TMI Blog2017 (2) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... reby sustained. - Decided partly in favour of assessee - ITA No. 328/JP/2014 - - - Dated:- 8-2-2017 - SHRI KUL BHARAT, JM and SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri Manish Agrawal (CA) For The Revenue : Shri R.A. Verma (Addl. CIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of CIT(Appeals), Ajmer dated 31/03/2014 for the assessment year 2009-10, wherein the assessee has taken the following grounds of appeal:- 1. On the facts and in the circumstances of the case, Ld. CIT(A) has grossly erred in confirming the addition of ₹ 65,46,664/- u/s 68 of the Income Tax Act, 1961 arbitrarily, without appreciating submission made and evidences adduced merely on assumptions and presumptions, thus the addition sustained deserves to be deleted in toto. 1.1 That the Ld. CIT(A) has further erred in confirming the addition without appreciating the fact that the appellant made surrender of ₹ 47,10,000/- on account of advances from customers in case of assessment year 2007-08 and said amount were repaid in A.Y. 2008-09 in the books available with the appellant and out of which deposits wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the books meaning thereby that funds were kept by assessee in cash with him. The same cash balance was used for depositing the fund as advance from customers in A.Y. 2009-10. However, the assessee s contention is not acceptable as there is no correlations between the amount surrendered in A.Y. 2007- 08 and bogus credits/deposits shown in A.Y. 2009-10. The amount surrendered in A.Y. 2007-08 of ₹ 47,10,000/- is represented by the various assets in the balance sheet for A.Y. 2007-08. It has not been shown that corresponding assets are bogus or have been liquidated. Further, as per the assessment order for A.Y. 2007-08, assessee has not given any address of the persons from whom the advances were shown and repayments were claimed to have been made in next year and assessee surrendered the above advance from customers of ₹ 47,10,000/- instead of giving the address of the said clients. The AO has also mentioned that above amount surrendered of ₹ 47.10 lacs was introduced in the cash book on 21.12.2009. In view of above discussions and findings of the AO as mentioned in the assessment order, set-off of ₹ 47,10,000/- as claimed by the assessee is not allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- was offered for taxation though these amounts come claimed to have been refunded meaning thereby that refund was available with assessee. The said cash was available with it which was introduced in the guise of cash deposits received from various customers in the year under appeal and thus telescoping of the same claimed however, Ld. AO rejected the plea of the assessee and made the addition of entire cash deposits of ₹ 65,46,664/- made during the year under appeal. 4.3. With regard to the allegation of the ld. AO that the benefit of surrender income has been allowed in F.Y. 2009-10 and the same may not be allowed for F.Y. 2008-09, i.e. A.Y. 2009-10, it was further submitted that assessee furnished cash book dated 21.12.2009, wherein surrender amount of ₹ 47,10,000/- was included. Your honours would appreciate that entry for booking income in respect of income surrendered would always be made on the date of conclusion of proceedings, in which income was offered. The Ld. CIT(A), rejected the claim of the assessee observing that amount surrendered in A.Y. 2007- 08 must have been represented by various assets and in the absence of liquidation of the same, no correla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e out of income offered in A.Y. 2007-08, which is not proved to be utilized elsewhere, thus deposits to that extent may please be treated as explained. 4.6 The ld AR further placed reliance on the following rulings: a. Shri Foods V/s ACIT (ITAT, Jpr) 22 TW 675: - Peak credit theory becomes applicable unless Assessing Officer proves destination of withdrawals elsewhere.- b. Rameshchand Modi Vs. ACIT (JP), 21 TW 510: -While making addition for unrecorded sales, adjustment for rotation/recycling/reinvestment/telescoping, credit purchases and peak credit should be given. c. Sandeep Loomba V/s ACIT (ITAT, Jpr) 26 TW 288: - Peak credit theory becomes applicable unless Assessing Officer proves destination of withdrawals elsewhere. 5. On the other hand, Ld. DR vehemently argued the matter and supported the order of the lower authorities and further referred to the decisions of the Hon ble Supreme Court in case of Anantharam Veersinghaiah reported in 123 ITR 57, Hon ble Rajasthan High in case of Tyaryamal Balchand reported in 165 ITR 453 and in case of R.S Rathore reported in 212 ITR 390. 6. In case of Anantharam Veersinghaiah, the Hon ble Supreme Court has laid down the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clear from the law discussed above, that the ITO was within his right to tax the amount of ₹ 16,950 as income from undisclosed sources. Even though he had added the amount of ₹ 18,117 in addition to the profit shown by the respondent-firm in their account books. However, in the present case, the respondent was well within his rights to plead that this amount of ₹ 16,950 is covered from the intangible income assessed at ₹ 18,117 and added in the income of the firm and apart from this, since for the last preceding 3 years, substantial additions amounting to ₹ 32,797 have been added, the amount of ₹ 16,950 could be taken as having come out of such intangible additions. In the case of Anantharam Veerasinghaiah Co. (supra), their Lordships of the Supreme Court have held that the additions made to the book profits in earlier years are the real income and can be treated as available for use in subsequent years or even in the same year. .. 8. In case of R.S Rathore (supra), the Hon ble Rajasthan High Court has held as under: Section 68 refers to cash credits which are found in the books of the assessee. If the explanation offered by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the amount surrendered in AY 2007-08 is shown as cash advances from customers which remain unexplained. As per the AO s finding in assessment order for AY 2007-08 which are final and binding, these were assessee s own money to the tune of ₹ 47,10,000 which were shown in the books as advances against booking of vehicles in name of various unknown persons. So, there were cash funds to the tune of ₹ 47,10,000 which were surrendered and available with the assessee. Though the surrender was made during the course of assessment proceedings for AY 2007-08 which was concluded by passing of assessment order on 21.12.2009 and a corresponding entry was made in the books of accounts on the same date, the surrender would be considered effective as on the last date of the financial year relevant to AY 2007-08. 11. Now coming to the AO s findings for the year under consideration wherein the AO has stated that cash deposited in the current financial year relevant to AY 2009-10 is different cash other than the surrendered amount in AY 2007-08. The AO also stated that the assessee has taken complete benefit of surrender income of ₹ 47,10,000 in AY 2010-11 given that the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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