TaxTMI 
TaxTMI 
2018 (6) TMI 957
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....iness as well as the residential premises of the assessee. The Punjab Police Vigilance Bureau registered FIR No. 5 dated 23.03.2007 in connection with Ludhiana City Centre Scam an assessee was arrested on 17.05.2007. The police have recovered a computer and pen drive from the assessee. The print out from the pen drive showed that the assessee had received credit entries from various persons. In the said pen drive, ledger accounts of various persons/parties have been mentioned. In the charge sheet filed by the police, it was clearly brought out that the entries in the pen drive represent unaccounted income of various persons being deposited with the assessee. As such, the pen drive represents the accounts of such unaccounted transactions which were being kept and maintained by the assessee. The peak credit of all the credit entries maintained in each and every ledger account has been worked out which comes to Rs. 43,67,62,555/-. The asserssee has however, shown salary and interest income in the return of income. These credit entries are not shown in the return of income. The AO, therefore, had reasoned to believe that income chargeable to tax has escaped assessment. The assessee in ....
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....The assessee in the rejoinder also explained that the process and methodology adopted by the assessee in earlier years also has judicial sanction because the peak statements were filed before the authorities below and the Tribunal also accepted the same while deciding appeals of the assessee for assessment years 2002-03, 2003-04 & 2004-05. The said orders of the Tribunal support, affirm and approve the methodology adopted by the assessee to determine the peak credit for the respective years and accordingly, there is no course legal, factual or any other logic reason to denote from the same. It was, therefore, submitted that AO should have adopted the calculation of the peak credit as is directed by the Tribunal in earlier year. 5. The Ld. CIT (A) confirmed the reopening of the assessment and dismissed this ground of appeal of the assessee. The Ld.CIT (A) as regards the working of the peak credit noted that the Tribunal has decided the issue in earlier year and have considered the method of working of the peak credit submitted by the assessee to the AO during assessment proceedings. The working of the peak credit, telescoping and set off all the entries and set off of the opening....
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.... earlier years. The AO in the remand report mentioned that the assessee in his working of peak had also considered the application of income and expenses in the rotation of funds as the cash available which is incorrect. The findings of the AO have been upheld by the CIT (A). Therefore, appeal of the assessee is not fully covered by decision of the ITAT. 9. Ld. DR submitted that the issue of reopening of the assessment u/s 148 of the Act is covered against the assessee by order of the Tribunal for earlier years (supra). Ld. DR referred to the statement of peak filed in the Paper Book to show that assessee has taken into consideration the expenses and interest which AO has excluded. Before the ITAT expenses were not referred, therefore, the AO may be directed to exclude the expenses while computing the peak. Set off of Rs. 46,16,387/- of AY 2003-04 is not available to assessee as it also contains the expenses. 10. On the other hand, Ld. Counsel for the assessee reiterated the submissions made before the authorities below and submitted that both the issues are covered by the order of the ITAT 'Delhi' Bench in the case of the assessee. He has submitted that the issue of peak is ....
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.... one a/c to other, the effect of contra entries and mistakes committed by lower authorities. While working out the printouts it will be disastrous to add each and every entry without appreciating that same moneys have been reused. Such an arbitrary practice will lead to disastrous result and unthinkable additions which are neither justified nor warranted by the material on record. It has been pleaded that assessee has discharged its burden in explaining each and every aspect necessary for arriving at a fair and reasonable assessment. Lower authorities have failed to rebut the discharge of burden by the assessee in reconciling his peak credit working. Therefore the peak working as offered by the assessee deserves to be accepted. 6.16. After careful consideration of facts, circumstances and material available on record, case laws and rival contentions it will be desirable to dwell on the aspects of peak credit; telescoping, set off of entries, availability of opening balance and its effect in such print out; this is necessary for arriving at a fair estimate of the deemed income of the assessee for AY 2002-03 and 2003-04. 6.17. Such concepts are well known in the law....
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....etic reduction of interest. Issue is carried in appeal, all the documents are filed again before CIT(A) who calls for a remand report from AO. The course of events reveals that assessees details are again not considered objectively and some prima facie adjustments are reduced by CIT(A). 6.23. The peak credit theory and the benefit of telescoping is generally accepted as it is logical and acceptable provided there is reasonable material to show that withdrawals or repayments could have been available on the date of subsequent credit or repayment, more so, in the accounts of different persons. The fact that assessee has been held to be a fund manager for 148 persons for which the moneys are frequently withdrawn or deposited as per these case laws and facts and circumstances of this case assessee will be entitled to work out a peak credit and avail the benefits of telescoping. We may hasten to add that it is not a proposition of law but the exercise is to be undertaken on the inferences based on normal preponderance of probabilities and based on normal human conduct. The department is entitled to displace such propositions advanced by the assessee on cogent reasons and not by....
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....o decide the quantum of undisclosed income of the assessee as under: (i) The reassessment for AY 2001-02 is quashed. (ii) For AY 2002-03 the credit for opening balance is not given as we have quashed the reassessment for AY 2001-02, therefore, the opening figure flowing from the quashed reassessment cannot be verified. Subject to these observations the peak credit as worked out by the assessee at Rs. 36,89,310/- is held as undisclosed income for this year. (iii) For A.Y. 2003-04: On the same methodology the peak credit worked out by the assessee at Rs. 46,16,387/- is held to be the peak credit for this year. However, this peak credit is to be telescoped with the income of AY 2002-03 as the same was available with the assessee for utilization. Consequently, the taxable income for A.Y. 2003-04 is worked out as under: (i) Peak credit for A.Y. 2003-04 Rs. 46,16,387/- (ii) Less: Peak credit for AY 2002-03 Rs. 36,89,310/- Taxable income for AY 2003-04 Rs. 9,27,077/- 7. Thus, the undisclosed income to be included in the assessee's income is determined at Rs. 36,89,310/- for A.Y. 2002-03 and Rs. 9,27,077/- for A.Y. 2003-04. The....
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....ated 21.06.2013 (supra) allowed the appeal of the assessee partly. The findings of the Tribunal in para 6 to 8 of the order are reproduced as under: "6. We have duly considered the rival contention and gone through the record carefully. Both the Id. Representative have agreed that issue regarding reopening of the assessment by issuance of a notice u/s 148 has been decided against the assessee in AYs 2002-03 and 2003-04, similar circumstances are available in this year, hence, ground no. 4 raised in the present appeal is to be rejected. Similarly it has been agreed that the entries found in the pen drive is admissible evidence against the assessee upon whom income of the assessee can be determined. Thus ground no. 2 raised by the assessee in the present appeal is also rejected. The following observations of the Tribunal in this connection are worth to note: 'AYs 2002-03 & 03-04 6.9. In these two assessment years the only challenge to jurisdiction to reassessment on the only ground about there being no live nexus between the reasons recorded and material available on record has been already dismissed by us. Consequently we proceed to decide the merits of th....
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.... such principles are routinely applied. " 7. As far as determination of total unexplained cash credits are concerned, the Tribunal has held that peak credit is to be worked out and income assessed in any earlier assessment year which is opening balance of the current AY is to be excluded. In the present AY the income of AY 2003-04 determined at Rs. 92,7,077/- is to be excluded from the peak credit because this amount was available to the assessee on the first day of the accounting year. The Tribunal has made discussion with regard to this issue from Paragraph No. 6.13 which read as under: "6.13. We have heard both the parties on these issues at length most of the arguments are contained in the written submissions filed before lower authorities, which are mentioned above in brief From AO's remand reports and observations contained in the orders Id. AO and CIT(A), the details furnished by assessee are as under: (i) Assessee filed details about each and every entry on day to day basis, these details are placed on paper book of respective year. (ii) From the details a summary of mistakes, opening balances (debit or credit as the case may be), con....
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....case of repetitive transactions. 6.18. We shall start with the theory) of the department that assessee is acting as a manager or administrator of funds for 148 other persons. Though some names are gjyen however no inference are drawn by authorities below. Therefore, we leave this issue here. More so they become third parties to the proceedings and any observations are undesirable and may impinge on principles of natural justice. The departmental theory of assessee being a fund manager for others is supported by the fact that assessee filed complete day to day details and entry by entry details of contents of print outs available with the department. They all are part of the paper books. They were submitted before Assessing officer and CIT(A). Remand report was submitted by AO on CIT(A) 's initiative. 6.19. From the explanation of the entries and departmental theory, it emerges that assessee was working as the fund manger or administrator for others. While dealing with the issue this fact is to be kept in reckoning. 6.20. Presumption u/s 292C will not be applicable in this case as admittedly there was no search proceedings under income tax act on the asses....
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....'s in explaining the entries contained in the pen drive and its print outs in terms of sec 68 or any other presumption statutory> or otherwise which may be raised in the context of the facts of this case. In our considered view assessee has discharged it's onus in explaining these entries by filing the details before AO, CIT(A) and in remand proceedings. Assessee has pushed the ball in the court of department by demonstrating from the details of entries that he manages the funds for others. In the course thereof he requests for necessary working of peak credit, correction of mistakes, contra entries and considering the claims of available opening balances. The claim of opening balances is made as the data recovered pertains to three years and assessees fund managing activities span to three years. Despite assessees diligence in filing all the details the authorities below fail to consider the assessee's objections and workings. In our considered view the facts and circumstances of the case and departmental theory warrant application of peak theory, telescoping, correction of mistakes and taking cognizance of journal/contra entries. In our view ratio of decisions in the cases of....
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....was neither a party to ED proceedings nor the statement was taken in his presence. Only on the basis of a third party statement before some other agency Assessing officer has made the addition without giving opportunity to cross examine Mr. Young. This clearly violates the principles of natural justice embodied in the maxim "audi alteram partem We find merit in the argument of Id. Counsel. The impugned addition cannot be made in the hands of the assessee unless proper opportunity to defend himself against the allegation including the cross-examination of Mr. Young and the result ofproceedings before the E.D. authorities are to be considered. This ground is set side restored back to the file of assessing officer to decide the same afresh in accordance with law. " 8. Respectfully following the order of the Co-ordinate Bench in the assessee's own case, where assessment was reopened on the similar reasons and same material i.e. credit entries pertaining to those years have been considered, we are of view that there is no disparity on facts, and, therefore, appeal of assessee deserve to be allowed for statistical purposes, we accordingly allow the appeal of assessee and direct ....