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TMI Blog2012 (7) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer as unexplained do not make any difference. 3. Because under the facts and circumstances of the case only the peak credit in the bank account could have been added in the income of unexplained deposit. The rest of the deposit being covered from previous withdrawal cannot be added in income as unexplained deposits." 4. The facts of the case are that original assessment order was passed u/s. 144 of the IT Act on dated 26.04.2005 and the addition under consideration was made in a sum of Rs.35,03,011/- on account of unexplained deposits in the bank account. The Assessing Officer observed that the assessee had made deposits in different dates of bank drafts aggregating to Rs.35,03,011/-. The books of account were not produced before the AO despite issue of statutory notice. Therefore, the amount of drafts of Rs.35,03,011/- was added to the total income u/s. 69 of the IT Act. The addition was challenged before the ld. CIT(A) who has, vide order dated 07.12.2005, confirmed the addition. The matter reached before the Tribunal in ITA No. 16/Agra/2006 and vide order dated 25.05.2007, the Tribunal confirmed the addition on account of unexplained deposit in the bank account fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also the legality in respect of peak theory, I am of the view that the appellant's alternate claim of peak credit is not acceptable. 5.1 On the peak credit theory, the legal position is as under : "Where there is more than one item of addition, the possibility of such addition being overlapping cannot be ruled out. Where there are many credits, all treated as non-genuine, withdrawal from one account should be treated as available for credit in another. Setting Off withdrawals against later credits to arrive at the peak credit is a permissible exercise, if the accounts are conceded as assessee's own accounts in different names. Similarly, additions for low gross profits can be given credit for investments with similar set offs between additions known as telescoping. Both these practices are recognized in precedents under the Income Tax law. Telescoping has even had judicial recognition in Anandtharam Veerasinghaiah & Co. vs. CIT (1980) 123 ITR 457 (SC). The system of limiting addition to peak credit in the case of cash credits has also been in vogue. The principle behind both the concessions is that the over all addition cannot amount to an income beyond, what is possible. But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 21 of the assessment order and submitted that in the case of Bhaiya Lal Shyam Behari (supra), the addition was made u/s. 68 of the IT Act. He has further submitted that in the bank account, drafts have been deposited by different persons and amounts were withdrawn in cash. Therefore, the addition could be made only of peak amount. He has relied upon the order of ITAT, Agra Bench in the case of Chandrabhan Bansal, 79 ITD 639 and the order of ITAT, Ahmedabad Bench in the case of S.P. Enterprises, 77 TTJ 69 on the proposition that peak addition could be made when the details are available of the funds from known sources. On the other hand, the ld. DR relied upon the order of the ld. CIT(A) and submitted that several drafts were deposited in the bank account of the assessee which were not explained by the assessee. The identity and the source of the same were not explained. Therefore, the Tribunal vide order dated 25.05.2007 confirmed the addition of Rs.35,03,011/- on merits. However, the issue of peak credit was remanded to the file of the ld. CIT(A) to examine the same as per law and the ld. CIT(A) examined the issue as per law by following the decision of Hon'ble Allahabad High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can the question of peak credit be raised. The said decision was later on followed by Hon'ble Allahabad High Court in the case of CIT vs. Vijay Agricultural Industries, 294 ITR 610 and held as under : "Held, that in respect of the squared up accounts of the two depositors, the Assessing Officer himself had taken the peak credit as unexplained deposit and added it under section 68 of the Act. So far as the remaining deposits were concerned there was no transaction between the depositors and the assessee. The principle of peak credit and could not apply in case of different depositors where there had been no transaction of deposits and repayment between a particular depositor and the assessee. The Tribunal was not justified in directing the Assessing Officer to take the peak credit for the purposes of section 68 of the Act." 6.1 Since in the case of assessee, it is not in dispute that different drafts were deposited in the bank account of the assessee in the name of different persons, therefore, peak theory cannot be applied in the case of assessee. Further, from the bank statement, it is clear that after deposit of bank drafts in the account in the name of different persons, cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 7.1 The ld. CIT(A), however, dismissed the appeal of the assessee in limine by not condoning the delay. His findings in para 3 to 3.3 are as under : "3. After careful application of mind, I find that although courts have taken a liberal view in matters of condonation of delay in appeal; at the same time, in P.K. Ramchandran vs. State of Kerala AIR 1998 (SC) 2276, it was pointed out that the law of limitation cannot be disregarded on equitable grounds. In the present case, the delay is inordinate of nearly two years. The affidavit filed is of present Advocate, which is a self serving and cannot be given much credence. The fault lay with the appellant & with its previous counsel but none of them has furnished any affidavit. If at all the mistake is of the previous counsel; his affidavit and that too with justified explanation along with personal appearance before the undersigned, was essential requirement for even considering this contention any further. 3.1. Reliance is placed in the case of Nihalkaran vs. CWT (1989) 175 ITR 14 (MP) wherein it has been held - "Prayer for condonation of delay, where reference application was barred by limitation. The contention was that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. It is also stated in the affidavit that when he received notice u/s. 221(1) dated 13.05.2009 (PB-7), the same was shown to the counsel for the assessee Shri Pankaj Gargh, Advocate, who argued the matter before the Tribunal and it came to know that the appeal has not been filed. Accordingly, papers were taken away from the earlier C.A. and handed over to the present advocate and appeal was accordingly filed with the request of condonation of delay. It is, therefore, averred in the affidavit of the director of the assessee company that the appeal could not filed within time due to lapse on the part of the earlier C.A. The ld. counsel for the assessee, therefore, submitted that the assessee may not be made to suffer for the negligence of counsel and relied upon the same judgments which were relied upon before the ld. CIT(A) and gist of the same has been incorporated in the appellate order. He has also submitted that the ld. CIT(A) instead of considering the factual position, dismissed the appeal of the assessee by holding that the affidavit is filed of the present advocate. He has further submitted that the ld. CIT(A) also noted that the fault lay with the assessee or the previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing the appeal of the assessee considering it to be time barred, the ld. CIT(A) confirmed the levy of penalty on the amount of addition of Rs.26,33,328/-, which has already been deleted and cancelled by the Tribunal vide order dated 25.05.2007. Since the order of the Tribunal was delivered after the levy of penalty, therefore, such circumstances and peculiar facts should have been considered by the ld. CIT(A) in the penalty appeal instead of dismissing the appeal of the assessee holding it to be time barred. By dismissing the appeal of the assessee considering it to be time barred, the levy of penalty on the addition of Rs.26,33,328/- on which the Tribunal has already deleted the addition, stands confirmed. In such circumstance, the assessee would suffer because of no fault on the part of the assessee. Such peculiar and exceptional circumstances shall have to be considered while considering the condonation of delay in the matter. This fact was neither considered by the ld. CIT(A) nor have been pleaded by the parties anywhere, but on going through the entire material on record, it transpires that the assessee had already suffered at the hands of its counsel in not filing the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In such circumstances, the delay should have been condoned by the ld. CIT(A) in filing the appeal before him. In view of the above discussion, we are satisfied that the assessee had sufficient cause for not presenting the appeal within the period of limitation before the ld. CIT(A). We, therefore, set aside the order of the ld. CIT(A) and condone the delay in filing the appeal before the ld. CIT(A) beyond the period of limitation. Since the delay is condoned in the matter and the ld. CIT(A) has not decided the appeal of assessee on merits, therefore, the appeal of the assessee is restored to the file of ld. CIT(A) with the direction to redecide the appeal on merits by giving reasonable and sufficient opportunity of being heard to the assessee. Since it is an old matter pertaining to assessment year 2003-04, therefore, the ld. CIT(A) is directed to dispose of the appeal of the assessee preferably within the period of two months from the receipt of this order. As a result, the appeal is allowed as indicated above. 10. In the result, appeal of the assessee in ITA No. 456/Agra/2010 is dismissed and ITA No. 457/Agra/2010 is allowed as indicated above. Order pronounced in the open cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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