Hon'ble Ajay Bhanot,J. This appeal was admitted on the substantial question of law as framed in the memorandum of appeal, which reads as follows:- (i) \"Whether the Appellate Tribunal was legally justified in upholding estimation of peak credit made by A.O. without rejecting books of accounts?\" In the facts of the instant case, we notice that an assessment order was passed on 21th December, 2009, relevant portion whereof is reproduced hereinbelow along with its english translation :- “bl laca/k esa fu/kkZfjrh dks fnukad 25&11&2009 ,oa 30&11&2009 dks dkj.k crkvks uksfVl tkjh fd;s x;sA buesa mDr jkf’k ds L=ksr crkus ds lkFk & lkFk fu/kkZfjrh ls ;g Hkh vis{kk dh x;h fd og ;g Hkh Li\"V djs fd dj fu/kkZj.k dk;Zokgh ds nkSjku mlus vius tks cSysal 'khV nkf[ky dh gS mlesa vkyksP; o\"kZ dh ,UVªht ds vkykok dksVd egsUnzk cSad dk tks cSysal fn[kk;k x;k gS og cSysal fnukad 13&02&2009 dk cSysal gS fd fnukad 31&03&2007 dkA bl laca/k esa fu/kkZfjrh us viuk tcko fnukad 08&12&2009 esa crk;k gS fd dEI;wVj esa ok;jl vkus ls dj fu/kkZj.k o\"kZ 2007&08 esa dksVd egsUnzk cSad ds [kkrs dh ,oa dqN vU; izfof\"V;ka xyr gks x;h FkhA fu/kkZfjrh dk ;g dFku Lohdkj djus ;ksX; ugha gS fd ok;jl ds dkj.k dksVd egsUnzk cSad okys [kkrs dh ,UVªh vkyksP; o\"kZ esa ds [kkrksa esa vk x;haA tcfd okLrfodrk ;g gS fd pwafd fu/kkZfjrh igys dksbZ [kkrs j[krk gh ugha Fkk fdUrq dj fu/kkZj.k dk;Zokgh ds nkSjku ekaxs tkus ij mlus lHkh [kkrs tYnh&tYnh esa rS;kj fd;s gSa vkSj (2) xyrh dj x;kA lHkh [kkrs mlus QSczhdsV fd;s gq, gSaA mlus tks dz; fodz; bu [kkrksa esa fn[kk;s gSa mudks og lR;kfir ugha djk ik jgk gSA mijksDr ls Li\"V gS fd fu/kkZfjrh :i;ksa dks xSj dkuwuh :i ls cSafdax pSuy dk nq:i;ksx djrs gq, VªkalQj djrk gSA vkSj og ckj&ckj volj fn;s tkus ij Hkh vius cSad [kkrksa esa tek jkf’k;ksa ds ihd dzsfMV dks Li\"V djus esa vleFkZ jgk gSA blfy, mlds }kjk bl dj fu/kkZj.k vkns’k esa Åij of.kZr cSad [kkrksa esa tek ihd dzsfMV :i;s 11]43]443@& dks fu/kkZfjrh }kjk vius v?kksf\"kr L=ksrksa ls tek fd;k x;k ekuk tkrk gS vkSj mldh vkyksP; o\"kZ dh vk; ekuk tkrk gSA pwafd fu/kkZfjrh us bl dj fu/kkZj.k o\"kZ esa :i;s 2]17]635@& dh ldy vk; viuh vk;dj fooj.kh esa fn[kk;h gqbZ gS blfy, 'ks\"k jkf’k :i;s 9]25]808@& dks fu/kkZfjrh dh vk; esa tksM+k tkrk gSA ,Mh’ku :i;s 9]25]808@& mijksDrkuqlkj fu/kkZfjrh dk dj fu/kkZj.k :i;s 11]43]443@& vk; ij fd;k tkrk gSA ekax i= ,oa pkyku tkjh djsa rFkk /kkjk 234A, 234B ,oa 234C ds rgr fu;ekuqlkj C;kt vyx ls pktZ djsaA lkFk gh vk;dj vf/kfu;e dh /kkjk 271 (1) (c) ds v/khu isukYVh uksfVl Hkh tkjh djsa D;ksafd fu/kkZfjrh us viuh vk; dks Nqik;k gS vkSj mlds laca/k esa xyr fooj.k@lk{;ksa dks nkf[ky fd;k gSA fnukad% 21-12-2009 ts- ih- frokjh vk;dj vf/kdkjh] 4 (2) vkxjkA “In this regard, show cause notices were issued to assessee on 25-11-2009 and 30-11-2009. It is expected from the assessee in these notices that, in addition to the disclosure of the source of aforesaid amount, he clarifies in his balance sheet filed during tax assessment proceedings as to whether the balance shown in Kotak Mahendra Bank apart from entries of the year in question is balance on 13-2-2009 or on 31-03-2007. In this regard, assessee has disclosed in his reply dated 08- 12-2009 that entry of the account in Kotak Mahindra Bank and (3) some other entries were rendered wrong in tax assessment year 2007-08 due to computer virus. This statement of the assessee is not admissible that because of virus, the entry of the account of Kotak Mahindra Bank could not be posted in the accounts of the year in question. Whereas the reality is that since the assessee, earlier, did not have any account at all but on having been demanded during the tax assessment proceedings, he prepared all the accounts just in hurry and committed mistake. He has fabricated all the accounts. He is not able to verify the sale-purchase which he has shown in these accounts. It is evident from the aforesaid that the assessee transfers the rupees by misusing the banking channel, and even having been given opportunity again and again, he has been unable to make clear the peak credit of the amount deposited in his bank- account. Therefore, in this tax assessment order, the peak credit of Rupees 11,43,443/- deposited in the aforesaid bank accounts is considered as deposited by the assessee through his undeclared sources and is considered as his income of the year in question. Since in this tax assessment year the assessee has shown gross income of Rs- 2,17,635/- in his income-tax details, therefore the rest amount Rs.- 9,25,808/- is added to the income of the assessee. Addition Rupees- 9,25,808/- As per the aforesaid, the tax of the assessee is assessed on the income of Rs.- 11,43,443/-. Demand letter and challan be issued and interest be separately charged as per the rule under sections 234A, 234B, 234C. As well, penalty notice also be issued under section 271(1) (c) of the Income Tax Act, because (4) the assessee has concealed his income and submitted false details/evidence in this regard. Date: 21.12.2009 Sd/- Illegible J.P. Tewari Income Tax Officer 4 (2) Agra” (English Translation by Court) Against this order of assessement, the assessee (being the appellant before us), preferred an appeal before the Commissioner of Income Tax Appeal - II raising certain grounds which have been quoted in the order of the learned Appellate Tribunal dated 2nd May, 2016. The learned Appellate Tribunal, while disposing of the appeal, has made the following observation in paragraph 6, which is relevant for the purpose of answering the question of law sought to be raised before us:- 6. \"We may state that the assessee could not establish with any evidence that he merely received commission income and the cash was received from the parties to whom or on whose behalf cheques were purportedly issued. No worthwhile evidence has been led in this regard. It is settled law that any sum found credited has to be explained as to its nature and source by the assessee which in our considered view, assessee has failed to explain in the present case. Both the authorities have been fair enough to tax the peak credits. Ld. Counsel tried to rework the amount of peak credits but we are not impressed with that working and the said working is self serving. We do not find any infirmity in the orders passed below. Therefore, the action of the lower authorities is confirmed and addition sustained by Ld. CIT(A) is also upheld by us\". (5) A plain reading of the above clearly reveals that in the fact situation of the case, the learned counsel had tried to rework the amount of peak credits, but the learned Appellate Tribunal was not impressed with that working since it was self serving. As such, in the facts and circumstances of the instant case, the learned Appellate Tribunal cannot be held to have not been legally justified in upholding estimation of peak credit made by the Assessing Officer without rejecting the books of accounts. As such, the order of the learned Appellate Tribunal does not warrant any interference on the basis of the substantial question of law as raised before us and the appeal stands disposed of accordingly. Order Date :- 13.1.2020 Pravin / Neeraj (Biswanath Somadder,J.) (Ajay Bhanot,J.) "