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TMI Blog2016 (4) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... M SHRI LALIET KUMAR, JM For The Assessee by : Shri Rajeev Sogani (C.A.) For The Revenue : ShriO.P. Bateja (Addl.CIT) ORDER PER SHRI T.R. MEENA, A.M. These are two appeals filed by the assessee emanating from the order of ld. CIT (A), Alwar dated 24.02.2014 for the A.Ys. 1998-99 and 1999-2000. The grounds raised in the appeals are as under :- ITA No. 262/JP/2014 A.Y. 1998-99 : 1. That the ld. AO has erred in law as well as on the facts and circumstances of the case in giving a finding in the assessment order that the assessee has accepted the loan during the year on the contrary there is no acceptance of loan, but the assessee has given the loan, which is established from the copy of the peak working submitted during the curse of assessment proceedings, which remained uncontroverted by the AO and ld. CIT (A) erred in sustaining the same. 2. That the ld. AO has erred in law as well as on the facts and circumstances of the case in adding a sum of ₹ 4,50,000/- being the peak credit under section 68 of the I.Tax Act 1961, whereas the facts remains that there is no peak credit, on the contrary there is a debit balance given by the assessee ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order to be made denovo after providing proper opportunity to the assessee on the proposed additions. In the meanwhile the assessee went in appeal before the Income Tax Appellate Tribunal, Jaipur and the Tribunal directed the assessee to make the addition on the basis of peak theory. Thereafter the AO had made reassessment u/s 148/264/143(3) and find out that the money introduced by the assessee was not his own money under the garb of borrowing in cash. Therefore he had not accepted the contention of the assessee that these are actual borrowings. The AO also examined all parties by calling them by issuing notice under section 131. All the parties have denied in having given any cash loan to the assessee. However, in compliance to the directions of the Tribunal the AO worked out the peak for the year under consideration and made the addition. The AO worked out the peak amount at ₹ 52,30,000/- and as such addition was made on this account. Further addition of ₹ 3,49,844/- was made on account of alleged interest paid on the cash credit of ₹ 52,30,000/-, trading addition of ₹ 19,399/- and completed the assessment under section 143(3)/148/264 of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Following the decision and direction of the ITAT Jaipur Bench Jaipur, he considered the peak of ₹ 4,50,000/- after taking into account all the Badla entries of diary for the period 01.01.1998 to31.03.1998. The assessee has admitted the calculation of peak work out at ₹ 4,50,000/- as such. Accordingly same was treated as undisclosed income u/s 68 of the IT Act at ₹ 4,50,000/-. Further, the AO also estimated the interest on this peak amount at ₹ 20,000/- which was also added to the income of the assessee. 3. Being aggrieved by the order of the AO, assessee carried the matter before ld. CIT (A) who had confirmed the addition by observing as under :- 4.7. I have gone through written submissions filed by the appellant and do not find any logic or rational in the argument that the peak credit worked out by the AO at ₹ 4,50,000/- may be dis-regarded. The present theory of the whole credit being given out of the cash balance available in the regular books of accounts is not acceptable as it had never been the stand of the appellant in the last 10 years. This peak credit was worked out by the AO after examination of the appellant himself, and thus th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year under consideration on account of peak credit working. In appellate stage also this was the first argument before ld. CIT (A). The ld. CIT (A) held that this was the change in stand of the assessee but the ld. A/R argued that even to calculate the real income, the change of stand is allowed by the various High Courts for which he cited number of decisions in support of his submission. The cases are as under :- CIT vs. Jute Corporation, 187 ITR 688 (SC) National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (SC) CIT vs. Rewari Central Co-operative Bank Ltd., 263 ITR 598 (P H) CIT vs. Kanpur Coal Syndicate, 53 ITR 225 (SC) Popular Automobiles vs. CIT, 187 ITR 86 (Ker.) The relevant question before the Court is that whatever claim made by the assessee is substantiated from the record or not. He further relied on the following cases :- CIT vs. S. Nelliappan, 66 ITR 722 (SC) Ahmedabad Electricity Co. Ltd vs. CIT, 199 ITR 351 (Bom.) CIT vs. Jute Corporation, 187 ITR 688 (SC) CIT vs. Breach Candy Swimming Bath Trust, 27 ITR 279 (Bom.) CIT vs. Indian Express (Madurai) P. Ltd. 140 ITR 7051 and requested to allow the appeal in favour of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 2,435/- has deleted. 4) Ground of unexplained cash creditors of ₹ 1,27,34,000/- : The ld. CIT (A) directed the AO to work out the amount of credit of Diary Geeta Dayanandini 1998 keeping in mind the direction of Hon ble ITAT, Jaipur Bench, Jaipur nd follow the decision of Hon ble Rajasthan High Court in the case of CIT vs. Ishwar Das Mutha 270 ITR 597. 5.3. Against the order of ld. CIT (A) dated 27.02.2007, the assessee preferred appeal before the ITAT. The AO after considering the ITAT decision dated 22.12.2006, completed the assessment proceedings u/s 143(3)/253 on 18.01.2007 by making the following additions :- 1) Trading addition in Chana Dal ₹ 69,679/- 2) Trading addition in Gwar ₹ 2,442/- 3) Unexplained cash credit ₹ 16,60,000/- 4) Investment in purchases as discussed above and confirmed by CIT (A) ₹ 20,90,604/- 5) Interest to cash creditors ₹ 3,52,800/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. ₹ 4.5 lacs to issue fresh loan in said year. The highest peak credit of ₹ 19.6 lacs has been voluntarily surrendered by the assessee. Accordingly he made addition of ₹ 16.60 lacs and interest thereon ₹ 3,52,800/-. 6. Being aggrieved by the order of AO, this addition was challenged before ld. CIT (A), Alwar who had partly confirmed the order by observing that transaction relating to cash receipt and payment recorded in the said diary relate to money taken from other parties and given on interest to other parties. Since the appellant could not explain the source of these receipts, the peak amount has been taxed in the hands of the appellant. For interest addition of ₹ 3,52,000/-, he has allowed the set off against the purchases made. Therefore, addition on account of interest has been deleted by the ld. CIT (A). 7. Now for the years the assessee is in appeal. 7.1. For AY. 1999-2000, the ld. A/R of the assessee submitted that the ITAT vide order in ITA No. 664 609/JP/2007 for AY 1998-99 and 1999-2000 as per para 9 page 4 of the order had observed as under :- 9. For A.Y. 1998-99 the addition on account of peak credit has been made at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Bombay High Court held that before the Tribunal any issue raised by the assessee for the first time, the Tribunal was right to adjudicate the same. The Tribunal is duty bound to give the sufficient opportunity on new issue raised by the assessee. Similar view has also been expressed by the Hon ble Madras High Court in case of CIT vs. Indian Express (Madurai) Pvt. Ltd. (1983) 140 ITR 705. The operative portion is reproduced as under :- 11. We would, however, take up for discussion those three cases in the reverse order. In Nelliappan s case (supra), the assessee was plying motor buses and lorries. He was assessed to Income-tax on estimates of income, and also in itemised additions of unexplained cash credits. The assessee appealed against the assessment made in this manner. While conducting the appeals both before the AAC and the Tribunal, the assessee found fault with the assessment on the limited ground that the estimate was excessive. The Tribunal rejected the assessee s contention. On a reference the High Court observed that the matter required reconsideration by the Tribunal, and disposed of the case accordingly. At the time of reconsideration, it was for the first t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93,215/- on the score that the parts of machinery called the Casablanca conversion system which replaced the existing spinning plant must themselves be regarded as new plant or machinery installed for the first time. The claim for development rebate was founded on this view of the Casablanca System. But the claim for development rebate was rejected by the ITO. On appeal filed by the assessee, the claim for development rebate was rejected by the AAC as unsustainable. On further appeal before the Tribunal, the assessee gave up its original ground of claim and raised fresh claim. This new plea was quite inconsistent with its claim for allowance of development rebate, as a percentage on the cost of the Casablanca system. The assessee contended that the amount spent for the introduction of the Casablanca conversion system must be allowed in the whole sum as a revenue item of expenditure under the head Current repairs . The Tribunal entertained this new plea. And on being satisfied about the merits of this plea, the Tribunal directed the deletion of the entire amount of ₹ 93,215/- as an admissible deduction of the revenue expenditure. The department challenged the propriety of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure, just like current repairs, in contrast with the assessee s original claim for the allowance of a percentage on that amount as development rebate. In both cases, the Supreme Court held that such a plea, although new, was within the appellate jurisdiction of the Tribunal. Indeed, in Mahalakshmi Textile Mills case (supra), the Supreme Court described the Tribunal s appellate jurisdiction in the widest terms possible when they said that all questions, whether of law or of fact, which relate to the assessment of the assessee may be raised before the Tribunal and there is nothing in the Income-tax Act, which restricts the Tribunal to the determination of the questions raised before the departmental authorities. On the basis of the principles laid down by the Supreme Court, it must be held in this case that the assessee was not precluded from raising a new contention, and the Tribunal was not precluded from examining and determining that contention, merely on the score that it had not been put forward at the earlier stages of the proceedings in assessment and in the first appeal. The peak credit submitted by the assessee before the AO had not been controverted by the lower ..... X X X X Extracts X X X X X X X X Extracts X X X X
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