Income Tax Appellate Tribunal - Chandigarh
Smt. Shobha Sharma, Ludhiana vs Assessee
I N T H E I NCO ME T AX APPE L L AT E T RI B UNAL
CH ANDI G ARH B E NCH E S 'A, CH AN DI GARH
BEF OR E S HR I T.R . S OOD, AC C OUNTA NT M EM BER
AND M s . S US HM A C HOW LA, J UD IC IA L M EM BER
I T A Nos . 21 & 22/ Ch d / 2013
(A.Y : 2006-07 & 2 009-10)
S m t . S hobha S harm a, Vs The Incom e T ax Offi ce r,
P rop. M / s B.K.C om m odi t i es , W ard V I (3),
70, New Laj p at Na gar, Ludhi an a.
Ludhi an a.
P AN: AC S P S -8828E
(Appel l ant ) (R es pondent )
Appel l ant by : S hri S udhi r S ehgal
R es pondent b y : S hri M anj i t S i ngh
Dat e of he ari n g : 05.08.2013
Dat e of P ronounc em ent : 23.08.2013
O R D E R
PE R S US H MA CH O WL A, J.M. :
These two appeals by same assessee are filed against the consolidated order of Commissioner of Income-tax-I Ludhiana, dated 19.10.2012 against the order passed under section 143(3) of the Income-
tax Act, 1961.
2. The grounds of appeal r ai s ed by t he as s es s ee in IT A No.21/ C hd/ 2013 rea d as under:
1. That the learned CIT(A) has erred in not giving his findings regarding reopening the case by the Assessing Officer and issuing notice U/s 148 of the Income Tax Act, 1961.
2. That notwithstanding the above said ground of appeal, the learned CIT(A) has erred in confirming the order of the Assessing Officer in assessing income at Rs.3,49,78,090/- against the returned income of Rs.1,51,885/- already assessed.2
3. That the learned CIT(A) failed to consider that the Assessing Officer has erred in not considering the fact that appellant is sub-broker and trading in commodities on behalf of his/her clients and return showing income from above said sources has been filed and assessed by the Assessing Officer and thus, there is no justification in assessing the same under Section 68 of the Act.
4. That the learned CIT(A) has erred in not considering that once the learned Assessing Officer has accepted and assessed the Appellant's source of income as sub-broker/dealer in commodities, he is not justified to assess the cash deposits in banks as appellant's income twice.
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 only commission has been assessed on the total deposits made in his bank account, since he was engaged in providing the accommodation entries to various persons and the same are facts in the present case.
8 That notwithstanding the above said ground of appeal, it is submitted that even otherwise, the learned CIT(A) has erred to consider that the action of the Assessing Officer to assess all the cash deposits in bank accounts without considering the peak figure of bank deposits is not justified.
9. That the action of the learned CIT(A) in withholding the addition made by the Assessing Officer is against the facts and circumstances of the case.
10. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
3. The grounds of appeal r ai s ed by t he as s es s ee in IT A No.22/ C hd/ 2013 rea d as under :
"1. That notwithstanding the above said ground of appeal, the learned CIT(A) has erred in confirming the order of the Assessing 3 Officer in assessing income at Rs.3,97,78,460/- against the returned income of Rs.1,05,810/- already assessed.
2. That the learned CIT(A) failed to consider that the Assessing Officer has erred in not considering the fact that appellant is sub-broker and trading in commodities on behalf of his/her clients and return showing income from above said sources has been filed and assessed by the Assessing Officer and thus, there is no justification in assessing the same under Section 68 of the Act.
3. That the learned CIT(A) has erred in not considering that once the learned Assessing Officer has accepted and assessed the Appellant's source of income as sub-broker/dealer in commodities, he is not justified to assess the cash deposits in banks as appellant's income twice.
4. 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.
5. 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.
6. 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 only commission has been assessed on the total deposits made in his bank account, since he was engaged in providing the accommodation entries to various persons and the same are facts in the present case.
7. That notwithstanding the above said ground of appeal, it is submitted that even otherwise, the learned CIT(A) has erred to consider that the action of the Assessing Officer to assess all the cash deposits in bank accounts without considering the peak figure of bank deposits is not justified.
9. That the action of the learned CIT(A) in withholding the addition made by the Assessing Officer is against the facts and circumstances of the case.
10. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
4. Both the appeals relating to the assessee on similar issue were heard together and are being disposed of by consolidated order for the sake of convenience.
45. The l d. AR for t he as s es s e e, at t h e out s et poi nt ed out t hat t hough s ev eral grou nds of appe al have been r ai s ed, but al l t he s ai d grounds of appeal r el at e t o one i s s ue of es t i m at i on of i ncom e of t he as s es s ee on t he b as i s of cas h depos i t s i n t he bank accou nt of t he as s es s ee. The l d. AR for t he as s es s ee fai rl y adm i t t ed t ha t t he i s s ue rai s ed i n t he pres e nt appeal i s deci de d agai ns t t he as s es s ee b y t he Tri bunal i n as s es s ee 's own c as e vi de ord er dat ed 27.06.2013 . The l d.
DR for t he revenue pl aced rel i anc e on t he order of t he Tri bunal i n as s es s ee 's own cas e rel at i ng t o as s es s m e nt ye ar 2007-08.
6. W e have he ard t h e ri val cont ent i ons and perus ed t he re cord.
The appe al s rel at i n g t o as s es s m ent ye ar 2006-07 and 2009-1 0 agai ns t order pas s ed und er s ect i on 143(3) of t he Act whi ch was co nfi rm ed b y t he C IT (Appe al s ), has been fi l ed b y t he as s es s ee. The i s s u e ari s i n g i n bot h t he appeal s i s i n rel at i on t o t he addi t i ons m ade b y t he As s es s i ng Offi cer b y i nvoki n g t he p r ovi s i ons of s ect i on 68 of t he In com e-t ax Act . Duri ng t he ye ar un der cons i de rat i on, t here wer e cas h depos i t s i n t he bank ac count of t he as s es s ee, for whi ch t he as s es s ee w as unabl e to furni s h com pl et e i nform at i on and cons equent l y, t he s ai d depos i t s were t reat ed as i n com e of t he as s es s ee i n vi ew o f t he provi s i ons of s e ct i on 68 of t he Act .
7. W e fi nd t hat i dent ical i s s ue i n res pe ct of cas h depos i t s i n t he bank account of t he as s es s ee a ros e bef ore t he Tri bunal i n bunch of appeal s wi t h l ead order i n IT A N o. 713/ C hd/ 2010 rel at i ng t o as s es s m ent ye ar 20 07-08 i n t he cas e o f S hri S udhi r Kum ar S harm a and al s o i n t he cas e of t he as s es s ee rel a t i ng t o as s es s m ent year 2007- 08 i n ITA Nos . 712/ C hd/ 2010 i n t he app eal fi l ed b y t h e as s e s s ee and i n ITA No. 962/ C hd / 2010 i n t he appeal fi l ed b y t h e revenu e a gai ns t 5 t he as s es s ee. Th e Tri bunal vi de o rder dat ed 27.06.2 003 aft er del i berat i n g upon t he i s s ue vi de par as 1 6 t o 28 hel d as unde r :
16. We h a v e h e a r d t h e r i v a l c o n t e nt i o n s and p e r u s e d t h e record. In the facts of the present case the assessee under a p p e a l i s f o r a s s e s s m e n t y e a r 2 0 0 7 - 0 8 f o r t h e p e r i o d e n d i ng 3 1 . 3 . 2 0 0 7. T h e a s s e s s e e d u r i ng t h e y e a r u n d er c o n s i d e r a t i o n h a d f u r ni s h e d r e t u r n o f i n c o m e d e c l a r i n g t o t a l i n c o m e o f R s .1 6 1 , 6 8 0/ - f i l e d on 0 1 . 1 1 . 2 0 07 . S u r v ey u / s 1 3 3 A o f t h e A ct w a s c o n d u c t e d o n t h e p r e m i s e s o f t he a s s e s s e e o n 31 . 1 0 .2 0 0 7 a n d t h e s t a t em e n t o f t h e a s s es s e e w a s r e c o r d e d o n 3 1. 1 0 . 2 0 0 7 . T h e c o py o f t h e s t at e m e n t o f t h e a s s e s s e e r e c o r de d d u r i ng t h e c o u r s e o f s ur v e y i s pl a c ed o n r e c o r d . A p e r u s a l o f t h e s a i d s t a t em e n t r e f l e c t s t h a t t h e c l a i m o f t h e a s s e s s e e d u r i n g s u r v e y w a s t h at M / s S u p er F i n v e s t (P ) L t d . w as s u b - b r o k e r b y L SE S e c u r i t i e s L t d . an d a l s o w o r k i n g as s ha r e b r o k e r . I n r e s p e c t o f M / s B i g B ul l C o m m o d i t i e s P . L t d . a n d M/ s B e s t B u y C o m m o d i t i e s P . L t d ., t h e a s s e s s e e s t at e d t h at t h e s e w e r e e n g ag e d i n a c c o m m o d a t i o n e n t r i e s ; M / s S h u b h K r i s h n a C o m m o di t i e s P . L t d . w a s s t a t e d t o b e e n g a g e d i n c om m o d i t y t r a di n g and a s s u b - b r o k e r on c o m m i s s i on b a s i s . I t w a s c l ai m e d b y t he a s s e s s e e t h at i t w a s e n g a g e d i n g i vi n g a c c o m m o d at i o n entries.
17. T h e c a s e o f t h e as s e s s e e w a s p i c k e d up f o r s c r ut i n y a n d s t a t e m e n t of t he a s s e s s e e w a s r e c o r d e d o n 1 4 . 1 2 . 2 009 .
I n r e p l y t o t h e q u e r i e s r ai s e d b y t h e As s e s s i n g O f f i c e r w h i l e r e c o r d i n g t h e s a i d s t a t e m e n t , t h e p l e a o f t h e as s e s s e e w as t h a t i t h a d r e c e i v ed c a s h f r o m i t s c l i e n t s a n d t h e d e t a i l s w e r e a v a i l a b l e i n b o o k s o f a c c o u n t w h i c h w o ul d b e p r o v i d e d t o t h e As s e s s i n g O f f i c e r on t h e n e x t d a t e o f h e a r i n g . T h e A s s e s s i n g O f f i c e r r e q ui s i t i o n e d t h e as s e s s e e t o p r o d u c e a t l e a s t 1 0 p e r s o n s w h o h a d de p o s i t e d Rs . O n e l ac a n d a b o v e i n t h e ba n k a c c o u n t . T h e a s s e s s e e r e p l i e d t ha t h e w o ul d v e r i f y t h e r e c o r d an d i n f o r m t h e s t at u s . In a n o t h e r q u e r y r ai s ed b y t h e As s e s s i n g O f f i c e r t h a t " L e t me k n o w h ow t h e a bov e p e r s o n s d e p o s i t e d t h e c a s h i n y ou r bank", the reply of the assessee was "Cash is received from customers and the same is deposited in bank." In view of t h e c o m m o d i t i es e x c h a n g e , t h e a s s e s s ee e x p l a i n e d t h a t t he L u d h i a n a C o m m od i t i e s E x c h a n g e c h a r g e t r a n s a ct i o n c h a r g e s f r o m t h e a s s e s s e e a t t h e r a t e s d e p e n d i ng o n t u r n o v e r . T h e c o nc e r n M / s S h u b h K r i s h n a , w h i c h w a s t h e p r o p r i et o r c o n c e r n o f t h e H U F o f t h e a s s e s s e e , w a s c l a i m ed t o b e r e g i s t e r e d w i t h L u d hi a n a C o m mo d i t i e s E x c h a n g e an d o t h e r c o m p a ni e s a n d f i r m s o f w h i c h h e w a s t h e D i r e c t o r / Pr o p r i e t o r w e r e c l ai m e d t o b e b r a n c h e s / t r a d e r s of M / s S h u bh K r i s h n a C o m m o d i t i e s . I n v i e w o f t h e e nt r i e s o f t r a d i ng b e i n g c a r r i e d o u t o n b e h al f o f t h e M / s S hu bh K r i s hn a b y t h e v a r i o u s c o m p an i e s / p r o p r i et o r y c o n c e r ns o w n e d b y t h e a s s es s e e , i t w a s e x pl a i n ed t h a t i n c a s e o f o ne o r t w o t r a n s a c t i o ns , t h e c o m m o d i t y e x c h a n g e e n t r y w a s through the Exchange and the balance entries were client to c l i e n t , w h i c h w e r e p e r m i s s i b l e as c o mm e r c i a l t r a n s a ct i o n, 6 a s p e r p r e v a l e nt ma r k e t t r e n d s . T h e a s s e s s e e c l a i m e d t ha t s o d a c o nf i r m at i o n s l i p v o u c h e r s i n r es p e c t o f c o m m o d i t i e s t r a n s a ct i o n w e r e be i n g m a i nt a i n e d b y t h e a s s e s s e e , w h i ch would be provided on the next date of hearing. The s t a t e m e n t s w w as ag a i n c o n t i n u e d o n 2 1 . 1 2 . 2 0 0 9 an d t h e p l e a o f t h e a s s e s s e e w a s t h a t i t h a d n ot b r o u g h t a n y r e c o r d o r a n y p e r s o n s t o b e p r o d u c e d a l o ng w i t h h i ms e l f o n t h e s a i d d a t e of h e ar i ng , a s h e h a d c o m e f o r r e c o r d i n g o f h i s statement. In the statement so recorded, in respect of v a r i o u s c a s h c r e d i t s / d e p o s i t s i n t h e ba n k a c c o u n t s i n t he n a m e o f d i f f e r e n t c o m p a n i e s i n w h i c h h e w as t h e D i r e c t o r / Pr o p r i e t o r , t h e as s e s s e e w a s a s k e d t o g i v e t he s o u r c e o f t h e s a i d ca s h d e p o s i t s i n v a r i o u s b a n k s a n d i t w as s t a t e d b y t h e a s s es s e e t h a t " R e pl y i s s a m e a s s t a t e d o n 1 5 . 1 2 . 2 0 09 " . H e f u r t h e r s u b m i t t e d t h a t h e w o u l d s t at e f u r t h e r r e l a t i n g t o c a s h d u r i ng t h e co u r s e o f as s e s s m e nt proceedings.
18. The Assessing Officer from the perusal of the bank a c c o u n t s o f t h e a s s e s s e e w o r k e d o u t t he c a s h c r e d i t s i n t he s a i d b a n k a c c o u nt s t ot a l i n g t o Rs .1 2 6 , 6 6 , 0 00 / - as pe r d e t a i l s i n a n n e x ur e - B t o t h e a s s e s s m e n t or d e r . The A s s e s s i ng O f f i c e r f u r t h e r n ot e d t h at w h i l e r e c o r di n g t he s t a t e m e n t , t h e a s s e s s e e w a s a s k e d t o p r o d u c e 1 0 p e r s o n s f or v e r i f i c a t i o n a n d t he a s s e s s e e f a i l e d t o p r o d u c e a n y p e r s o n f o r v e r i f i c a t i on no r a n y c o n f i r m at i o n w a s f i l e d b y t h e a s s e s s e e . T h e a s s es s e e h a d f a i l e d t o d i s c h a r g e t h e i n i t i a l b u r d e n c a s t u p o n hi m t o p r o v e g e n ui ne n e s s o f t h e a m o unt s c r e d i t e d i n h i s b ook s o f a c c o u n t i . e . by p r o v i n g t h e i d e n t i t y o f t h e p e r s o ns , w h o h a n d e d o v e r t h e c as h t o t h e a s s e s s e e or p r o d u c t i o n of t h e r e l e v a n t b o o k s o f a c c o u n t w h er e n a me , a d d r e s s a nd t r an s a ct i o n s e nt e r e d b y t h em w e r e r e f l e c t e d nor f u r n i s h i n g an y d e t ai l s o f s u c h p e r s o n s w h o h a d g i v e n h i m t h e c a s h a n d e v e n c r e d i t w o r t h i n e s s of t h e p e r s o n s g i v i ng c a s h c o u l d n o t b e pr o v e d . T h e a s s e s s e e h a d f a i l e d t o f i l e t h e r e q u i s i t e d e t a i l s du r i n g t h e a s s e s s m en t p r o c e e d i n gs . T h e A s s e s s i ng O f f i c e r , t h u s h e l d t ha t i n vi e w t h e r e o f , w h e t he r t h e c a s h d e p os i t s b e l o n g g e n ui n e l y t o t h e c u s t o m e r s or i t b e l o n g e d t o t h e a s s e s s e e , c o ul d no t b e as c e r t a i n e d, r e s u l t i n g i n t h e g en u i n e n e s s o f t h e t r a n s a c t i on s b ei n g no t p r o v e d . I t w a s a l s o a f i nd i n g of t h e As s e s s i n g O f f i c e r , t ha t only cash deposits were made in the bank account and there w e r e n o c a s h w i t h d r a w al s f r o m t he s a i d b a n k . The o u t g o i n g s w e r e o nl y c h e q u e s w h i c h w e r e u n v e r i f i a bl e . T he a s s e s s e e h a d f ai l e d t o c o r r o b or a t e t h e ca s h d e p o s i t w i t h a ny e v i d e n c e o f t h e i d e n t i t y o f t h e d e po s i t or o r a n y o t he r e v i d e n c e . T h e A s s e s s i n g O f f i c e r , t hu s m a d e a dd i t i o n of R s . 1 2 6 , 6 6, 0 0 0 / -.
19. T h e p l e a b e f o r e t h e C I T (A p p e a l s ) r a i s e d b y t h e a s s e s s e e w a s t w o -f ol d i . e . t h e p r o v i s i o ns o f s e c t i on 6 8 w e r e n o t t o b e a p p l i e d a nd i t b e s t t h e a d d i t i on c o u l d b e r e s t r i c t ed t o t h e p e a k c r e d i t s . T h e C I T (A p p e a l s ) u p h e l d t h e p e a k c r e d i t t h e o r y t o be a p p l i e d t o t h e f a c t s of t h e c a s e an d r e s t r i c t e d t h e a d di t i o n t o R s . 1 0 , 55 , 2 6 0/ - . T h e C I T (A p p e a l s ) h o w e v e r , i n p r i n c i p l e h e l d t ha t t h e A s s e s s i ng O f f i c e r w as 7 c o r r e c t i n h o l d i ng t h a t t h e a b o v e s a i d a d di t i o n s w er e m a i n t ai n a b l e i n v i ew o f t h e p r o v i s i o n s o f s e c t i o n 6 8 o f t he Act.
20. T h e a s s e s s e e i s i n a p p e a l b e f o r e u s i n r e s p e c t of b o t h t h e i n v o k i n g of p r o v i s i o n s o f s e c t i o n 6 8 i n t h e pr e s e n t c a s e a n d a l s o a g ai n s t t h e a d di t i on o f R s . 1 0 , 5 5 , 26 0 / - . T h e r e v e n u e i s a g gr i e ve d b y t h e a pp l i c at i o n o f p e a k c r e di t t h e o r y i n t h e h and s o f t h e a s s e s s e e a n d s e c o n d , r e l i e f a l l ow e d t o t h e a s s es s e e .
21. T h e f i r s t i s s u e t o be a d d r e s s e d b y us i n t h e p r e s e nt f a c t s a n d c i r c u m s t a n c e s o f t h e c as e i s w h e t h er t he p r o v i s i o n s of s e c t i o n 6 8 o f t h e A c t a r e a p p l i c ab l e t o t h e f a c t s o f t h e pr e s e n t c a s e . D u r i n g t h e c o u r s e of s u r v ey c o n d u c t e d u / s 1 3 3A o f t h e A c t o n 3 1 . 1 0 . 2 00 7 , i n t h e s t a t e m e n t r e c o r d e d , t h e as s e s s e e a d mi t t e d t o b e e n g ag e d i n t h e b u s i n e s s o f g i v i n g a c c o m m o d a t i o n e n t r i e s . T h e m o d us - o p e r a n d i e x p l a i n e d d u r i n g t h e c ou r s e of s u r v e y w a s t h at t he a s s e s s e e w a s r e c e i v i n g t h e a m o u n t i n c a s h a n d t h e s a me were being returned vide cheques through bank accounts. H o w e v e r , d u r i n g t he c o u r s e o f a s s e s s m e n t p r o c e e d i n gs , t h e s t a t e m e n t of t h e a s s e s s e e w a s a g ai n r ec o r d e d w h e r e i n w h en c o n f r o n t e d w i t h t h e b a n k s t a t e m e nt o f M / s Bi g Bul l C o m m o d i t i e s P v t . L t d . w i t h C e n t ur i a n B a n k , P a k h ow al R o a d , L u dh i a n a i n w h i c h h u g e c a s h w a s d e p o s i t e d b y v a r i o u s e nt r i e s , t he a s s e s s e e i n r e p l y s t a t e d t h at t h e c as h w a s d e p o s i t e d as p e r b o o k s o f a c c ou n t o n b e h al f of t h e c l i e n t s . V i d e q u e r y N o . 8 , t h e a s s e s s e e w a s a s k e d t o p r o vi de t h e n a m e s a nd a d dr e s s e s o f t h e c u s t om e r s / c l i e n t s w h o ha d d e p o s i t e d t h e s e a mo u n t s . T h e r e pl y of t h e a s s e s s e e i n t hi s regard was, "If details are there, I will check from books of a c c o u n t a n d p r o v i de t h e s a m e . " T h e a s s e s s e e , t h e r e a f t e r w a s d i r e c t e d t o p r o d u c e a t l e a s t 10 p e r s o n s w h o ha d d e p o s i t e d R s .1 l a c a n d a b o v e i n t h e b a n k a c c o u n t . T h e a s s e s s e e e x p l a i n e d t h a t h e w i l l v e r i f y f r o m r e c o r d a n d l et t h e A s s e s s i n g O f f i c e r k n o w a b o u t i t . I n r e p l y t o q u er y N o . 1 0 , t h e a s s e s s e e c l a i m e d t h at c as h i s r e c e i v e d f r om c u s t o m e r s an d s a me i s d e p os i t e d i n ba n k . T h e p l e a o f t h e a s s e s s e e b e f o r e t he A s s e s s i ng O f f i c er w a s t h at h e w as e n g a g e d i n t h e bu s i n e s s o f c o m m o d i t i e s a n d q u er y N o .1 2 , 13 w e r e r a i s e d i n r e s p e c t o f t h e c o m m i s s i o n r e c e i v e d f r om L u d h i a n a C o m m o d i t i e s E x c h a n g e . T h e r e p l y o f t h e a s s e s s ee t o q u e r y N o . 13 i .e . " A r e y ou r e g i s t e r e d w i t h L u dh i an a C o m m o d i t y E x c h a n ge " w a s t h at " O n l y M / s S h u bh K r i s hn a o f w h i c h H U F i s t h e p r o p r i et o r a nd I a m k a r t a o f H U F i s r e g i s t e r e d w i t h L C E a n d ot h e r c om p a n i e s a n d f i r m s i n w h i c h I a m D i r e c t or o r P r o p r i et o r a r e b r a n c h e s / t r a d e r s of M/s shubh Krishna Commodities". T h e q u e r y N o .1 4 w a s " Wh e t h e r t h e s ai d c o m p a n i e s / f i r m s w ho w e r e t h e t r a d er s o f M / s S h u b h K r i s h n a w e r e p a y i n g a n y ch a r g e s t o M / s S h u bh K r i s hn a " T h e r e p l y o f t h e a s s e s s e e i n t h i s r e g a r d w as t ha t " H e w o ul d l e t t h e As s e s s i n g O f f i c e r k n ow a f t e r c h e c k i n g t he 8 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 transactions will be provided on the next date.
Q:-19 Which type documents you take from the client/customer & when you do the transaction for them.
Ans: It is soda confirmation slip voucher commodities be provide tomorrow. Statement will be continued on 15.12.2009. In continuation to the above statement. 21.12.2009."
22. A b a r e p e r u s a l o f t h e s t at e m e n t r e c o r de d d u r i ng t h e c o u r s e o f a s s e s s m en t p r o c e e d i n g s r e f l e c t t h a t t h e c l a i m o f the assessee to have changed. The assessee admits that o n l y M / s S h u b h K r i s h n a w a s r e g i s t er e d w i t h L u d hi a n a C o m m o d i t i e s E x c h an g e a n d r e s t a l l t he c o n c e r n s w e r e t h e b r a n c h e s o r t r a d e r s o f M / s S h u b h K r i s hn a C o m m o d i t i e s . I n r e s p e c t o f t h e c a s h d e p o s i t i n t h e b a nk a c c o u n t o f o n e o f t h e c o n c e r n , t h e a s s e s s e e s t a t e d t h at i t h a d r e c e i v e d c a s h f r o m v a r i o u s p a r t i es a n d t h e s a m e w a s a s p e r t h e b o o k s o f account. T h e c as e o f t h e a s s e s s ee w a s t h a t i t w as r e c e i v i n g c a s h f r om i t s c l i e n t s . B u t b e f o r e t h e A s s e s s i ng O f f i c e r i t w as n o t t h e c a s e o f t h e as s e s s e e t h a t i t w as engaged in providing accommodation entries. In respect o f t h e e n t r i e s n o t be i n g t h r o ug h t h e e x c h a n g e , t h e a s s e s s ee c l a i m e d t h at c l i e n t t o c l i e nt t r a n s a c t i on s w e r e p e r mi s s i b l e a s c o m m e r c i a l t r ans a c t i o ns . T h e s t a t em e n t w a s c o n t i n u e d o n 2 1 . 1 2 . 20 0 9 a nd a s p e r q u e r y N o . 2 4 , t h e r e w a s a specific query raised to e x p l ai n various cash c r e d i t s / d e p o s i t s i n t h e ba n k a c c ou n t s o f d i f f e r e n t companies in which the assessee was the Director and the assessee was also asked to give source of cash deposits in v a r i o u s a c c o u nt s . I n r e p l y t o t h e s a me , a s h o r t r e p l y w as g i v e n b y t h e a s s e s s e e t h a t i t i s t h e s am e a s w ha t i s s t a t ed o n 1 5 . 1 2 . 2 00 9 . At t h e c o n c l u s i on of r e c o r d i n g of t h e 9 statement, the assessee stated that he would further e x p l a i n r e l at i n g t o t h e c a s h , d u r i n g t h e c o u r s e o f a s s e s s m e n t p r o c e e d i n g s . H o w e v e r , t he a s s e s s e e f a i l e d t o p r o d u c e t h e b o o k s of a c c o u n t n o r gi v e a n y e x p l a n a t i o n v i s -
à - v i s t h e s o ur c e o f c a s h d e p o s i t s i n t h e b a n k a c c o u n t . In the absence of any explanation or any evidence being produced by the assessee. The onus cast upon the assessee n o t b e i ng di s c h a r ge d , t h e s ai d c a s h c r e d i t s a r e t o b e i n c l u d e d a s i n c om e o f t h e a s s e s s e e i n v i e w o f t he p r o v i s i o n s of s e c t i on 6 8 o f t h e A c t .
23. S e c t i o n 6 8 o f t h e A c t r e a d s as u n d e r :
"68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation 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. U n d e r t h e p r o v i s i on s o f s e c t i o n 6 8 of t h e A c t , i t i s p r o v i d e d t h a t w h e r e t h e a s s e s s e e o f f e r s n o e x p l a n a t i o n a b ou t t h e n a t u r e an d s o ur c e o f t h e c r e d i t s i n t h e b o o k s o f a c c o un t , a l l t h e a m ou n t s s o c r e d i t e d o r w h e r e t h e e x p l a n a t i o n o f f er e d b y t h e as s e s s e e i s n o t s a t i s f a c t or y i n r e l a t i on t o t h e s a me , t h e n s u c h c r e di t s m a y b e c h a r g e d t o t a x a s i n c o m e o f t h e a s s e s s e e f o r t h at p ar t i c u l ar p r e v i ou s y e a r . A d m i t t e d l y , i n t h e c a s e o f t h e a s s e s s ee , v a r i o u s a m o u n t s i n c a s h a r e d e p o s i t e d i n t h e b a n k a c c o u nt s of t h e a s s e s s e e an d t h e on u s w a s u po n t h e a s s e s s e e t o e x p l a i n n a t ur e a n d a l s o t h e s o u r c e o f t h e s a i d c a s h d e p o s i t s . T h e a s s e r t i on o f t h e a s s e s s e e i n t hi s r e ga r d w a s t h at i t w a s t h e a m o u n t r e c e i v e d f r o m c l i e n t s . H o w e v e r , t h e a s s e s s e e f a i l e d t o g i v e t h e l i s t o f s u c h p e r s o n s w h o ha d a d v a n c e d t h e s ai d c a s h t o t h e a s s e s s ee . T h e as s e s s e e e v e n f a i l e d t o b r i ng o n r e c o r d a n y e v i d e n c e t o p r o v e i t s s t a n d t h a t i t w a s t h e a m o un t r e c e i v e d f r o m s u c h p e r s o n s w h o w e r e h i s clients. T h e a s s es s e e f a i l e d t o f i l e a n y c o n f i r m a t i o n i n 10 r e s p e c t o f t h e s a i d c a s h c r e d i t s n o r any o f t h e p e r s o n s w er e p r o d u c e d f o r e x am i n a t i o n b ef o r e t h e A s s e s s i n g Of f i c e r , t h o u g h s p e c i f i c d i r e c t i o n i n t hi s r e gar d w as g i v e n b y t h e A s s e s s i ng O f f i c e r w i t h i n t h e c o u r s e of r e c o r d i n g of s t at e m e n t o f t h e a s s e s s e e , d u r i n g a s s e s s m e n t pr o c e e d i n g s . T h e a s s e s s e e e v e n f a i l e d t o p r o du c e t h e b o o k s o f a c c o u n t . I n t h e a b s e n c e o f t h e a s s e s s e e h av i n g d i s c h a r g e d hi s o n u s o f pr o v i n g t h e i d e n t i t y , c r e d i t w o r t h i n es s a n d g e n u i n e n e s s o f t h e c a s h t r a n s a ct i o n o f t h e c a s h c r e d i t s i n t h e b a n k a c c o u n t , w e f i n d n o m e r i t i n t h e pl e a o f t h e a s s e s s ee i n t h i s r e g a r d a n d dismiss the same.
25. A n o t h e r pl e a r ai s ed b y t h e l d. A R b e f o r e u s w as t ha t a s t h e a s s e s s e e w a s e n g a g e d i n g i v i n g a c c o m m o d at i o n e n t r i e s , o nl y c o m m i s s i o n s ho u l d b e i n cl u d e d a s i n c o m e o f t h e a s s e s s e e . A d m i t t e dl y , w h i l e r e c o r d i n g t h e s t at e m e n t d u r i n g t h e c o u r s e o f s ur ve y , t h e a s s e s s e e ha d s t a t e d t h a t i t w a s e n g a g e d i n t h e b u s i n e s s o f g i v i n g a cc o m m o d a t i o n e n t r i es . H o w e v e r , d u r i n g t he c o u r s e o f a s s e s s m e n t p r o c e e d i n g s , t h e a s s e s s e e d i d n ot r ai s e a n y s u b m i s s i on s i n t h i s r e g a r d an d o n t h e o t h e r h a n d , t h e a s s e s s e e t i m e a n d ag a i n , i n t h e c o u r s e o f s t a t e m e n t r e c o r d ed d u r i n g t h e a s s e s s m e n t p r o c e e d i n g s , p o i n t e d ou t t h a t t he c a s h d e p o s i t e d i n t h e b a n k a c c o u n t w a s a s p e r e n t r i es i n t he b o o k s o f a c c o u n t a n d t h e s a m e w ou l d b e e x p l a i n e d f r o m t h e b o o k s o f a c co u n t . The plea of a c c o m m o d a t i o n e nt r i e s w as n o t p u t t o t h e A s s e s s i n g Of f i c e r . H o w e v e r , b e f o r e C I T (A p p e a l s ), a p l e a w a s r a i s e d t h a t on l y c o m m i s s i o n i s t o be a d d e d i n t h e h a nd s o f t h e a s s e s s e e i n v i e w o f v a r i o u s j u di c i a l pr e c e d e n t s . A p e r u s a l o f t h e o r d e r o f t h e C I T (A p p e a l s ) d o e s n o t r e f l e c t a n y f i n d i n gs o n t h i s i s s u e a n d i s s u e s a dd r e s s e d b y t h e C I T (A p p e a l s ) w e r e w h e t h e r p r o v i s i o n s of s e c t i o n 6 8 ar e a p pl i c a b l e a n d i n t h e a l t e r n at i v e , w h et h e r p e a k - c r e d i t i s t o b e a p p l i e d i n t h e ha n d s o f t h e a s s e s s e e . T he a s s e s s e e i n t h i s g r o u n d o f a p p e a l r ai s e d b e f o r e t h e T r i bu n al h a s no t r a i s e d an y s u c h i s s u e o f t h e commission income being included in his hands. Only two i s s u e s h a v e b e e n r ai s e d ; i . e . i n v o k i n g of p r o v i s i o n s o f s e c t i o n 6 8 o f t h e A c t a n d co n f i r m at i on o f a d di t i o n o f Rs . 1 0 5 5 ,2 6 0/ - . T h e i s s u e of w h e t h e r t h e a s s e s s e e i s e n g a g e d i n g i v i n g a c c o m m o d a t i o n e nt r i e s o r n ot i s a p ur e l y f a c t u a l i s s u e w hi c h h a s n o t b e e n r ai s ed b e f o r e t h e a u t ho r i t i e s b e l o w i . e . du r i n g t h e c o u r s e o f a s s es s m e n t pr o c e e d i n g s o r e v e n b e f o r e t h e C I T (A p p e a l s ), t h e s a i d i s s u e h a s n o t be e n a d j u d i c a t e d . T h e p l e a o f t h e a s s e s s e e o f ad m i s s i o n o f s u c h n e w f a c t u al i s s u e i s n o t a d m i s s i b l e a t t h i s s t a g e o f a dj u d i c a t i n g o f t h e a p p e al i n t h e c a p t i o n e d y e a r s . We f i n d n o m e r i t i n t h e s a i d p l e a of t h e a s s e s s e e a n d t h e s am e i s r e j e c t e d .
26. We a r e i n c o n f o r m i t y w i t h t h e o r d e r of C I T (A p p e a l s ) i n h o l d i n g t h at t h e p r o v i s i o n s of s e c t i on 6 8 of t h e A ct i n t h e p r e s e n t s e t of f a c t s a n d c i r c u m s t anc e s o f t h e c a s e a r e a p p l i c a bl e a n d w e u p h o l d t h e o r d e r of C I T (A p p e a l s ) i n t h i s regard.
27. T h e r e l i a n c e p l a c ed u p o n b y t h e a s s es s e e o n v a r i o u s case laws has been referred to and commented upon by the 11 C I T (A p p e a l s ) a n d w e a r e i n c on f o r mi t y w i t h t h e f i n di n gs o f C I T (A p p e a l s ) i n t h i s r e g a r d .
28. The next issue raised in the present appeals is in r e l a t i on t o t h e a p p l i c a b i l i t y o f p e a k c r e d i t t h e o r y . I n t h e f a c t s o f t h e p r e s e n t c a s e , t h e s a i d p e ak c r e d i t t h e o r y i s no t a p p l i c a bl e a s t h e a s s e s s e e h a d d e p o s i t e d c a s h i n t h e ba n k a c c o u n t a n d t h e r e a f t e r , c h e q u e s w e r e i s s u e d t o di f f e r e n t parties. It i s n ot a c a s e w h e r e c as h w as d e p os i t e d o n d i f f e r e nt d a t e s a n d i n b e t w e e n , t h e r e w e r e c a s h w i t hd r aw a l s f r o m t h e b a n k a c c ou n t . I t i s a c a s e w h e r e t h e r e a r e d e p o s i t s in cash but as against the said cash deposited, various c h e q u e s w e r e i s s u e d a n d t h e a s s e s s e e w a s u na b l e t o e x p l a i n t h e s o ur c e o f c as h d e p o s i t e d i n h i s b an k a c c o u n t . R e j e c t i n g t h e t h e o r y o f p e a k c r e d i t s ap p l i e d b y t h e A s s e s s i n g Of f i c e r , w e r e v e r s e t h e f i ndi n g s o f C I T (A p p e a l s ) i n t h i s r e g ar d an d r e s t o r e t h e a dd i t i on m a d e b y t h e As s e s s i n g Of f i c e r a t R s . 1 , 2 6 , 6 6 , 00 0 / - . We f i n d s u p p or t f r o m t h e r a t i o l a i d d o w n b y t h e H o n' b l e Al l aha b a d H i gh C o u r t i n B h ai y a L a l S h ya m B e h a r i V C o m mi s s i o n e r o f I n c o m e - t a x (s u p r a ) w h e r e i n t h e C o u r t h e l d as u n d e r :
"During the assessment year in question certain amount of cash credits standing in the names of various persons were added in the income of the applicant by invoking the provision of section 68 of the Act. Before the Tribunal the alternative plea was taken by the applicant that in the event deposit/cash credits are treated to be unexplained then only peak credit is to be added. The submission has been negatived by the Tribunal in the following words :
"13. Let us suppose that in the account of 'A', there was shown a deposit of Rs. 10,000 on April 1,1978, and in the account of 'B' there was a deposit of Rs. 10,000 on December 1, 1978. The assessee has not established the genuineness of these two deposits. Now according to the assessee in case there was a withdrawal of Rs. 10,000 in the account of 'A' prior to the deposit of Rs. 10,000 in the account of 'B' then no separate addition 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 fresh deposit in the account of 'B' then it may be possible to accept the contention of the assessee. But in case the assessee all along maintains that the various loans are genuine then we fail to understand as to how the assessee can put 12 forward the claim that separate additions for the unexplained cash credit in different accounts should not be made. When the assessee himself does not contend that the deposit made in the account of 'B' is out of prior withdrawal made in the account of 'A', how does the assessee expect the Department to subscribe to this point of view. We hence reject this contention of the assessee."
Heard Sri Krishna Agrawal, learned counsel for the applicant and Sri Shambhu Chopra learned standing counsel for the Revenue. The applicant submitted that as the amount of cash credit has been treated to tax by invoking the provisions of section 68 of the Act and the said amount have been treated as income from the unexplained source, the applicant was entitled to take up a plea of addition of the aforesaid peak credit as the entire deposits have been treated to be income of the applicant. The contention is wholly misconceived. For adjudicating upon the plea of peak credit the factual foundation has to be laid by the assessee. He has to own all cash credit entries in the books of account and only thereafter the question of peak credit can be raised. As in the present case the amount of cash credits were standing in the names of different persons which all along the applicant 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 applicant to claim benefit of peak credit.
In this view of the matter we do not find any legal infirmity in the order of the Tribunal. We answer the aforesaid questions referred to us in the negative, i.e. in favour of the Revenue and against the assessee. There will be however, no order as to costs. Other Information • In favour of revenue"
8. The f act s of t he p r es ent c as e are i dent i cal t o t he fa ct s be fore t he Tri bunal i n t he earl i er c as e and f ol l owi ng t he s am e pari t y of reas oni n g and as ad m i t t ed b y bot h t he a ut hori z ed repres ent a t i ves , we confi rm t he order o f C IT( Appeal s ) i n hol di ng t hat t he provi s i ons of s ect i on 68 of t he Act are appl i cabl e t o t he fact s and ci rcum s t ances of t he cas e i n t urn uphol di ng addi t i on of R s .3.49 crores i n as s es s m ent ye a r 2006-07 and R s . 3.97 crores i n as s es s m ent ye ar 20 09-10. In vi ew t her eof, t h e gr ounds of app eal rai s ed b y t he as s es s ee i n bot h t he appeal s a re, t hus di s m i s s ed.
9. The as s es s ee i n IT A No. 21/ C hd/ 2013 vi de ground No.1 has rai s ed t he i s s ue a ga i ns t re-openi n g o f a s s es s m ent and i s s ue of not i ce 13 under s ect i on 148 o f t he Incom e-t ax Act . Howeve r, t he l d. AR for t he as s es s ee f ai l ed t o addres s t he s ai d i s s ue befor e us and as s uch t he s am e i s al s o di s m i s sed as not pres s ed.
10. In t he res ul t , bot h t he appe al s of t he as s es s ee a re di s m i s s ed .
Order Pronounced in the Open Court on this 23 r d day of Aug., 2013.
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(T .R.S O OD) (S US H MA CH O WL A)
ACCO UNT ANT ME MB E R JUDI CI AL ME M B E R
Dat ed : 23 r d Aug.20 13
P oonam
C opy t o:
1. T he Appel l ant
2. T he Res pondent
3. T he C IT
4. T he C IT (A )
5. T he DR
B y Order
As s i s t ant R egi s t rar, IT AT,
C handi ga rh