IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "F" : DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI L.P. SAHU, ACCOUNTANT MEMBER
ITA.No.893/Del./2015
Assessment Year 2005-2006
M/s. RL Travels Pvt. Ltd.,
118, Ansal Bhawan, The DCIT, Central Circle-12
Kasturba Gandhi Marg, vs
New Delhi.
New Delhi - 110 001.
PAN AAACR2852C
(Appellant) (Respondent)
ITA.No.5214/Del./2016
Assessment Year 2005-2006
M/s. RL Travels Pvt. Ltd.,
The ACIT, Central Circle-7
118, Ansal Bhawan,
Room No.330, ARA
vs Kasturba Gandhi Marg, New
Centre, Jhandewalan
Delhi - 110 001.
Extn, New Delhi.
PAN AAACR2852C
(Appellant) (Respondent)
Shri Ashwani Kumar &
For Assessee :
Shri Aditya Kumar, C.As.
For Revenue : Shri Surender Pal, Sr.D.R.
Date of Hearing : 06.09.2018
Date of Pronouncement : 18.09.2018
2
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
ORDER
PER BHAVNESH SAINI, J.M.
ITA.No.893/Del./2015 by Assessee-Company has
been directed against the Order of the Ld. CIT(A)-24, Delhi,
Dated 22.12.2014, for the A.Y. 2005-2006. ITA.No.5214/Del./
2016 by Department is directed against the Order of the Ld.
CIT(A)-24, New Delhi, Dated 25.07.2016, for the A.Y. 2005-
2006, challenging the cancellation of penalty.
2. We have heard the Learned Representatives of both
the parties and perused the material available on record. Both
the Appeals are decided as under.
ITA.No.893/Del./2015 M/s. RL Travels Private Limited :
3. Briefly the facts of the case are that the assessee-
company filed its original return of income under section 139
of the Income Tax Act, 1961 on 27.10.2005 showing total
income of Rs. 20,94,725/-. Notice under section 148 was
issued on 29.03.2012 after recording the following reasons:
3
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
"A search, operation was carried out by the Punjab
Vigilance Bureau on 17.05.2007 in the case of Sh.
Chetan Gupta at his business premises situated at
118, Ansal Bhawan, K. G. Marg, New Delhi. During
search, a Pen-drive was found from the possession of
Sh. Chetan Gupta, who is one of the Directors of
Assessee-Company. In the said pen-drive, ledger
accounts of different parties were found to be
maintained by Sh. Chetan Gupta. Printouts of the
year-wise ledger accounts had been taken by the
Punjab Vigilance Bureau from the Pen-drive and were
sent to the Income Tax Department. It has been alleged
by the Punjab Vigilance Bureau that Sh. Chetan Gupta
was keeping the black money earned by Capt.
Amrinder Singh, Ex. Chief Minister of Punjab and
keeping the record in computerized data stored in Pen-
drive.
4
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
2. As per information available in this office, the
assessee during the relevant previous year entered
into financial transactions of expenditure and
investments which were apparently not entered in the
books of accounts of the assessee and are also not in
commensuration with the declared sources of income
as per particulars of income declared in the return of
income filed for the AY 2005-06.
3. As per details available on page 57 of the
Annexure, there is credit of Rs.2,21,00,788/- with
particulars "TRF TO P/L" in the account maintained in
the name of "RLTRV PVT. EXP". There are debits of
Rs.2,21,00,788/- in the aforesaid account which
appear to be expenses made on various heads which
are apparently not entered in the books of account for
the year under consideration and accordingly, not
declared in the return of income. The amount of
undisclosed expenditure made by the assessee is
5
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
covered within the provisions of section 69C of the
Income Tax Act. 1961. Therefore, I have reasons to
believe that unexplained expenditure of
Rs.2,21,00,788/- is not declared fully and truly in the
return of income for the A Y 2005-06 and the same has
escaped from assessment and levy of tax.
4. In view above fads, I have reasons to believe
that in the case of the assessee, for the AY 2005-06, a
total amount of Rs.2,21,00,788/- has escaped from
assessment and taxability within the provisions of
section 147 of the Income Tax Act, 1961 by reason of
the failure on the part of the assessee."
2.1. In response to the notice under section 148, the
assessee-company submitted that the original return filed may
be treated as return filed in response to notice under section
148 of the Income Tax Act, 1961. The A.O. asked for the
explanation of the assessee-company regarding entries
contained in pen-drive found from the possession of Shri
6
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
Chetan Gupta. The assessee-company explained that the
alleged pen-drive was recovered from Shri Chetan Gupta has
got no relevance or correlation with the affairs of the
Company. He was merely a Director of the Assessee-Company
and any document being allegedly maintained or belonging to
him does not have any correlation with the accounts of the
Assessee-Company. Shri Chetan Gupta himself has denied the
pen-drive belonging to him during his income tax proceedings
as well as search operation carried out by Punjab Vigilance
Bureau during 2007. The assessee-company is a Private
Limited Company and its accounts are audited by Chartered
Accountant who has given unqualified report to the Company.
Therefore, assessee-company maintained proper books of
account. Therefore, entries contained in the pen-drive cannot
be made basis for addition against the assessee-company. The
A.O. considered the reply of the assessee-company and noted
some entries relating to Shri Chetan Gupta's five companies/
firms were found on both the pen-drive and in the fair books of
account of Shri Chetan Gupta. The accounts in the pen-drive
7
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
were maintained like the normal books of account. Shri
Chetan Gupta has given cheque of Rs.2 crores to Shri Gurpal
Singh, son-in-law of Capt. Amrinder Singh and it was found
that these cheques had been issued from his companies RL
Travel, Indo Arab Services and Trans Air in October, 2005.
This money was subsequently returned by Shri Gurpal Singh
to Shri Chetan Gupta in January, 2006. Assessee's denial is,
therefore, not justified. The A.O. considered the issue in the
light of provisions of Section 68 of the I.T. Act and noted that
working of the peak credit prepared by the A.O. as per entries
in the pen-drive comes to Rs.2,21,00,788/-. It was added as
unexplained credit in the hands of the assessee-company
under section 68 of the I.T. Act.
3. The assessee-company challenged the initiation of
re-assessment proceedings under section 148 and addition of
Rs.2,21,00,788/- before Ld. CIT(A). The assessee-company
reiterated the same submissions before the Ld. CIT(A) and
submitted that addition is made because the entries contained
8
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
in the pen-drive have not been entered into the books of
account of the assessee-company despite the entries have no
co-relation with the assessee-company. The A.O. himself was
not sure as to the basis of the addition because A.O. in the
reasons for reopening of the assessment has initiated the re-
assessment proceedings for undisclosed expenditure under
section 69C of the I.T. Act. However, the A.O. made addition
under section 68 on account of unexplained cash credit. The
provisions of Section 69C are not applicable in this case
because assessee-company has not debited nor claimed any
expenditure in the P & L A/c for the purpose of computing
taxable income. The addition under section 68 also cannot be
made-out because no entries were found in the books of
account of the assessee-company. Therefore, entire addition is
liable to be deleted. A perusal of the print out of the said pen-
drive would show that nothing concrete or definitive can be
made out therefrom. This paper is unsigned and in the name
of some `RLTRV PVT EXP.' This paper is not related to the
assessee-company and has no evidentiary value to make any
9
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
addition against the assessee-company. It was submitted that
the Special Judge, Ludhiana while granting bail to Shri
Chetan Gupta has held that "the entries of the pen-drive are
without any basis and has no legal value". The entry in the
pen-drive are not corroborated by any evidence. The assessee-
company submitted that entries in the books of account of any
third person cannot be solely the basis for arriving at any
conclusion with respect to the case of the assessee-company.
Reliance was placed on the decision of Hon'ble Supreme Court
in the case of CBI vs. V.C. Shukla & Others (1988) AIR 1406
(SC). The assessee-company further submitted that reopening
of the assessment is bad in law because there was no material
to justify reopening of the assessment. There was no nexus
between the material and the belief of escapement of income
from assessment. The A.O. did not apply his mind to the facts.
Therefore, assessment order is bad in law.
4. The Ld. CIT(A), however, considering the facts of the
case, rejected the explanation of assessee-company and
10
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
dismissed the appeal of assessee-company. The Ld. CIT(A)
noted that the amount clearly represents the expenses
incurred by the assessee-company as recorded in the pen-
drive of its Director, therefore, addition is liable to be made
under section 69C of the I.T. Act. No addition could be made
under section 68 of the I.T. Act. He has also considered the
decision of ITAT in the case of Shri Chetan Gupta for
A.Ys.2002-2003, 2003-2004 and 2004-2005 and noted that
there is a live nexus established between assessee-company
and the contents of the pen-drive. Therefore, addition under
section 69C was made by the Ld. CIT(A). As regards reopening
of the assessment, Ld. CIT(A) noted that A.O. has to come to
the prima facie conclusion that there was escapement of
income, therefore, re-assessment is justified in the matter.
Appeal of assessee-company was accordingly dismissed.
5. We have heard the Learned Representatives of both
the parties and perused the material available on record.
Learned Counsel for the Assessee reiterated the submissions
11
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
made before the authorities below and submitted that the
issue on merit is covered by the Order of ITAT, Delhi F-Bench,
in the case of Shri Chetan Gupta in ITA.Nos.1788 &
2389/Del./2016 for the A.Y. 2005-2006 dated 07.06.2018 in
which the Tribunal confirmed the part addition in the hands of
Shri Chetan Gupta holding that entries contained in the pen-
drive belong to Shri Chetan Gupta only. He has, therefore,
submitted that no addition could be made in the hands of the
assessee-company. He has, further submitted that the Ld.
CIT(A)-23, New Delhi, in the case of the assessee-company for
the A.Y. 2007-2008 vide Order dated 23.02.2016 following the
Order of the Tribunal in the case of Shri Chetan Gupta held
that the addition on account of details mentioned in the pen-
drive have been considered in the case of Shri Chetan Gupta.
Therefore, no addition could be made against the assessee-
company. Similar addition has been deleted by the Ld. CIT(A).
He has also relied upon the Order of ITAT F-Bench, in the case
of R.L. Agencies Pvt. Ltd., New Delhi vs. DCIT, Central Circle-
12, New Delhi in ITA.No.2196/Del./2015, dated 30.07.2018 in
12
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
which the Tribunal considered the pen-drive stood accepted by
Shri Chetan Gupta, deleted the similar addition in their case.
Learned Counsel for the Assessee submitted that it is a case of
sister concern of the assessee-company. He has, therefore,
submitted that once addition has been considered in the
hands of Shri Chetan Gupta, therefore, no addition could be
made in the hands of the assessee-company. He has reiterated
the submissions as regards reopening of the assessment and
also submitted that once Department says that pen-drive
belongs to Shri Chetan Gupta, it cannot be the basis for
reopening of the assessment in the case of the assessee-
company. He has submitted that there is no material available
on record to justify reopening of the assessment in the case of
the assessee-company. He has relied upon the decisions of the
Hon'ble Delhi High Court in the case of Shipra Srivastava vs.
ACIT 319 ITR 221, CIT vs. SFIL Stock Broking Ltd., 325 ITR
285 and PCIT vs. Meenakshi Overseas Pvt. Ltd., 395 ITR 677.
13
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
6. On the other hand, Ld. D.R. relied upon the Orders
of the authorities below and submitted that sufficient material
is available on record to justify reopening of the assessment.
7. On consideration of the rival submissions, we are of
the view that reopening of the assessment as well as addition
in the case of the assessee-company are wholly unjustified. It
is an admitted fact that alleged pen-drive was recovered during
the search from the possession of Shri Chetan Gupta by
Punjab Vigilence Bureau on the reasons that Shri Chetan
Gupta was keeping the black money earned by Capt.
Amarinder Singh, Chief Minister of Punjab. The Department
has also proceeded against Shri Chetan Gupta in various
assessment years on the basis of the entries contained in the
pen-drive recovered from him. The Tribunal decided several
appeals of Shri Chetan Gupta and finally the appeal of Shri
Chetan Gupta was decided by ITAT, Delhi F-Bench, in
ITA.Nos.1788 & 2389/Del./2016 for the A.Y. 2005-2006 vide
14
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
Order dated 07.06.2018 and in paras 3 to 16 it was held as
under :
"3. Brief facts of the case are that assessee is an
individual filed his return of income u/s 139 of the Income
Tax Act, 1961 (hereinafter for short called as the `Act') on
29.10.2005 declaring total income of Rs. 3,41,612/-. The
AO issued notice u/s 148 of the Act after recording the
reasons. The reasons are reproduced in the assessment
order in which it is noted that Punjab State Vigilance
Bureau has conducted a search operation on 17.05.2007
at the business 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
15
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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 response to notice issued u/s 148 of the Act submitted
before the AO that original return filed may be treated as
return having been filed u/s 148 of the Act. The AO at the
reassessment stage asked for the explanation of the
assessee with regard to the credit/debit entries appearing
16
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
on these papers which are taken out from the pen-drive.
The assessee submitted that from these papers the
statement has been prepared after posting day wise each
entry reflected in the individual accounts of the statements
from the alleged pen-drive and consolidated the same to
find out balance of the day. The said entries are verifiable
from the statement of accounts. According to the above
statement, peak balance as per details enclosed is
Rs.1,82,59,248/- as on 10.04.2004. However, this peak
balance has been worked out as per instruction of the AO
and since the alleged pen-drive does not belong to the
assessee, he has nothing to do with the said peak
balance. The AO noted that pen-drive was recovered from
the assessee which contained the accounts of political
persons whose un-accounted/black money was being
managed by the assessee. The pen-drive has direct co-
relation with the books of accounts of the assessee. The
explanation of assessee that the pen-drive does not belong
to him was rejected. The AO also prepared working of the
17
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
peak credit and mentioned at pages 7 to 10 of the
assessment order and the total of the same comes to
Rs.43,67,62,555/- which was treated as unexplained
credit and addition was made to the income of the
assessee.
4. The assessee challenged the addition before the Ld.
CIT (A) as well as challenged the reopening of the
assessment in the matter. The submissions of the
assessee are reproduced in the appellate order in which
the assessee explained that the ITAT had decided the
case of the assessee for earlier assessment years i.e.
2001-02, 2002-03 & 2003-04, wherein the assessee has
been granted the benefit of calculation of peak balance
and telescoping thereof in the manner discussed above.
Keeping the said decision in view, the addition, if any, at
all has to be limited to the peak credit of Rs.1,82,59,348/-
as on 10.04.2004 as telescope for the maximum peak
balance of earlier years i.e. Rs.46,16,837/- for AY 2003-
18
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
04 resulting in net addition, if at all, of Rs. 1,36,42,861/-.
The assessee also made submissions against reopening of
the assessment. 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
19
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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 balances have been accepted. The Ld. CIT (A)
forwarded the copy of the peak credit working submitted
by the assessee to AO for filing a remand report. The AO
filed the remand report in which the AO explained the
peak credit is worked out on similar lines as was
considered in earlier years AY 2002-03 and 2003-04.
However, examination of the working of peak balances
showed that assessee while working out the peak
balances had also debited the expenses incurred. This
method is incorrect for working peak balance. The AO,
therefore, reported that the peak after excluding the debits
on account of expenses for assessment year under appeal
would come to Rs.5,10,51,972/- as against claim of
20
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
assessee of Rs.1,82,59,248/-. The Ld. CIT (A) accepted
the contention of the AO and noted that the debit entries
and expenditure cannot be considered in the peak and
accordingly, directed the AO to modify the assessment as
per fresh peak balance working considered in the order
subject to adjustment of opening balances as directed
above. The appeal of the assessee was accordingly,
partly allowed.
6. The assessee in his appeal challenged the addition
of the peak credit to the extent of Rs.5,10,51,972/- and
challenged the reopening of the assessment u/s 148 of
the Act. The Revenue in their appeal challenged the
deletion of addition of Rs.38,57,10,583/- on account of
unexplained credit u/s 68 of the Act.
7. We have heard the Ld. Representatives of both the
parties.
21
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
8. Ld. DR relied upon the order of the AO and submitted
that pen-drive was seized by the Punjab Vigilance Bureau
from the possession of the assessee on the basis of which
AO made an addition of peak amount of credit u/s 68 of
the Act. The CIT (A) directed the set off of opening balance
of cash available against the said peak credit. The AO
had worked out the peak of individual ledger account
while the assessee consolidated all the accounts in the
working of the peak. The ITAT decided the appeals for
assessment years 2001-02 to 2004-05 in which the
working of the peak as per assessee has been accepted
and set off has been given of the opening balance. The
orders of the Tribunal dated 21.06.2013 and 31.01.2014
are filed in the Paper Book. For AY 2005-06 the order of
the CIT (A) is dated 23.02.2016 on the basis of the
remand report dated 22.01.2016 and both the dates are
subsequent to the order of the Tribunal in earlier years.
The AO in the remand report mentioned that the assessee
in his working of peak had also considered the application
22
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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
23
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
assessee. He has submitted that the issue of peak is
covered in favour of the assessee and assessee is entitled
for benefit of set off of Rs.46,16,387/- for AY 2003-04
upon which assessee had already paid the taxes. He has
submitted that peak contains all entries found in the pen-
drive which was provided to the assessee. Similar peak
was calculated in earlier years which have been found
accepted by the Tribunal. Therefore, all the issues are
covered by earlier orders of the Tribunal and peak may be
accordingly calculated.
11. We have considered the rival submissions and
perused the material available on record. The ITAT `B'
Bench Delhi in the case of the same assessee for
assessment years 2001-02, 2002-03 & 2003-04, vide
order dated 21.06.2013 decided the identical issue and
appeals of the assessee have been partly allowed and
departmental appeal has been dismissed.
24
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
12. The findings of the Tribunal in pars 6.13 to 11 are
reproduced 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 ld. 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), contra entries etc is furnished to
work out the correct amount of credits
emerging from the print outs.
(iii) These details are further supported by
working of peak credit for each year from,
which are filed by assessee.
25
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
6.14. Assessee claims to have submitted all these
details before AO, who though gave some cursory
interest adjustments but did not look into all other
details refusing the assessee claims summarily. They
were filed before CIT(A) again who called for remand
report, however CIT(A) also did not deal with the core
issue and gave some adjustments here and there. Thus
assessment has not been framed in a reasonable and
proper manner. To ensure high pitched assessments
the huge additions have been made one way or other
in a capricious manner.
6.15. Ld counsel took us through the relevant entries to
demonstrate how the funds have been reutilized from
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
26
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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 with a
rider of caution that they are question of facts and
depend on case to case. Hon'ble Supreme court and
various other High Courts have laid down the
propositions that such adjustments can be applied
while making the assessments in the cases of working
27
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
out of seized and incriminating documents in 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
given 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
28
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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 assessee. A
statutory presumption can be raised against assessee
when the prescription of law warrants it. In the
absence of enabling statutory provision such
presumption can not be propped up against assessee.
Since there was no search on assessee u/s 132 under
income tax act, presumption u/s 292C can be applied
to him. However the assessee case comes in the ken of
sec 68 about giving reasonable explanation of cash
credits found from his record.
6.21. This scenario does not alter the situation
materially in as much as assessee has to discharged the
burden cast by deeming fiction of sec. 68. The burden
is by and large similar to sec 292C.
6.22. The department proceeds on premise that
assessee manages funds for 148 person or so and keeps
29
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
a record thereof. Assessee filed every detail in date
wise and entry wise manner. AO does not consider it
objectively and allows some cosmetic 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
30
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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 summary rejection of the
explanation. In the next para we will be dealing with
various case laws right upto Hon'ble Supreme Court
where this factual preposition has been upheld subject
to certain conditions.
6.24. The important question which arises is whether
the assessee has discharged it'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
31
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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 Anantharam Veerasinghaiah & Co.
(supra); K.S.M. Guruswamy Nadar & Sons (supra);
Singhal Industrial Corpn. (supra); Kantilal & Bros.
(supra); Sanjay Kumar Jain (supra); & Ishwardass
Mutha (supra), support the assessee's case for peak
credit and telescoping benefits.
6.25. In consideration of foregoings we have no
hesitation to hold that assessee has discharged his
32
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
primary burden in explaining the entries in terms of
sec. 68 or any other presumption which may be raised
in behalf of the entries in the print outs. Department in
effective and convincing terms has failed to rebut the
same except giving some general observations that the
claims can not be considered. In our view we have to
estimate the undisclosed income of the assessee for
AYs2002-03 & 03-04 keeping in mind our observations
and conclusions in this behalf.
6.26. In the wake of these observation we proceed to
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
33
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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. These
grounds are accordingly partly allowed.
8. Apropos the remaining ground for AY 2002-03 in
respect of addition of Rs.9,21.200/- being alleged
unaccounted payment of US $ 20,000 transferred to
Park Young Tae, it is pleaded that his statement before
Enforcement Directorate was taken behind his back.
Assessee 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
34
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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 ld. 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 of proceedings 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.
9. Apropos the revenue's appeal for A.Y. 2002-03,
regarding the properties sold by the assessee, the sale
consideration has been received by the assessee
through a registered sale deed. There is no allegation
about violation of any circle rate or comparative sale
instance. The purchaser of the property has not been
examined so as to raise any doubt about any on money
received by the assessee. In our view when a property
is sold by a registered document, the addition cannot be
35
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
made purely on the basis of a valuation report which is
only in the nature of an opinion. CIT(A) while deleting
the addition, has rightly relied on the Hon'ble Delhi
High Court judgment in the case of CIT. In view thereof
we do not find any infirmity in the order of CIT(A),
which is upheld.
9.1. Since we have disposed of the assessee's appeals in
above manner, there is no need to deal with the
assessee's ground about additional evidence.
10. In the result, revenue's appeal is dismissed.
11. In the result, assessee's appeal for A.Y. 2001-02 is
allowed; for A.Y. 2002-03 & 2003-04 are partly allowed.
Revenue's appeal for AY 2002-03 is dismissed."
13. The ITAT `B' Bench Delhi in the case of the same
assessee for AY 2004-05, vide order dated
31.01.2014 following its earlier order dated
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:
36
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
"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 the additions.
37
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
6.10. Reverting to the merits of the
addition, department has consistently held
that assessee manages wealth for other 148
persons. In this behalf some names of parties
are here and there in the assessment order.
However no enquiry from such parties have
been solicited and findings are given in the
order. Thus from the conspectus of facts made
available by the department in this behalf the
assessees role by and large emerges to be of a
money manager for others apart from the
dealings of his associate concerns.
6.11. Apropos the peak credit working,
set off of opening balances, contra entries, roll
over utilization of funds which has been
explained in details above; assessee
vehemently claims to have fully reconciled the
details about each and every entry. The details
working thereof were filed before AO and
thereafter before Id CIT(A), who called for w
remand reports also. These details are placed
before us also on the various paper books.
Some of the relevant pages thereof are
mentioned above.
38
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
6.12 AO and CIT(A) have given some
rebates or set off of interest receipts and
payments. Assessee claims that his
reconciliation of entities is supported by facts
and material on record and is backed by the
legally established propositions of peak credit
working, telescoping and set off, which have
not been given to assessee despite the
remand reports. It is agitated that assessee's
valid contentions have not been considered at
all. On one hand assessee is considered as
money' manager for others, thus his
ostensible role will be to hold such funds in
trust for others, receive or pay them on the
instructions of principals and to earn some
managerial remuneration thereon. On the
other hand in the guise of a fiction of
presumption u/s 292C all the funds are being
treated as owned by the assessee and on top
of that proper adjustments of peak credit
emerging from the pen-drive is being refused
to be worked by the department. That apart
the other logical claims of set off role over,
correction of mistakes and credit of opening
39
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
balances which are emerging from the same
contents i.e. print outs of pen-drive is not
being allowed to assessee. The assessment of
undisclosed income is thus arbitrary and
patently against the settled judicial
propositions and departments own way of
working in other survey, search or
reassessment cases in which 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:
40
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
"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), contra entries etc is furnished to
work out the correct amount of credits
emerging from the print outs.
(iii) These details are further supported by
working of peak credit for each year from,
which are filed by assessee.
6.14. Assessee claims to have submitted
all these details before AO, who though gave
some cursory interest adjustments but did not
41
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
look into all other details refusing the assessee
claims summarily. They wee filed before
CIT(A) again who called for remand report,
however CIT(A) also did not deal with the core
issue and gave some adjustments here and
there. Thus assessment has not been framed
in a reasonable and proper manner. To ensure
high pitched assessments the huge additions
have been made one way or other in a
capricious manner.
6.15. Ld counsel took us through the
relevant entries to demonstrate how the funds
have been reutilized from 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
42
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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 with a rider of caution that they are
question of facts and depend on case to case.
Hon 'ble Supreme court and various other High
Courts have laid down the propositions that
such adjustments can be applied while making
the assessments in the cases of working out of
43
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
seized and incriminating documents in 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
44
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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 assessee. A statutory presumption can
be raised against assessee when the
prescription of law warrants it. In the absence
of enabling statutory provision such
presumption can not be propped up against
assessee. Since there was no search on
assessee u/s 132 under income tax act,
presumption u/s 292C can be applied to him.
However the assessee case comes in the ken
of sec 68 about giving reasonable explanation
of cash credits found from his record.
6.21. This scenario does not alter the
situation materially in as much as assessee
has to discharged the burden cast by deeming
fiction 6f sec. 68. The burden is by and large
similar to sec 292C.
45
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
6.22. The department proceeds on
premise that assessee manages funds for 148
person or so and keeps a record thereof
Assessee filed every detail in date wise and
entry wise manner. AO does not consider it
objectively and allows some cosmetic
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
46
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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 summary)
rejection of the explanation. In the next para
we will be dealing with various case laws right
upto Hon'ble Supreme Court where this factual
preposition has been upheld subject to certain
conditions.
6.24. The important question which arises
is whether the assessee has discharged it'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
47
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
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-
Anantharam Veerasinghaiah & Co. (supra);
K.S.M. Guruswamy Nadar & Sons (supra);
48
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
Singhal Industrial Corpn. (supra); Kantilal &
Bros, (supra); Sanjay Kumar Jain (supra); &
Ishwardass Mutha (supra), support the
assessee's case for peak credit and telescoping
benefits.
6.25. In consideration of foregoings we
have no hesitation to hold that assessee has
discharged his primary burden in explaining
the entries in terms of sec. 68 or any other
presumption which may be raised in behalf of
the entries in the print outs. Department in
effective and convincing terms has failed to
rebut the same except giving some general
observations that the claims can not be
considered. In our view we have to estimate
the undisclosed income of the assessee for
AYs2002-03 & 03-04 keeping in mind our
observations and conclusions in this behalf.
[
6.26. In the wake of these observation we
proceed to decide the quantum of undisclosed
income of the assessee as under:
49
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
i. The reassessment for A Y 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 AY 2003-04
Rs.46,16,387/-
50
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
ii) Less: Peak credit for AY 02-03
Rs.36,89,310/-
Taxable income for AY 03-04
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. These
grounds are accordingly partly allowed.
8. Apropos the remaining ground for AY
2002-03 in respect of addition of
Rs.9,21.200/- being alleged unaccounted
payment of US $ 20,000 transferred to Park
Young Tae, it is pleaded that his statement
before Enforcement Directorate was taken
behind his back. Assessee 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
51
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
principles of natural justice embodied in the
maxim "audi alteram partem. We find merit in
the argument of ld. 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
of proceedings 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 the Ld. AO to verify the
accounts and worked out the peak credit in
52
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
accordance with the working made by the
Tribunal in AY 2002-03 and 2003-04."
13.1. The assessee has filed statement of peak in
the Paper Book from pages 15 to 75 of the Paper Book.
The peak as on 10.04.2004 is calculated at
Rs.1,82,59,248/-. It is not in dispute that working of
the peak for this year is same as have been computed
by the assesse in preceding AY 2001-02 to 2004-05.
14. The Ld. CIT (DR), however, contended that in this
year the AO recomputed the peak and filed the
remand report in which it is stated that the debit
entries on account of expenses may be excluded.
However, there is nothing in the order of the Tribunal
for earlier years to exclude the debits of the peak. It is
not in dispute that peak is worked out in all preceding
assessment years and in assessment year under
appeal on the basis of entries found in the pen-drive
recovered from the possession of the assessee. The
53
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
print out from the pen-drive have been brought on
record, therefore, all the entries contained in the
seized pen-drive shall have to be taken into
consideration for working out the peak. The process
and methodology adopted by the assessee in earlier
years have been accepted by the ITAT in two orders
for assessment years 2001-02 to 2004-05. Therefore,
the authorities below are bound to follow the orders of
the Tribunal and should not have reworked out the
peak in their own way. Since the peak credit
statement is prepared by the assessee on the basis of
the entries found in the pen-drive and accepted by the
Tribunal in earlier years, therefore, same method shall
have to be followed in assessment year under appeal.
Therefore, there was no justification for the AO to
substitute the peak for assessment year under appeal
from Rs.1,82,59,248/- to Rs.5,10,51,972/-. The
assesse's counsel has also rightly contended that the
Tribunal has given benefit of opening balance of the
54
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
earlier years and that assessee had paid tax on the
peak credit for AY 2003-04 of Rs.46,16,387/-.
Therefore, such amount shall have to be reduced from
the peak calculated by the assessee and benefit of the
same shall have to be granted to the assessee.
Therefore, as per the decisions of the Tribunal in the
case of the assessee reproduced above, the net
addition shall have to be made against the assessee
in a sum of Rs.1,36,42,861. The issue of the peak is,
therefore, fully covered by the earlier years orders of
the Tribunal. In those orders also the Tribunal has
dismissed the ground of appeal of the assessee as
regards reopening of the assessment u/s 148 of the
Act. Therefore, these grounds of appeal of the
assessee are dismissed.
15. Considering the above discussion and following
the reasons for decisions of ITAT in the case of the
same assessee for assessment years 2001-02 to
55
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
2004-05, we set aside the orders of the authorities
below and direct the AO to make an addition of
Rs.1,36,42,861/- on account of peak credit.
16. In the result, the appeal of the assessee is partly
allowed and Departmental appeal is dismissed."
7.1. In this Order, the entire facts have been considered
which shows that the Department has considered the peak
credit of all the credit entries maintained in each and every
ledger account at Rs.43,67,62,555/-. According to the
Department, the pen-drive represents the accounts of such
unaccounted transactions which were being kept and
maintained by Shri Chetan Gupta. The Tribunal in earlier
Orders decided the issue partly in favour of Shri Chetan Gupta
and reduced the working of the peak credit, which is
reproduced in the above Order and following the Order of the
Tribunal in the case of Shri Chetan Gupta for earlier years, it
was observed that the print-out from the pen-drive have been
brought on record, therefore, all the entries contained in the
56
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
seized pen-drive shall have to be taken into consideration for
working out the peak. Shri Chetak Gupta also prepared the
statement of the peak credit. The Tribunal following the Order
in earlier year in the case of Shri Chetan Gupta directed the
A.O. to make addition of Rs.1.36 crores on account of peak
credit. The Order of the Tribunal, therefore, clearly established
that all the entries in the pen-drive were considered for
calculating the peak credit entries in the hands of Shri Chetan
Gupta and as such Learned Counsel for the Assessee has
rightly contended that when the peak credit has been
considered entirely in the hands of Shri Chetan Gupta, there
were no question of making any addition against the assessee-
company. Further, Shri Chetan Gupta has not made any
statement against the assessee-company, if any entries belong
to the assessee-company. Nothing is brought on record in this
regard. Ld. CIT(A) in the case of the assessee-company for A.Y.
2007-2008 vide Order dated 23.02.2016 following the Order in
the case of Shri Chetan Gupta deleted the entire addition. The
ITAT, Delhi F-Bench also in the case of sister concern of the
57
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
assessee-company R.L. Agencies Pvt. Ltd., (supra) on identical
issue following the Order in the case of Shri Chetan Gupta
(supra), deleted similar addition. These facts clearly prove and
establish that assessee-company has no connection with the
entries contained in the pen-drive. The print-out of the pen-
drive was brought on record which was unsigned. No name of
the assessee-company is mentioned. Therefore, it was having
no evidentiary value to make any addition against the
assessee-company. The issue is, therefore, covered by the
Order of the ITAT, Delhi Bench in the case of Shri Chetan
Gupta (supra) and others. We, therefore, hold that no addition
could be made against the assessee-company. We,
accordingly, set aside the orders of the authorities below and
delete the addition of Rs.2,21,00,788/-.
7.2. The A.O. recorded reasons for reopening of the
assessment on the basis of pen-drive found from the
possession of Shri Chetan Gupta. Shri Chetan Gupta do not
make any allegation against the assessee-company. The
58
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
Tribunal has held that the pen-drive belongs to Shri Chetan
Gupta. In the reasons for reopening of the assessment, no
name of the assessee-company have been mentioned because
it is mentioned as "RLTRV PVT EXP". The reasons for
reopening of the assessment did not refer to any material to
connect the assessee-company with escapement of income or
incurring any unaccounted expenses. The A.O. did not verify
the details contained in the pen-drive. The A.O. has initiated
the re-assessment proceedings because assessee-company has
incurred unaccounted expenditure under section 69C of the
I.T. Act. But, later on, did not make any addition under
section 69C of the I.T. Act. The A.O. has failed to establish as
to how assessee-company has incurred the expenses. The
assessee-company has not debited any expenditure in the
profit and loss account and also did not claim deduction of the
same in its books of account. How the entries in the pen-drive
were connected with the assessee-company have also not been
established. It, therefore, appears that A.O. did not apply his
mind to the alleged pen-drive before initiating the re-
59
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
assessment proceedings in the matter. Thus, there is absence
of link between alleged tangible material and formation of
belief. At the most, it could be inferred that the belief of the
A.O. was based on mere imagination, speculation and
suspicion. Therefore, it is not a fit case for initiation of re-
assessment proceedings under section 147/148 of the I.T. Act
against the assessee-company. We, accordingly, set aside the
Orders of the authorities below and quash the reopening of the
assessment in the matter. Appeal of the Assessee-Company is
allowed.
8. In the result, ITA.No.893/Del./2015 of the Assessee
is allowed.
ITA.No.5214/Del./2016 Revenue Appeal :
9. The Ld. CIT(A) cancelled the penalty on the above
addition in the light of the Order of the Tribunal in the case of
Shri Chetan Gupta (supra) and held that same amounts
cannot be assessed as income in the hands of the assessee.
Since, we have quashed the re-assessment proceedings and
60
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
deleted the addition on merit, therefore, no basis is left to
interfere with the Order of the Ld. CIT(A) in cancelling the
penalty. We, accordingly, dismiss the Departmental Appeal.
10. In the result, ITA.No.5214/Del./2016 of the
Revenue is dismissed.
11. To sum-up, appeal of Assessee is allowed and
appeal of Revenue is dismissed.
Order pronounced in the open Court.
Sd/- Sd/-
(L.P. SAHU) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi, Dated 18th September, 2018
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT "F" Bench
6. Guard File
61
ITA.No.893/Del./2015 & ITA.No.5214/Del./2016
M/s. R.L. Travels Pvt. Ltd., New Delhi.
// BY Order //
Asst. Registrar : ITAT Delhi Benches :
Delhi.
|
