Income Tax Appellate Tribunal - Chandigarh
Sudhir Kumar Sharma Huf, Ludhiana vs Assessee on 3 September, 2013
I N T H E I NC O ME T A X A P PE L L A T E T RI B U N AL
C H A NDI G A RH B E N CH E S ' B ' CH A N DI G A RH
BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER
AND MS SUSHMA CHOWLA, J UDIC IAL MEMBER
ITA No. 17 & 18/Chd/2013
A.Y:2006-07 & 2009-10
Shri Sudhir Kumar Shar ma,HUF Vs The Income Tax Officer,
Prop. M/s Subh Krishna Commodities, Ward V I(3),
70, New Laj pat Nagar, Ludhiana.
Ludhiana.
PAN No. AAKHS-0128R
&
ITA No. 19 & 20/Chd/2013
A.Y:2006-07 & 2009-10
Shri Sudhir Kumar Shar ma, Vs The Income Tax Officer,
Prop. M/s S.K.& Co.Commodities, Ward V I(3),
70, New Laj pat Nagar, Ludhiana.
Ludhiana.
PAN : ADBPS-0503N
(Appellant) (Respondent)
A p p e l l a n t b y: Shri Sudhir Sehgal
Respondent by : Shri Manjit Singh
Date of Hearing : 03.09.2013
Date of Pronouncement : 20.09.2013
O R D E R
PER SUSHMA CHOWLA, J.M.
This bunch of appeals are filed by two different assessees against separate orders of CIT(Appeals) as detailed under :
S.No . Ca se No . Na me A. Y. Da te o f o r d er Or d er p a ss ed o f CI T ( Ap p eal s) u nd er sec tio n
----- ---------- ---------------- ---------- ------------------ --------------
1 . I T A/1 7 / C hd /2 0 1 3 S u d hi r K u ma r S har ma , 2 0 0 6 -0 7 1 9 .1 0 .2 0 1 2 1 4 3 ( 3 ) r ead
HU F wi t h sec tio n
147 of the
Act.
2 . I T A/1 8 / C hd /2 0 1 3 S u d hi r K u ma r S har ma , 2 0 0 9 -1 0 1 9 .1 0 .2 0 1 2 143(3) of
HU F t he Ac t.
2
3 . I T A/1 9 / C hd /2 0 1 3 S u d hi r K u ma r S har ma 2 0 0 6 -0 7 1 9 .1 0 .2 0 1 2 1 4 3 ( 3 ) r ead
wi t h s ec tio n
1 4 7 o f t he
Act .
4 . I T A/2 0 / C hd /2 0 1 3 S u d hi r K u ma r S har ma 2 0 0 9 -1 0 1 9 .1 0 .2 0 1 2 143(3)
o f t he Ac t
2. All the four appeals relating to Shri Sudhir Kumar Sharma, H U F a n d S h r i S u d h i r K u m a r S h a r m a i n i n d i v i d u a l c a p a c i t y, i n v o l v i n g similar issue, were heard together and are being disposed of by this consolidated order for the sake of convenience.
3. The ld. AR for the assessee, at the outset pointed out that the issues in the present appeals are identical and are squarely covered by the order of the Tribunal in assessee's own case vide order dated 05.06.2013.
4. The ld. DR for the revenue placed reliance on the orders of the authorities below and also the order of the Tribunal in assessee's o w n c a s e f o r d i f f e r e n t a s s e s s m e n t ye a r s .
5. In ITA No. 17/Chd/2013, the assessee has raised following grounds of appeal :
"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.26,56,60,530/- against the returned income of Rs.1,52,340/- already assessed.
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.3
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.
6. The ground No. 1 raised by the assessee against re-opening of assessment under section 148 of the Income Tax Act is not pressed and hence, the same is dismissed as not pressed.
7. The issue in ground Nos. 2 to 9 are against the addition of Rs. 7,02,85,510/- under section 68 of the Income Tax Act.
8. The brief facts of the case are that originally the return of income filed by the assessee at Rs. 152,520/- was processed under section 143(1) of the Act. However, it came to the knowledge of the Department that the assessee had deposited unexplained cash in the bank account and notice under section 148 of the Act was issued to the assessee after recording reasons for re-opening the assessment.4
The assessee, in response to the notice issued under section 148 of the Act filed the return of income declaring the same income as shown in the original return. The Assessing Officer vide para 3 notes that the assessee was asked to produce complete books of account i.e. journal, cash book, ledger, client register, vouchers and also to furnish evidence regarding cash deposits in the bank account, however, despite many opportunities the assessee failed to produce the books of account. During the course of assessment proceedings on 09.12.2011, statement of Shri Sudhir Kumar Sharma was recorded which is incorporated under para 3 at pages 2 to 5 of the assessment order. The assessee claimed that the source of cash deposit in the bank account was cash received from various clients and while recording the statement, the assessee was asked to produce atleast 15 persons for verification. But assessee failed to produce any person for verification nor any confirmation was filed during the assessment proceedings. The assessee towards the end of the assessment proceedings, produced computerized cash book and ledger but failed to produce the client register, sauda book and vouchers. Further, on examination of the cash book and ledger, it was noted that the ledger accounts were opened in short names and complete addresses of the persons in whose names ledger accounts were opened were not given.
The statement of the accountant was also recorded and the same is incorporated under para 5 of the assessment order. In the absence of any evidence being filed by the assessee, the Assessing Officer show caused the assessee as to why total cash deposits in the bank account may not be added to the taxable income being income from unexplained sources. In the absence of any explanation, the Assessing Officer made an addition of Rs. 7,02,85,510/- is income from unexplained sources.5
9. The CIT(Appeals) held that if the assessee was engaged in the business of commodity trading on behalf of the its client, then it was incumbent upon him to maintain its accounts in such a manner so as to show that any amount due from clients could be recovered as and when required. The CIT(Appeals) held that the assessee had failed to maintain such details and as such had failed in the onus cast upon him under section 68 of the Act, as no details of the clients from whom the impugned cash had been claimed to have been received had been filed. The offer of the assessee of being assessed @ 0.05% being commission income earned was rejected and the addition of Rs.
7,02,85,510/- was upheld.
10. The assessee is in appeal against the said addition made in his hands. The total addition made in the hands of the assessee is Rs.
7,02,85,510/-. However, the grounds of appeal talk of assessment of income at Rs. 26,56,60,530/-, though in-fact the assessment in the case was completed at Rs. 7,04,38,030/-.
11. We find that similar issue of addition under section 68 of the Act on account of cash deposits in the bank account of the assessee arose before the Tribunal in bunch of appeals filed by both the assessees who are before us, alongwith appeals filed by Smt. Shobha Sharma. The Tribunal in bunch of appeals with lead order in ITA No. 713/Chd/2010 in the case of Shri Sudhir Kumar Sharma Vs ITO relating to assessment ye a r 2007-08 alongwith ITA Nos.
963/Chd/2010, ITA 714/Chd/2010, ITA 964/Chd/2010 and ITA 712/Chd/2010 & ITA 962/Chd/2010 (A.Y. 2007-08) vide order dated 27.06.2013 held as under :
" 1 6 . We h a v e h e a r d t h e r i v a l c o n t e n t i o n s a n d p e r u s e d t h e record. I n t h e f ac t s o f t h e p r e s e n t ca s e t h e a s s e s s e e u nd e r 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 20 0 7 - 0 8 f o r t h e p er i o d e n di n g 6 3 1 . 3 . 2 0 0 7. T h e a s s e s s e e d u r i n g t h e y e a r u n d e r c o n s i d e r at i o n h a d f ur n i s h e d r e t ur 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 80 / - f i l e d on 0 1 . 1 1 . 2 0 07 . S u r v e y u / s 1 3 3 A o f t h e A c t w a s c o n d u c t e d on t h e p r e m i s e s o f t h e a s s e s s e e o n 3 1 . 10 . 20 0 7 a n d t h e s t a t e m e nt o f t h e a s s e s s ee w a s r e c o r d e d o n 3 1 . 1 0 . 2 0 07 . T h e c o p y o f t h e s t at e m e n t o f t h e a s s es s e e r e c o r d e d d u r i n g t h e c o u r s e of s u r v e y i s p l a c e d o n r e c o r d . A p e r u s a l o f t h e s ai d s t at e m 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 ur v e y w a s t h a t M / s S u p e r F i n v e s t (P ) L t d. w a s s u b - b r o k e r b y L S E S e c u r i t i e s L t d . a n d al s o w o r ki n g a s s h a r e b r o k e r . I n r e s p e c t o f M / s B i g Bu l 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 di t i e s P . L t d . , t h e a s s e s s e e s t a t e d t h a t t h e s e w e r e e n ga g e d i n a c c o m m o d at i o n e nt r i e s ; M / s S hu b h K r i s hn a C o m m o di t i e s P . L t d . w a s s t at e d t o b e e n g a g e d i n c o m m o d i t y t r a d i ng a n d a s s u b - b r o k e r o n c o m m i s s i o n b as i s . I t w a s c l a i m e d b y t he a s s e s s e e t h a t i t w a s e n g a g e d i n gi v i n g a c c o m m o d a t i o n e nt r i e s .
17. The case of the assessee was picked up for scrutiny and s t a t e m e n t o f t h e as s e s s e e w as r e c o r de d o n 1 4. 1 2 . 2 00 9 . I n r e p l y t o t h e q u er i e s r a i s e d b y t h e As s e s s i n g Of f i c e r w h i l e r e c o r d i n g t h e s ai d s t a t e m e n t , t h e pl e a o f t h e a s s e s s e e w a s t h a t i t ha d r e c e i v e d c a s h f r o m i t s c l i e nt s a n d t h e d e t ai l s w e r e a v a i l a bl e i n b o o k s o f a c c o u n t w h i c h w o u l d b e p r o vi d e d t o t h e A s s e s s i ng O f f i c e r o n 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 ng O f f i c e r r e q ui s i t i o ne d t h e a s s e s s e e 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 h a d d ep o s i t e d R s . O n e l a c a n d a b o v e i n t h e b a n k account. The assessee replied that he would verify the record and inform the status. I n an o t h e r q u e r y r a i s e d b y t h e A s s e s s i ng O f f i c e r t h a t " L e t m e k n o w h o w t h e a b o v 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 o u r b a n k" , t he r e p l y o f t h e a s s e s s e e w a s " C as h i s r e ce i v e d f r o m c u s t o me r s a n d t h e s a m e i s d e p o s i t e d i n b a n k . " I n v i e w o f t h e c o mm o d i t i e s e x c h a n g e , t h e a s s e s s e e e x p l a i n e d t h a t t h e L ud h i an a C o m m o d i t i e s E x c h an g e charge transaction charges from the assessee at the rates d e p e n d i n g o n t u r no v e r . T h e c o n c e r n M / s S hu b h K r i s h n a , w h i c h w a s t h e p r o pr i e t o r c o n c e r n of t he H U F o f t h e as s e s s e e , was claimed to be registered with Ludhiana Commodities Exchange and other companies and firms of which he was the D i r e c t o r / Pr o p r i e t o r w e r e c l a i m e d t o b e b r a n c h e s / t r a d e r s o f M/s Shubh Krishna Commodities. In view of the entries of t r a d i ng b e i n g c ar r i e d o u t o n b e h al f of t h e M / s S h ub h K r i s h n a b y t h e v a r i o u s c o m p a n i e s / pr o p r i e t o r y c o n c e r n s o w n e d b y t h e a s s e s s e e , i t w a s e x p l a i n e d t h a t i n c a s e o f o n e or t w o t r a n s a ct i o n s , t h e co m m o d i t y e x c h a n g e e n t r y w a s t h r o ug h t h e E x c h a n g e a n d t h e b a l a n c e e n t r i e s w e r e c l i e n t t o c l i e n t , w hi c h w e r e p e r m i s s i bl e a s c o m m e r c i a l t r a ns ac t i o n , a s p e r p r e v a l e n t m a r k e t t r e n d s . T h e a s s e s s e e c l ai m e d t h a t s o da c o n f i r m a t i o n s l i p v o u c h e r s i n r e s p e c t o f c o m m o d i t i e s t r an s a c t i o n w e r e b e 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 c h w o u l d b e p r o v i d e d o n the next date of hearing. T h e 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 21 . 1 2 .2 0 0 9 a n d t h e pl e a of t h e a s s e s s e e w a s t h a t i t h a d n o t br o u g ht 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 du c e d a l o n g w i t h h i ms e l f on t h e s a i d d a t e o f h e a r i n g , 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 hi s s t a t e m e n t . I n t h e s t a t e m e n t s o r e c o r de d , i n r e s p e c t of v a r i o u s c a s h cr 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 h e nam e o f d i f f e r e n t c o mp a n i e s i n w hi c h h e w a s the Director/Proprietor, the assessee was asked to give the 7 s o u r c e o f t h e s ai d c a s h d e p o s i t s i n v ar i o u s b a n k s a nd i t w a s s t a t e d b y t h e a s s e s 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 mi t t e d t h a t h e w o u l d s t a t e f u r t h e r r el a t i n g t o 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 me n t proceedings.
18. T h e A s s e s s i n g O f f i c e r f r o m t h e p e r us a l o f t h e b a nk a c c o u n t s of t h e as s e s s e e w o r k e d o u t t h e c a s h c r e di t s i n t h e s a i d b a n k a c c o u n t s t o t a l i n g t o R s . 1 2 6 ,66 , 0 0 0 / - a s p e r d e t a i l s i n a nn e x u r e - B t o t he a s s e s s m e n t o r d er . T h e A s s es s i n g O f f i c e r f u r t h e r n ot e d t h a t w h i l e r e c o r d i n g t h e s t a t e m e n t , t h e a s s e s s e e w a s as k e d t o p r o du c e 1 0 p e r s o ns f or v e r i f i c a t i on a n d t h e a s s e s s e e f a i l e d t o pr 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 o n n o 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 ee . T h e a s s e s s e e h a d f a i l e d t o d i s c h ar g e t h e i ni t i al bu r d e n ca s t u po n hi m t o p r ov e g e n u i n e n e s s of t h e a m o u n t s c r e di t e d i n h i s bo o k s o f a c c o u nt i . e . b y 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 n s , w h o h a n d e d ov e r t h e c a s h t o t h e a s s e s s e e o r pr o d u c t i o n o f t h e r el e v a n t b oo k s o f a c c o u n t w h e r e na m e , a d d r e s s a n d t r a n s a c t i o n s e n t e r e d b y them were reflected nor furnishing any details of such p e r s o n s w h o ha 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 hi n e s s of t h e pe r s o n s g i vi n g c a s h c o u l d n o t b e p r o ve d . T h e a s s e s s e e h a d f ai l e d t o f i l e t h e r e q ui s i t e d e t a i l s 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 di n g s . T h e A s s e s s i n g O f f i c e r , t h us he l d that in view thereof, whether the cash deposits belong genuinely to the customers or it belonged to the assessee, c o u l d n o t b e a s c e r t a i n e d , r e s u l t i ng i n t h e g e n u i n e n e s s of t h e t r a n s a ct i o n s b e i ng n o t p r o v e d . I t w a s a l s o a f i n d i n g o f t h e A s s e s s i ng O f f i c e r , t h a t o n l y c a s h d e p os i t s w e r e m a d e i n t h e b a n k a c c o u n t a n d t h e r e w e r e n o c a s h w i t h d r aw a l s f r o m t h e s a i d b an k . T h e ou t g o i ng s w er e o n l 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 ab l e . T h e as s e s s e e h a d f a i l e d t o c o r r o b o r at e t h e c a s h d e p o s i t w i t h a n y e vi 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 o r o r a n y o t h e r e v i d e n ce . T h e As s e s s i n g O f f i c e r , t h us m ad e a d d i t i o n of R s . 12 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 o l d i . e . t he p r o v i s i o n s of s e c t i o n 6 8 w e r e n ot t o b e a p p l i e d a n d i t b e s t t h e a d di t i o n c o ul d b e r e s t r i c t e d 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 he o r y t o b e a p pl i e d t o t h e f a c t s of t h e c as e a n d r e s t r i c t e d t h e a d d i t i o n t o R s . 1 0 ,5 5 , 2 6 0 / - . T h e C IT (A p p e a l s ) h o w e v e r , i n p r i n c i pl e h e l d t h at t h e A s s e s s i n g Of f i c e r w as c o r r e c t i n h o l d i ng t h at t h e ab o v e s a i d a d di t i o n s w e r e m a i n t a i n a bl e i n v i e w o f t h e p r o v i s i on s o f s e c t i o n 68 o f t h e A c t .
20. The assessee is in appeal before us in respect of both t h e i n v o k i n g o f p r ov i s i o n s o f s e c t i o n 6 8 i n t h e p r e s e n t c a s e a n d al s o a g a i ns t t he a d d i t i o n o f R s . 10 ,5 5 , 2 6 0 / - . T h e r e v e n u e i s a g g r i e v e d b y t h e a p p l i c a t i o n o f p e ak c r e d i t t h e o r y i n t h e h a n d s o f t h e a s s es s e e a n d s e c o n d , r e l i e f a l l o w e d t o t h e assessee.
21. T h e f i r s t i s s u e t o b e 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 an c e s o f t h e c a s e i s w h e t h e r t h e p r o v i s i o n s o f s e c t i o n 6 8 of t he A c t a r e a p p l i c a bl e t o t h e f a c t s o f t h e present case. During the course of survey conducted u/s 1 3 3 A o f t h e A ct o n 3 1 . 1 0 . 2 0 07 , 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 8 a s s e s s e e a d m i 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 of g i vi n g a c c o m m o d a t i o n e nt r i e s . T h e m o d us - o p e r a n d i e x p l ai ne d during the course of survey was that the assessee was r e c e i v i n g t h e a m ou n t i n c a s h a n d t h e s a m e w e r e b ei n g r e t u r n e d v i d e c h eq u e s t h r o u g h ba n k a c c o u n t s . H o w ev e r , d u r i n g t h e c o ur s e of a s s e s s m e n t pr o c e e d i n g s , t h e s t a t e m e nt o f t h e a s s e s s e e w a s a g a i n r e c o r d e d w he r e i n w h e n c o n f r on t e d with the bank statement of M/s Big Bull Commodities Pvt. L t d . w i t h C e n t u r i a n B a n k , P a k h o w a l R oa d , L u d hi a n a i n w h i c h h u g e c a s h w a s d e po s i t e d b y v a r i o us e n t r i e s , t h e 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 a s h w a s d e p o s i t e d a s p e r b o o k s o f a c c o u n t o n b e h a l f o f t h e c l i e nt 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 as k e d t o p r o v i d e t h e n a m e s a n d a d d r e s s e s o f t h e c u s t o m e r s / c l i e n t s w h o h ad d e p o s i t e d t h e s e a m o u nt s . The r e p l y o f t h e a s s e s s ee i n t h i s r e g a r d w a s , " I f d e t a i l s a r e t h er e , I w i l l c h e c k f r o m b o o k s o f a c c o u nt an d p r o v i d e t h e s a me . "
T h e a s s e s s e e , t h e r ea f t e r w as d i r e c t e d t o p r o d u c e a t l e as t 1 0 p e r s o n s w h o h a d de p o s i t e d R s .1 l a c an d a b o v e i n t h e b an k a c c o u n t . T h e as s e s s e e e x p l a i n e d t ha 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 e t t h e A s s e s s i ng 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 e r y N o . 1 0 , t he a s s e s s e e c l a i m e d t h a t c a s h i s r e c e i v e d from customers and same is deposited in bank. The plea of t h e a s s e s s e e b e f or e t h e A s s e s s i ng O f f i c e r w a s t h at h e w a s 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 di t i es a n d q u e r y N o . 1 2 , 1 3 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 mm i s s i on r e c e i v e d f r o m L u d h i a n a C o m m o di 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 e e t o q u e r y N o. 1 3 i .e . " A r e y o u r e g i s t e r e d w i t h L u d h i an a Commodity Exchange" was that "Only M/s Shubh Krishna of w h i c h H U F i s t h e p r o p r i e t o r a n d I a m k a r t a o f H UF i s r e g i s t e r e d w i t h L C E a n d o t h e r c o m p an 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 o r o r P r o p r i e t o r a r e b r an c h e s / t r a d e r s o f M / s s h u b h K r i s h na C om m o d i t i e s " . The query No.14 was " Wh e t h e r t h e s a i 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 e r 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 c h a r g e s t o M / s S hu b h 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 ar d w a s t h a t " H e w o ul d l e t t h e A s s e s s i ng O f f i c e r kn o w af t e r c h e c k i n g t h e s a m e . " Q u e r y N o . 1 6 t o 19 a n d t h e i r an s w e r s w e r e a s un de r :
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.9
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."
2 2 . A b a r e p e r u s a l o f t h e s t a t e m e n t r e co r d e 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 ng s r e f l e c t t h a t t h e c l ai m of t h e a s s e s s e e t o h a v e c ha n g e d . T h e a s s e s s e e a d m i t s t ha t o nl y M / s S h u b h K r i s h n a w as r e g i s t e r e d w i t h L u d h i a n a C o m m o di t i e s Exchange and rest all the concerns were the branches or t r a d e r s o f M / s S h ub h K r i s h na C o m m od 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 n k a c c o u n t of on 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 ha t 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 e s and the same was as per the books of account. The case of t h e a s s e s s e e w a s t ha t i t w a s r e c e i v i n g c a s h f r o m i t s c l i en t s . But before the Assessing Officer it was not the case of the 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 p r o v i d i n g a c c o m m o dat i o n entries. I n r e s p ec t o f t h e e nt r i e s n o t b e i n g t h r o u gh t h e exchange, the assessee claimed that client to client t r a n s a ct i o n s w e r e p e r m i s s i b l e a s c om m e r c i a l t r a ns a c t i o n s . T h e s t a t e m e n t w a s c o n t i n u e d o n 21 . 1 2 .2 0 0 9 a nd a s p e r q ue r y N o . 2 4 , t h e r e w as a s p e c i f i c q u e r y r a i s e d t o e x p l a i n v a r i o u s c a s h c r e d i t s / d e po s i t s i n t h e b a n k a c c o u n t s o f d i f f e r e n t c o m p a n i e s i n w hi c h t h e a s s e s s e e w a s t h e D i r e c t or a n d t h e 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 am e , a s h o r t r e p l y w a s 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 on 1 5 . 1 2 . 2 0 09 . A t t h e c o n c l u s i o n of r e c or d i n g o f t h e s t a t e me n t , t h e a s s e s s e e s t a t e d t h a t h e w o u l d f u r t h e r e x p l a i n r e l a t i ng 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 ng 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 p r o d uc e t h e b o o k s o f a c co u n t n o r g i v e a n y e x p l a na t i o n v i s -à - v i s t h e s o u r 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 . I n t h e a b s e n c e o f a n y e x p l a n a t i o n or a n y e v i d e n c e b e i n g p r od u c e d b y t h e as s e s s e e . T h e o n us c a s t up o n t h e a s s e s s e e n o t b ei n g di s c h a r g e d, t h e s a i d c a s h c r e d i t s a r e to be included as income of the assessee in view of the 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--10
(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 an a t i o n a bo ut the nature and source of the credits in the books of account, all the amounts so credited or where the explanation offered b y t h e a s s e s s e e i s n o t s a t i s f a ct o r y i n r e l a t i o n t o t h e s am e , then such credits may be charged to tax as income of the 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 ea r . A d mi t t e dl y , i n t h e c a s e o f t h e a s s e s s e e, v a r i o us a m ou n t s i n c a s h ar e d e p o s i t ed i n the bank accounts of the assessee and the onus was upon the a s s e s s e e t o e x p l a i n n a t u r e a n d al 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 o n of t h e as s e s s e e i n t h i s r e ga r d w a s t ha t i t w as 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 ev e r , t h e a s s e s s e e f a i l e d t o gi v e t h e l i s t of s u c h p e r s o n s w h o h a d a d v a n c e d t h e s a i d c a s h t o t h e a s s e s s ee . T h e a s s e s s e e e v e n failed to bring on record any evidence to prove its stand that it was the amount received from such persons who were his clients. T h e a s s e s 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 at i o n i n 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 or a ny o f t h e p e r s on s w er e p r o d u c e d f o r e x a m i n a t i o n b e f or e t h e A s s e s s i ng O f 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 ga r d w a s gi 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 o f r e c o r d i n g o f s t a t e me n t o f t h e a s s e s s e e , d ur i n g a s s e s s m e nt p r o ce 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 cc o u n t . I n t h e a b s en c e o f t h e a s s e s s e e hav i n g d i s c h a r g e d h i s o n u s o f p r o v i ng 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 nu 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 of 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 nd n o m e r i t i n t h e p l e a o f t h e a s s e s s e e i n t h i s r e ga r d an d di s mi s s the same.
25. A n o t h e r pl e a r a i s e d b y t h e l d . AR b e f or e u s w a s t h a t a s t h e a s s e s s e e w a s en g a g e d i n g i v i ng ac c o m m o d a t i o n e nt r i e s , o n l y c o m m i s s i o n s h o u l d b e i n c l u d ed a s i n c o m e o f t h e a s s e s s e e . Ad m i t t e dl y , w hi l e r e c o r d i n g t h e s t a t e m e n t d u r i n g t h e c o u r s e o f s u r ve y , t h e a s s e s s e e ha d s t at e d t h a t i t w a s e n g a g e d i n t h e b us 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 . H o w e v e r , d u r i n g t h e c o u r s e of as 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 o ns i n t h i s r e g a r d a n d o n t h e o t h e r h a nd , t h e a s s e s s e e t i m e a n d a g 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 o u t t h at t he c a s h d e p o s i t e d i n t h e ba n k a c c o u n t w a s a s p e r e n t r i e s 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 o u l d b e explained from the books of account. T h e pl e a o f a c c o m m o d a t i o n e n t r i e s w a s no t p u t t o t h e A s s e s s i ng O f 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 at o n 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 an d s o f t h e a s s e s s ee i n v i e w o f v a r i o u s j u di c i a l p r e c e d e n t s . A p e r u s a l of t h e o r d e r o f 11 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 g s o n t h i s i s s u e a n d i s s u e s a d d 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 on 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 a t i v e , w h e t h e r p e a k - c r e d i t i s t o b e a p pl i e d i n t h e h a n d s of t h e a s s e s s e e . T h e a s s es 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 b un a l h a s n ot r a i s e d a n y s u c h i s s u e o f t h e c o m m i s s i o n i n c o m e b e i n g i n c l ud e d i n h i s h a n ds . O n l y t w o i s s u e s ha v e b e e n r a i s e d ; i . e . i nv o k i n g o f pr o v i s i o ns o f s e c t i o n 6 8 o f t h e A c t a n d c o n f i r m at i on o f a d di t i o n of R s .1 0 5 5 , 2 6 0/ - . T h e i s s u e o f w h et h e r t h e a s s es 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 at i o n e n t r i e s o r n ot i s a p u r e l y f a c t u al i s s u e w h i c h h a s n o t b e e n r a i s e d b e f o r e t h e au t h o r i t i e s b e l ow i . e . d u r i n g t h e c o u r s e of a s s e s s m e n t p r o c e e di n g s or e v e n b e f o r e t h e C IT (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 a d m i s s i o n of s uc h n e w f a c t u al i s s u e i s n o t a d mi s s i b l e a t t h i s s t a g e o f ad j ud i c a t i ng o f t h e a pp e a l i n t h e c a pt i on 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 o f t h e a s s e s s e e a n d t h e s a m 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 o f C I T (A p p e a l s ) i n h o l d i ng t h a t t h e p r o v i s i o ns o f s e c t i on 6 8 o f t h e A c t i n t h e p r e s e n t s e t o f f ac t s a n d c i r c u m s t an c e s o f t h e c as 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. The reliance placed upon by the assessee on various c a s e l a w s h as b e e n r e f e r r e d t o a n d co m m e n t e d u p o n b y t h e C I T (A p p e a l s ) a n d w e a r e i n c o n f o r m i t y w i t h t h e f i nd i 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. T h e n e x t i s s u e r ai s e d i n t h e p r e s e nt a p p e al s i s i n r e l a t i on t o t h e app 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 n ot 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 ea f t e r , c h e q u e s w e r e i s s u e d t o d i 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 at 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 h d 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 i n c a s h b u t a s ag a i n s t t h e s a i d c as h d e p o s i t e d , v ar i o u s c h e q u e s w e r e i s s u ed a n d t h e a s s e s s e e w a s u n a bl e t o e x p l a i n t h e s o u r c e of c a s h d e p o s i t e d i n hi 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 a pp l i e d b y t h e A s s e s s i n g O f f i ce r , w e r e v e r s e t h e f i nd i n g s of C IT (A p p e a l s ) i n t h i s r e g a r d a n d r e s t o r e t h e a d d 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 at 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 ai d do w n b y t h e H o n ' bl e A l l a ha b a d H i g h C o u r t i n B h a i y a L a l Shy a m B e h a r i V C o m m i 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 :12
"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 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 13 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"
29. The grounds of appeal No. 1(a) to 1(c) raised by the assessee are, thus dismissed and the grounds of appeal raised by the revenue are allowed."
12. The issue raised in the present appeal is identical to the issue raised before the Tribunal (supra) in the bunch of appeals and following the same parity of reasoning, we dismiss the ground Nos. 2 to 9 raised by the assessee.
13. The assessee in ITA No. 18/Chd/2013 has raised ground Nos. 1 to 8, which are identical to ground Nos. 2 to 9 raised by the assessee in ITA No. 17/Chd/2013. As the issue raised in ITA No. 18/Chd/2013 is identical to the issue raised in ITA No. 17/Chd/2013, our decision in ITA No. 17/Chd/2013 shall appl y mutatis-mutandis to the appeal in ITA No. 18/Chd/2013. The grounds of appeal raised by the assessee are, thus dismissed.
14. In ITA No. 19/Chd/2013, ground No. 1 raised by the assessee is against re-opening of assessment under section 148 of the Act and the same was not pressed by the assessee. Hence, the same is dismissed as not pressed.
15. The issue in ground Nos. 2 to 9 raised by the assessee is identical to the issue raised in ITA No. 17/Chd/2013 vide ground Nos. 2 to 9. Hence, our decision in ITA No. 17/Chd/2013 shall apply mutatis-mutandis to the appeal in ITA No. 18/Chd/2013. The grounds of appeal raised by the assessee are, thus dismissed.
1416. In ITA No. 20/Chd/2013, the issue in ground Nos. 1 to 8 raised by the assessee is identical to the issue raised in ITA No. 17/Chd/2013 vide ground Nos. 2 to 9. Hence, our decision in ITA No. 17/Chd/2013 shall appl y mutatis-mutandis to the appeal in ITA No. 20/Chd/2013. The grounds of appeal raised by the assessee are, thus dismissed.
17. In the result, all the appeals filed by the assessee i.e. ITA Nos.
17, 18, 19 & 20/Chd/2013 are dismissed.
Order pronounced in the Open Court on this 20th day of September, 2013.
Sd/- Sd/-
(T.R.SOOD) (SUSHMA CHOWLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 20th September,2013
Poonam
Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR
By Order
Assistant Registrar, ITAT,
Chandigarh