AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 525
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....mail Singh and his son Shri Arshpreet Singh. However, on protective basis, he made additions in the hands of the assessee on the basis of "Diary No. SGF-XIV". The ld.CIT(Appeals) has observed that since addition on substantive basis has been confirmed by the ld.CIT(Appeals) in the hands of Shri Gurmail Singh and his son Shri Arshpreet Singh, therefore, it is not necessary to confirm the protective addition. The brief findings of ld.CIT(Appeals) read as under: "6.2 Grounds of Appeal Nos. 4, 5 & 6: The assessment in the case has been completed u/s 147 r.w.s. 143(3) of the Income Tax Act, 1961. The addition has been made on a protective basis in the hands of the assessee society amounting to Rs. 6,81,29,000/-. The said amount has been worked out on the basis of transactions mentioned in a diary impounded during the course of survey. Substantial addition of the same amount of transactions has been made in the hands of Sh. Gurmail Singh and Sh. Arshpreet Singh (half amount in hands of each of them). Sh. Gurmail Singh was the Administrator of the Society and Sh. Arshpreet Singh is the son of Sh. Gurmail Singh. During the course of appellate proceedings, the AR was direc....
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....e only by calculating the peak credit available in these entries. After working out the peak credit of Rs. 1,40,65,000/- in all the years, Tribunal has worked out that roughly addition of Rs. 70,32,500/- each would come in the hands of both the individuals. The Tribunal further noted that Shri Gurmail Singh and his son have already disclosed Rs. 3 Crores in aggregate in their ITR for 2014-15 which could take care of all the entries in all three years, therefore, has set off this working of peak credit against income declared by both the individuals. 6. In this order, Tribunal has not recorded a categoric finding whether this diary belongs to M/s Satguru Foundation or to the individuals. Therefore, impugned order of the CIT (Appeals) deserves to be set aside and ld.CIT(Appeals) ought to be directed to decide the issue on merit. 7. We have duly considered the rival contentions and gone through the record carefully. We deem it appropriate to take note of the facts noticed by ITAT, Amritsar in the case of Shri Gurmail Singh and Shri Arshpreet Singh. We also deem it appropriate to take note of the findings of the ITAT, which read as under : 5. Briefly, the facts as per re....
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.... of the above appeal: The proceedings u/s 147/148 are void ab- initio because the notice u/s 148 was never served in accordance with the provisions of section 282 of the Income- tax Act, 1961. The proceedings u/s 147/148 are void ab-initio because the reasons to believe recorded by the AO are infact reasons to suspect. That no satisfaction was recorded by the Principle CIT which was mandatory under the provisions of Section 151(1) & reliance for the contention has been placed on the following judgments:- i. Smt. Nirmal Kaur vs. Dy. CIT International Taxation, Chandigarh I.T.A No. 575/ASR/2016 ii. United electrical Co. (P) Ltd. Vs. CIT [2002] 125 TAXMAN 775 (Delhi) iii. ITO vs. M/s Observer Investment & Finance Pvt. Ltd. ITA No. 1185 & 1186/Del/2009 (IT. AT Delhi E) iv. CIT vs. M/s Goyanka Lime and Chemical ITA No. 82 of 2012 (MP). "3.3 I have given careful consideration to the contentions of the appellant and to begin with non- service of notice has not been established by the appellant whereas in the assessment order specific date has been mentioned on which the notice was served. The Assessing Officer as ment....
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....to file explanation about the nature and source of the amounts recorded in the diary. Further, the assessee has failed to file nature of outgoings and it has not been established by the assessee that the amounts were rotated to be reintroduced as receipts in the diary. Under the circumstances, the contention of the assessee is devoid of any merit and is therefore rejected. As observed above, the assessee in his letter dated 25.02.2014 dearly stated that he was confronted with certain documents which related to him. The assessee, on the basis of such documents surrendered an amount of Rs 1,60,00,000/- for the A Y 2014-15 along with his son Sh. Arshpreet Singh, who surrendered an amount of Rs 1,40,00,000/- for the A Y 2014-15. The documents confronted to the assessee included diaries relevant for the A Y 2014-15 as well diary No SGF- X1V. The assessee, in his statement recorded on 25.02.2014, in reply to Q. No 5 stated that diaries marked as SGF- XII, SGF- XHI, SGF- 1 X, SGF- XV 1 and SGF- XV belonged to him and his son. Further, a copy of diary No SGF- XIV was again provided to the counsel of the assessee on 11.07.2017 and the assessee was required to explain the nature of entries r....
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....f peak is to be further divided in both the appellants: A.Y. Peak Credit Arshpreet Singh share Gurmail Singh Share 2010-11 14,00,000 7,00,000 7,00,000 2011-12 34,65,000 17,32,500 17,32,500 2012-13 54,50,000 27,25,000 27,25,000 2013-14 37,50,000 18,75,000 18,75,000 Total 1,40,65000 70,32,500 70,32,500 14. When above kind of noting or diary is found, debits and credits both are to be considered and peak is to be arrived at to compute the real income. For this proposition, we rely upon the ratio of decisions in: * Mr. Nadessan Sivapraqasam Vs. ACIT ITA No. 112-114/Cheny/2021 (ITAT Chennai) (Refer page no. 92-127 of compilation of judgement already on record) * DCIT Vs. Shree Bhagwati Machines Pvt. Ltd. ITA No. 296-301/Jp/20221 ITAT Jaipur/ (Refer page no. 128-172 of compilation of judgement already on record) 15. It is further submitted that as against above aggregate peak of Rs. 1,40,65000/- from the diary in all the years, the appellants have already disclosed Rs. 3 crores in aggregate in their ITRs for AY 2014-15 based on that very survey. Therefore, benefit of that surrender....
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....vey, were diaries which were then marked as "SGF-XII", "SGF-XIII", "SGF- IX", SGF- XII", "SGFXVI" and "SGF-XV" "SGF- XVI. On confronting, these diaries to Sh. Gurmail Singh, who was present at the time of survey, has admitted in his statement recorded on oath in answer to question no. 5 as above that "These diaries belong to me and my son Mr. Arshdeep Singh. These dairies have no relevance with the Satguru Foundation or Desh Bhaga Dental College.......". and in answer to question no. 6 that the dairies marked as "SGF-IX", "SGF- XV", "SGF- XIII" and "SGF- XIV" belongs to me and the balance diaries pertain to my son Mr. Arshpreet Singh. (APB, Pgs. 194-204). While recording the statement on oath of the appellant (Sh. Arshpreet Singh) on the date of survey u/s 133A of the Act, in answer to specific question no.3, he admitted that the documents marked at "SGF- XII", "SGF- XVI (notebook green) loose papers as listed in the impounded order dtd. 18.02.2014, were belong to him (APB, Pgs. 205-208) which is reproduced as under: "Q.3 During the course of survey at the premises of Satguru Foundation (Regd.) carried out on 18.02.2014, certain documents and loose papers marked at "SGF- X....
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....k green) loose papers as listed in the impounded order dtd. 18.02.2014, and which he admitted were being belonging to him (APB, Pgs. 205-208) which is reproduced as under: "Q.3 During the course of survey at the premises of Satguru Foundation (Regd.) carried out on 18.02.2014, certain documents and loose papers marked at "SGF- XII", "SGF- XVI (notebook green) loose papers as listed in the impounded order dtd. 18.02.2014, which are being shown to you. In his statement recorded on oath on 18.02.2014 your father Sh. Gurmail Singh has deposed that these dairies/documents pertain to you. Do you agree with his statement? Answer-Yes, I agree with the depositions made by my father in respect of these documents, as these documents belongs to me." 12. Under the circumstances and considering the material facts, we are of the considered view that the Ld. AR contention that diary No. "SGF- XIV" in specific has never been confronted to the appellant during the survey is appears to be factually correct and this facts is also evident from the statement of the father and son as above wherein neither the survey party nor the AO has confronted any such document marked as Di....
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.... of the Survey U/s 133A did belong to the appellants and that the transaction entered therein are unexplained investment being either made in the properties were out of books of accounts or other tangible or intangible Assets. In view of that matter we are of the considered opinion that the ld. CIT(A) did not appreciate the facts on record and he was not furnished in confirming the addition. 15. Even if the notings in the diary SGF XIV ( APB, Pgs. 45 to 117 with English version 118 to 192 ) presumed to be belonging to the appellant assesses, then the benefit of peak credit would be allowed to the appellants by considering the debits and credits entries of both sides written in the pages of the alleged diary no SGF XIV while computing the real income. If, the benefit of payments is given to the appellant to arrive at correct picture of peak, the year-wise calculation from this diary comes as under: A.Y. Receipt Payments Peak Credit 2010-11 6,61,54,600 6,66,13,700 14,00,000 2011-12 7,57,24,715 7,44,03,715 34,65,000 2012-13 5,84,55,112 5,96,76,112 54,50,000 2013-14 2,83,61,830 2,84,61,830 37,50,000 16. Witho....
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....ision of the Hon'ble Allahabad High Court in the case of L. Sohan Lal Gupta Vs CIT (1958) 33 ITR 786 that an affidavit filed by the assessee cannot be discarded, unless an opportunity is given to the assessee to substantiate its case. In this case, the Assessing Officer as well as learned CIT(A) has discarded retraction letter filed by the assessee only on the basis of admission of undisclosed income recorded in the statement u/s.132(4) of the Income Tax Act, 1961. In our considered view, the Assessing Officer as well as learned CIT(A) were completely erred in making additions towards only credit entries in the seized documents, disregarding explanation furnished by the assessee. 18. Coming back to another important aspect of the issue. The ld. AR has made an alternative argument without prejudice to its first argument. The assessee contended that if at all, a credit entry in the seized documents is considered as sales made outside regular books of account, then entire sales cannot be added as income, but only net profit from the business should be treated as income of the assessee. The assessee has also made arguments for applying peak credit theory in light of debits and....
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....ve considered income as well as expenditure. If you consider debit entry as expenditure, then only net income from said document needs to be taxed. Since, we have already stated in earlier part of this order, credit entry does not depict any income and debit entry does not show any light on expenditure, then the only possible method to determine undisclosed income for the above period is adoption of peak credit theory and in this case, particularly peak credit theory is best method to determine undisclosed income of the assessee. The assessee has filed working of peak credit, which is available in paper book filed for relevant period. The assessee has copied entries contained in seized documents relied upon by the Assessing Officer and recorded date- wise receipts and payments. For the financial year 2015-16 as on 23.03.2015, peak credit works out to Rs. 36.25 lakhs, which is net of debit and credit entries recorded in seized document. Therefore, addition is required to be made to the extent of Rs. 36.25 lakhs for the assessment year 2015-16. Hence, we direct the Assessing Officer to sustain additions to the extent of Rs. 36.25 lakhs for the assessment year 2015-16 towards undisclo....
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....e and credit side is investment outside regular books of account, although nature of said investment is not known to the assessee as well as the Assessing Officer. Therefore, we are of the considered view that either the Assessing Officer has to take one side credit entries and other side debit entries from the pages of the alleged Diary No. SGF XIV to compute real income of the appellant assesses by considering debit side of entries as expenditure incurred for earning said income or else he ought to have adopt peak credit theory to compute real income investment in properties from the receipts and payment sides of the dairy. Thus, in our view, the credit entry does not depict any income/ receipt and debit entry does not show any light on expenditure/investment, then the only possible method to determine undisclosed income for the above period is adoption of peak credit theory and in this case, particularly peak credit theory is best method to determine undisclosed income of the assessee. The assessee has filed working of peak credit, as above which is available in paper book filed for relevant period. The assessee has copied date-wise of receipt and payments entries contained in i....
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....rent aspect which was raised at time of admission of present special leave petition filed by Appellant-He drew our attention to orders dated February-Leave granted limited to question as to whether in respect of sales which are shown in stock register of. Ltd., there has been double taxation- It is clear from above that leave was granted limited to question as to whether addition made on account of aforesaid sale would amount to double taxation-To put it differently submission of learned Counsel for Appellant is that on the aforesaid sales, which are found in the accounts of Plastic Industries receipts are shown as income on which tax has been paid by During hearing of this appeal, learned Counsel submitted that he can bring satisfactory evidence in support of this plea- Court are of the view that order of authorities below should be sustained but if Appellant is able to prove that tax on income generated from sale of material has been paid by M/s. Ashish Agro P. Ltd. benefit thereof should be extended to Appellant. 23. In the present cases, since the appellant- assessees have made disclosure in survey in two hands of the group (Father and Son), paid taxes and accordingly,....