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TMI Blog2014 (3) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is engaged in the business of providing accommodation entries through banking channel. As such, addition of Rs. 5,98,82,294/- in respect of deposits in various banks upheld by him is not assessee's own money but the same relates to transactions made during the course of business providing of accommodation entries on which assessee gets only commission, which can only be taxed. 4. That the learned CIT(A)-I, Ludhiana has erred in holding that the addition of the entire bank deposits and thus, he has looked into credit side only and has ignored the debit side, thereby ignoring the settled law that if some addition is made on the basis of some material then that material has to be used in totality and not in piece meal. The CIT(A)-I has failed to consider the Bank Account in totality. 5. That the learned CIT(A)-I, Ludhiana has not considered the statement filed by the assessee during the course of hearing of all the bank accounts and also cheques issued from such bank accounts in a consolidated manner and a bare look at the various deposits and issuance of cheques immediately, thereafter, prove that it is a simple case of providing the accommodation entries especiall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es exchange or any authorized broker of the said party. Further the assessee had failed to furnish names and addresses of the persons from whom the cash was received and even the books of account reflected only the names without any addresses. Hence the identity , creditworthiness and genuineness of the transaction was not verifiable. The Assessing Officer made addition on account of unexplained amount of Rs. 5,98,82,294/-. 5. The CIT (Appeals) upheld the order of the Assessing Officer. 6. We find that similar issue of addition under section 68 of the Act on account 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 in the case of Shri Sudhir Kumar Sharma Vs ITO relating to assessment year 2007-08 alongwith ITA Nos. 963/Chd/2010, ITA 714/Chd/2010, ITA 964/Chd/2010 and ITA 712/Chd/2010 & ITA 962/Chd/2010 (A.Y. 2007-08) vide order dated 27.06.2013 held as under : "16. We have heard the rival contentions and perused the record. In the facts of the present case the assessee under appeal is for assessment year 2007-08 for the period ending 31.3.2007. The assessee during the year under considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 various banks and it was stated by the assessee that "Reply is same as stated on 15.12.2009". He further submitted that he would state further relating to cash during the course of assessment proceedings. 18. The Assessing Officer from the perusal of the bank accounts of the assessee worked out the cash cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in reply stated that the cash was deposited as per books of account on behalf of the clients. Vide query No.8, the assessee was asked to provide the names and addresses of the customers/clients who had deposited these amounts. The reply of the assessee in this regard was, "If details are there, I will check from books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 commercial transactions. The statement was continued on 21.12.2009 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 assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious 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 of the assessee, during assessment proceedings. The assessee even failed to produce the books of account. In the absence of the assessee having discharged his onus of proving the identity, credit worthiness and genuineness of the cash transaction of the cash credits in the bank account, we find no merit in the plea of the assessee in this regard and dismiss the same. 25. Another plea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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(Appeals) in this regard and restore the addition made by the Assessing Officer at Rs. 1,26,66,000/-. We find support from the ratio laid down by the Hon'ble Allahabad High Court in Bhaiya Lal Shyam Behari V Commissioner of Income-tax (supra) wherein the Court held as under : "During the assessment year in question certain amount of cash credits standing in the names of various persons were add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 factual foundation has to be laid by the assessee. He has to own all cash credit entries in the books of account and only thereafter the question of peak credit can be raised. As in the present case the amount of cash credits were standing in the names of different persons which all along t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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