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 M/s. RL Travels Pvt. Ltd., 118, Ansal Bhawan, Kasturba Gandhi Marg, New Delhi - 110 001. vs. The DCIT, Central Circle-12 New Delhi.
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M/s. RL Travels Pvt. Ltd., 118, Ansal Bhawan, Kasturba Gandhi Marg, New Delhi - 110 001. vs. The DCIT, Central Circle-12 New Delhi.
September, 18th 2018
         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.

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