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TMI Blog2018 (8) TMI 1761X X X X Extracts X X X X X X X X Extracts X X X X ..... t the most important fact is that the assessee could not adduce a single piece of evidence to demonstrate that the money has been circulated and reintroduced in the books of account. The assessee could not demonstrate any nexus between the inflation of items mentioned elsewhere and reintroducing the cash generated from such inflation. Forget about the direct evidences, there is not even a single circumstantial evidence to substantiate the claim of the assessee. The first appellate authority, in his wisdom, blindly accepted the theory of the assessee without asking for /looking for any evidence in support of the claim of peak credit theory. Since the assessee could not adduce any evidence, the benefit of peak credit cannot be given to the assessee. The first appellate authority has grossly erred in giving benefit and, therefore, his finding deserves to be set aside. We accordingly set aside the order of the CIT(A) to this extent and restore that of the Assessing Officer. Appeal filed by the Revenue is, accordingly, allowed. Addition of loan - The loan taken during the year under consideration appears to have been repaid in the subsequent years as can be seen from the bank acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The A.Y under consideration is one of the A.Ys out of six A.Ys, relevant for the date of search. 5. Pursuant to the notice u/s 153A of the Act, the assessee filed its return of income declaring total income of ₹ 7,13,983/-. The assessee was asked to furnish information and to produce books of account/vouchers as per questionnaire attached with the notice issued u/s 142(1) of the Act. 6. No compliance was made and once again fresh notices were issued and served upon the assessee. The assessee chose not to furnish evidences and no compliance was made. Subsequently, the Assessing Officer was informed that an application before the Settlement Commission has been filed and requested the Assessing Officer for adjournment of the case. 7. The Settlement Commission, however, vide their order passed u/s 245D(2C) of the Act dated 17.09.2007, declared the application filed by the assessee for all the A.Ys as invalid on account of non-payment of tax. The assessment proceedings were once again started and the assessee was once again directed to comply with the details. 8. While scrutinising the seized documents and register of share applications, the Assessing Officer notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.02.2002 28.02.2002 28.02.2002 Sehgal Fluid Equipment RZ-41A, Mohan Nagar, Pankha Road, New Delhi 1,00,COO 10,00,000 30.03.2002 30.03.2002 30.03.2002 FNS Consultancy Pvt. Ltd. A-66, Tagore Garden, New Delhi 1,50,000 15,00,000 30.03.2002 30.03.2002 30.03.2002 Rajesh Kumar Gupta 127, Mohalla Kanjimal, Dasna Gate (Ghaziabad) 30,000 3,00,000 30.03.2002 30.03.2002 30.03.2002 Maestro Marketing Adversiting Pvt. Ltd. A- 4/181, Sec-17, Rohini Delhi-85 1,50,000 15,00,000 30.03.2002 30.03.2002 30.03.2002 Harish Bhashin T-l, Rajori Garden, New Delhi 1,50,000 15,00,000 10.12.2001 10.12.2001 10.12.2001 Harish Bhashin T-l, Rajori Garden, New De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 30.03.2002 30.03.2002 30.03.2002 Polo Leasing Finance Ltd. A-4/181, Rohini Sector-17, New Delhi 1,25,000 12,50,000 13.12.2001 13.12.2001 13.12.2001 Polo Leasing Finance Ltd. A-4/181, Rohini Sector-17, New Delhi 1,00,000 10,00,000 28.02.2002 28.02.2002 28.02.2002 M.V.Marketing Pvt. Ltd. A-32, Tagore Garden (Ext), New Delhi 1,00,000 10,00,000 10.12.2001 10.12.2001 10.12.2001 M.V.Marketing Pvt. Ltd. A-32, Tagore Garden (Ext), New Delhi 20,000 2,00,000 28.02.2002 28.02.2002 28.02.2002 Shree Niwas Leasing Finance Ltd. A-10, 204 Sai Bhawan, Ranjeet Nagar, New Delhi 60,000 6,00,000 10.12.2001 10.12.2001 10.12.2001 Shree Niwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jasdeep Financers Pvt. Ltd. 203, Mukund House, Commercial Complex, Azadpur, New Delhi 1,50,000 15,00,000 28.02.2002 28.02.2002 28.02.2002 S.N. Electrical Pvt. Ltd. S-172, Co Cir. 29(4), New Delhi 1,50,000 15,00,000 28.02.2002 28.02.2002 28.02.2002 Titan Securities Ltd. A-2/3, Lusa Tower, Azadpur, New Delhi 2,00,000 20,00,000 28.02.2002 28.02.2002 28.02.2002 Tanuja Industries Credit Ltd. A-2/3, Lusa Tower, 3rd Floor, Azadpur, Delhi 75,000 7,50,000 28.02.2002 28.02.2002 28.02.2002 Arun Finvest Pvt. Ltd. CA/16-D, Hari Nagar, New Deihi 2,00,000 20,00,000 28.02.2002 28.02.2002 28.02.2002 Fair N Square A-66, Tagore Garden Ex., New Delhi 2,00,000 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- d. Vinayak Corporate Con [P] Ltd ₹ 5,00,000/- e. V.P.S. Values Tubes [P] Ltd ₹ 15,00,000/- Total ₹ 65,00,000/- 12. On receiving no plausible explanation in respect of unsecured loans, the same were treated as unexplained cash credit u/s 68 of the Act and, accordingly, addition of ₹ 65 lakhs was made. 13. The assessee carried the matter before the CIT(A) and once again explained the modus operandi pleading that the benefit of peak credit should be allowed to the assessee. In support of its claim, the assessee furnished the valuation report by the Valuation Cell of the I.T. Department pointing out that even the Valuation Cell has valued the cost much lesser than the cost shown by the assessee. It was strongly contended that by inflating the cost, the assessee siphoned the surplus towards its share capital and, therefore, benefit of peak credit should not be denied. The assessee also furnished a chart arriving at the peak amount of cash introduced during the year. The CIT(A) found that the peak is coming to ₹ 70 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es below. There is no dispute that the entire share capital has been accepted as bogus by the assessee itself. It would not be out of place to mention that the assessee itself has accepted this before the Settlement Commission in its petition. There is no dispute that the petition of the assessee was dismissed by the Settlement Commission as the assessee could not pay tax as per the provisions of law. The fact of the matter is that the assessee has admitted that the share capital is bogus. 23. Now the only issue remaining to be decided is whether the assessee is entitled for benefit of rotation of cash thereby restricting the addition to the extent of peak credit. No doubt, the assessee in its explanation has time and again stated that it has inflated the cost of land/building/plant and machinery/expenditure. It is also not in dispute that the assessee has time and again contended that by inflating the assessee has rotated cash back in its books of account, therefore, bogus share capital introduced through accommodation entries taken from the brokers. But the most important fact is that the assessee could not adduce a single piece of evidence to demonstrate that the money has be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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