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TMI Blog2016 (12) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... nable to provide appropriate explanation to the satisfaction of the AO or the AO is not fully satisfied with the appellant’s explanation, given the periodicity of deposits and utilisation of such deposits from time to time, the AO is directed to apply the well-accepted peak theory to determine the quantum of additions in the hands of the appellant. - Decided in favour of assessee for statistical purposes. - ITA No.166/JP/13 - - - Dated:- 2-12-2016 - SHRI KUL BHARAT, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri Sharwan Kumar Gupta, Adv. For The Revenue : Shri Rajendra Jha (JCIT) ORDER PER SHRI VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of Ld. CIT(A)-III, Jaipur dated 6.11.2012 where in the assessee has taken following grounds of appeal: (1) On the facts and in the circumstances of the case, the ld. AO had factually and legally erred in rejecting the explanation of the appellant regarding cash deposits of ₹ 17,90,000/- in his saving bank account without appreciating the facts of the case in right perspective. (2) On the facts and in the circumstances of the case, the ld. AO had factually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was explained by him that cash of ₹ 1,50,000/- was paid by him out of his past saving and ₹ 2,00,000/- was paid out of sale of agricultural produce. However, he could not produce any evidence to substantiate his sources of investment. Shri Rajendra Singh was working as a salesman in some Bhang/Doda Posta shop. It was stated by him that cash of ₹ 1,44,000/- was paid by him out of his past savings and borrowings from colleagues for which no supporting evidence was produced. H was neither having any bank account nor assessed to tax. Shri Rajendra Singh was not aware that he is a proprietor of some concern whose books of accounts were maintained and were audited for A.Y. 2009-10. Shri Dayal Singh was working as an electrician doing domestic fittings. He stated that he paid cash of ₹ 8 lacs to the assessee out of his past saving and loan of ₹ 4.5 lacs taken from his relatives. He was neither having any bank account nor assessed to tax. He could not file any evidence to substantiate his source of investment. Shri Dayal Singh was also not aware that he is a proprietor of some concern whose books of accounts were maintained and were audited for A.Y. 2009-10. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions of the appellant, the ld. CIT(A) has given his findings as under: I have duly considered the submission of the ld. AR and the material available on records. I have perused the affidavits and the sworn statements of the four creditors and agree with the conclusion of the AO that appellant has not been able to prove the credit worthiness of the aforesaid creditors and the genuineness of the transaction. There are several contradictions and inconsistencies in the explanation of the appellant submitted from time to time. In his letter dated 30.08.2011, it was stated that the appellant provided only technical service to the said four creditors for obtaining the license for which he earned commission/dalali. However in the undated agreement filed during the appeal proceedings , it was stated that assessee entered into partnership agreement with those persons to do the business of Bhang/Doda Posta where profits/loss of the business were to be shared in the ratio of their capital contribution. Appellant filed the audited accounts of the business allegedly done by Shri Rajendra Singh and Shri Dayal Singh though these persons were themselves not aware about their business and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Hon ble Allahabad High court in the case of Bhaiylal Shyam Behari (276 ITR 38) where it was held that : For adjudicating upon the plea of peak credit the factual foundation had to be laid by the assessee. He had to own all cash credit entries in the books of account and only thereafter the question of peak credit could be raised. As in the instant case the amount of cash credit were standing in the name of different persons which all along the assessee had been claiming to be genuine deposit, withdrawal payment of the amount to different set of persons during the previous years would not at all entitle the assessee to claim benefit of peak credit. Thus there was no legal infirmity in the Tribunal s order. 2.3 During the course of hearing, the Ld AR firstly submitted that the deposits in his bank accounts are from the cash deposited by the persons who were not having the bank accounts, for the purpose of getting the licenses of Bhang Doda Post and to prepare the demand draft in the name of District Excise officer. The assessee was having the experience and engaged in the business of sale of Bhang Doda Post for last so many years. The Govt. grants the license of Dod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y vital facts while completing the assessment proceedings and upholding the additions. The Ld.AR further submitted the details of cash deposits received from various persons, the details of demand drafts prepared and the amount received back on cancellation of demand drafts and subsequently returned back to the respective persons. In this regard, it was submitted that firstly, the addition of ₹ 29,88,000/- has been made by the ld. AO and CIT(A) on account of total cash deposits in both the bank accounts of the assessee. The source of his ₹ 29,88,000/- was as under: ₹ 3,50,000/- Anil Kumar Explained in statement ₹ 1,44,000/- Rajendra Singh Explained in statement ₹ 16,30,000/- Shri Dayal Singh (Rs. 800000/) and ₹ 8,30,000/- Shri Gajanand Explained in statement ₹ 90,000/- Sh. Puranmal Rajendra Singh Explained in statement Total ₹ 22,14,000/- ₹ 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08.04.2009 32,500/- 08.04.2009 32,500/- 08.04.2009 32,500/- Total 6,30,000/- Thus out of ₹ 28,38,732/-, the DD s of ₹ 14,39,452/- has been cancelled and the DD s of ₹ 13,99,280/- has been retained by DEO office Sikar on account of shop or license allotted to Shri Dayal Singh in the partnership M/s Gajanand Dayal Singh. The DD s of ₹ 20,62,000/- were made in the name of Shri Dayal Singh and out of this, DD s of ₹ 7,30,720/- has been cancelled. Thus the assessee has received ₹ 22,14,000/- from the above persons out of which ₹ 13,99,280/- has been kept by the DEO Sikar. Hence the assessee had to return only ₹ 8,14,720/- [22,14,000 (-) ₹ 13,99,280/-] to the above persons, which has been returned by the assessee after withdrawals from the banks in the year itself as under vie bank statements. Date Name of Bank Amount (Rs) 14.03.2009 Central Bank of India 2,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n had stated in their statement. As per settled legal position the assessee is only required to prove the sources not sources of sources of sources. If the AO was having any doubt he could have taken the action in the hands of persons. Further the assessee in support has filed the affidavits of the persons, their ITR, their statements has been recorded in which they have explained with source and purpose of giving cash deposits in the bank account of the assesee. When all these evidences are on record when they have not been rebutted with the help of evidence no addition can be made only and only assumption, presumption and suspicion. Therefore the position is very clear, hence the addition so made may kindly be deleted in full. 2.4 The ld DR is heard who has relied on the order of the lower authorities. 2.5 We have heard the rival contentions and perused the material available on record. Regarding source of cash deposit of ₹ 29,88,000 in the two bank accounts maintained by the assessee, the ld AR has contended that ₹ 7,74,000 is out of assessee s own money out of past savings, etc and the balance ₹ 22,14,000 has been received from various persons to appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 2214000 less ₹ 13,99,280) and the assessee has repaid ₹ 750,000 to respective persons as evident from its bank statements and the balance ₹ 64,720 relates to DDs preparation/cancellation charges, etc. 2.6 The above factual matrix explains the utilisation of money once the money has been deposits in the bank accounts maintained by the assessee. Mere application to the District Excise officer in name of these persons along with the demand draft doesnot establish that the money originally belong to those persons. In the context of section 69 of the Act, the primary question that arises for consideration before us is whether the assessee has discharged its primary onus of explaining the initial source of the deposits made in his two bank accounts. In other words, whether the money belong to the four persons as claimed by the assessee or the money actually belongs to the assessee. In this regard, we have gone through the contentions of the ld AR as well as carefully examined the material which is available on record and are of the view that the ld CIT(A) has rightly come to a conclusion that the appellant has not been able to discharge his primary onus of proving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions in the case of CIT vs. K. Chinnatharmban (292 ITR 682)(SC) and Manoj Aggarwal vs. DCIT (113 ITD 377) (SB. Del.). In view of above discussion, it is held that the appellant has not been able to discharge his onus of proving the credit worthiness of the aforesaid four persons and the genuineness of transaction. 2.7 The necessary corollary of the above finding is that all the money, which has been found deposited in his two banks, belongs to the appellant. Section 69 provides that where in the financial year, the assessee has made investments which are not recorded in the books of accounts, if any maintained by him for any source of income. Undisputedly, the money deposited in the appellant s bank accounts are investments by way of deposits and such deposits doesn t find recorded in the books of account. Regarding the nature and source of deposits, the ld AR has submitted that the assessee is an old person, doing business since 1972 and a regular IT assessee since A.Y. 1995-96 and the assessee had filed copies of his IT returns from A.Y. 2002-03 to 2009-10 to the AO vide letter dated 16.11.2011. Hence the source of deposits of ₹ 7,74,000/- by the assessee were f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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