TMI Blog2014 (7) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... l had rightly held that there were cash deposits in the bank account and thereafter cheques were issued to different parties and in such circumstances, the theory of peak credit could not be accepted - assessee had not been able to show that there existed any nexus whereby the amount deposited in cash had been withdrawn in cash and thereafter re-deposited to take benefit under peak credit theory – thus, no substantial question of law arises for consideration – Decided against Assessee. - ITA No. 122 of 2014 (O&M) - - - Dated:- 12-5-2014 - Ajay Kumar Mittal And Jaspal Singh,JJ. For the Appellant : Mr. Sanjay Bansal, Sr. Advocate with Ms.Rajni Pal, Advocate. ORDER Ajay Kumar Mittal,J. 1. This order shall dispose of ITA Nos.122, 131, 81 to 89 and 128 of 2014 as according to the learned counsel for the appellant, the issues involved therein are similar. However, in ITA No.81 of 2014, an additional substantial question of law regarding reopening has been proposed which is to the following effect:- Whether the Hon'ble Tribunal as well as the learned CIT(A) acted illegally and perversely in sustaining the addition under Section 68 of the Income Tax Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rading in shares and commodities. Survey under Section 133A of the Act was conducted at the business premises of the assessee on 31.10.2007 whereupon statement of the assessee was recorded by the then Assistant Director of Investigation (Income Tax). Thereafter, for the assessment year in question namely 2007- 08, the assessee herein filed his return of income declaring total income of Rs.1,61,680/-. During assessment proceedings, the Assessing officer directed the appellant to produce certain documents like cash book, general ledger, stock register etc. The assessee submitted the requisite documents. His statement was also recorded. After examining the record, the Assessing Officer vide order dated 31.12.2009, Annexure A.1 made an addition of Rs. 7,81,87,362/- by invoking the provisions of Section 68 of the Act holding that the amount was in the form of unexplained cash credits. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 16.4.2010, Annexure A.2, the CIT(A) partly allowed the appeal and sustained the addition on the basis of peak deposits to the tune of Rs. 17,66,000/- thereby deleting the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s recorded by the CIT(A) in his order dated 16.4.2010, Annexure A.2 are as under:- 3.4 I also do not agree with the learned counsel that the decision of the Hon'ble Rajasthan High Court in the case of Smt. Harshila Chordia v. ITA reported in (2007) CTR (RAJ) 208 (supra), helps the case of the appellant. In that case the Hon'ble Tribunal had found as a fact that the assessee was receiving money from the customers against which delivery of vehicles was made. It was accordingly held there that such cash deposits were self explanatory and would not attract Section 68 of the Act. However in the case of the appellant question of receiving advances against subsequent delivery of any other goods etc. was not found to be a fact on the basis of material whatsoever brought on record. Therefore, the ratio of this decision would further not help the case of the appellant. 4. Next in the written submissions by referring to the decision of the Hon'ble Mumbai High Court in the case of Commissioner of Income Tax, Poona v. Bhaichand H.Gandhi reported at 141 ITR 67 and the decision of the Hon'ble Chandigarh bench of ITAT in the case of Ms. Mayawati v. Dy. CIT reported in (2008) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credits maintained additions amounting to Rs. 17,66,000/- only out of total amount of Rs. 7,64,21,362/-. A perusal of the order of CIT(A) clearly spells out that CIT(A) without recording whether there existed any nexus between various entries had allowed the benefit of peak credit which was legally not sustainable. 8. While dismissing the appeals of the assessees and accepting those of the revenue and reversing the aforesaid basis of peak credit, the Tribunal vide order dated 27.6.2013, Annexure A.3, noticed as under:- 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 under Section 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 recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 commercial transactions. The statement was continued on 22.12.2009 and as per query No.24, there was a specific query raised to explain various cash credits/deposits in the bank accounts of different companies in which the assessee was the Director and the assessee was also asked to give source of cash deposits in various accounts. In reply to the same, a short reply was given by the assessee that it is the same as what is stated on 15.12.2009. At the conclusion of recording of the statement, the assessee stated that he would further explain relating to the cash, during the course of assessment proceedings. However, the assessee failed to produce the books of account nor give any explanation vis a vis the source of cash deposits in the bank account. In the absence of any explanation or any evidence being produced by the assessee, the onus cast upon the assessee not being discharged, the said cash credits are to be inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books of account and the same would be explained from the books of account. The plea of accommodation entries was not put to the Assessing Officer. However, before CIT(Appeals), a plea was raised that only commission is to be added in the hands of the assessee in view of various judicial precedents. A perusal of the order of the CIT(Appeals) does not reflect any findings on this issue and issues addressed by the CIT(Appeals) were whether provisions of section 68 are applicable and in the alternative, whether peak credit is to be applied in the hands of the assessee. The assessee in this ground of appeal raised before the Tribunal has not raised any such issue of the commission income being included in his hands. Only two issues have been raised i.e. invoking of provisions of section 68 of the Act and confirmation of addition of Rs. 10,55,260/-. The issue of whether the assessee is engaged in giving accommodation entries or not is a purely factual issue which has not been raised before the authorities below i.e. during the course of assessment proceedings or even before the CIT(Appeals), the said issue has not been adjudicated. The plea of the assessee of admission of such ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to allow the appellant further opportunity to produce the persons. The parameters for leading additional evidence were not fulfilled, therefore, CM No.5693 CII of 2014 cannot be accepted and is accordingly rejected. Further, the Tribunal had rightly held that there were cash deposits in the bank account and thereafter cheques were issued to different parties and in such circumstances, the theory of peak credit could not be accepted. Moreover, the appellant had not been able to show that there existed any nexus whereby the amount deposited in cash had been withdrawn in cash and thereafter redeposited to take benefit under peak credit theory. 10. In respect of the issue regarding reopening in ITA No.81 of 2014, it may be noticed that once the additions were taxable under Section 68 of the Act, the reopening was validly initiated. The reasons for reopening recorded, as appearing at Pages 44 and 45 of Paper Book of ITA No.81 of 2014, read thus: In this case the assessment was framed under section 143(3) of the Income Tax Act, 1961 vide order dated 18.12.2008 at an income of Rs. 42,420/- as against returned income of Rs. 11,622/-. During the assessment proceedings, information ..... X X X X Extracts X X X X X X X X Extracts X X X X
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