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TMI Blog2014 (7) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... erred by the assessee under Section 260A of the Income Tax Act, 1961 (in short, "the Act") against the order dated 27.6.2013, Annexure A.3 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh in ITA No.964/Chd/2010 for the assessment year 2007-08, proposing to raise following substantial questions of law for determination of this Court:- "a) Whether the Tribunal misdirected itself in law as well as on facts in reversing the order of the learned CIT(A) whereby the latter had upheld the theory of peak credit on the facts of the case of the appellant emerging from the material on record? b) Whether on the facts and in the circumstances of the case, the Tribunal while affirming the order passed by the Assessing Officer acted illegally and perversely in recording its conclusions based on irrelevant findings and in ignoring uncontroverted relevant material on record? c) Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in applying the provisions of section 68 of the Income Tax Act, 1961while affirming the additions made by the Assessing Officer? d) Whether on the facts and in the circumstances of the case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the entries were trade debts and, therefore, Section 68 of the Act was not applicable. An application bearing CM No.5693-CII of 2014 has been filed by the appellant giving the list (Annexure A.5) of persons (cash creditors), from whom cash had been received and payment had been made by cheque. Learned counsel submitted that without prejudice to the rights of the department to recover the amount under the orders of the Tribunal, the matter may be remanded back to the Assessing Officer to summon all persons as per Annexure A.5. Similar applications have also been filed in some of the connected appeals as well. 5. We have heard learned counsel for the appellant and perused the record. 6. While framing the assessment, the Assessing Officer vide order dated 31.12.2009, Annexure A.1 invoking Section 68 of the Act made additions amounting to Rs. 7,81,87,362/- on account of alleged cash credits. It was noticed as under:- "5. In view of the facts mentioned above, the cash deposits taken from so called customers have entered in cash book and accordingly the cash deposited in the bank account of the assessee are unexplained cash credits in the books of the assessee and fall within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant that books of account were not maintained. The observation of the AO in this case has been that such books of account were not produced. In answer to question No.5 of the statement of Shri S.K.Sharma recorded by the AO on 14.12.2009 and which has been reproduced in the assessment order, Shri Sharma has stated that 'record of clients is as per books of account'. In answer to question No.6 wherein the AO asked to provide the books of account Shri Sharma had stated that 'I will provide it on tomorrow i.e. 15.12.2009'. Again with regard to the query in respect of cash deposited as per books of account on behalf of the clients, in answer to question No.8 of the statement Shri Sharma had stated that the details were there and that he would check from the books of account and provide the same. The answer to these questions clearly show that the appellant did maintain the books of account. It is therefore, implied that the deposits made in the bank accounts were also entered in these books of account of the appellant. Accordingly though in the absence of the books of account the AO has made the basis of addition to be the deposits in the bank account, this would ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes and addresses of the customers/clients who had deposited these amounts. The reply of the assessee in this regard was, 'If details are there, I will check from books of account and provide the same'. The assessee, thereafter was directed to produce atleast 10 persons who had deposited Rs.1 lac and above in the bank account. The assessee explained that he will verify from record and let the Assessing Officer know about it. In reply to query No.10, the assessee claimed that cash is received from customers and same is deposited in bank. The plea of the assessee before the Assessing Officer was that he was engaged in the business of commodities and query Nos.12, 13 were raised in respect of the commission received from Ludhiana Commodities Exchange. The reply of the assessee query No.13 i.e. 'Are you registered with Ludhiana Commodity exchange' was that 'only M/s Shubh Krishna of which HUF is the proprietor and I am karta of HUF is registered with LCE and other companies and firms in which I am Director or Proprietor are branches/traders of M/s Shubh Krishna Commodities'. The query No.14 was 'whether the said companies/firms who were the traders of M/s Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is not satisfactory in relation to the same, then such credits may be charged to tax as income of the assessee for that particular previous year. Admittedly, in the case of the assessee, various amounts in cash are deposited in the bank accounts of the assessee and the onus was upon the assessee to explain nature and also the source of the said cash deposits. The assertion of the assessee in this regard was that it was the amount received from clients. However, the assessee failed to give the list of such persons who had advanced the said cash to the assessee. The assessee even failed to bring on record any evidence to prove its stand that it was the amount received from such persons who were his clients. The assessee failed to file any confirmation in respect of the said cash credits nor any of the persons were produced for examination before the Assessing Officer, though specific direction in this regard was given by the Assessing Officer within the course of recording of statement of the assessee, during assessment proceedings. The assessee even failed to produce the books of account. In the absence of the assessee having discharged his onus of proving the identity, cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and we uphold the order of CIT(Appeals) in this regard. xx xx xx xx xx xx x 28.The next issue raised in the present appeals is in relation to the applicability of peak credit theory. In the facts of the present case, the said peak credit theory is not applicable as the assessee had deposited cash in the bank account and thereafter, cheques were issued to different parties. It is not a case where cash was deposited on different dates and in between, there were cash withdrawals from the different dates and in between there were cash withdrawals from the bank account. It is a case where 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. Rejecting the theory of peak credits applied by the Assessing Officer, we reverse the findings of CIT(Appeals) in this regard and restore the addition made by the Assessing Officer at Rs. 1,26,66,000/-. xx xx xx xx xx xx xx" 9. A perusal of the findings recorded by the authorities below clearly spells out that admittedly, various amounts in cash were deposited in the bank account of the assessee and the onus was upon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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