TMI Blog2017 (6) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... of repayment was available for many advances - The calculation of “peak credit theory” is applied for those entries for which dates of advance and repayment are available - hence advances for which no dates are available are held to be not paid back till date of search - currency notes were recovered having writing and is not a case of unaccounted debit and credit simplicitor, thus “peak credit theory” was not applied - matter is remanded back to the Settlement Commission to decide the issue of decoding afresh, involvement of the petitioner in money lending and other issues - matter remanded back - S. B. Civil Writ Petition No. 802 / 2014 - - - Dated:- 9-6-2017 - M. N. Bhandari, J. For Petitioner : Mr.NM Ranka, Sr. Adv. with Mr.NK Jain For Respondent : Mr.Anil Mehta with Ms.Archana JUDGMENT By this writ petition, a challenge is made to the order dated 30th September, 2013 so as the notice of demand and income tax computation dated 01st November, 2013. The further prayer is to accept the undisclosed income of ₹ 10 lac or alternatively of ₹ 25 lac, as earlier computed. Learned counsel submits that the petitioner is carrying business of trading as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No evidence to receive interest was available. Addition in those circumstances can be made on peak credit basis and, as per the aforesaid, total comes to ₹ 2,36,000/- instead of ₹ 3,36,50,000/-. It is further stated that on 20th November, 2012, the Settlement Commission directed the Revenue to check the calculation on peak credit theory but without receiving comment, the decoding was made by treating 1 equals to 1 lac. The currency notes were containing signatures of the petitioner, which could not have been if the money is to be advanced, rather it was a case of receiving emeralds on approval. In view of the above, the Department failed to discharge its burden as per Section 132(4A) as well as under Section 69 of the Act of 1961. It is also stated that if the amount was advanced since 30th September, 1995 and onwards, there is no evidence to show repayment of it, which cannot happen in the case of money lending. All these aspects are relevant but were not considered by the Settlement Commission. The peak credit theory was also not applied though no objection for it was made by the Department. The order was passed with pre-determination. The Commission made an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the practice in the State of Rajasthan. In a case of money lending, there exists convention of repayment in two months. It has been duly noticed in Rule 9 Report. The amount otherwise rotates. The investment is thus to be computed on peak credit theory and it is consistently followed in the State of Rajasthan and all over India. The aforesaid has not been considered properly by the Commission. The calculation should have been made by applying peak credit theory . An alternate argument in reference to Rule 9 Report has also been given. The total amount comes to ₹ 9,71,460/- only by applying decoding of 1 = 1000. As per the peak credit theory , the amount would be ₹ 4,61,000/-against the total transaction of ₹ 9,71,460/-. The peak credit theory was not accepted by the Commission as writing was on the currency notes and not on the document. The peak credit theory was ignored despite the fact that Assessing Officer had no objection for its application. The petitioner was even discriminated with other assessees, who were assessed on peak credit theory . It is also a settled law that tax is to be calculated on real income and not on imaginary or on hypot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of advance was recorded in code. The advances were renewed bi-monthly. It is stated that if Mr.Rajkumar Sharma used to send emeralds on approval basis i.e. Jakad to the assessee then transactions should have been recorded in his regular books of account. The assessee failed to show a single transaction where emeralds has been purchased. If emeralds are send on Jakad, it is recorded on papers and not on currency notes and is to be for short period, whereas, slips attached on the currency notes were showing by monthly date of renewal and it was for longer period. The assessee has admitted that figure mentioned on the seized paper and documents is 1=100. This clearly shows illintention of the assessee otherwise in case of fair transaction, figures would not have been mentioned in code. The Settlement Commission has taken note of all the issues. The issue of peak credit theory and the issue of decoding has been dealt with extensively in the impugned order. The issue of decoding was considered in the case of Parshvanath Sharebrokers Pvt. Ltd. also where search under Section 132 of the Act of 1961 was carried out. While answering the question No.20, a statement was rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tailed finding. The petitioner has contested the issue aforesaid by stating that emeralds were given on Jakad . It is also stated that money lending could not be proved by the Revenue in Rule 9 Report thus burden under Section 132(4A) of the Act of 1961 has not been discharged. Reference of many judgments has been given. It is also alleged that burden under Section 69 of the Act of 1961 was not discharged by the respondents. I find that the Settlement Commission has considered all the material produced before it and based on the aforesaid, finding has been recorded. It is not only after considering the fact that the material seized from Mr.Rajkumar Sharma were not only loose papers and note books but currency notes. It was showing calculation of interest on bi-monthly basis and, for that, writing on different papers was showing calculation of interest. It was also found that if emeralds were given on Jakad basis, it cannot be for a long period because if emeralds are not approved, it would be returned. The seized documents were showing transaction for long duration. The books of account of the parties do not show a single entry of purchase of emeralds said to have been given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs is concerned, the same being a factual issue should not have been gone into by the High Court exercising the writ jurisdiction and the High Court should not have substituted its own opinion against the opinion of the Settlement Commission when the same was not challenged on merits. Para Nos.11.7 to 11.9 of the impugned order are quoted hereunder to show how the issue has been considered and reflects that finding has not been recorded based on presumption but is in reference to the material available on the record : 11.7 The Scrutiny of these seized materials discloses that these papers/currency notes are having record of money lending transactions pertaining to Sh. P.C. Dhadda as P.C. Dhadda s name is appearing on several places on these papers particularly on all the currency notes. An examination of the currency notes and account slips attached with these currency notes discloses name of the person to whom advance of money has been made, date of advance, period for which advance has been renewed. The amount of advance has been recorded in code. The advances have been renewed in a bimonthly manner which is a common feature in the field of money leading business. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned to the transaction. It is, however, a fact that Mr.Rajkumar Sharma has used two codes by indicating 1=100 and other 1=1000. It could not be explained as to how two codes were used but merely for that reason, presumption cannot be drawn for using code 1 = 1,00,000. The revenue is required to discharge its burden. The perusal of the order of the Settlement Commission shows decoding based on presumption than material on record. The decoding of 1=1,00,000 cannot be made on hypothetical basis thus while holding that the documents seized from Mr.Rajkumar Sharma are related to money lending, finding regarding decoding cannot be accepted, rather, matter needs to be remanded for passing fresh order limited to the issue of decoding. The third issue is as to whether peak credit theory should have been applied. It is alleged by learned counsel for the petitioner that there is custom and convention of repayment of amount on bimonthly basis and has been noticed in Rule 9 Report thus peak credit theory should have been applied. The theory of peak credit has not been applied by the Settlement Commission by giving detailed reasons. Under what circumstances, peak credit the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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