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2016 (4) TMI 806 - ITAT JAIPUR

2016 (4) TMI 806 - ITAT JAIPUR - [2016] 51 ITR (Trib) 290 - Addition on unexplained peak cash credit - Held that:- The peak credit submitted by the assessee before the AO had not been controverted by the lower authorities as such there was debit balance which means the assessee firm had advanced the money from the regular books of account. Therefore, we delete the addition confirmed by the ld. CIT (A) as fund advances from the regular cash book but the transactions of loan were recorded in diary .....

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d partly in favour of assessee - ITA No. 262/JP/2014 & 492/JP/2013 - Dated:- 18-2-2016 - SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM For The Assessee by : Shri Rajeev Sogani (C.A.) For The Revenue : ShriO.P. Bateja (Addl.CIT) ORDER PER SHRI T.R. MEENA, A.M. These are two appeals filed by the assessee emanating from the order of ld. CIT (A), Alwar dated 24.02.2014 for the A.Ys. 1998-99 and 1999-2000. The grounds raised in the appeals are as under :- ITA No. 262/JP/2014 A.Y. 1998-99 : 1. That t .....

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well as on the facts and circumstances of the case in adding a sum of ₹ 4,50,000/- being the peak credit under section 68 of the I.Tax Act 1961, whereas the facts remains that there is no peak credit, on the contrary there is a debit balance given by the assessee out of his firms regular cash balance, therefore, the no addition deserves to have been made and ld. CIT (A) erred in sustaining the same. 3. That the ld. AO has erred in law as well as on the facts and circumstances of the case i .....

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he investment in purchases of ₹ 20,90,604/- and ld. CIT (Appeals), has erred in sustaining the action of the AO with reference to ₹ 19,60,000/-. 2. The AO observed that the assessee is a partnership firm engaged in the business of trading of Chan Dal, Chana Churi and Chana Chilka during the year. A survey u/s 133A of I.T. Act was carried out at the business premises of the assessee on 05.03.1999. During the course of survey proceedings it was found that the assessee was in habit of t .....

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e notice dated 28.03.2003 and complete the assessment proceeding. The assessee failed to comply with the notice issued u/s 148/142(1), therefore, assessment was completed at assessed income of ₹ 1,09,81,916/- under the provision of section 144 of the Income Tax Act, 1961 on 31.01.2004 by making the trading addition of ₹ 19,399/-, unexplained cash credits ₹ 1,09,45,000/- u/s 68 of the Act. 2.1. He further observed that aggrieved by the order of the AO, the assessee filed a petit .....

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and find out that the money introduced by the assessee was not his own money under the garb of borrowing in cash. Therefore he had not accepted the contention of the assessee that these are actual borrowings. The AO also examined all parties by calling them by issuing notice under section 131. All the parties have denied in having given any cash loan to the assessee. However, in compliance to the directions of the Tribunal the AO worked out the peak for the year under consideration and made the .....

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rms of the decision of Hon ble Rajasthan High Court in the case of Commissioner of Income Tax vs. Ishwar Dass Mutha, 270 ITR 597. Thereafter the assessee has preferred an appeal before ld. CIT (A), Alwar. 2.2. He further observed that the ld. CIT (A), Alwar in his appeal order no. 138/2005- 2006 dated 28.03.2007 confirmed the addition of ₹ 52,30,000/- and interest therein at ₹ 3,49,844/-. Thereafter further appeal was filed against the order of ld. CIT (Appeals) s order dated 28.03.2 .....

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t of addition on the basis of peak credit. 2.4. The Income Tax Appellate Tribunal, Jaipur Bench, Jaipur had further directed to examine the addition in respect of alleged interest afresh if the AO is of the view that this amount is not of the assessee and not taken from any other party. The issue was also sent back to the AO to consider afresh. 2.5. As per direction given by the ITAT, Jaipur Bench, Jaipur in case of assessee, the AO issued notice under section 143(2) of the Act and decided the c .....

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ssessment order. After considering the assessee s submission and statement, it has been held that assessee had accepted fresh loan direct and through Badla during the period from 01.01.1998 to 31.03.1998 which are recorded in Geeta Dayanandini Diary. Following the decision and direction of the ITAT Jaipur Bench Jaipur, he considered the peak of ₹ 4,50,000/- after taking into account all the Badla entries of diary for the period 01.01.1998 to31.03.1998. The assessee has admitted the calcula .....

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d do not find any logic or rational in the argument that the peak credit worked out by the AO at ₹ 4,50,000/- may be dis-regarded. The present theory of the whole credit being given out of the cash balance available in the regular books of accounts is not acceptable as it had never been the stand of the appellant in the last 10 years. This peak credit was worked out by the AO after examination of the appellant himself, and thus the present argument is nothing but change of stand on the par .....

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nder section 133A on 5.3.1999 and during the course of survey cash of ₹ 33,699/-, Geeta Dayanandini Diary was found in which transactions of borrowing/lendings were recorded. The ld. A/R has also drawn our attention on the ground raised before the ITAT that assessee never accepted the loan taken but it is contrary that assessee had given loan during the year and peak credit of ₹ 4,50,000/-. The ld. CIT (A) by way of reference to the peak working done on the basis of entries in the im .....

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The ld. CIT (A) had not expressed any opinion on assessee s claim that these are the loans given, and not taken. The diary had a number of pages containing almost numerous entries. The peak calculation was cumbersome. For this reason, the peak calculation kept on changing at various levels. Even the ITAT set aside the matter in first round to the file of the AO with the direction to calculate it correctly. Thus, peak was correctly calculated for the first time by the AO in order dated 29.12.201 .....

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this was the change in stand of the assessee but the ld. A/R argued that even to calculate the real income, the change of stand is allowed by the various High Courts for which he cited number of decisions in support of his submission. The cases are as under :- CIT vs. Jute Corporation, 187 ITR 688 (SC) National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (SC) CIT vs. Rewari Central Co-operative Bank Ltd., 263 ITR 598 (P&H) CIT vs. Kanpur Coal Syndicate, 53 ITR 225 (SC) Popular Automobiles vs. .....

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essee. 4.2. At the outset, the ld. D/R supported the order of ld. CIT (A). 5. In A.Y. 1999-2000 the assessee s appeal is against not allowing the set off of trading addition in Chana Dal of ₹ 69,676/-, in Guwar of ₹ 2442/- and unexplained peak credit of ₹ 19,60,000/- against the investment in purchase of ₹ 20,90,604/-. The AO observed that the assessee filed return on 19.03.2002 at (-) ₹ 51,847/- (After set off of surrendered income of ₹ 3,00,000/-). Assessmen .....

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d. 5.1. The assessee firm preferred appeal against the order of ld. CIT before Hon ble ITAT Jaipur Bench Jaipur. But in the meantime, the AO had passed order under sec. 143(3)/263 on 24.03.2006 after affording opportunity to the assessee and completed the assessment at the total income of ₹ 1,66,83,873/- making the trading addition of ₹ 69,676/- in Chana Dal and ₹ 2,442/- in Guar, ₹ 20,90,604/- on account of investment in purchase, ₹ 2,434/- on account short cash, & .....

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on ble Jurisdictional High Court. Thereafter, the ld. CIT (A) decided the appeal vide order dated 27.02.2007 and allowed relief and confirmed the addition as under :- 1) Trading addition of ₹ 69,676/- & 2,442/- in Chana Dal and Gwar account have been confirmed as such. 2) Addition of investment in purchase ₹ 20,90,605/- has confirmed. 3) Addition of cash short ₹ 2,435/- has deleted. 4) Ground of unexplained cash creditors of ₹ 1,27,34,000/- : The ld. CIT (A) directed .....

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ing additions :- 1) Trading addition in Chana Dal ₹ 69,679/- 2) Trading addition in Gwar ₹ 2,442/- 3) Unexplained cash credit ₹ 16,60,000/- 4) Investment in purchases as discussed above and confirmed by CIT (A) ₹ 20,90,604/- 5) Interest to cash creditors ₹ 3,52,800/- The assessee again filed appeal before ld. CIT (A), Alwar on the ground of addition made on account of unexplained cash credit entries, interest paid thereto but before deciding the appeal by ld. CIT (A .....

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n the basis of peak credit and amount of interest payment be considered afresh. Thereafter the AO issued various notices. The assessee was found non-cooperative to the AO. Finally, he summoned one of the partners, namely, Ashok Kumar Gupta under section 131 on 15.12.2011 by fixing date of hearing on 20.12.2011. On 29.12.2011 statement of Shri Ashok Kumar Gupta was recorded under section 131 of the IT Act. The facts of the case are identical to A.Y. 1998-99 as on the basis of survey conducted und .....

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TAT, Jaipur Bench, decision dated 30.12.2010, the assessee was asked to explain the peak calculated by the AO at ₹ 19.6 lacs on the basis of this diary. The statement of Shri Ashok Kumar Gupta has been reproduced by the AO at page 4 of his order. After considering the assessee s reply, the AO held that the peak worked out as on 03.12.1998 at ₹ 19.6 lacs pertained to A.Y. 1999-2000 and ₹ 4,50,000/- as on 09.03.1998 pertained to A.Y. 1998-99. The assessee himself admitted that pe .....

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ed before ld. CIT (A), Alwar who had partly confirmed the order by observing that transaction relating to cash receipt and payment recorded in the said diary relate to money taken from other parties and given on interest to other parties. Since the appellant could not explain the source of these receipts, the peak amount has been taxed in the hands of the appellant. For interest addition of ₹ 3,52,000/-, he has allowed the set off against the purchases made. Therefore, addition on account .....

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of the assessee seems to be considerable that if the amount of loan is treated belonging to the assessee then the same amount will be available with the assessee for next year also. This aspect has also not been examined by the AO. Therefore, we set aside the issue to the file of A.O to examine this aspect also. Same finding is also given in respect of interest charged for A.Y. 1999-2000. We order accordingly. He further submitted that no borrowing was substantiated from the record. There was n .....

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in the cash book of the firm and had explained the sources of cash given by the assessee. The cash was available in the books whereas in diary there was a debit balance. If both are to be seen together, the source of debit balance had been explained by the assessee before the lower authorities. The ld. CIT (A) had rejected the assessee s claim on the ground that this argument was raised by the assessee for the first time. The coordinate Bench of ITAT had set aside the orders of lower authoritie .....

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by considering the various decisions of the Apex Court. The ld. A/R relied upon the judgment in case of CIT vs. Jute Corporation, 187 ITR 688 (SC), National Thermal Power Co. Ltd. vs. CIT, 229 ITR 383 (SC). In case CIT vs. Breach Candy Swimming Bath Trust, 27 ITR 279 (Bom.), Hon ble Bombay High Court held that before the Tribunal any issue raised by the assessee for the first time, the Tribunal was right to adjudicate the same. The Tribunal is duty bound to give the sufficient opportunity on ne .....

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s. The assessee appealed against the assessment made in this manner. While conducting the appeals both before the AAC and the Tribunal, the assessee found fault with the assessment on the limited ground that the estimate was excessive. The Tribunal rejected the assessee s contention. On a reference the High Court observed that the matter required reconsideration by the Tribunal, and disposed of the case accordingly. At the time of reconsideration, it was for the first time put forward before the .....

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ing the question whether the Tribunal was right in law in making out a new case for the assessee and interfering with the assessment. The Tribunal rejected the reference application. The department moved the High Court for a direction to the Tribunal, asking it to state a case and refer the question of law for decision. This application was dismissed by the High Court. On appeal by special leave, the Supreme Court observed as under : In hearing an appeal the Tribunal may give leave to the assess .....

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ed income from the business withheld from the books, the Tribunal made out a new case inconsistent with the assessee s own plea. In any event, the Tribunal is not precluded from adjusting the tax liability of the assessee in the light of its finding merely because the findings are inconsistent with the case pleaded by the assessee. 12. In Mahalakshmi Textile Mills Case (supra), decided by the Supreme Court, the course of appellate proceedings was different. The assessee in that case was a textil .....

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st themselves be regarded as new plant or machinery installed for the first time. The claim for development rebate was founded on this view of the Casablanca System. But the claim for development rebate was rejected by the ITO. On appeal filed by the assessee, the claim for development rebate was rejected by the AAC as unsustainable. On further appeal before the Tribunal, the assessee gave up its original ground of claim and raised fresh claim. This new plea was quite inconsistent with its claim .....

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enue expenditure. The department challenged the propriety of the Tribunal entertaining this new plea. The department brought a reference before the High Court, on this question, as a jurisdictional issue. But the High Court upheld the jurisdiction of the Tribunal to permit the assessee to raise a new contention, which had not been raised by the assessee before the departmental authorities. The Commissioner thereupon took the matter on special leave before the Supreme Court. It was urged for the .....

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of questions raised before the departmental authorities. All questions whether of law or of fact which relate to the assessment of the assessee may be raised before the Tribunal. If for reasons recorded by the departmental authorities in rejecting a contention raised by the assessee, grant of relief to him on another ground is justified, it would be open to the departmental authorities and the Tribunal, and indeed they would be under a duty, to grant that relief. The right of the assessee to the .....

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of unexplained cash credits had become redundant, when the assessing officer had already decided to estimate the year s income. This plea was put forward very late, only after the case came back to it from the High court. In Mahalakshmi Textile Mills, case (supra), the plea of the assessee for the first time in the appeal before the Tribunal was for deduction of the entire amount spent on the Casablanca conversion system as an item of the revenue expenditure, just like current repairs, in contra .....

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