TaxTMI 
TaxTMI 
TaxTMI 
2014 (2) TMI 418
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....rse on facts of case and against rule of law. (b) That the amount received from customers against business transactions is not cash credits and section 68 cannot be attracted. (c) That the learned Commissioner of Income Tax Appeal erred in confirming addition of Rs. 10,55,260/- 2. That assessment proceedings are barred by limitation as notice u/s 143(2) of Income Tax Act has not been served on appellant within stipulated period provided under law. 3. That the appellant craves to amend, alter, delete or supplement any ground of appeal before the appeal is finally heard and disposed off." 4. The revenue raised identical grounds of appeal in all the three appeals and the grounds of appeal raised in ITA 963/Chd/2010 read as under : 1. On the facts and in the circumstances of the case, the Ld. CIT (A)-II, Ludhiana has erred in adopting peak deposits in Bank Account even when there was no cash withdrawal. 2. On the facts and in the circumstances of t....
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.... be set aside and that of the A.O. be restored. 9. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed off. 5. The ground No.2 raised by the assessee against limitation is not pressed and hence the same is dismissed as not pressed. 6. The issue raised by way of ground No.1 by the assessee and various grounds of appeal by the revenue are in relation to the addition made by the Assessing Officer under the provisions of section 68 of the IT Act. Both the appeals of the assessee and the revenue relates to the same issue and are being adjudicated in the paras hereunder. 7. The brief facts of the case in ITA No. 713/Chd/2010 and ITA No. 963/Chd/2010 are that survey u/s 133A of the Act was conducted at the premises of the assessee on 31.10.2007 and statement of the assessee was recorded. The assessee had filed return of income declaring total income of Rs.1,61,680/-. The case was selected for scr....
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....fficer noted that there were cash credits amounting to Rs.1,26,66,000/- in the bank accounts of the assessee i.e. in the case of Shri Sudhir Kumar Sharma. The details of the said cash deposits were annexed as Annexure-B to the assessment order. The assessee failed to produce 10 persons for verification nor any further explanation was given in respect of the cash deposits claimed to be belonging to customers. The creditworthiness of the persons giving cash to the assessee could not be established as the assessee failed to produce the requisite details or even produce some of the persons. In view thereof, the Assessing Officer held the assessee to have failed to prove the source of cash deposits in his bank accounts and addition of Rs.1.26 crores was made u/s 68 of the Incometax Act. 8. Before the CIT(Appeals), the assessee furnished written submissions which are reproduced under para 2.3 at pages 2 to 6 of the appellate order. The plea of the assessee before the CIT(Appeals) was that the Assessing Officer was biased against the assessee and without conducting any enquiry, had decided the issue adversely against the assessee. The assessee claimed to be share and commodities broker a....
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....ous case laws relied upon by the assessee in this regard was countered by the CIT(Appeals) in para 4.2 and it was held that, "Ratio of this decision of the Hon'ble jurisdictional Bench covers the case of the appellant against it, in respect of addition u/s 68 of the Act in principle. As far as quantum of addition is concerned, it is the peak of deposits which could be added as per this decision. During appeal proceedings the ld. counsel was requested to furnish necessary details to work out such peak of deposits. These details are as per annexure-A to this order. As could be seen from these details, the peak credit balance in respect of ING Vyasa bank account No.557011001677 comes to Rs.7,54,420/- as on 15.2.2007. Further the peak deposit in bank account No. 557011009579 of the appellant as per the same details come to Rs.300,840/-. Therefore, the addition on the basis of peak deposits in this case would come to Rs.10,55,260/-." 11. The CIT(Appeals) in view thereof upheld the addition of Rs.10,55,260/- and deleted the addition of Rs.116,10,740/-.The assessee is in appeal against the addition of Rs.10,55,260/- and the revenue is in appeal against the deletion of addition of Rs.1.16....
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....lleged cash to the assessee for the alleged accommodation entries, the provisions of section 68 of the Income-tax Act were squarely applicable and addition of the total cash credits was to be made in the hands of the assessee. The ld. DR for the revenue placed reliance on the ratio laid down by the Hon'ble Allahabad High Court in Bhaiyalal Shyam Behari V Commissioner of Income-tax reported in 276 ITR 38 (All). 15. In rejoinder, the ld. AR for the assessee admitted that though no cash was withdrawn from the bank account, but the money of the clients of the assessee were treated as the money of the assessee against which cheques were issued to various persons. The ld. AR for the assessee was categoric in the admission that cash was deposited in the bank account but no cash was withdrawn from the said bank account and only cheques were issued to various parties. The ld. AR for the assessee placed reliance on B.K.Jain V ITO, Ludhiana in ITA Nos. 1096/Chd/2008 relating to assessment years 2002-03 to 1094 to 2004-05 and cross-appeals in ITA Nos. 1087 to 1089/Chd/2008. 16. We have heard the rival content....
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....r/Proprietor were claimed to be branches/traders of M/s Shubh Krishna Commodities. In view of the entries of trading being carried out on behalf of the M/s Shubh Krishna by the various companies/proprietory concerns owned by the assessee, it was explained that in case of one or two transactions, the commodity exchange entry was through the Exchange and the balance entries were client to client, which were permissible as commercial transaction, as per prevalent market trends. The assessee claimed that soda confirmation slip vouchers in respect of commodities transaction were being maintained by the assessee, which would be provided on the next date of hearing. The statements wwas again continued on 21.12.2009 and the plea of the assessee was that it had not brought any record or any persons to be produced alongwith himself on the said date of hearing, as he had come for recording of his statement. In the statement so recorded, in respect of various cash credits/deposits in the bank accounts in the name of different companies ....
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....5,260/-. The CIT(Appeals) however, in principle held that the Assessing Officer was correct in holding that the abovesaid additions were maintainable in view of the provisions of section 68 of the Act. 20. The assessee is in appeal before us in respect of both the invoking of provisions of section 68 in the present case and also against the addition of Rs.10,55,260/-. The revenue is aggrieved by the application of peak credit theory in the hands of the assessee and second, relief allowed to the assessee. 21. The first issue to be addressed by us in the present facts and circumstances of the case is whether the provisions of section 68 of the Act are applicable to the facts of the present case. During the course of survey conducted u/s 133A of the Act on 31.10.2007, in the statement recorded, the assessee admitted to be engaged in the business of giving accommodation entries. The modus-operandi explained during the course of survey was that the assessee was receiving the amount in cash and the same were being returned vide cheques through bank accounts. However, during the course of assessment proceedings, the statement of the assessee was again recorded wherein when confronted wi....
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....sp; 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 bare perusal of the statement recorded during the course of assessment proceedings reflect that the claim of the assessee to have changed. The assessee admits that only M/s Shubh Krishna was registered with Ludhiana Commodities Exchange and rest all the concerns were the branches or traders of M/s Shubh Krishna Commodities. In respect of the cash deposit in the bank account of....
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....ded 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. Under the provisions of section 68 of the Act, it is provided that where the assessee offers no explanation about the nature and source of the credits in the books of account, all the amounts so credited or where the explanation offered by the assessee is not satisfactory in relation to the same, then such credits may be charged to tax as income of the assessee for that particular previous year. Admittedly, in the case of the assessee, various amounts in cash are deposited in the bank accounts of the assessee and the onus was upon the assessee to explain nature and also the source of the said cash deposits. The assertion of the assessee in this regard was that it wa....
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.....e. invoking of provisions of section 68 of the Act and confirmation of addition of Rs.1055,260/-. The issue of whether the assessee is engaged in giving accommodation entries or not is a purely factual issue which has not been raised before the authorities below i.e. during the course of assessment proceedings or even before the CIT(Appeals), the said issue has not been adjudicated. The plea of the assessee of admission of such new factual issue is not admissible at this stage of adjudicating of the appeal in the captioned years. We find no merit in the said plea of the assessee and the same is rejected. 26. We are in conformity with the order of CIT(Appeals) in holding that the provisions of section 68 of the Act in the present set of facts and circumstances of the case are applicable and we uphold the order of CIT(Appeals) in this regard. 27. The reliance placed upon by the assessee on various case laws has been referred to and&n....
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....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 u....