TMI Blog2015 (11) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... w that a particular with drawal/repayment could not have been available on the date of the subsequent credit. A refinement or extension of the plea occurs where the credits appear not in the same account but in the accounts of different per sons. Even then, if the genuineness of all the person is disbelieved and all the credits appearing in the different account are held to be the assessee's own moneys, the assessee will be entitled to set off and a determination of the peak credit after arranging all the credits in the chronological order. - Decided against Revenue. - Income Tax Appeal No. 81 of 2007 along with I. T. A. Nos. 160 of 2012, 87 of 2007, 333 and 332 of 2011 and 96 of 2003. - - - Dated:- 24-2-2015 - SUDHIR AGARWAL and SHASHI KANT, JJ. A. N. Mahajan for the appellant in I. T. A. Nos. 81 of 2007 and 332 and 333 of 2011. A. N. Mahajan and Bhartji Agarwal for the appellant in I. T. A. No.160 of 2012. Standing Counsel (I. T. Department) A. N. Mahajan and S. Chopra for the appellant in I. T. A. No. 87 of 2007. A. N. Mahajan, Ashok Kumar, Bhartji Agarwal, C. S. C., D. Awasthi, G. Krishna, R. K. Upadhaya and S. Chopra for the appellant in I. T.A. No. 96 of 2003. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was never established that the peak credit of the assessment year 1995-96 was available for induction in the assessment year 1996-97 ? 4. Whether the hon'ble Income-tax Appellate Tribunal has erred in law in holding that the peak of the unexplained debits in the assess ment year 1996-97 will explain the peak of unexplained credits in the subsequent assessment year 1997-98 without giving any finding that the amount representing the peak debits of the assessment year 1996- 97 were available with the assessee in the assessment year 1997-98 and without appreciating the ratio of the decision of the hon'ble Madras High Court reported in 242 ITR 719 referred to above ? 5. Whether the hon'ble Income-tax Appellate Tribunal has erred in law in not appreciating that consequent to its order the total income of the assessee has become less than the undisclosed income shown by the assessee in the block return which is in violation of the pro visions of section 156BC expressly debarring the assessee from revis ing the block return ? 5. In Income Tax Appeal No. 332 of 2012-CIT v. Fertilizers Traders Gandhi Nagar Golghar, the questions formulated are the same as above. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l dated February 13, 2004, has not been accepted by the Department and appeal under section 260A has been filed which is sub judice ? 9. Brief facts necessary to understand the dispute may be stated as under : 10. The assessee, M/s Sarraf Trading Co., Gandhi Nagar, Gorakhpur (hereinafter referred to as M/s. Sarraf Trading Co. ), deals in fertilizers and is a partnership firm. Search and seizure operation was conducted on February 12, 1997, under section 132(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act, 1961 ). Several documents along with computer print outs were found and seized during the course of search and seizure operation. Similar search and seizure operation on the same day was conducted at the business premises of the sister concern of the assessee, i.e., M/s. Fertilizers Traders, which also deals in fertilizers. Original block assessment was completed on February 24, 1999, under section 158BC(c) of the Act, 1961 for both firms, i.e., the assessee and its sister concern together and bifurcated at ₹ 66,71,000 and ₹ 1,14,39,192, between M/s. Fertilizers Traders and the assessee, respectively, against the undisclosed return income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e filed by the assessee and its sister concern, assailing the Commissioner of Income-tax (Appeals)'s order dated August 14, 2002, i.e., Appeal No. 304(Alld)/2002 and 305(Alld)/2002. 17. All these appeals have been decided by the Tribunal by a common order dated February 13, 2004. 18. The Tribunal, while deciding the Department's appeal, restored the issue relating to computation of part of undisclosed income with certain directions. Two appeals preferred by the assessee and its sister concern were allowed and order dated October 4, 2000, passed by the Assessing Officer and August 14, 2002, passed by the Commissioner of Income-tax (Appeals) were quashed. 19. Directions given by the Tribunal for computation part of undisclosed income, to be considered by the Assessing Officer are as under : (i) Each credit/debit appearing in the computer print outs for the financial years 1994-95 and 1995-96 and the computer print outs for the financial year 1996-97 (as segregated by the Assessing Officer himself at the original stage of computation of undisclosed income) shall be arranged chronologically and date-wise. (ii) From the aforesaid figure the day-to-day cash book s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 23. The Commissioner of Income-tax (Appeals) gave its reasons for making alteration in the peak debit for the assessment years 1995-96 and 1996-97 and maintaining the peak credit for the assessment year 1997-98, observed as under : It may be recapitulated that the first two years, i.e., the assess ment years 1995-96 and 1996-97, the receipts exceeds the payment meaning thereby that the undisclosed income takes care of the pay ments made by the assessee. However, in the last year, i.e., the assessment year 1997-98 there is excess of payment by ₹ 31,94,289 which means that in this year the undisclosed income of ₹ 48,01,158 was not sufficient to cover the payment made by the assessee and the assessee made payments far in excess of his undisclosed income of the earlier two years and determined the peak credit. In other words, the amount of undisclosed amount of ₹ 48,01,158 was exhausted and the assessee further invested ₹ 31,94,789 which was to be added separately. We are engaged in computing the undisclosed income and unexplained credit appearing in the books of the asses see. If in all the three years, there was excess of receipts over pay ments then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found credited in the books of account and if the assessee has given no explanation or his explanation is not found satisfactory, the same credit is liable to be treated to be undertaxed income of the assessee of that previous year. The High Court held that the Tribunal has proceeded on assumption, conjectures and surmises, that there may have been some escaped income. This is nothing but a sheer possibility based on no material on record. The court noticed that various courts have taken a view, where certain additions were made in the earlier years, that would constitute source for the credit entry in subsequent years. But, having said so, found that in the case which was came up for consideration before the Madras High Court, there was a concealed income which was neither disclosed in the assessment proceedings nor in any other ancillary proceedings for any earlier year and, therefore, there can be no occasion to constitute it a source for subsequent credit entry. The court said that the explanation of the assessee that source credit entry of undisclosed income of the earlier years is included then it will open doors of tax evasion and purpose behind the enactment of section 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they should all be arranged in serial order, that a credit following a debit entry should be treated as referable to the latter to the extent possible and that, not the aggregate but only the 'peak' of the credit should treated as own explained. To give a simple example, suppose there are credits in the assessee's book in the account. A or ₹ 5,000 each on October 1, 1990, and again on November 5, 1990, but there is a debit by way of repayment shown on October 27, 1990, the expla nation will be that the credit appearing on November 5, 1981, has or could have come out of the withdrawal/repayment on October 27, 1981. This plea is generally accepted as it is logical and acceptable (whether the creditor is a genuine party or not), provided there is nothing in the material on record to show that a particular with drawal/repayment could not have been available on the date of the subsequent credit. 15. A refinement or extension of the plea occurs where the credits appear not in the same account but in the accounts of different per sons. Even then, if the genuineness of all the person is disbelieved and all the credits appearing in the different account are held t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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