AI Drafter 
TaxTMI 
TaxTMI 
2016 (4) TMI 806
X X X X Extracts X X X X
X X X X Extracts X X X X
..... That the ld. AO has erred in law as well as on the facts and circumstances of the case in adding a sum of Rs. 4,50,000/- being the peak credit under section 68 of the I.Tax Act 1961, whereas the facts remains that there is no peak credit, on the contrary there is a debit balance given by the assessee out of his firms regular cash balance, therefore, the no addition deserves to have been made and ld. CIT (A) erred in sustaining the same. 3. That the ld. AO has erred in law as well as on the facts and circumstances of the case in making an addition of Rs. 20,000/- being the interest paid on unexplained cash credits, whereas the facts remains that there is no peak cash credit and ld. CIT (A) erred in sustaining the same. ITA No. 492/JP/2013 A.Y. 1999-2000 : 1. That the ld. AO has erred in law s well as on the facts and circumstances of the case in not allowing the set off of trading addition in Chana Dal of Rs. 69676.00 in Guwar of Rs. 2442.00 and unexplained peak cash credit of Rs. 19,60,000/- against the investment in purchases of Rs. 20,90,604/- and ld. CIT (Appeals), has erred in sustaining the action of the AO with reference to Rs. 19,60,000/-. 2. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... such addition was made on this account. Further addition of Rs. 3,49,844/- was made on account of alleged interest paid on the cash credit of Rs. 52,30,000/-, trading addition of Rs. 19,399/- and completed the assessment under section 143(3)/148/264 of the Income Tax Act, 1961, at total income of Rs. 56,16,760/- on 30.03.2005. the assessment order in this case was passed after adopting the peak credit in terms of the decision of Hon'ble Rajasthan High Court in the case of Commissioner of Income Tax vs. Ishwar Dass Mutha, 270 ITR 597. Thereafter the assessee has preferred an appeal before ld. CIT (A), Alwar. 2.2. He further observed that the ld. CIT (A), Alwar in his appeal order no. 138/2005- 2006 dated 28.03.2007 confirmed the addition of Rs. 52,30,000/- and interest therein at Rs. 3,49,844/-. Thereafter further appeal was filed against the order of ld. CIT (Appeals)'s order dated 28.03.2007 before the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur. 2.3. Subsequently the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur in ITA No. 664 & 609/JP/2007 dated passed the order on 30.12.2010. In the order the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur has directed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sh balance available in the regular books of accounts is not acceptable as it had never been the stand of the appellant in the last 10 years. This peak credit was worked out by the AO after examination of the appellant himself, and thus the present argument is nothing but change of stand on the part of the appellant. This kind of shifting of stance on the part of appellant is with a view to defeat the process of law as would be clear from the sequence of events as stated in para 4.1 above. Accordingly, I have no hesitation to confirm the addition of Rs. 4,50,000/- made by the AO u/s 68 of the IT Act." The ld. CIT (A) has also confirmed the interest of Rs. 20,000/- on peak amount. 4. Now the assessee is before us. 4.1. The ld. A/R for the assessee submitted that there was a survey under section 133A on 5.3.1999 and during the course of survey cash of Rs. 33,699/-, Geeta Dayanandini Diary was found in which transactions of borrowing/lendings were recorded. The ld. A/R has also drawn our attention on the ground raised before the ITAT that assessee never accepted the loan taken but it is contrary that assessee had given loan during the year and peak credit of Rs. 4,50,000/-. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y Co. Ltd vs. CIT, 199 ITR 351 (Bom.) CIT vs. Jute Corporation, 187 ITR 688 (SC) CIT vs. Breach Candy Swimming Bath Trust, 27 ITR 279 (Bom.) CIT vs. Indian Express (Madurai) P. Ltd. 140 ITR 7051 and requested to allow the appeal in favour of the assessee. 4.2. At the outset, the ld. D/R supported the order of ld. CIT (A). 5. In A.Y. 1999-2000 the assessee's appeal is against not allowing the set off of trading addition in Chana Dal of Rs. 69,676/-, in Guwar of Rs. 2442/- and unexplained peak credit of Rs. 19,60,000/- against the investment in purchase of Rs. 20,90,604/-. The AO observed that the assessee filed return on 19.03.2002 at (-) Rs. 51,847/- (After set off of surrendered income of Rs. 3,00,000/-). Assessment was completed under section 143(3) of the Act at Rs. 16,80,271/- making the trading addition of Rs. 69,676/- in Chana Dal, Rs. 2,442/- in Guwar and unexplained cash credit of Rs. 16,60,000/- which was set aside by the ld. CIT, Alwar under section 263 of the IT Act vide order dated 22.12.2004 on the ground that AO had not considered the decision of Hon'ble Rajasthan High Court delivered in case of Swaroop Chand Koju Ram, 235 ITR 732 in w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....appeal before ld. CIT (A), Alwar on the ground of addition made on account of unexplained cash credit entries, interest paid thereto but before deciding the appeal by ld. CIT (A), Alwar, the ITAT set aside the order dated 24.03.2006 passed by the AO and directed to go back to consider the submissions made by the assessee afresh and then pass a fresh order on the issue of cash credit. The ITAT has observed that there is no dispute that the amount of addition has been worked out on account of peak credit on the basis of diary found and addition has been made on the basis peak credit. As such the matter was set aside to the AO to ascertain the correct amount of addition on the basis of peak credit and amount of interest payment be considered afresh. Thereafter the AO issued various notices. The assessee was found non-cooperative to the AO. Finally, he summoned one of the partners, namely, Ashok Kumar Gupta under section 131 on 15.12.2011 by fixing date of hearing on 20.12.2011. On 29.12.2011 statement of Shri Ashok Kumar Gupta was recorded under section 131 of the IT Act. The facts of the case are identical to A.Y. 1998-99 as on the basis of survey conducted under section 133A, a diar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n made of Rs. 16,60,000/- + interest. The contention of the assessee seems to be considerable that if the amount of loan is treated belonging to the assessee then the same amount will be available with the assessee for next year also. This aspect has also not been examined by the AO. Therefore, we set aside the issue to the file of A.O to examine this aspect also. Same finding is also given in respect of interest charged for A.Y. 1999-2000. We order accordingly." He further submitted that no borrowing was substantiated from the record. There was no interest payment, therefore, the addition deserves to be deleted. 7.2. We have heard rival contentions and perused the material available on record. The AO, as per statement of Shri Ashok Kumar Gupta, has assessed the unexplained cash peak at Rs. 19.60 lacs for A.Y. 1999-2000 and Rs. 4.50 lacs for A.Y. 1998-99. The assessee always has taken the stand before the lower authorities in all the repeated proceedings that these are the debit balances. The assessee had sufficient cash balances in the cash book of the firm and had explained the sources of cash given by the assessee. The cash was available in the books whereas in diary there....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the ITO could not make an estimate of income and also add further amounts towards unexplained cash credits. The assessee further contended that the addition of credits was redundant, in the circumstances, and must be deleted. The Tribunal accepted this new plea of the assessee, and allowed the appeal in part directing the deletion of the cash credits from the assessee's taxable income. The Commissioner thereupon demanded a reference from the Tribunal, raising the question whether the Tribunal was right in law in making out a new case for the assessee and interfering with the assessment. The Tribunal rejected the reference application. The department moved the High Court for a direction to the Tribunal, asking it to state a case and refer the question of law for decision. This application was dismissed by the High Court. On appeal by special leave, the Supreme Court observed as under : "In hearing an appeal the Tribunal may give leave to the assessee to urge grounds not set forth in the memorandum of appeal, and in deciding the appeal the Tribunal is not restricted to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal. The Tribunal was, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t a reference before the High Court, on this question, as a jurisdictional issue. But the High Court upheld the jurisdiction of the Tribunal to permit the assessee to raise a new contention, which had not been raised by the assessee before the departmental authorities. The Commissioner thereupon took the matter on special leave before the Supreme Court. It was urged for the department that the Tribunal had no jurisdiction to allow a plea from the assessee which was inconsistent with the plea raised before the departmental authorities. This contention, however, was negative by the Supreme Court. The court observed thus: "Under sub-section (4) of section 33 of the Indian Income-tax Act, 1922, the Appellate Tribunal is competent to pass such orders on the appeal 'as it thinks fit'. There is nothing in the Income-tax Act which restricts the Tribunal to the determination of questions raised before the departmental authorities. All questions whether of law or of fact which relate to the assessment of the assessee may be raised before the Tribunal. If for reasons recorded by the departmental authorities in rejecting a contention raised by the assessee, grant of relief to him on a....