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TMI Blog2014 (2) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... count - In the absence of the assessee having discharged his onus of proving the identity, credit worthiness and genuineness of the cash transaction of the cash credits in the bank account, there was no merit in the plea of the assessee - the provisions of section 68 of the Act are applicable. Applicability of peak credit theory – Held that:- The peak credit theory is not applicable as the assessee had deposited cash in the bank account and thereafter, cheques were issued to different parties - there are deposits in cash but as against the said cash deposited, various cheques were issued and the assessee was unable to explain the source of cash deposited in his bank account – there was no legal infirmity in the order of the Tribunal – Decided against Assessee. - ITA No. 17 to 20 /Chd/201 3 - - - Dated:- 20-9-2013 - T R Sood And Sushma Chowla, JJ. For the Appellant : Shri Sudhir Sehgal For the Respondent : Shri Manjit Singh ORDER:- PER : Sushma Chowla This bunch of appeals are filed by two different assessees against separate orders of CIT(Appeals) as detailed under : S.No. Case No. Name A.Y. Date of order of CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. That notwithstanding the above said ground of appeal, the learned CIT(A) has erred to consider that the Assessing Officer has failed to take the notice of the statement of the Sudhir Kumar Sharma (Karta) as recorded during the course of survey conducted at the business premises of the assessee on 31.10.2007, wherein he had categorically stated that we are engaged only in giving the accommodation entries to various persons and at best only commission to the tune of 0.05% should have been assessed against the addition of all the deposits in the bank account of the assessee. 6. That the learned CIT(A) has erred to consider that the Assessing Officer has failed to take the notice of the fact that the assessee does not have any immovable/movable property and no worthwhile sources to enable him to deposit the huge cash in his bank account. 7. That the learned CIT(A) has erred to consider that the Assessing Officer has failed to take the notice of the Judgment of jurisdictional Bench of the Income Tax Appellate Tribunal i.e. Chandigarh Bench in the case of Shri B K Jain, wherein under the similar facts and circumstances, the assessment had been framed in his hands and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards the end of the assessment proceedings, produced computerized cash book and ledger but failed to produce the client register, sauda book and vouchers. Further, on examination of the cash book and ledger, it was noted that the ledger accounts were opened in short names and complete addresses of the persons in whose names ledger accounts were opened were not given. The statement of the accountant was also recorded and the same is incorporated under para 5 of the assessment order. In the absence of any evidence being filed by the assessee, the Assessing Officer show caused the assessee as to why total cash deposits in the bank account may not be added to the taxable income being income from unexplained sources. In the absence of any explanation, the Assessing Officer made an addition of Rs. 7,02,85,510/- is income from unexplained sources. 9. The CIT(Appeals) held that if the assessee was engaged in the business of commodity trading on behalf of the its client, then it was incumbent upon him to maintain its accounts in such a manner so as to show that any amount due from clients could be recovered as and when required. The CIT(Appeals) held that the assessee had failed to mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 17. The case of the assessee was picked up for scrutiny and statement of the assessee was recorded on 14.12.2009. In reply to the queries raised by the Assessing Officer while recording the said statement, the plea of the assessee was that it had received cash from its clients and the details were available in books of account which would be provided to the Assessing Officer on the next date of hearing. The Assessing Officer requisitioned the assessee to produce atleast 10 persons who had deposited Rs. One lac and above in the bank account. The assessee replied that he would verify the record and inform the status. In another query raised by the Assessing Officer that "Let me know how the above persons deposited the cash in your bank", the reply of the assessee was "Cash is received from customers and the same is deposited in bank. " In view of the commodities exchange, the assessee explained that the Ludhiana Commodities Exchange charge transaction charges from the assessee at the rates depending on turnover. The concern M/s Shubh Krishna, which was the proprietor concern of the HUF of the assessee, was claimed to be registered with Ludhiana Commodities Exchange and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te details during the assessment proceedings. The Assessing Officer, thus held that in view thereof, whether the cash deposits belong genuinely to the customers or it belonged to the assessee, could not be ascertained, resulting in the genuineness of the transactions being not proved. It was also a finding of the Assessing Officer, that only cash deposits were made in the bank account and there were no cash withdrawals from the said bank. The outgoings were only cheques which were unverifiable. The assessee had failed to corroborate the cash deposit with any evidence of the identity of the depositor or any other evidence. The Assessing Officer, thus made addition of Rs. 126,66,000/-. 19. The plea before the CIT(Appeals) raised by the assessee was two-fold i.e. the provisions of section 68 were not to be applied and it best the addition could be restricted to the peak credits. The CIT(Appeals) upheld the peak credit theory to be applied to the facts of the case and restricted the addition to Rs. 10,55,260/-. The CIT(Appeals) however, in principle held that the Assessing Officer was correct in holding that the abovesaid additions were maintainable in view of the provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raders of M/s shubh Krishna Commodities". The query No.14 was "Whether the said companies/firms who were the traders of M/s Shubh Krishna were paying any charges to M/s Shubh Krishna" The reply of the assessee in this regard was that "He would let the Assessing Officer know after checking the same. " Query No. 16 to 19 and their answers were as under: Q:-16 Is the transaction, made by above stated companies through recognized commodities exchange or not. Ans: t is through exchange in one or two cases is other cases it may be client to client. M/s B.K commodities and M/s M.K commodities are registered with Ludhiana, commodities Exchange others are not. Q:-17 You have stated that in some concerns I routed business privately not through MCX. It means you running a parallel commodities exchange, please explain the same. Ans: t is not correct that we are running parallel running exchange However client to client dealing as per prevalent market rate are permissible as commercial transactions. Q-.-18 You are requested to provide the soda book maintained by you for running the business. Ans: What ever is available relating to these tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10." 24. Under the provisions of section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. However, before CIT(Appeals), a plea was raised that only commission is to be added in the hands of the assessee in view of various judicial precedents. A perusal of the order of the CIT(Appeals) does not reflect any findings on this issue and issues addressed by the CIT(Appeals) were whether provisions of section 68 are applicable and in the alternative, whether peak-credit is to be applied in the hands of the assessee. The assessee in this ground of appeal raised before the Tribunal has not raised any such issue of the commission income being included in his hands. Only two issues have been raised; i.e. invoking of provisions of section 68 of the Act and confirmation of addition of Rs. 1055,260/-. The issue of whether the assessee is engaged in giving accommodation entries or not is a purely factual issue which has not been raised before the authorities below i.e. during the course of assessment proceedings or even before the CIT(Appeals), the said issue has not been adjudicated. The plea of the assessee of admission of such new factual issue is not admissible at this stage of adjudicating of the appeal in the captioned years. We find no merit in the said plea of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion should be resorted to on account of unexplained deposit in the account of 'B'. According to the assessee, it should be presumed that the deposit in the account of 'B' was made out of the funds which were available to the assessee after the withdrawal of the amount from the account of 'A'. We cannot subscribe to this point of view. According to us, if the assessee is not able to prove the genuineness of the deposit in the account of 'B', a separate addition in respect of that will be required to be made. As per the provisions of section 68, where any sum is found credited in the books of an assessee and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory, the sum so credited is to be charged to income-tax as the income of the assessee. Hence, it is for the assessee to establish the source of the deposit in the account of 'B'. If the assessee admits that the alleged deposit in the account of 'A' was not genuine and, in fact, it was the assessee's own money which had been introduced in the books in the garb of a loan from 'A' and hence when this amount was available to the assessee for being introduced as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the ground Nos. 2 to 9 raised by the assessee. 13. The assessee in ITA No. 18/Chd/2013 has raised ground Nos. 1 to 8, which are identical to ground Nos. 2 to 9 raised by the assessee in ITA No. 17/Chd/2013. As the issue raised in ITA No. 18/Chd/2013 is identical to the issue raised in ITA No. 17/Chd/2013, our decision in ITA No. 17/Chd/2013 shall apply mutatis-mutandis to the appeal in ITA No. 18/Chd/2013. The grounds of appeal raised by the assessee are, thus dismissed. 14. In ITA No. 19/Chd/2013, ground No. 1 raised by the assessee is against re-opening of assessment under section 148 of the Act and the same was not pressed by the assessee. Hence, the same is dismissed as not pressed. 15. The issue in ground Nos. 2 to 9 raised by the assessee is identical to the issue raised in ITA No. 17/Chd/2013 vide ground Nos. 2 to 9. Hence, our decision in ITA No. 17/Chd/2013 shall apply mutatis-mutandis to the appeal in ITA No. 18/Chd/2013. The grounds of appeal raised by the assessee are, thus dismissed. 16. In ITA No. 20/Chd/2013, the issue in ground Nos. 1 to 8 raised by the assessee is identical to the issue raised in ITA No. 17/Chd/2013 vide ground Nos. 2 to 9. Hence, our dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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