DCIT, Jaipur v. SURAJ MAL JAIN, Kota

ITA 1335/JPR/2010 | 2006-2007
Pronouncement Date: 16-09-2011 | Result: Allowed

Appeal Details

RSA Number 133523114 RSA 2010
Assessee PAN ABNPJ0151B
Bench Jaipur
Appeal Number ITA 1335/JPR/2010
Duration Of Justice 10 month(s)
Appellant DCIT, Jaipur
Respondent SURAJ MAL JAIN, Kota
Appeal Type Income Tax Appeal
Pronouncement Date 16-09-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 16-09-2011
Assessment Year 2006-2007
Appeal Filed On 16-11-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO. 1335 1336 & 1337/ JP/2010 ASSESSMENT YEAR 2006-07 2007-08 & 2008-09 PAN: ABNPJ 0151 B THE DCIT VS. SHRI SURAJ MAL JAIN CENTRAL CIRCLE- 3 NEAR GIRLS SCHOOL JAIPUR RAMGANJ MANDI KOTA (APPELLANT ) (RESPONDENT) DEPARTMENT BY : SHRI SUNIL MATHUR ASSESSEE BY: NONE (A/D ON RECORD) DATE OF HEARING: 12-09-2011 DATE OF PRONOUNCEMENT: 16-09-2011 ORDER PER N.L. KALRA AM:- THE REVENUE HAS FILED APPEALS AGAINST RESPECTIVE ORDERS OF THE LD. CIT(A)- CENTRAL JAIPUR DATED 01-09-2010 FOR THE A SSESSMENT YEARS 2006-07 2007-08 & 2008-09. THE GROUNDS OF APPEAL FOR ALL TH E ASSESSMENT YEARS ARE SIMILAR EXCEPT ONE GROUND OF APPEAL WHICH HAS BEEN RAISED FOR THE ASSESSMENT YEAR 2007-08 AND 2008-09. 2.1 WE ARE REPRODUCING THE GROUNDS OF APPEAL FOR TH E ASSESSMENT YEAR 2007-08. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN REDUCING THE PEAK AMOUNT OF ADVANCES MADE BY THE ASSESSEE TO RS. 2 15 19 92 500/- FOR THE ASSESSMENT YEAR 2006-07 200 7-08 AND 2008-09 AS AGAINST RS. 25 64 35 000/- CALCULATED BY THE AO. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN REDUCING THE UNACCOUNTED ADVANCES MADE BY THE ASSESSEE TO RS . 27 64 000/- AS AGAINST RS. 17 43 95 000/- CALCULATE D BY THE AO. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE AOS METHOD OF TREATING EACH CONTENDED LEN DER SEPARATELY AND THEN GROSSING UP THE AMOUNT OF PEAK UNACCOUNTED ADVANCE WAS NOT CORRECT. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO CALCULATE THE PEAK UNACCOUNTED ADVANCES B Y MERGING DIFFERENT CONTENDED LENDERS INTO ONE ONLY AND TREAT ING ONE PERSON AS THE LENDER THEREBY SUBSTITUTING THE METHO D ADOPTED BY THE ASSESSEE. 2.2 THE FIGURES MENTIONED IN THE GROUNDS OF APPEALS ARE DIFFERENT FOR DIFFERENT ASSESSMENT YEARS. THE GROUND OF APPEAL NO . 2 RELEVANT FOR THE ASSESSMENT YEAR 2007-08 IS ALSO ARISING FOR THE ASS ESSMENT YEAR 2008-09 BUT IT IS NOT ARISING IN ASSESSMENT YEAR 2006-07. HENCE GROUNDS OF APPEAL NO. 3 AND 4 AS MENTIONED ABOVE ARE GROUNDS OF APPEAL NO. 2 AND 3 FOR THE ASSESSMENT YEAR 2006-07. 2.3 THE APPEALS HAVE BEEN FIXED ON 09-02-2011 26-0 5-2011 20-07-2011 AND 12-09-2011. THE RECORDS SHOW THAT THE FIXATION NOTICE HAS BEEN SERVED 3 UPON AND THE ACKNOWLEDGMENTS ARE AVAILABLE ON RECOR D. WE ARE THEREFORE DECIDING THE APPEALS AFTER HEARING THE LD. DR AND P ERUSING THE RECORDS. 2.4 IN THE CASE OF THE ASSESSEE AND HIS SON SHRI RA JENDRA KUMAR JAIN SEARCH ACTION WAS CARRIED OUT ON 16 TH MAY 2007 AT THE RESIDENTIAL PREMISES ALONGWITH THE SEARCH U/S 132(1) OF THE ACT IN THE CASES OF SETHI GROUP OF RAMGANJ MANDI KOTA. SURVEY U/S 133A OF THE ACT CA RRIED OUT AT THE BUSINESS PREMISES ON 16-05-2007 WAS CONVERTED INTO SEARCH. DURING THE COURSE OF SEARCH FOLLOWING INCRIMINATING DOCUMENTS WERE FOUND. 1. CASH WAS FOUND TO THE EXTENT OF RS. 2 54 375/- O UT OF WHICH A SUM OF RS. 1.50 LACS WAS SURRENDERED. HOWEVER ON T HE BASIS OF THE VALUABLES FOUND THE ASSESSEE SURRENDERED A SUM OF RS. 65.95 LAC. 2.5 THE ASSESSEE HAS SHOWN THE INTEREST INCOME FROM BROKERAGE FROM MONEY LENDING BUSINESS INTEREST AND RENTAL INCOME. THE AO HAS MENTIONED IN HIS ORDER THAT THE ASSESSEE OFFERED THROUGH LETT ER / SEARCH OPERATION THE ADDITIONAL INCOME OF RS. 6 13 75 000/- IN ASSESSMEN T YEAR 2007-08 AND 2008-09 RELATING TO MONEY LENDING TRANSACTION AND A LSO OFFERED A SUM OF RS. 1.50 LACS FOUND AS CASH AS ADDITIONAL INCOME AND A LSO OFFERED ADDITIONAL INCOME OF RS. 65.96 LACS BEING REPRESENTED BY UNDIS CLOSED HUNDIES. HOWEVER THE ASSESSEE HAS OFFERED RS. 40.00 LACS AS UNDISCLOSED INCOME IN THE RETURNS. THE ASSESSEE ALSO SUBMITTED THE STATEM ENT SHOWING WORKING OF 4 INCOME UNDER VARIOUS HEADS OFFERED IN THE RETURNS F ILED U/S 153A OF THE ACT. THE WORKING AS MENTIONED BY THE AO IN HIS ORDER IS REPRODUCED AS UNDER:- A.Y. NET INCOME HEAD OF INCOME OFFERED OTHERS 2002-03 8 00 000/- INVESTMENT IN ADVANCES (HUNDIES) 2004-05 2 05 000/- INVESTMENT IN ADVANCES (HUNDIES) 2007-08 26 00 000 INVESTMENT IN ADVANCES (HUNDIES) 2008-09 1 95 000 CASH & HOUSE HOLD ITEMS/ EXPENSES & OTHERS INCOME OFFERED ON ACCOUNT OF ASSET/ EXPENDITURE APPROACH AND UDI GETS AUTOMATICALLY TAXED WHEN THE ASSET FOUND IN SEARCH HAVE BEEN OFFERED TO TAX 2.6 THE AO HAS REPRODUCED THE REPLY OF THE ASSESSEE IN ANSWER TO QUESTION NO. 14 IN THE STATEMENT RECORDED U/S 132( 4) ON 29-06-07. THE ASSESSEE ADMITTED THAT ANNEXURE A-1 & A-2 GIVE THE DETAILS OF THE AMOUNTS ADVANCED TO DIFFERENT PERSONS AND SUCH AMOUNTS HAVE BEEN ADVANCED AFTER GETTING THE LOANS FROM OTHER PARTIES. THE ENTRIES A RE OF INDICATIVE NATURE. IN CASE HE IS ABLE TO GIVE THE NAMES AND COMPLETE ADD RESS OF THE PERSONS FROM WHOSE BEHALF HE MADE THE TRANSACTIONS AND IN CASE H E FAILS TO GIVE THESE DETAILS THEN IT SHOULD BE PRESUMED THAT THE AMOUNTS ADVANCES ARE FROM HIS OWN UNDISCLOSED INCOME. THE ASSESSEE VIDE HIS LETTE R DATED 12 TH JULY 2007 AND 23 RD JULY 2007 OFFERED THE ADDITIONAL INCME OF RS. 6 1 3 75 000/- FOR ASSESSMENT YEAR 2007-08 AND 2008-09 ON ACCOUNT OF PEAK BALANCE OF 5 ADVANCES GIVEN TO VARIOUS PARTIES AS PER SEIZED ANN EXURE A-1 & A-2. HOWEVER SUCH UNDISCLOSED INCOME WAS NOT SHOWN IN T HE RETURN OF INCOME. THE AO HAS RELIED UPON THE FOLLOWING CASE LAWS TO S UPPORT THE CASE OF THE REVENUE THAT THE ASSESSEE CANNOT RETRACT FROM THE STATEMENT. 1. V. KUNHAMBU & SONS VS. CIT 219 ITR 235 (KER) 2. DR S.C. GUPTA VS. CIT 248 ITR 782 (ALL.) 2.7 BEFORE THE AO THE ASSESSEE FILED HIS SUBMISSIO N VIDE LETTER DATED 27 TH NOV. 2009 IN WHICH IT WAS STATED THAT THE ASSESSEE HAS NOT DONE ANY MONEY LENDING BUT ONLY ACTED AS A BROKER AND ARRANGED THE TRANSACTIONS BETWEEN THE BORROWER AND LENDER. THIS IS EVIDENT FROM THE DIARI ES SEIZED AS ANNEXURE A- 3 & A-4. THE DIARIES CONTAINED THE NAME OF THE LEND ERS AS WELL BORROWERS. ATTENTION WAS DRAWN TO PAGE 2 TO 4 OF ANNEXURE A-58 IN WHICH BROKERAGE INCOME HAS BEEN CALCULATED IN RESPECT OF TRANSACTI ON OF M/S. AGARCHAND POONAM CHAND AND M/S. KAUSAL KUMAR YASWANT KUMAR. T HIS TRANSACTION IS RECORDED IN THE SEIZED ANNEXURE A-3 & A-4. IT WAS A LSO SUBMITTED THAT THE DIARIES HAVE BEEN MAINTAINED IN THE NORMAL COURSE A ND THEREFORE TRANSACTIONS NOTED IN THE DIARIES ARE TO BE ACCEPTE D AS SUCH. IF THE TRANSACTIONS IN THE DIARIES ARE NOT TREATED AS GENU INE THEN NO ADVERSE INFERENCE SHOULD BE TAKEN. 6 2.8 THE AO HAS REFERRED TO CERTAIN TRANSACTIONS AS CONTAINED IN THE SEIZED PAPERS. SOME OF THE TRANSACTIONS RECORDED IN THE SE IZED PAPERS HAVE BEEN ANNEXED TO THE ASSESSMENT ORDER. THE AO VIDE LETTER NO. 1317 DATED 18-12- 09 REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY PEAK AMOUNT OF MONEY LENDING TRANSACTIONS SHOULD NOT BE ADDED AS HIS UNEXPLAINED INCOME AS THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THESE TRANSACTI ONS HAVE NOT BEEN PROVED. THE AO IN VIEW OF NON-COOPERATION FROM THE ASSESSEE COMPUTED THE FUNDS INVOLVED IN THE TURNOVER OF MONEY LENDIN G TRANSACTIONS. THE PEAKS OF THE AMOUNT LENT BY VARIOUS SUPPOSED LENDERS TO V ARIOUS BORROWERS HAVE BEEN WORKED OUT. THE PEAK AMOUNT WAS WORKED OUT AT RS. 46 82 82 000/-. THE PEAK AMOUNT SO CALCULATED WAS CONFRONTED TO THE ASSESSEE AND THE ASSESSEE FILED THE REPLY VIDE LETTER DATED 24-12-09 . THE SUBMISSIONS GIVEN BY THE ASSESSEE IN HIS LETTER ARE AS UNDER:- 1. THE ASSESSEE IN HIS STATEMENT HAS ADMITTED THAT HE IS BROKER AND SEIZED DOCUMENTS ALSO SUGGEST THAT HE HAS ARRANGED MONEY BETWEEN THE BORROWERS AND LENDERS. T HE ASSESSEE HAS BEEN SEARCHED AND NO ASSET OF ANY WORT H WAS FOUND. THE ASSESSEE IS AGED OF 70 YEARS AND IS HAVI NG NO OTHER SOURCE OF INCOME. IN CASE THE DEMAND IS RAISE D BY VIRTUE OF THE ADDITION THEN THE SAME SHOULD BE RECO VERED FROM THE PARTIES IN RESPECT OF WHOM THE ADDITION I S BEING MADE IN THE CASE OF THE ASSESSEE. 7 2. THE TRANSACTIONS ENTERED IN THE ANNEXURE A-3 AND A-4 ARE MENTIONED ON THE DUE DATE AND THE DATES MENTIONED IS NOT REAL DATE OF TRANSACTION. THE MONE Y BEING LENT FOR FIXED PERIOD AND THE DATE ON WHICH MONEY IS RECEIVABLE IS MENTIONED IN THE TRANSACTION. THE TRANSACTIONS IF RENEWED THEN IT IS AGAIN RECORDED O N THE DUE DATE. 3. THE TOTAL TRANSACTION COMES TO RS. 1 04 69 77 00 0/- AND THE ASSESSEE HAS EARNED BROKERAGE OF 0.10% WHIC H MEANS THAT THE BROKERAGE INCOME WILL BE RS. 10 46 9 77/-. 4. THE TRANSACTIONS WHICH HAVE NOT BEEN RENEWED ARE ALSO ENTERED AND IF THESE TRANSACTIONS ARE EXCLUDED THEN THE AMOUNT WILL BE REDUCED BY FIGURE OF RS. 8 15 80 000/- 5. THE BURDEN IS ON THE REVENUE TO PROVE THAT APPARENT IS NOT REAL. THE TRANSACTIONS AS RECORDED IN THE DOCUMENTS CLEARLY SUGGEST THAT THE NATURE OF AMOUNT S BEING GIVEN BY THE LENDER TO BORROWERS THROUGH THE ASSESSEE. 6. THE REVENUE HAS RECORDED THE STATEMENTS OF CERTA IN BORROWERS AND THESE BORROWERS HAVE ADMITTED THAT TH E ASSESSEE IS A BROKER. 2.9 THE AO HAS CONSIDERED THE SUBMISSIONS. THE DIAR IES CONTAINING TRANSACTIONS ARE IN THE NATURE OF BOOKS OF ACCOUNTS IN THE EYE OF LAW. THE ONUS WAS ON THE ASSESSEE TO ESTABLISH THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS MADE IN THE DIARIES IN THE NAMES OF THE 8 BORROWERS AND THE LENDER. THE AO HAS OBSERVED THAT THE PEAK OF AMOUNT LENT TO EACH BORROWER BY EACH LENDER WAS WORKED OUT AND THIS TOTALLED TO RS. 46 82 82 000/-. HOWEVER IT WAS NOTICED THAT THE AM OUNT LENT TO ONE BORROWER WAS DISCONTINUED ON A PARTICULAR DATE AND THE SAME WAS LENT TO OTHER BORROWER. IF THIS ASPECT IS CONSIDERED THEN T HE PEAK AMOUNT WILL COME TO RS. 25 64 35 000/-. THE PEAK AMOUNT WHICH HAS BE EN BIFURCATED FOR THREE ASSESSMENT YEARS ARE AS UNDER:- (I) TRANSACTIONS RELATING TO ASSESSMENT YEAR 2006-0 7 RS. 3 73 90 000/- (II) TRANSACTIONS RELATING TO ASSESSMENT YEAR 2007- 08 RS. 17 43 95 000/- (III) TRANSACTIONS RELATING TO ASSESSMENT YEAR 2008 -09 RS. 4 46 50 000/- TO TAL RS. 25 6435 000/- ACCORDINGLY THE AO MADE THE ADDITION TO THE EXTENT REFERRED ABOVE FOR ALL THE ASSESSMENT YEARS. 2.10 BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT T HE BOOKS OF ACCOUNTS OR DOCUMENTS FOUND DURING THE COURSE OF SEARCH ARE TO BE PRESUMED AS BELONGING TO THE ASSESSEE IN WHOSE POSSESSION SUCH BOOKS OF ACCOUNTS HAVE BEEN FOUND AND CONTENTS OF THE BOOKS OF ACCOUNTS A ND DOCUMENTS ARE TO BE PRESUMED AS TRUE UNLESS OTHERWISE PROVED. THE ALLEG ED SURRENDER OF RS. 6 13 75 000/- WAS MADE VIDE LETTER DATED 12-07-07 A ND THIS LETTER WAS SIGNED BY THE COUNSEL OF THE ASSESSEE. THE LETTER DATE D 23-07-07 IS SIGNED BY THE ASSESSEE. ALTERNATIVELY IT WAS SUBMITTED THAT IN RESPECT OF ALL THE 9 LENDERS IT SHOULD BE PRESUMED THAT THE AMOUNTS HAV E BEEN LENT BY THE ASSESSEE AND THE PEAK SHOULD BE WORKED OUT ACCORDIN GLY. IF THAT WORKING IS DONE THEN THE PEAK AMOUNT WILL BE OF RS. 15 19 92 5 00/-. 2.11 THE WORKING AS WORKED OUT BY THE LD. AR WAS F ORWARDED TO THE AO TO FURNISH HIS COMMENTS. THE AO IN HIS REPORT HA S STATED THAT THE WORKING OF THE PEAK IS CORRECT IN CASE ALL THE LEND ERS ARE MERGED. HOWEVER THE AO STATED THAT THE PEAK SHOULD BE WORKED OUT ON THE BASIS OF EACH LENDER. 2.12 THE LD. CIT(A) HAS RECORDED THE FINDINGS THAT THE AO WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS ADVANCING THE MONEY OU T OF HIS UNACCOUNTED INCOME. THE LD. CIT(A) AGREED WITH ALTERNATIVE ARGU MENTS OF THE LD. AR THAT WHEN THE AO HAS PRESUMED THAT THE ASSESSEE COULD LE NDER OF MONEY LENDER THEN THERE IS NO REQUIREMENT TO MAKE WORKING OF THE PEAK MONTHWISE. ON THE BASIS OF SUCH WORKING OF THE PEAK THE LD. CIT(A) H ELD THAT THE AMOUNT WHICH IS REQUIRED TO BE ADDED FOR THREE ASSESSMENT YEARS WILL BE AS UNDER:- PEAK OF THE TRANSACTIONS RELATING TO ASSESSMENT YEA R 2006-07 IS TO BE CONSIDERED AS UNDISCLOSED INCOME RS. 13 91 51 000/- PEAK OF THE TRANSACTIONS RELATING TO ASSESSMENT YEA R 2007-08 IS TO BE CONSIDERED AS UNDISCLOSED INCOME RS. 27 64 000/- PEAK OF THE TRANSACTIONS RELATING TO ASSESSMENT YEA R 2008-09IS TO BE CONSIDERED AS UNDISCLOSED INCOME RS. 1 00 77 500 10 2.13 WE HAVE HEARD LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE INCRIMINATING DOCUMENTS HAVE BEEN FOUND DURING THE COURSE OF SEARCH . THESE DOCUMENTS CLEARLY SUGGEST THAT THE ASSESSEE I S INDULGING IN MONEY LENDING BUSINESS. THE TRANSACTIONS ARE RECORDED IN THE DIARIES AND THESE DIARIES ARE TO BE CONSIDERED AS BOOKS OF ACCOUNTS B ECAUSE THE TRANSACTIONS ARE RECORDED IN CHRONOLOGICAL ORDER. SECTION 68 IS CLEARLY APPLICABLE AND THE ONUS IS ON THE ASSESSEE TO ESTABLISH THE IDENTITY A ND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. WHEN THE INCOME IS TO BE CONSIDERED DEEMED INCOME THEN ONUS IS NOT ON THE RE VENUE TO ESTABLISH THAT IT IS A REAL INCOME. 2.14 IT IS NOTICED THAT THE ASSESSEE HIMSELF FILED A LETTER AFTER THE SEARCH IN WHICH HE DISCLOSED THE ADDITIONAL INCOME OF RS. 6 1 3 75 000/-. SEARCHED WERE CONDUCTED ON 16-05-07 WHILE THE LETTER IS DATE D 23-07-07. THUS DISCLOSURE HAS BEEN MADE AFTER AROUND TWO MONTHS OF THE SEARCH. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE FILE D ANOTHER LETTER TO RETRACT HIS OFFER OF UNDISCLOSED INCOME. INSTEAD OF SHOWING UNDISCLOSED INCOME IN THE RETURN THE ASSESSEE HAS SHOWN ONLY BROKERAGE I NCOME. SUBSEQUENT RETRACTION IS NOT PERMISSIBLE AND RELIANCE IS PLACE D ON THE FOLLOWING DECISIONS.. 1. NARAYAN BHAGWANTRAO GOSAVI BALAJIWALE VS. GOPAL VINAYAK GOSAVI AIR 1960 SC 100 : ADMISSION IS THE BEST 11 EVIDENCE THOUGH NOT CONCLUSIVE DECISIVE UNLESS PRO VED ERRONEOUS. 2. SURJEET SINGH CHHABRA VS. UNION OF INDIA AIR 1 997 SC 1560 : CUSTOMS OFFICIALS ARE NOT POLICE AND THEREFO RE CONFESSION MADE BEFORE THEM IS TO BE TAKEN ACCORDIN GLY AND THAT PRINCIPLES OF NATURAL JUSTICE CANNOT BE SAID TO BE VIOLATED. 3. MANOHARLAL KASTURBCHAND CHOKSHI VS. ASST. CIT (1 997) 61 ITD 55 (AHD.) PARAM ANAND BUILDERS (P) LTD. VS. ITO (1996) 59 ITD 29 (MUMBAI) : FOR RETRACTION OF STA TEMENT THE ASSESSEE SHOULD PROVE THREAT OR COERCION. 4. V. KANHAMBU AND SONS VS. CIT (1996) 219 ITR 235 (KER.) : ASSESSMENT ON THE BASIS OF VOLUNTARY STATE MENT IS VALID. 2.15 THE HON'BLE KERALA HIGH COURT IN THE CASE OF V. KANHAMBU AND SONS VS. CIT (1996) 219 ITR 235 OBSERVED AT PAGE 24 1 AS UNDER: THE AUTHORIZED OFFICER HAD THE POWER TO RECORD STATEMENTS ON OATH ON ALL MATTERS PERTAINING TO THE SUPPRESSED INCOME. THE STATEMENT CANNOT BE CONFINED ONLY TO TH E BOOKS OF ACCOUNTS. IF A PARTNER OF THE FIRM CAME FORWARD TO DISCLOSE ABOUT NON-ENTRY OF THE EXCESS STOCK IN THE REGISTERS DURI NG THE COURSE OF SEARCH THERE IS NO REASON WHY THE INCOME-TAX OF FICER SHALL NOT MAKE USE OF IT EVEN THOUGH THERE IS NO ACTUAL V ERIFICATION OF THE STOCK. 12 IN RAMESHCHANDRA AND COMPANY VS. CIT (1987) 168 ITR 375 THE T BOMBAY HIGH COURT OBSERVED THAT WHER E AN ASSESSEE HAS MADE A STATEMENT OF FACTS HE CAN HAVE NO GRIEVANCE OF THE TAXING AUTHORITY TAXES HIM IN ACC ORDANCE WITH THAT STATEMENT. WE ARE ALSO AWARE OF THE OBSERVATION MADE BY INCOME -TAX APPELLATE TRIBUNAL AHEMDABAD BENCH IN THE CASE OF ASSTT. CIT VS. SHILADEVI S. AGARWAL (1994) 50 ITD 524 THE LEARNED BENCH OBSERVED (HEAD NOTE): ALL THAT IS STATED BY ANY DEPONENT ON THE SEARCH DAY SHOULD NOT BE TAKEN AS THE TRUTH THE WHOLE TRU TH AND NOTHING BUT THE TRUTH. SUCH STATEMENTS INDUBITABLY HAVE EVIDENTIARY VALUE AND CREDITABILITY IN LAW BUT THE SAME SHOULD BE VIEWED WITH GREAT CAUTION PARTICULARLY W HEN THE SAME IS DENIED VARIED OR RETRACTED OR ESTABLIS HED BY THE DEFENDANT TO HAVE BEEN OBTAINED OR GIVEN UNDER MENTAL STRESS COERCION UNDUE INFLUENCE OR DUE TO ANY OTHER ABNORMAL CONDITION AND CIRCUMSTANCES WHEN SUC H STATEMENT WAS GIVEN. IF A PERSON AT LATER STAGE RET RACTS FROM THE STATEMENT GIVEN ON THE SEARCH DAY THEN TH E COURT OR TRIBUNAL SHOULD TRY TO ASCERTAIN THE REASO N OR CIRCUMSTANCES FROM SUCH PERSON FOR DOING SO AND IF SATISFIED NOT TO PLACE HEAVY RELIANCE ON SUCH EARL IER STATEMENT WHICH HAS SUBSEQUENTLY BEEN DENIED AND RETRACTED. 13 THE LEARNED AHEMDABAD BENCH IN THE CASE OF DEPUTY CIT VS. BHOGILAL MULCHAND (2005) 96 ITD 344 HELD THAT STATEMENT GIVEN U/S 132(4) IS NOT CONCLUS IVE AND PERSON CAN RETRACT UNDER CERTAIN CIRCUMSTANCES. HOW EVER TIME GAP BETWEEN STATEMENT AND RETRACTION OF STATEM ENT IS ONE OF THE IMPORTANT POINTS TO BE TAKEN INTO ACCOUN T TO DECIDE AS TO WHETHER THE STATEMENT WAS GIVEN UNDER MISTAKEN BELIEF OF EITHER FACT OR LAW. HOWEVER WHE N THE ASSESSEE RETRACTED STATEMENT MADE U/S 132(4) AFTER THREE AND A HALF MONTHS OF DISCLOSURE AND THERE WAS NOT A N IOTA OR EVIDENCE TO SUPPORT RETRACTION THEN THE ASSESSIN G OFFICER WAS JUSTIFIED IN NOT ACCEPTING THE ASSESSEE 'S RETRACTION. IN THE INSTANT CASE THE ASSESSEE HAS N OT RETRACTED THE DISCLOSURE BEFORE THE DDIT BUT HAS N OT INCLUDED THE UNDISCLOSED INCOME WHILE FILING THE R ETURN ON APRIL 13 1999. DISCLOSURE WAS ADMITTED VIDE LETT ER DATED JAN. 22 1999. THUS THE TIME GAP IS TOO LARG E AND HENCE THE LD. CIT(A) WAS JUSTIFIED IN DETERMINING T HE UNDISCLOSED INCOME ON THE BASIS OF LETTER FILED BY THE ASSESSEE. THE LEARNED ITAT MUMBAI BENCH IN THE CAS E OF HIRALAL MAGANLAL AND CO. VS. DCIT (2005) 96 IT D 113 ON THE IDENTICAL FACTS HELD THAT RETRACTION OF STATEMENT NOT BASED ON EVIDENCE IS NOT TO BE ACTED UPON. IN T HAT CASE THE PARTNER OF THE FIRM OFFERED ADDITIONAL IN COME BASED ON THE STOCK ENTRIES MADE ON PAPER TO BUY PEA CE AND SUBSEQUENTLY RETRACTED FROM THE SAME THAT SUCH STOCK WAS NOT FOUND. THE TRIBUNAL HELD THAT THE ASSESSEE COULD 14 NOT DENY LATER ON TRUTH OR CORRECTNESS OF THE DECLA RATION MADE AT THE TIME OF SEARCH WHEN THE DEPARTMENTAL AUTHORITIES ACCEPTED SUCH DECLARATION AND DID NOT P ROCEED WITH FURTHER INVESTIGATION. IT WAS HELD THAT SECTIO N 115 OF THE EVIDENCE ACT IS APPLICABLE. THE UNDERLYING PHILOSOPHY BEHIND THE PRINCIPLE CONTAINED IN SECTIO N 115 OF THE EVIDENCE ACT IS THAT JUSTICE PREVAILS OVER T RUTH. IN CASE BEFORE THE MUMBAI BENCH EXCESS STOCK AS FOUND RECORDED ON PAPER WAS NEITHER FOUND NOR ATTEMPTS WE RE MADE TO FIND AFTER THE DECLARATION WAS MADE. 21.6 THE NEXT ISSUE BEFORE US AS TO WHETHER THE PEA K SHOULD BE TAKEN LENDERWISE OR IT SHOULD BE TAKEN BY MERGING OF THE LENDERS ALTOGETHER BY HOLDING THAT THE PAYMENT HAVE BEEN MADE BY THE ASSE SSEE. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SWAROOP CH AD KOJURAM VS. CIT 235 ITR 732 HAD AN OCCASION TO CONSIDER THE ISSUE A S TO WHETHER THE ADDITION MADE BY FOLLOWING THE PEAK CREDIT THEORY IS A QUEST ION OF LAW. IN THAT CASE THE CREDIT ON PEAK THEORY AMOUNTING TO RS. 1 42 846 /- AFTER CONSIDERING THE DEBITS. THE AO MADE THE ADDITION OF RS. 3.58 LACS ON THE BASIS OF THE CREDITS WITHOUT DEDUCTING THE DEBITS. BEFORE THE HON'BLE JU RISDICTIONAL HIGH COURT IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESS EE THAT A REFINEMENT OR EXTENSION OF THE PEAK THEORY OCCURS WHERE THE CREDI TS APPEAR NOT IN THE SAME ACCOUNT BUT IN THE ACCOUNTS OF DIFFERENT PERSONS. I F THE GENUINENESS OF ALL THE 15 PERSONS IS DISBELIEVED AND ALL THE CREDITS APPEARI NG IN THE DIFFERENT ACCOUNTS ARE HELD TO BE THE ASSESSEE'S OWN MONEY THEN THE AS SESSEE WILL BE ENTITLED TO A SET OFF AND A DETERMINATION OF THE PEAK CREDIT A FTER ARRANGING ALL THE CREDITS IN CHRONOLOGICAL ORDER. SUCH INFERENCES ARE BASED O N NORMAL PROBABILITIES AND CAN BE DISPLACED BY MATERIAL ON RECORD WHICH MA Y INDICATE FACTS TO THE CONTRARY. SUCH SUBMISSIONS OF THE ASSESSEE WERE AGA INST THE FINDING OF THE TRIBUNAL IN NOT MERGING OF THE CREDITS. HOWEVER HO N'BLE JURISDICTIONAL HIGH COURT HELD THAT BENEFIT OF PEAK CREDIT THEORY C OULD OR COULD NOT BE GRANTED TO THE ASSESSEE IS REALLY QUESTION OF LAW. IN THE INSTANT CASE THE AO HAS ALLOWED THE PEAK CREDIT IN RESPECT OF A PARTIC ULAR LENDER. THE PEAK CREDIT OF EACH LENDER HAS BEEN CONSIDERED FOR ARRIVING AT THE PEAK ADDITION TO BE MADE IN EACH YEAR. IT IS NOT THE CASE OF THE ASSESS EE THAT HE HIMSELF IS A LENDER. IN CASE THE ASSESSEE HAS GIVEN AN ADMISSION THAT THE MONEY BELONGED TO HIM THEN CREDITS OF THE LENDERS SHOULD HAVE BEEN MERGED. THE ASSESSEE IN SPITE OF FILING THE LETTER OF DISCLOSING THE ADDITI ONAL INCOME HAS NOT HONOURED SUCH DISCLOSURE. THE NAMES OF LENDERS ARE AVAILABLE IN THE DIARIES AND THE ASSESSEE HAS CONTENDED THAT HE IS GETTING 0.10% BRO KERAGE. UNDER THESE CIRCUMSTANCES WE FEEL THAT THE AO WAS JUSTIFIED IN CONSIDERING THE PEAK IN RESPECT OF EACH LENDER AND COMPUTING THE UNDISCLOS ED INCOME FOR THREE 16 YEARS IN VIEW OF SECTION 68 OF INCOME TAX ACT . WE THEREFORE UPHOLD THE ORDERS OF THE AO AND THE ORDERS OF THE LD. CIT(A) A RE VACATED. 3. IN THE RESULT THE APPEALS OF THE REVENUE ARE AL LOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16-09 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 16 /09/2011 *MISHRA COPY FORWARDED TO :- 1. THE DCIT CENTRAL CIRCLE- 3 JAIPUR 2. SHRI SURAJ MAL JAIN KOTA 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.1355 TO 1137/JP /10) A.R ITAT JAIPUR 17 18