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TMI Blog2011 (9) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 17,43,95,000/- calculated by the AO. 3. Whether on the facts and circumstances of the case, the ld. CIT(A) has erred in law and on facts in holding that the AO's method of treating each contended lender separately and then grossing up the amount of peak unaccounted advance was not correct. 4. Whether on the facts and circumstances of the case, the ld. CIT(A) has erred in law and on facts in directing the AO to calculate the peak unaccounted advances by merging different contended lenders into one only and treating one person as the lender thereby substituting the method adopted by the assessee.'' 2.2 The figures mentioned in the grounds of appeals are different for different assessment years. The ground of appeal no. 2 relevant for the assessment year 2007-08 is also arising for the assessment year 2008-09 but it is not arising in assessment year 2006-07. Hence, grounds of appeal no. 3 and 4 as mentioned above are grounds of appeal no. 2 and 3 for the assessment year 2006-07. 2.3 The appeals have been fixed on 09-02-2011, 26-05-2011, 20-07-2011 and 12-09-2011. The records show that the fixation notice has been served upon and the acknowledgments are available on record. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e behalf he made the transactions and in case he fails to give these details then it should be presumed that the amounts advances are from his own undisclosed income. The assessee vide his letter dated 12th July, 2007 and 23rd July, 2007 offered the additional incme of Rs. 6,13,75,000/- for assessment year 2007-08 and 2008-09 on account of peak balance of advances given to various parties as per seized Annexure A-1 & A-2. However, such undisclosed income was not shown in the return of income. The AO has relied upon the following case laws to support the case of the revenue that the assessee cannot retract from the statement. 1. V. Kunhambu & sons Vs. CIT, 219 ITR 235 (Ker) 2. Dr S.C. Gupta Vs. CIT, 248 ITR 782 (All.) 2.7 Before the AO, the assessee filed his submission vide letter dated 27th Nov. 2009 in which it was stated that the assessee has not done any money lending but only acted as a broker and arranged the transactions between the borrower and lender. This is evident from the diaries seized as Annexure A- 3 & A-4. The diaries contained the name of the lenders as well borrowers. Attention was drawn to page 2 to 4 of Annexure A-58 in which brokerage income has been cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red and if these transactions are excluded then the amount will be reduced by figure of Rs. 8,15,80,000/- 5. The burden is on the revenue to prove that apparent is not real. The transactions as recorded in the documents clearly suggest that the nature of amounts being given by the lender to borrowers through the assessee. 6. The revenue has recorded the statements of certain borrowers and these borrowers have admitted that the assessee is a broker. 2.9 The AO has considered the submissions. The diaries containing transactions are in the nature of books of accounts in the eye of law. The onus was on the assessee to establish the identity, creditworthiness and genuineness of the transactions made in the diaries in the names of the borrowers and the lender. The AO has observed that the peak of amount lent to each borrower by each lender was worked out and this totalled to Rs. 46,82,82,000/-. However, it was noticed that the amount lent to one borrower was discontinued on a particular date and the same was lent to other borrower. If this aspect is considered then the peak amount will come to Rs. 25,64,35,000/-. The peak amount which has been bifurcated for three assessment years a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available on record. The incriminating documents have been found during the course of search . These documents clearly suggest that the assessee is indulging in money lending business. The transactions are recorded in the diaries and these diaries are to be considered as books of accounts because the transactions are recorded in chronological order. Section 68 is clearly applicable and the onus is on the assessee to establish the identity and creditworthiness of the creditors and genuineness of the transactions. When the income is to be considered deemed income then onus is not on the revenue to establish that it is a real income. 2.14 It is noticed that the assessee himself filed a letter after the search in which he disclosed the additional income of Rs. 6,13,75,000/-. Searched were conducted on 16-05-07 while the letter is dated 23-07-07. Thus disclosure has been made after around two months of the search. There is nothing on record to suggest that the assessee filed another letter to retract his offer of undisclosed income. Instead of showing undisclosed income in the return, the assessee has shown only brokerage income. Subsequent retraction is not permissible and reliance i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven on the search day, then the court or Tribunal should try to ascertain the reason or circumstances from such person for doing so and, if satisfied, not to place heavy reliance on such earlier statement which has subsequently been denied and retracted.' ''The learned Ahemdabad Bench in the case of Deputy CIT Vs. Bhogilal Mulchand (2005) 96 ITD 344 held that statement given u/s 132(4) is not conclusive and person can retract under certain circumstances. However, time gap between statement and retraction of statement is one of the important points to be taken into account to decide as to whether the statement was given under mistaken belief of either fact or law. However, when the assessee retracted statement made u/s 132(4) after three and a half months of disclosure and there was not an iota or evidence to support retraction then the Assessing Officer was justified in not accepting the assessee's retraction. In the instant case, the assessee has not retracted the disclosure before the DDIT but has not included the undisclosed income while filing the return on April 13,1999. Disclosure was admitted vide letter dated Jan. 22, 1999. Thus, the time gap is too large and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary. Such submissions of the assessee were against the finding of the Tribunal in not merging of the credits. However, Hon'ble Jurisdictional High Court held that benefit of ''peak credit'' theory could or could not be granted to the assessee is really question of law. In the instant case, the AO has allowed the peak credit in respect of a particular lender. The peak credit of each lender has been considered for arriving at the peak addition to be made in each year. It is not the case of the assessee that he himself is a lender. In case the assessee has given an admission that the money belonged to him then credits of the lenders should have been merged. The assessee in spite of filing the letter of disclosing the additional income, has not honoured such disclosure. The names of lenders are available in the diaries and the assessee has contended that he is getting 0.10% brokerage. Under these circumstances, we feel that the AO was justified in considering the peak in respect of each lender and computing the undisclosed income for three years in view of Section 68 of Income Tax Act . We therefore, uphold the orders of the AO and the orders of the ld. CIT(A) are vacated. 3. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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