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2022 (10) TMI 1232 - AT - Income TaxReopening of assessment u/s 147 - allegation of reopening as bad in law - Violation of principle of natural justice - Addition u/s 68 - HELD THAT:- On a perusal of case records, it is apparently evident that, on the basis of large financial transaction undertaken by the assessee and in the absence of ITR, the Ld. AO invoked the provisions of section 147 of the Act by service of notice u/s 148 dt 30/03/2015 and eventually culminated the assessment - FAA finding no force in the contention of the appellant dismissed the ground as reason for re-opening is the non-filing of the Return by the Appellant. It is only during the course of Assessment proceedings, that the Appellant/Director of the company had clearly state that, she had no knowledge of the company, its activities and the financials as they were handled by her Late husband and nobody attended the proceedings that the AO was compelled to complete the Assessment 144 of I.T. Act, 1961. The reply of the Director, was received by the Assessing officer by speed post on 9.03.2016. Thus, the contention of the Appellant has no legs to stand on, and is, therefore, unacceptable. Violation of principle of natural justice - As assessment order emanates that, the assessee was well informed the grievance for rebuttal through notices u/s 148, 142(1) and 144 of the Act and in response thereto the director/Appellant preferred a written submission, considering the same in the light of evidential material and keeping in mind that the assessee has failed to ITR till that date, the assessment proceedings were concluded. Whereas from the records it also apparent that, the Ld. FAA in an appellate proceedings before him granted a reasonable opportunity to the assessee company to support of its legal as well meritare grounds raised and considering the representation of Ld. AR put forth before him through written submission, the addition made u/s 68 of the Act was confirmed, thus ex-facie contention of the appellant fails, resultantly the ground number 2. Inapplicability of provisions of section 68 - Admittedly, neither during the assessment proceedings, nor in the course of appellate proceedings including the present one, the assessee company could adduce any evidential material to satisfactory establish the nature and sources of credits entered in the books of accounts, moreover the appellate failed to produce the books before the Ld. TAB to substantiate the exact sum of cash credit availed by it, consequently the claim of the appellant fails and the ground of the present appeal. Restricting addition to “Peak Credit” - The legal position in seeking the benefit of ‘peak credit’ as explained in “Bhaiyalal Shyam Behari [2005 (1) TMI 424 - ALLAHABAD HIGH COURT] is that, the assessee has to make a clean breast of all the facts within its knowledge concerning the credit entries in the accounts, further has to explain with sufficient evidential detail the source of all the deposits as well as the corresponding destination of all payments therefrom the accounts, thus the assessee should be able to show that money has been transferred through banking channels from the bank account of creditors to the bank account of the Assessee, the identity of the creditors and that the money paid from the accounts of the assessee has returned to the bank accounts of the creditors in discharging the primary onus fastened u/s 68 of the Act, in the event of failure to do so, the application of peak credit theory calls out. We take note that there is no factual finding of either of the Ld. TAB that the assessee is the owner of the entire deposit made in the bank account so question of money belonging to the assessee does not arise and, therefore, applying peak credit fails, consequently prayer to restrict addition to peak credit deserves to be rejected, ergo we order accordingly. Levy of interest u/s 234B & 234C is consequential and mandatory in nature and the Ld. AO has no discretion in the matter of charging of interest, and we find this proposition has been rightly upheld in the case of “Anjum H Ghaswala” [2001 (10) TMI 4 - SUPREME COURT] therefore the claim of the appellant company being contralegem deserves to be rejected, ergo we uphold the action of the Ld. TAB in charging the said interest.
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