TMI Blog2013 (11) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the assessee herein and evidences gathered by the department show that the partnership firms do belong to the assessee and their bank accounts also belong to the assessee. - Decided against the assessee. Additions on the basis of peak credit - Held that:- When the assessing officer has proposed to assess the peak credit amount in assessment years 2002-03, 2003-04 and 2005-06, in our view, it would not be correct on his part to assess the entire amount of deposits as income of the assessee in assessment year 2004-05 alone. In our view, the assessing officer should have assessed the peak credit amount only in the assessment year 2004-05 also. - AO to compute the peak credit amounts of each of the year in accordance with the method discussed supra and assess the peak credit amount in the initial year i.e.,in assessment year 2002-03 and only incremental peak credits in succeeding years. - Decided partly in favor of assessee. - I.T.A. Nos. 44-48/Coch/2013 - - - Dated:- 26-7-2013 - Shri N. R. S. Ganesan, JM And B. R. Baskaran, AM,JJ. For the Petitioner : Shri P. Raghunathan, Adv. For the Respondent : Smt. Susan George Varghese, Sr. DR Shri M. Anil Kumar, CIT(DR) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd transacted huge sums of money through the bank accounts opened in the name of those partnership firms. Accordingly, he proposed to assess the said transactions in the hands of the assessee. According to the assessing officer, he stated the reasons for the above said proposals and also offered inspection of the documents in his possession, which led him to arrive at the conclusion stated above. In response there to, the assessee objected to the above said proposal and asked for copies of documents relied upon by the assessing officer. There after, it appears that the assessee did not take any effort to inspect the documents, but sought time, on the plea of paucity of time and non-availability of his accountant. 4. The facts relating to the partnership firms, referred above, are stated in brief. The department got the information that heavy money transactions were carried out through the bank accounts of the following partnership firms opened with M/s Centurion Bank, Kozhikode. Sl. No. NAME OF FIRM NAME OF PARTNERS 1. Blue Marine Sea Foods Bineesh K.T.Sharif 2. Oasis Corporation Bineesh Karim 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. (g) There were calls between the above said telephone numbers and the assessee's son's (Sri Asarulla Khan) phone number also. (h) The assessee's son, Sri Asarulla Khan, had opened a NRE account with Centurion Bank and deposited Rs.50.00 lakhs as Term deposit. Subsequently, one the partnership firms, viz., M/s National Sea Foods, availed overdraft loan facility against the deposit of Rs.50.00 lakhs cited above. While closing the fixed deposit, the overdraft loan was adjusted against the deposit. (i) The department made enquiries with Shri C. Arun Kumar, the branch head of Centurion Bank. In the statement taken from him, he submitted that the bank account in the name of M/s Western Sea Foods was opened at the request of Shri Bineesh Mathew, Shri K.T.Sharif and Shri O. Kasim. When the volume of cash transactions increased, the bank insisted for deposits and accordingly a sum of Rs.50.00 lakhs was deposited by the son of the assessee, Shri Asarulla Raka Khan. He further submitted that new accounts were opened in the name of other partnership firms at the request of Shri Asarulla Khan. He also submitted that the assessee herein came to the bank in order to open ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer also estimated commission income @ 2% of the aggregate deposits made in each year in all the bank accounts of the partnership firms. The peak credit additions made and commission income estimated in each of the years under consideration is tabulated below:- Assessment year Peak credit amount assessed Commission income assessed 2002-03 5,68,70,041 1,17,37,256 2003-04 3,79,07,081 58,15,277 2003-04 (II reassessment) 69,84,936 43,15,716 2004-05 52,64,67,613 -- 2005-06 62,08,470 64,40,716 8. These additions were also made on protective basis in the hands of the respective partnership firms. 9. In the appellate proceedings, the Ld CIT(A) noticed that the information about money laundering transactions were brought to light by the Directorate of Enforcement. Hence the Ld CIT(A) directed the assessing officer to get the reports from the Directorate of enforcement and take appropriate action/further investigation depending upon the results thereof. The assessee challenged the said direction before Hon'ble High Court of Kerala. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said report. 14. However, we notice that the Ld CIT(A) has extracted the comments offered by the assessing officer in full in pages 12 to 14 of his order. Hence, in our view, no purpose will be served in attaching the same again in the paper book filed by the assessee. However, at the time of hearing, the Ld D.R filed a copy of letter dated 14.12.2012 submitted by the assessing officer to Ld CIT(A) and a copy of the same was also given to Ld A.R. We notice that the entire contents of the letter, as stated earlier, has been extracted by the Ld CIT(A) in his order. 15. The Ld counsel, during the course of hearing, contended that the assessing officer has placed full reliance on the complaint dated 11.3.2004 filed u/s 16(3) of FEMA by the Deputy Director of Directorate of Enforcement. Though the copy of said complaint was given to the assessee during the course of appellate proceedings, the statements taken by the enforcement directorate were not furnished to the assessee. Accordingly, it was submitted that the assessee was not in a position to submit his views in an effective manner on the remand report of the assessing officer. However, we notice that both the tax authorities ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sser Alikoya, T. Sheriff, Mohammed Ashraf, Mohammed Basheer with Centurion Bank HDFC Bank evidences deposits of funds aggregating to 346.10 crores and immediate withdrawal of funds between April 2000 to August 2002 from these accounts in cash, they have not been able to explain satisfactorily either the source of the funds or the purposes of withdrawal. Considering the magnitude of funds transferred through these bank accounts it is very much apparent that these bank accounts would certainly have been acting on behalf of one person. As the persons in whose names the bank accounts stood and the persons who were used in these bank transactions could not give any satisfactory explanation with regard to sources of bank accounts or withdrawals and also in view of the fact that these persons have admitted on oath with various enforcement agencies that they have been acting on behalf of Shri K.P. Abdul Majeed of Calicut, it is evident that they were acting merely as a carrier for Shri K.P. Abdul Majeed and they do not have any major assets to show that they have benefited from these transactions. Considering the above facts, Shri Abdul Majeed owe explanations for the amounts found cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, in our view, the assessing officer had reasons to believe that the beneficiary of the bank accounts is the assessee herein. In the case of Lakhmani Mewal Das (supra), the Hon'ble Supreme Court has observed in a clear manner that a Court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the income tax officer on the point as to whether action should be initiated for reopening the assessment. In our view, it cannot be said that the AO did not have reasons to form belief about escapement of income. Hence, we are unable to agree with the contentions of Ld A.R that the reasons cited by the assessing officer would not justify reopening of assessments under consideration. 18. The Ld Counsel also contended that the order passed by Ld CIT(A) is vitiated since (a) the Ld CIT(A) has directed the assessing officer on 16.11.2001 to collect the reports from various investigating agencies and to examine the individuals, who were not examined during the course of assessment proceedings and submit a remand report. (b) the Ld CIT(A) has placed reliance on the contentions raised in the appeals filed by the partnership firms, in whose nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , they had already stated that they have acted upon the behest of the assessee herein. The said fact is very much known to the assessee, since the entire assessments have been re-opened on that basis only. Further, it is a fact that the additions have been made on substantive basis in the hands of the assessee herein and on protective basis in the hands of the partnership firms. Hence the appeals filed by the said partnership firms are interconnected with the appeals filed by the assessee herein. Under these set of facts, it is inconceivable as to how any appellate authority could pass orders without referring to the arguments advanced in the case of protective assessments. Hence, we do not find merit in the contentions raised by Ld A.R on this point also. 20. The Ld Counsel for the assessee also contended that the Ld CIT(A) has placed reliance on the documents collected during the course of remand proceedings, viz., copy of complaint filed by the Enforcement Directorate. According to Ld Counsel, the Ld CIT(A) should not have placed reliance on the documents which were not available at the time of assessment. There is no merit in the said contentions. We have already noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. However, the statements of these witnesses, when analysed would show that they have not in any way, indicated that the appellant was running these firms and/or the bank accounts. 8.4.2 However, all the partners who were made available for cross examination went back on their statements and denied the suggestions of the Assessing Authority. In fact, the statements themselves would show that the stand of the department could not be true. Even the Bank Manager who had given a statement have not indicated that the appellant was in any way connected with or involved in the bank accounts referred to and relied upon by the Assessing Authority, except for stating that in connection with taking loan on fixed deposit made by his son, the appellant had come to the Bank. 8.4.3: Going by the statements given in cross examination, the witnesses would, instead of connecting the appellant, state that it was another person - Sri Kasim - who was running the dealings and it would appear that all the Partnership Deeds were prepared on blank papers where their signatures were obtained and that too, at Mumbai, though such Deeds appear to have been Notarised at Calicut. 8.4.4 : The Officer also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I do not know anything about the business dealings or business affairs. Only Sri Abdul Majeed knows about the overall accounts and the dealings of amounts which come to the Bank. It is only according to his instructions that we withdraw cash and entrust him. It is after he gives cheque leaves and WE sign that WE go to the bank and withdraw cash. I do not know anything about coming to the bank and dealing in cash. Q.10: On whose instructions did you open the bank accounts in the name of the above firms? A: As I already stated earlier, myself KASIM and K.T. Sheriff are Sri K.P. Abdul Majeed's employees. We started all the bank accounts as per the instructions of Sri K.P. Abdul Majeed. All of us were persons drawing salary from Sri Abdul Majeed. Q.11: Do you have anything further to state? A: Please pardon me for the wrong statements given in the beginning because of the fear of my mind. Myself, Kasim and Sheriff are only employee of Majeed. As stated earlier, all cash dealings and instructions for the business dealings done with the ban by the above establishments were issued by Sri K.P. Abdul Majeed. It is only according to his instructions that myself, Kasim and Sheriff ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Sea Foods who had availed an OD against the fixed Deposit of Asarulla Khan. 8.4.9: The two other partners Sri N.P. Prabhu and K.P. Abdul Gaffoor who were examined and cross examined on 07-11-2008 and 21-12-2009 have also not established any connection with the appellant and the firms. 8.4.10: Thus it may be seen that all witnesses are consistent in maintaining they it was Mr Kasim who was running the various bank accounts and the partnership firms. HOWEVER, THIS MR KASIM WAS NOT EXAMINED OR HAS BEEN EXAMINED BUT HIS STATEMENT IS NOT FORTH COMING The reasons for the issue of Sec. 148 notice - in particular, notice dated 10-01-2008 - would indicate that he was questioned and he has not been able to explain satisfactorily either the source of the funds or the purposes of withdrawal. [Copy of letter and reply from Counsel dt. 15-01-2008 annexed].** (**Not attached in this order) 8.4.11: None of the witnesses have stated or even given any indications to show that the Appellant was in any way connected with the various partnership firms or the bank accounts. The evidence relied upon by the Assessing Authority does not in any way connect the appellant with the bank accounts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the name of Smt Umaiba, assessee's wife. (iii) During the course of assessment proceedings, the assessee and the counsel claimed ignorance about the firms and its partners. However, it was noticed by the Assessing Officer that partnership deeds of all the firms were prepared by none other than M/s. Raghunath Associates, Advocates, who had represented the assessee in the assessment proceedings as well as the appellate proceedings before me. Therefore, the plea of the counsel and the assessee that they do not know about the firms and its partners cannot be accepted in its face value. These facts were also brought to the notice of the assessee by the Assessing Officer during the course of assessment proceedings for the assessment year 2002-03 by his letter dated 21-12-2006. The advocate Shri Raghunath has not been able to given any explanation regarding this before me as to why advocate for assessee will draft the partnership deeds of the firms concerned with which there apparently have no relation. This is a nexus which shows 'strong links between the assessee and the firms concerned'. (iv) The assessee's son Shri Asarulla Raka Khan KP had opened an NRE account with Centurion B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the six of the above firms Shri A.V. Muralidharan, Advocate stated clearly that the firms were controlled by Shri KP Abdul Majeed only. The extract of the order sheet in the case of one of the firms M/s. Oasis Corporation for the A.Y. 2002-03 is reproduced below on this account:- "03-12-2012 - Shri A.V. Muralidharan, Advocate attends for A.Y. 2002- 03 and 2003-04 for both quantum and penalty. States that the appellants are not related to the business transaction involved. Since it has already been stated in the statements dated 08-05-2006 by Bineesh Mathew (Partner in the appellant firm) that he was signing and operating the concerned bank accounts which are involved in this case on the instructions of his employer Shri Abdul Majeed, vide answer to question No. 3 9 in the above statement by ACIT, Circle-1(1). Therefore, Shri Muralidharan submits that addition and penalty should not be made in the name of the appellant firm. He further stated in view of the statement dated 08-05-2006 on which he is relying the subsequent statement of Shri Bineesh Mathew dated 30-06-2008 should be taken as incorrect". In view of the above, the argument given Shri Abdul Majeed comes into conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. In this regard, I would like to point out that these answers are all totally false. Shri Bineesh Mathew was my driver till the beginning of 2006 and his services were discontinued sometime during January/February 2006. He was not happy because I had terminated his services and had not paid him any benefits through he had demanded." In the affidavit, the assessee states that Shri Bineesh Mathew worked as his driver for six years whereas in the statement given on oath he submits that he never met a person called Bineesh Mathew. Thus, the assessee is attempting to conceal his relationship with Shri Bineesh Mathew. This only points towards the contumacious conduct of the assessee. Such deliberate and delayed retraction can only be looked upon dimply by the Law. As held in Dr. SC Gupta Vs. CIT 248 ITR 782 (All.) in case of retraction, the burden of proof that the original statement was incorrect shifts to the assessee. Therefore, a bald retraction without any basis does not allow the Assessing Officer to overlook the merits of the original statement. In N. Deshraj 28 ITD 386 (Ahd.), the Hon'ble Tribunal has held that initial statements are spontaneous and usually reflect the true s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olved have not been revealed by the assessee, addition as per settled law has to be made in the hands of the assessee. 11. All the above facts independently establish the nexus between Shri KP Abdul Majeed and the partnership firms concerned and go to prove that these are front entities floated by Shri KP Abdul Majeed to conduct his business. In view of this, I hold that Shri KP Abdul Majeed is the real beneficiary of money transactions carried out through the bank accounts of these firms, for all the four assessment years 2002-03 to 2005-06." 23. We have carefully considered rival submissions on this issue. The Ld Counsel for the assessee reiterated that there is no direct evidence to connect the assessee herein to the bank accounts belonging to the partnership firms. It is settled proposition of law that the Evidence Act need not be applied in a strict manner in Income tax proceedings, meaning thereby, the matters under Income tax Act can be based on the basis of preponderance of probabilities, surrounding circumstances and human conduct. The Ld CIT(A) has explained the same on the following lines:- "14. As far back as 1954, the Hon'ble Supreme Court in Dhakeswari Cotton Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used adversely against another person has, as per settled legal principles, to be confronted to the party who is adversely affected and needs no case law to be referred to hold that opportunity to cross examine the party is necessarily to be provided. Though in reference to criminal proceedings, confession is a form of admission consisting of direct acknowledgement of the guilt but in income tax proceedings there is, as such, no substantial difference between confessions and admissions. In civil proceedings confession is a formal admission of some allegation by the other side. Admissions in the income tax proceedings are statements by a party of the existence of a fact which is relevant to an issue in dispute. Section 17 of the Indian Evidence Act, 1872 defines admission as an oral or documentary statement which suggests any inference as to any fact in issue or relevant fact. As per section 31 of the Indian Evidence Act admissions are not conclusive proof of the matters admitted, but they may operate as estoppel under the provisions of the law as contained. When section 31 of the Evidence Act says that an admission is not a conclusive proof, it does not mean that an admission is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability or accountability of the assessee for any other law or obligation. The admissibility of documents, evidence or material differs greatly in income tax proceedings and criminal proceedings respectively. In criminal proceedings, the charge is to be proved by the State against the accused, establishing it beyond doubt, whereas as per the settled proposition of law, the income tax liability is ascertained on the basis of the material available on record, the surrounding circumstances, human conduct and preponderance of probabilities. 6.2. The proceedings for assessment before the Assessing Officer have been described as quasi-judicial in character by Hon'ble Supreme court in Indian Eastern Newspaper Society v. CIT (1979) 119 ITR 996(SC). (i) In the case of Dhakeshwari Cotton Mills Ltd. Vs. CIT (1954) 26 ITR 775(SC), the Supreme Court has observed that assessment proceedings are purely administrative. After the receipt of the return also the Assessing Officer is entitled to make private enquiries to find out as to whether there is reason to suspect that the return is incorrect or incomplete. No objection can be taken to such enquiries made behind the back of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if it does not, in all respects satisfy the requirements of the Indian Evidence Act. What is necessary is that he should have material upon which to base the assessment; "material" as distinguished from "evidence" which includes direct and circumstantial evidence. (ix) In Gopinath Naik v. CIT (1936) 4 ITR I (All.), the Hon'ble Allahbad High Court held that the very nature of the proceedings for assessing the income tax liability, necessitates the use of such media as the AO chooses for collecting information which he may not like to disclose to the assessee and he would be perfectly within his rights to refuse to disclose to the assessee the source of his information and the name of the informant. (x) In Dinshaw Darabshaw Shroff v. CIT (1943) 11 ITR 172 (Bom.), the Hon'ble Bombay High court held that although an Assessing Officer making an assessment is not strictly acting as a court of law, it is clear from section 131, that he is acting in quasi-judicial capacity, and he ought to conform to the more elementary rules of judicial procedure, and in particular to conduct the case himself, and not allow somebody else, even his superior officer, to interfere in the conduct of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l that is required is that if they want to use any material collected by them which is adverse to the assessee, then the assessee must be given a chance to make his submissions thereon. The principles of natural justice are violated if an adverse order is made on an assessee on the basis of the material not brought to his notice................ ............... SUSPICIOUS AND DIBIOUS TRASANCTION HOW TO BE DEALT WITH: 6.11. The tax liability in the cases of suspicious transactions is to be assessed on the basis of the material available on record, surrounding circumstances, human conduct, preponderance of probabilities and nature of incriminating information/ evidence available with AO. 6.12. In the case of Sumati Dayal V. CIT (1995) 80 Taxman 89 (SC), the Hon'ble Supreme Court has dealt with the relevance of human conduct, preponderance of probabilities and surrounding, circumstance, burden of proof and its shifting on the Department in cases of suspicious circumstances, by following observations: ". . It is, no doubt, true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the department to prove that it is within the taxing, provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e -- (1) the circumstances alleged must be established by such evidence, as in the case of other evidence ; (2) the circumstances proved must be of a conclusive nature and not totally inconsistent with the circumstances or contradictory to other evidence. (3) although there should be no missing links in the case, yet it is not essential that every one of the links must appear on the surface of the evidence adduced ; some of these links may have to be inferred from the proved facts ; (4) in drawing those inferences or presumptions, the Authorities must have regard to the common course of natural events, to human conduct and their relation to the facts of the particular case. (5)The circumstantial evidence can, with equal facility, be resorted to in proof of a fact in issue which arises in proceedings for the assessment of taxes both direct and indirect, circumstantial evidence can be made use of in order to prove or disprove a fact alleged or in issue. In fact, in whatever proceedings or context inferences are required to be drawn from the evidence or materials available or lacking, circumstantial evidence has its place to assist the process of arriving at the truth." 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transactions and smokescreen corporate jugglery. There is no presumption in law that the AO is supposed to discharge an impossible burden to assess the tax liability by direct evidence only and to establish the evasion beyond doubt as in criminal proceedings. This is why Hon'ble courts by way of a catena of binding judicial pronouncements, have held that tax liabilities can be assessed by Revenue Authorities on consideration of material available on record, surrounding circumstances, human conduct, preponderance of probabilities and nature of incriminating information/ evidence available on record. 6.44. In such clandestine operations and transactions, it is impossible to have direct evidence or demonstrative proof of every move. The income tax liability is to be assessed on the basis of the above parameters and when the witness i.e. the assessee is not forthcoming with proper facts and chooses to be elusive and evasive, the AO has no choice but to take recourse to estimate. The only caveat is that it should be reasonable and based on material available on record. It should not be perverse or based merely on conjectures. In our view, herein the AO has considered the relevant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original statement. There should not be any doubt that these partners have spoken before the Ld CIT(A) through the mouth of their Counsel. Hence, in our view, one cannot attach any value to the retraction, if any, made by them during the course of cross examination. 28 We have already seen in the preceding paragraphs that the matters can be decided in income tax proceedings on preponderance of probabilities, surrounding circumstances, human conduct and circumstantial evidences. In the instant case, the various points listed out by Ld CIT(A), in our view, establishes the connection between the assessee and the bank accounts opened in the name of the partnership firms. We notice the assessee has failed to address the statement given by the bank manager that the son of the assessee Sri Asarulla Khan opened the NRE account and made a deposit of Rs.50.00 lakhs. Further he has allowed disbursing a loan of Rs.37.50 lakhs to one of the firms named M/s National Sea Foods on the security of the above said deposit. Most important point is that the said loan was adjusted against the fixed deposit, meaning thereby, Sri Asarulla Khan has given a sum of Rs.37.50 lakhs to M/s National Sea Foods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel stated that the assessing officer has assessed peak credits of each of the bank accounts u/s 69A of the account for the assessment year 2002-03; u/s 69 for the assessment year 2003-04; u/s 68 of the Act for the assessment years 2003-04 (II reassessment) and 2005-06. However, the assessing officer has assessed the entire deposits u/s 68 of the Act for the assessment year 2004-05. The Ld Counsel submitted that the provisions of either sec.69 or 69A do not enable the assessing officer to assess the bank deposits as "money" or "investment", as contemplated under those sections. He further submitted that the assessing officer has also erred in invoking the provisions of 68 also, since the said section is applicable only to the cash credits found credited in the books of accounts maintained by the assessee. The impugned bank accounts do not find place in any of the books maintained by the assessee. The Ld Counsel submitted that the "Pass Books" issued by a bank cannot be considered as books of account and for this proposition, he placed reliance on the decision of Hon'ble Bombay High Court in the case of CIT Vs. Bhaichand H Gandhi (1983)(141 ITR 67) and also Smt. Shanta Devi Vs. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the CIT(A) and no reasons have been shown as to why they should have been admitted. In the absence of any clinching evidence to show the nature and source of the monies deposited into the bank account which belong to the assessee, the AO was justified in adding the amount as the assessee's unexplained income.--A. Govindarajulu Mudaliar vs. CIT (1958) 34 ITR 807 (SC) applied." Hence, in our view, the assessee is required to explain the sources of the deposits, even if the assessing officer has mentioned different sections in different years. 34. The next question raised by the assessee relates to the method of computation of peak credits in each of the year. As stated earlier, the AO has worked out the peak credit in each of the bank accounts and assessed them as the income of the assessee. However, in assessment year 2004-05, the assessing officer has assessed entire deposits found in the bank accounts as the income of the assessee. The contentions of Ld A.R are that:- (a) there is no reason to treat the deposits as the money belonging to the assessee, since it is on record that the funds were transferred to the impugned bank accounts from Mumbai, which fact clearly sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act further reinforces the case of the revenue that the funds belonging to the assessee would have been ploughed into this business. We may make it clear that we are not placing any reliance on the statement given by Mr. Mohammed Nazar before the Directorate of Enforcement. We have already noticed that the deposits made into the bank accounts of the partnership firms are liable to be assessed in the hands of the assessee in view of the legal fiction enshrined in sec. 68/69/69A of the Act. The statement given by Mr. Mohammed Nazar only strengthens the legal fiction provided under the provisions stated above. 38. The points (b) to (d) raised by the assessee relates to the computation of peak credit. The assessing officer had worked out peak credit in each of the bank accounts separately and assessed the aggregate amount of peak credit so computed. The AO has computed the peak credit in each of the year in the like manner and ignored the amount of peak credit assessed in the preceding year, while computing the peak credit of succeeding year. In this regard, we find merit in the contentions of the assessee viz., (a) The peak credit of the initial year, ie., assessment year 2002-03 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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