TMI Blog2013 (12) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... RDER:- PER : Sushma Chowla These two appeals by same assessee are filed against the consolidated order of Commissioner of Income-tax-I Ludhiana, dated 19.10.2012 against the order passed under section 143(3) of the Income-tax Act, 1961. 2. The grounds of appeal raised by the assessee in ITA No.21/Chd/2013 read as under: 1. That the learned CIT(A) has erred in not giving his findings regarding reopening the case by the Assessing Officer and issuing notice U/s 148 of the Income Tax Act, 1961. 2. That notwithstanding the above said ground of appeal, the learned CIT(A) has erred in confirming the order of the Assessing Officer in assessing income at Rs.3,49,78,090/- against the returned income of Rs.1,51,885/- already assessed. 3. That the learned CIT(A) failed to consider that the Assessing Officer has erred in not considering the fact that appellant is sub-broker and trading in commodities on behalf of his/her clients and return showing income from above said sources has been filed and assessed by the Assessing Officer and thus, there is no justification in assessing the same under Section 68 of the Act. 4. That the learned CIT(A) has erred in not conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming the order of the Assessing Officer in assessing income at Rs.3,97,78,460/- against the returned income of Rs.1,05,810/- already assessed. 2. That the learned CIT(A) failed to consider that the Assessing Officer has erred in not considering the fact that appellant is sub-broker and trading in commodities on behalf of his/her clients and return showing income from above said sources has been filed and assessed by the Assessing Officer and thus, there is no justification in assessing the same under Section 68 of the Act. 3. That the learned CIT(A) has erred in not considering that once the learned Assessing Officer has accepted and assessed the Appellant's source of income as sub-broker/dealer in commodities, he is not justified to assess the cash deposits in banks as appellant's income twice. 4. That notwithstanding the above said ground of appeal, the learned CIT(A) has erred to consider that the Assessing Officer has failed to take the notice of the statement of the Sudhir Kumar Sharma (Karta) as recorded during the course of survey conducted at the business premises of the assessee on 31.10.2007, wherein he had categorically stated that we are engaged onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al contentions and perused the record. The appeals relating to assessment year 2006-07 and 2009-10 against order passed under section 143(3) of the Act which was confirmed by the CIT(Appeals), has been filed by the assessee. The issue arising in both the appeals is in relation to the additions made by the Assessing Officer by invoking the provisions of section 68 of the Income-tax Act. During the year under consideration, there were cash deposits in the bank account of the assessee, for which the assessee was unable to furnish complete information and consequently, the said deposits were treated as income of the assessee in view of the provisions of section 68 of the Act. 7. We find that identical issue in respect of cash deposits in the bank account of the assessee arose before the Tribunal in bunch of appeals with lead order in ITA No. 713/Chd/2010 relating to assessment year 2007-08 in the case of Shri Sudhir Kumar Sharma and also in the case of the assessee relating to assessment year 2007-08 in ITA Nos. 712/Chd/2010 in the appeal filed by the assessee and in ITA No. 962/Chd/2010 in the appeal filed by the revenue against the assessee. The Tribunal vide order dated 27.06.2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r companies and firms of which he was the Director/Proprietor were claimed to be branches/traders of M/s Shubh Krishna Commodities. In view of the entries of trading being carried out on behalf of the M/s Shubh Krishna by the various companies/proprietory concerns owned by the assessee, it was explained that in case of one or two transactions, the commodity exchange entry was through the Exchange and the balance entries were client to client, which were permissible as commercial transaction, as per prevalent market trends. The assessee 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 statements wwas again continued on 21.12.2009 and the plea of the assessee was that it had not brought any record or any persons to be produced alongwith himself on the said date of hearing, as he had come for recording of his statement. In the statement so recorded, in respect of various cash credits/deposits in the bank 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 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 revenue 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 present 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 31.10.2007, in the statement recorded, the assessee admitted to be engaged in the business of giving accommodation entries. The modus-operandi explained during the course of survey was that the assessee was receiving the amount in cash and the same were being returned vide cheques through bank accounts. However, during the course of assessment proceedings, the statement of the assessee was again recorded wherein when confronted with the bank statement of M/s Big Bull Commodities Pvt. Ltd. with Centurian Bank, Pakhowal Road, Ludhiana in which huge cash was deposited by various entries, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsactions will be provided on the next date. Q:-19 Which type documents you take from the client/customer when you do the transaction for them. Ans: It is soda confirmation slip voucher commodities 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 the assessee to have changed. The assessee admits that only M/s Shubh Krishna was registered with Ludhiana Commodities Exchange and rest 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 received cash from various parties and the same was as per the books of account. The case of the assessee was that it was receiving cash from its clients. But before the Assessing Officer it was not the case of the assessee that it was engaged in providing accommodation entries. In respect of the entries not being through the exchange, the assessee claimed that client to client transactions were permissible as commerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 credited or where the explanation offered by the assessee is not satisfactory in relation to the same, then such credits may be charged to tax as income of the assessee for that particular previous year. Admittedly, in the case of the assessee, various amounts in cash are deposited in the bank accounts of the assessee and the onus was upon the assessee to explain nature and also the source of the said cash deposits. The assertion of the assessee in this regard was that it was the amount received from clients. However, the assessee failed to give the list of such persons who had advanced the said cash to the assessee. The assessee 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 respect of the said cash credits nor any of the persons were produced for examination before the Assessing Officer, though specific direction in this regard was given by the Assessing Officer within the course of recording of statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected. 26. We are in conformity with the order of CIT(Appeals) in holding that the provisions of section 68 of the Act in the present set of facts and circumstances of the case are applicable and we uphold the order of CIT(Appeals) in this regard. 27. The reliance placed upon by the assessee on various case laws has been referred to and commented upon by the CIT(Appeals) and we are in conformity with the findings 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 of the present case, the said peak credit theory is not applicable as the assessee had deposited cash in the bank account and thereafter, cheques were issued to different parties. It is not a case where cash was deposited on different dates and in between, there were cash withdrawals from the bank account. It is a case where there are deposits in cash but as against the said cash deposited, various cheques were issued and the assessee was unable to explain the source of cash deposited in his bank account. Rejecting the theory of peak credits applied by the Assessing Officer, we reverse the findings of CIT(Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 'B' then it may be possible to accept the contention of the assessee. But in case the assessee all along maintains that the various loans are genuine then we fail to understand as to how the assessee can put forward the claim that separate additions for the unexplained cash credit in different accounts should not be made. When the assessee himself does not contend that the deposit made in the account of 'B' is out of prior withdrawal made in the account of 'A', how does the assessee expect the Department 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 Revenue. 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 source, the applicant was entitled to take up a plea of addition of the aforesaid peak credit as the entire deposits have been treated to be income of the applicant. The contention is wholly misconceived. For adjudicating upon the plea of peak credit the factu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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