TMI Blog2023 (12) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... is of presumption drawn and the statement of Shri Parul Ahluwalia. However, statement of the assessee has not been recorded on this issue either at the time of search, post search inquiries or even during the assessment proceedings. A careful examination of the account AP as reproduced in the assessment order would reveal that in the remarks column various acronyms have been used against different transactions such as JD, KCX, RBG Overseas, KMTY, Oven AJ, JBL Coins, Oppo Mobile, Satia, Ishaan, Anshul, Vinod 8676, Guddu etc. These abbreviations show that the transaction recorded is ne ither through bank nor cash because since specific acronyms have been used, these transactions cannot be inferred to be pertaining to the assessee even if it is presumed with account AP be longs to the assessee. Hence, keeping in view, the entire factual matrix of the case, we hold that no addition is warranted in the case of the assessee. In the result, the peak credit theory set out by the ld. CIT(A) would also be come infructuous. The appeals of the assessee on this ground are allowed. Addition on sale of gold - assessee argued that notwithstanding anything, if the gold is considered to be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Assessing Officer in making addition based upon material seized from the premises of a third party by relying upon the statement of Shri Parul Ahluwalia, Director of Jindal Bullion Ltd. 2.2 That on the facts and circumstances of the case and in law the CIT (A) erred in giving a finding in Para 4.2.18 of the order by holding that the appellant did not request for cross-examination of Shri Parul Ahluwalia at the assessment stage 2.3 That on the facts and circumstances of the case the CIT (A) was not Justified in upholding addition of Rs. 11,70,000/- out of total addition of Rs. 1,72,92,951/- as unexplained investments u/s 69 of the I.T. Act. 3. That on the facts and circumstances of the case and in law, the CIT (A) erred in not disposing off the objections of the appellant challenging the maintainability of the assessment order passed u/s 153A of the IT Act in which additions were made on the basis of alleged incriminating material seized during the course of search on a different party, although the objections have been reproduced on page 73 to 75 of the impugned order. 3.1 That as per the proposition of law settled by the Delhi High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a different party. 4. In ITA No. 1643/Del/2021, following grounds have been raised by the assessee: 1. That on the facts and circumstances of the case and in law the order passed by CIT (A) -24, New Delhi is contrary to facts and bad in law. 2. That on the facts and circumstances of the case and in law the CIT (A) was not justified in upholding the action of the Assessing Officer in treating the Ledger Account titled AP appearing in Hazir Johri software which was seized during the course of search action on a different party namely M/s Jindal Bullion Ltd. as belonging to the appellant and making an addition on the basis of such material in the hands of the appellant in assessment order passed u/s 153A of the Act. 2.1 That the CIT (A) erred in upholding the action of the Assessing Officer in making addition based upon material seized from the premises of a third party by relying upon the statement of Shri Parul Ahluwalia, Director of Jindal Bullion Ltd. 2.2 That on the facts and circumstances of the case and in law the CIT (A) erred in giving a finding in Para 4.2.18 of the order by holding that the appellant did not request for cross-examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stified in confirming the addition of Rs. 54,80,828/- by inferring seized document Annexure A-2, page-4 as a trial balance disclosing profit earned by the appellant from dabba transactions. 9. That on the facts and circumstances of the case and in law, the ld. CIT(A) was not justified in confirming the addition of Rs. 1,50,000/- by holding cash and jewellery amounting to Rs. 36,66,5 98/- seized during the course of search action as unexplained. 10. That on the facts and circumstances of the case and in law, the ld. CIT(A) was not justified in confirming the addition of Rs. 44,870/- u/s 69A by holding the 1055.400 gms of silver found during the course of search action as unexplained investment. 5. In ITA No. 156/Del/2022, following grounds have been raised by the Revenue: 1. Ld. CIT(A) had erred in accepting request of assessee for allow 8,40,1 benefit of peak credit as assessee never accepted that entries be longs to him during assessment proceedings and appellate proceedings. 2. Ld. CIT(A) had erred in allowing peak credit to assessee as it is a settled legal position that peak credit is not applicable where depo sits remain unexplained under section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... po sits remain unexplained under section 68. In the case of CIT(A) Vs. D. K. Garg [2017] 84 taxmann.com 257 (Delhi), HC held that peak credit is not applicable where depo sits remain unexplained u/s 68 of the Act . As in present case, entries remained unexplained and additions were made u/s 68 if the Act, benefit of peak credit should not be allowed to assessee. 3. Ld. CIT(A) had erred in allowing peak credit to assessee as the principle of peak credit is not applicable in the cases of where deposits remain unexplained during the assessment proceedings. For adjudicating upon plea of peak credit factual foundation has to be laid by assessee, who has to own all cash credit entries in books of accounts and only thereafter question of peak credit can be raised. In this case, assessee never accepted that credit entries belongs to him. Assessee only requested as per para 4.2.20, 4.2.21 and 4.2.22 of appellate order to allow benefit of peak credit. Ld. CIT(A) in para 4.2.19 himself held that AO was justified in adding back undisclosed income arising from seized mate rial in the hands of the appellant. 4. Ld. CIT(A) had erred in allowing peak credit to assessee as the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ware, contained both cash transactions of JBL as well as its transactions through banking channels. The transactions through banking channels are reflected in the Tally books of accounts of JBL whereas the cash transactions are not reflected in the same. The Assessing Officer held that comparison of the two accounts data viz . the one maintained in Johri-Hazir software and the one maintained in Tally software, reveals a number of discrepancies between the two sets of accounting data pertaining to JBL. It was held that most of the ledger accounts maintained in Hazir are in code names and a relation was established between the ledger account of the actual entity which was found in the tally accounts and the ledger account of the same entity as per Hazir-Johri accounts. The identification of the said Hazir accounts has been done on the basis of a number of criteria like of statements given by Shri Parul Ahluwalia, Kusharg Jindal Directors of JBL and also on the basis of banking transactions appearing in the Hazir Johri ledger accounts. The Assessing Officer held that in the Hazir account of a particular entity, there were transactions like cash received and gold paid in lieu of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this background, the pages pertaining to assessee has been examined in the Hazir Johri software. The narration recorded in the software is as under: 13. The AO has totaled up the entire credits in the said account for the year amounting to Rs. 1,72,92,950/- and treated the same u/s 69 of the Income Tax Act, 1961. The reasons given by the AO are as under: Statement of Sh. Parul Ahluwalia and Ms. Ekta Soni who confessed about the cash transactions. Name of the assessee appearing on the account as M/s Priyanka Jewellers and as AP. From the said data, a summary of daily cash transactions or cash book of Jindal Bullion limited from 01.02.2015 to 28.08.2016 and further from 28.08.2016 to 05.11.2016 were available. The said summary or cash book contained chronological record of daily cash received from and cash paid to various Hazir ledger accounts say, 'A J' or 'S D', by JBL. From the above summary, a list of Hazir ledger accounts from whom cash was received by JBL along with the amount of cash received in the relevant period was obtained. Similarly, from the said summary, a list of Hazir accounts to whom cash was paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and allowing the peak credit concept. Thus, the appeals of both the parties vis- - vis the additions made on account of Hazir Johri software account are intertwined. 19. Before us, the ld. AR argued reiterating the submissions made before the authorities be low. The submissions of the ld. AR as placed before the AO are as under: During the course of the search and survey at premises of the M/s Jindal Bullion Ltd., the search team found that the M/s Jindal Bullion Ltd. maintaining their accounts in software called 'Hazir Johri' for purchase / sale transaction and cash transactions by M/s Jindal Bullion Ltd. In which the investigation team found two ledgers named 'AP and M/s Priyanka Jewellers. It has been alleged that both of these ledgers be longs to Sh. Anoop Soni (Prop. M/s. Priyank a Jewellers). Your goodself has asked for the details of transactions mentioning in the ledger account in the name of 'AP' and 'M/s Priyanka Jewellers' attached with the questionnaire. In this regard, it is submitted that: - The entries which are reported in the above said two ledgers do not belong to the captioned assessee, except for the ones which are disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated in the SCN that the ledger account maintained in the name of AP in the Hazir accounts maintained by JBL is sufficient evidence that it be longs to the assessee Sh. Anoop Soni since the banking entries in the said ledger account match with the transaction in bank account of the assessee. There after, the total summation of credit entries for FY 2016-17, 2015-16 2014-15 has been tabulated and the assessee has been finally show-caused as to why the amount of Rs. 2,47,95,486/-, Rs. 9,32,78,397/- and Rs. 1,72,92,951/- may not be treated as unexplained investment in Jindal Bullion Ltd. for AY 2017-18, 2016-17 2015-16 respectively. 2 With regard to the above issue, it is submitted that upon close examination of the documents seized in search of Jindal Bullion Ltd. i.e. Ledger Account, following factse merge: a) The said ledger account pertain to one Mr. A.P. There is no evidence to even remotely suggest that the term AP means the name of the assessee i.e. Anoop Soni. b) In respect of all entries there is an acronym used such as JD KCX RBJ Overseas, Kamty, 01 AJ, JBL Coins, Oppo Mobiles, Setia Ishan, Anshul, Vinod 8676, Guddi etc. c) In certain transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. has been credited by Rs. 20,00,000/-. The narration states Axis Bank 9130200524704 . It is not understandable as to how this transaction can be treated as unexplained and outside books of accounts. In view of the above, it is submitted that no addition is warranted on the basis of above referred ledger account. 20. On the other hand, the ld. DR relied on the order of the Assessing Officer. 21. Heard the arguments of both the parties and peruse d the material available on record. 22. We have examined the Assessment Orders, submissions of the assessee, paper book and the order of the ld. CIT(A) containing 111 pages, containing 95 pages of the submissions of the assessee on various pleas. 23. The Assessing Officer reproduced on a sample basis at Para 5.5, copy of a loose sheet seized from the residential premises of Sh. Parul Ahluwalia, Director of JBL. The statement of Sh. Parul Ahluwalia recorded during the course of search on Jindal Bullion Ltd. on 02.01.2017 has been reproduced at para 5.6. In Para 5.8 of the assessment order it has been stated that analysis of the Hazir Johri software revealed two accounts one named AP and other named Priyanka Jewellers w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al proceedings to show that the assessee requested for cross-examination at assessment stage. The ld. CIT(A) held that the assessee was ex-director of JBL and the seized material was found from employees of JBL itself. In these circumstances, the witnesses were employees of the same company and cross-examination was not essential. We find that during the assessment proceedings vide reply dated 09.12.2018 the Assessing Officer was specifically requested to provide any evidence/statement on oath on the basis of which the transactions were being treated as related to the assessee (Page 18 of AO). Further, vide letter dated 14.1 2.2018 it was submitted that the assessee has not been provided copy of any statement furnished by JBL explaining the contents of AP ledger account. In the absence of non-provision of opportunity any adverse inference drawn on the basis of said ledger account would be against the principles of natural justice (Page 20 of AO). Anoop Soni was not the director of the JBL at the time of search. It is also an accepted position that he was neither the share holder nor promoter of JBL and therefore it cannot be said that the witnesses namely Shri Parul Ahluwalia whose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted income can be brought to tax. 30. The banking transactions pertaining to other entities such as Aarthav Gems Jewels Pvt. Ltd., Surasti Overseas Pvt. Ltd., M/s Saumya Bullion Jewellers were also recorded in the account AP whereas it had nothing to do with the assessee. In the Remand Report dated 02.08.2021 the Assessing Officer verified all these banking transactions and accepted the contentions of the assessee. In other words, it was verified by the Assessing Officer that some of the banking transactions recorded in the account AP pertain to other entities and not the assessee. Only 23% of the total banking transactions pertain to assessee and remaining 77% are between JBL and other parties. In the facts of the assessee's corroboration is missing. It is for the searched party i.e . JBL to explain the contents of material recovered from his premises. In case the searched party states that the material belongs to a third party there has to be some connect or corroboration with the third party. on the facts of the present case there is no direct evidence to establish that the account AP belongs to Anoop Soni. The entire action is based on presumptions made by the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition of Rs. 6,72,900/- u/s 69: 35. The AO made addition of Rs. 51,50,000/- based on the same page as discussed above. The ld. CIT(A) determined amount of unaccounted receipts also and accorded benefit of unaccounted receipts of Rs. 44,77,000/-. Hence, we decline to interfere with the order of the ld. CIT(A). Addition of Rs. 10,64,700/- u/s 69: 36. The AO made addition on account of 2 kg of gold mentioned at impounded page no. 28 discussed above. Before us, it was argued that notwithstanding anything, if the gold is considered to be sold, the same ought to have been purchased by the assessee. Hence, only the profit needs to be taxed. The argument of the ld. AR is in tune with the regular business practice. Hence, the AO is directed to compute 2 % on the said sale of gold. Addition of Rs. 2,89,300/- u/s 69: 37. This addition has been made based on the nothings on the impounded page no. 28 discussed above against the column stock of silver. Before us, it was argued that notwithstanding anything, if the silver is considered to be sold, the same ought to have been purchased by the assessee . Hence, only the profit needs to be taxed. The argument of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39; refers to account of the appellant as on 03.01.2017 in carrying out Dabba' trading on MCX. 40. Before us, the ld. AR argued that, a. the examination of the trial balance would reveal that it is a single page print out which is a trial balance as on 03.01.2017 of multiple accounts which are named in the first column. b. simple examination of the seized document would reveal that the various transactions in the form of future and options in gold, silver, crude oil have been mentioned. c. the names of various individuals/entities are not discernible. d. there is no title at the top of the trial balance, therefore, it is not clear that the said trial balance belongs to which individual or entity or to the assessee. e. there needs to be corroborative evidence to link the assessee being involved in doing MCX transactions outside books of accounts on Dabba trading platform. No papers or materials have been found to corroborate settlement of such transactions outside book of accounts. The person allegedly running dabba transactions is also not known. f. the said trial balance would also reveal that there is a specific line item appearing with the title A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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