Commissioner Of Income Tax(Central), Jaipur v. Shri Pradeep Agarwal, 5

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 152 / 2014 Commissioner of Income Tax(Central), Jaipur ----Appellant Versus Shri Pradeep Agarwal, 5-2, Punjabi Bagh Extn. Club Road, Delhi. ----Respondent Connected With D.B. Income Tax Appeal No. 153 / 2014 Commissioner of Income Tax (Central), Jaipur ----Appellant Versus Shri Pradeep Agarwal, 5-2, Punjabi Bagh Extn. Club Road, Delhi. ----Respondent D.B. Income Tax Appeal No. 154 / 2014 Commissioner of Income Tax(Central), Jaipur ----Appellant Versus Shri Pradeep Agarwal, 5-2, Punjabi Bagh Extn. Club Road, Delhi. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Sameer Sharma with Mr. Gaurav Gaur for Mr. Anil Mehta For Respondent(s) : Mr. N.L. Agarwal with Mr. S.L. Poddar _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 20/09/2017 1. In all these appeals common question of law and facts areinvolved hence they are decided by this common judgment. 2.By way of these appeals, the appellant has assailed thejudgment and order of the tribunal whereby tribunal has partlyallowed the appeal of the assessee and dismissed the appeal ofthe department. 3.This court while admitting the appeals framed followingsubstantial question of law:- Appeal No.152/2014 admitted on4.2.2016 “(i) whether the order of ITAT is perverse indeleting the addition of Rs.1,36,00,655/-made on account of peak unexplained cashcredit ignoring the seized documents, searchstatements and without rebutting the findingsof fact given in para 6.4 of CIT(A) order? (ii) Whether the order of ITAT is right indeleting the addition of Rs.20,49,345/- whichwas made on account of undisclosedinvestment in cash ignoring the seizeddocuments, search statements and withoutrebutting the findings of fact given in para 8.4of order of CIT(A)?” AppealNo.153/2014admittedon4.2.2016 “(i) whether the order of ITAT is perverse indeleting the addition of Rs.39,50,000/- madeon account of peak unexplained cash creditignoring the seized documents, searchstatements and without rebutting the findingsof fact given in para 6.4 of CIT(A) order?” Appeal No.154/2014 admitted on4.2.2016 “(i) Whether the order of ITAT is perverse indeleting the addition of Rs.36,32,837/- onaccount of surrender ignoring the seizeddocuments, search statements and without rebutting the findings of fact given in para 8.4of order of CIT(A)? 4.The facts of the case are that a search and seizure operationu/s 132 of the Act was conducted on 17.9.2008. Simultaneously, asurvey u/s 133A of the Act was conducted in re-members ofcommonly known as ‘Kamdhenu Group’ on 17.9.2008. Theassessee namely Sh. Pradeep Agarwal is stated to be the defectohead of Pradeep Agarwal Group, which is again treated as a sub-group of main Kamdhenu Group. Consequent upon the result ofsearch, a notice u/s 153A of the Act dt. 15.4.2009 was issued andserved on the assessee requiring him to file the true and correctReturn of Income (ROI) as per Rules of Income Tax Rules, 1962within a period of 30 days from the date of service of this notice.In response thereto, the assessee filed the Return of Incomedeclarining income of Rs.18,51,642/- on 29.11.2010 which wasactually the Return of Income originally filed by the assessee u/s139(1) of the Act on 1.8.2005. The assessee derives mainly itsincome from salary, capital gain and other sources. For this A.Y.,the assessment was completed on 30.6.2011 at a total income ofRs.39,53,640/-. The AO has made addition of Rs.21.02 lacs onaccount of disallowance of claim of the gift allegedly received byhim during the year from following five persons:- S.N. Name of the donor Amount of giftDate of gift1Sh. Gopal3,00,00017.5.20042Sh. Gopal3,00,00022.5.20043Sh. Gopal (HUF)4,00,00017.5.20044Sh. Mukesh Kumar 5,51,0007.7.2004 4.1To prove the above gifts, the assessee also filed the giftdeeds/affidavits to prove the genuinity of the gifts. The assesseealso filed the copies of Return of Income for the A.Y. 2003-04 incase of Sh. Pawan Kumar and Sh. Mukesh Kumar but did not filesuch returns in case of Sh. Gopal and Sh. Gopal (HUF) onlybecause the assessee did not maintain his relationship with thedonor and did not file the bank statement of the donors. The AOhas treated all these gifts as bogus and has pre-planned strategyof the assessee for receiving such gifts. The AO alleged that theassessee own money has been routed back to him in the shape ofgifts. Accordingly, he has not treated these gifts as genuine andhas also the decisions of various courts and the Tribunal Hon’bleHigh Courts and Hon’ble Jurisdictional High Court on some reasonor others. 5.Counsel for the appellant has taken us to the order of the AOand contended that the AO while considering the matter observedas under:- “9. Undisclosed transactions in Cash During the course of search, severaldocuments/records/loosepaperscontaining, amongst others, transactionsmade in cash were found. Thedocuments/records/loose papers were,inter alia, in the nature of ledgeraccounts of real and/or fictitious personsin the name of real and/or fictitiousentities/persons such as the account ofAshwani C/A in the books of P.K. Co-II,Kamdhenu in the books of Sh. Krishna,Kamdhenu Co. in the books of Sh.Krishna, New Company in the books of P.K. Co-II, P.K. Gaddi etc. Theseaccounts recorded transactions fordifferent period of time falling indifferent financial years. In his statement recorded during thecourse of search, Sh. Vijesh Karnwal,one of the employees of the Assessee-group and close ally of the Assesseestated that P.K. Gaddi is a code word forP.K.-I. Similarly, Sh. Ashish Agarwal,another employee of the assessee grouplooking after Finance & Accounts, in hisreply to Q.19 of his statement recordedon oath on 19.11.2008, in context ofAnnexures A-5 & A-7 seized from hisresidence at C-8, Rohini, New Delhistated that the said documents (ascontained in the above referredannexures)containedtransactionsrelating to Sh. Pradeep Agarwal and hiscompaniesandbusinessconcerns/establishments and whichinclude both the accounted andunaccounted transactions. Even theAssessee in his statement recorded inpresence of his counsel on 20.1.2009,stated in reply to Q.59 and 60 that hewas accountable and responsible for thedocuments/loose papers found and/orseized from the residence of Sh. AshishAgarwal and that he agrees with thestatement of Sh. Ashish Agarwalrecorded on 13.10.2008, 3.11.2008,19.11.2008 & 10.12.2008 in which, interalia, Sh. Ashish Agarwal stated that thedocuments/loose papers found andseized from his residence containedtransactions-accounted as well asunaccounted of Sh. Pradeep Agarwaland/orhisassociated/concernedbusiness concerns. Similarly theAssessee in response to Q.61 of hisabove referred statement stated that heis accountable for the transactionscontained in documents/loose papersbrought from residence of Sh. VijeshKarnwal which were later seized. A copyof the relevant extract of the statementof Assessee dt. 20.1.2009 is annexed asAnnexure A to his Order. Further, in hisletter furnished by the Assesssee it hasbeen categorically stated that thetransactions stated to in the name ofP.K. & Co.-II etc. are actually transactions of the Assessee himself i.e.Pradeep Agarwal. Thus, the Assesseehas made categorical admission that heis accountable for the transactions-unaccounted as well as accountable-inthe above referred document/loosepapers. Therefore, these transactionsare being considered in the hands of theassessee. transactions of the Assessee himself i.e.Pradeep Agarwal. Thus, the Assesseehas made categorical admission that heis accountable for the transactions-unaccounted as well as accountable-inthe above referred document/loosepapers. Therefore, these transactionsare being considered in the hands of theassessee. Considering the fact that all theaccounts were actually in the books ofthe Assessee himself, therefore, aconsolidated cash book containing alltransactions in cash was granted. Onperusal of the cash book it was noticedthat the maximum credit balance entryof Rs.1,36,00,655/- appeared on10.7.2007. The relevant extracts of thesaid cash book are reproduced here forthe sake of ready reference. A copy ofthe relevant extract of the said cashbook is enclosed as Annexure B (B-1 &B-2) to this order. It is an established principle ofaccounting that a cash book cannothave a credit balance. In other words, acash book cannot have negative cash-acash book can have a zero balance or itcan have a positive balance; but it cannever have a negative balance (creditbalance). The assessee vide Order SheetEntry dated 31.5.2011 was furnished acopy of this generated cash book of theAssessee and asked to show as to whythe maximum credit balance (peakamount) appearing on Rs.1,36,00,655/-should not be treated as his undisclosedincome. The assessee was also advisedto offer his comments on the cash bookfurnished to him. In response to the above show cause,the assessee furnished his reply, therelevant portions of which arereproduced hereunder for the sake ofready reference: “calculation of peak amount in rotationin various transactions done by thegroup for obtaining accommodationentries and building up of stock. That onthe basis of documents found and seizedfrom the residence of Shri Ashishagarwal the modus-operandi of the assessee group is clear that first of allthey obtained purchase bill and madepayment by making LC limits and onreceiving of cash amount either theypaid it for cheque received againstbogussalesorforobtainingaccommodation credit entry. In thiswhole process the cash money utilizedwas out-come of LC limit and theoriginate point is receiving of cash fromthe dealer from where we have obtainedbogus purchase bill. The accountedmoney was converted in unaccountedmoney through this process. But topurchase piece of mind and avoidfurther litigation and reduce thecomplication we have calculated thepeak amount in rotation in all suchtransaction on the basis of followingseized documents: a. Ashawani CA A/c in the books of P.K.& Co.-II for the period of 1.4.2007 to7.3.2008. b. Kamdhenu in the books of ShreeKrishna is related to Raghuveer Metaland its does not relates to the assesseegroup ….. Only amount of Rs.39,50,000/- is related to us which wehave included in our summary. Theseamount are rs. 400,000/- on 5.7.06, Rs.50,000/- on 25.07.06, Rs.25,00,000/-on 26.07.2006 and Rs.5,50,000/- on27.07.2006. c. kamdhenu Co. in the books of ShreeKrishnaPeriod01.04.2007to17.10.2007d. Kamdhenu in the books of ShreeKrishnaPeriod01.04.2007to01.07.2007. e. New Co. in the books of P.K. & Co-IIperiod 01.04.2007 to 19.10.2007. We have put all the above ledgeraccount in single tally data and on thebasis of that calculated the peak amountfor each financial year which are asunder: The Combined account the year wisesummary is under:- Maximum Maximum Maximum Dr. Maximum Dr. EntryCr. EntryBalanceCr. Balance2006-07350000025000002294357639500002007-086050877480000030812685136006552008-09525000032000001098617070Summary6050877480000010986170713600655 So on the basis of above working wefurther offer following incomes fortaxation year wise in the hands of ShriPradeep Kumar Agarwal as under:- Financial Year Assessment YearIncome Offered on the basis on Maximum debit entry2006-072007-0835000002007-082008-0925500002008-092009-100Total6050000 e. New Co. in the books of P.K. & Co-IIperiod 01.04.2007 to 19.10.2007. We have put all the above ledgeraccount in single tally data and on thebasis of that calculated the peak amountfor each financial year which are asunder: The Combined account the year wisesummary is under:- Maximum Maximum Maximum Dr. Maximum Dr. EntryCr. EntryBalanceCr. Balance2006-07350000025000002294357639500002007-086050877480000030812685136006552008-09525000032000001098617070Summary6050877480000010986170713600655 So on the basis of above working wefurther offer following incomes fortaxation year wise in the hands of ShriPradeep Kumar Agarwal as under:- Financial Year Assessment YearIncome Offered on the basis on Maximum debit entry2006-072007-0835000002007-082008-0925500002008-092009-100Total6050000 This surrender amount will cover the allannexure mentioned above and allaccommodation entries in the books ofvarious business concerns, companiesand individuals, HUF and others. We willpaid the taxes on above surrenderedincome in the hands of Shri PradeepKumar Agarwal subject to the conditionthat no penalty proceeding will beinitiated because the above rotation isonly out of accounted cash withdrawnfrom LC account.” The submission of the Assessee has beenexamined carefully. It is seen that theassessee has not disputed themethodologyadoptedbytheundersigned in estimating the peakamounts of cash involved in undisclosedcash transactions of the assessee and hisassociated/connected businesses. For the year under consideration, theassessee has surrendered an amount ofRs.25,50,000/- which is the approximate difference between the maximum debitentry of Rs. 60,50,877/- of the yearunderconsideration and the maximum debitentry of Rs.35,00,000/- the previousfinancial year thereby giving himself the benefit of set-off. However, the argument put for the bythe assessee in surrendering amount onthe basis of maximum debit entry for therelevant year and the year previous tothe year under consideration is grosslyillogical, mathematically incorrect andbeyond comprehension! The maximumcredit balance, signifying negative cash,in cash book occurs on 10.7.07 at anamount of Rs. 1,36,50,000/-. It is thismaximum credit balance in the cashbook which should have beensurrendered by the assesse. It ispertinent to mention here that as perestablished accounting principles, a cashbook can never have a credit balance i.e.it cannot have a situation where it showsnegative cash. In other words, a cashbook would always have a debit balanceor at best be nil. A debit entry in cashbook signifies that the cash book hasreceived money. Therefore, a surrenderof a maximum debit entry does notsignify anything except that on thatparticular date that amount of moneywas available in the cash book. While onthe other hand, a credit balance in cashbook signifies that the assessee has beenreceiving cash and making payments incash which was not accounted for by himin his cash book and that is the reasonthe cash book shows a credit balance(negative cash). Had all the cash thathad been received and paid through thecash book, then it would never haveshown a credit balance- it could witherbe positive (debit balance) or nil. Such acredit balance in cash book only provesthat expenditure has been incurred bythe assessee in cash which wasunaccounted. Hence, the maximum credit balance ofRs.1,36,00,655/-standingon10.07.2007 is the maximum amount ofmoney that the assessee has paid in cash outside his books from hisundisclosed income. Therefore, thisamount of Rs.1,36,00,655/- is addedback to his income on account ofundisclosed payments in cash. Hence, the maximum credit balance ofRs.1,36,00,655/-standingon10.07.2007 is the maximum amount ofmoney that the assessee has paid in cash outside his books from hisundisclosed income. Therefore, thisamount of Rs.1,36,00,655/- is addedback to his income on account ofundisclosed payments in cash. Also, in view of the above, I am satisfiedthat the assessee has concealedparticulars of his income and/orfurnished inaccurate particulars of hisincome. Therefore, penalty proceedingsu/s 271(1)(c) of the Act are initiatedagainst the assessee separately.” 6.It was further carried and in appeal and CIT(A) observed asunder:- “6.4 I have carefully considered thesubmissions of the appellant as also thefindings of the AO. The AO’s case is thatduring the course of search variousdocuments and loose papers indicatingtransactions made in cash were foundwhich were in the nature of ledgeraccount of real fictitious persons andhaving transactions for different periodof time. During the course of search oneof the employee of this group namelySh. Vijay Karnwal whose statement wasrecorded admitted that “P.K. Gaddi” isalso a code word similarly anotheremployee Sh. Ashish Agarwal in hisstatement dt. 19.11.08 in context ofAnnex. A-5 & A-7 admitted that suchdocumentscontainedtransactionsrelated to Sh. Pradeep Agarwal and hisbusiness concerns as also that thetransactions both of accounted andunaccounted nature are recorded onthese papers. The appellant himself inhis statement dt. 20.1.09 admitted thathe was accountable and responsible forthe documents or loose papers foundand seized from the residence of Sh.Ashish Agarwal and the appellant alsoagreed with the statement of Sh. AshishAgarwal recorded on 3.11.08, 19.11.08and 10.12.08. On the basis of thesefacts the AO come to the conclusion thatall such accounts pertain to theassessee and transactions were of unaccounted nature outside books ofaccounts. The AO accordingly generated aconsolidated cash book and in this cashbook maximum credit balance entry ofRs.13600655/- was noted on 10.11.07.As per AO, as per the establishedaccounting principles the cash bookscannot have a credit balance andaccordingly required the assessee whysuch peak amount of credit balanceappearing for Rs.13600655/-should notbe treated as undisclosed income.During the assessment proceedings, theappellant submitted its modus operandias to how the appellant obtainedpurchase bills and made payments bymaking LC limits and on receiving thecash amount either they paid it againstcheque received on account of bogussales or for obtaining accommodationcredit entry and that in the wholeprocess the originate point was receivingof cash from where bogus purchase billswere obtained. It was contended that bysuch process the accounted money wasconverted into unaccounted money.However to purchase peace of mind andavoid further litigation the appellant alsocalculated the peak amount on the basisof rotation in all such transactions andon the basis of such peak amount, inA.Y. 2007-08 income of Rs.35 lacs wereoffered and in A.Y. 2008-09 income ofRs.25.50 lac was offered. However suchincome was not shown in the revisedreturn. However the AO was notconvinced with such submission and byobserving that credit balance indicatingnegative cash was amounting toRs.13600655/- and accordingly thesame amount was added. During the appellate proceedings, theappellant again submitted the samemodus operandi as to how the boguspurchases were obtained against whichLC limit was availed and then paymentthrough cheque was made to the sellerparty and subsequently cash wasreceived from such seller party. It isfurther stated that the AO has annexedtwo sheets of papers as Annex. B (B-1 &B-2) and as regards the observation of During the appellate proceedings, theappellant again submitted the samemodus operandi as to how the boguspurchases were obtained against whichLC limit was availed and then paymentthrough cheque was made to the sellerparty and subsequently cash wasreceived from such seller party. It isfurther stated that the AO has annexedtwo sheets of papers as Annex. B (B-1 &B-2) and as regards the observation of the AO that a consolidated cash bookcontainingalltransactionswasgenerated showing credit balance ofRs.13600655/- on 10.11.07, theappellant has contended that the AO hasnot referred any annexure from wherethe cash transaction have beenconsolidated. The appellant has furtherreferred to page no.9 to 23 of Annex. A-5 seized from the residence of Sh.Ashish Agarwal so as to establish a linkbetween page no.19 to 23 and cashbook was prepared by the AO. It isstated that the AO has been selective intaking only entries of cash and ignoringentries of cheque corresponding to theentries of cash and if the AO has takenboth the entries of cheque and cashsuch difference would not have arisenand the entries would be perfectivelymatched. As per appellant there was nounexplained cash. The appellant furthercontended that the assessee has takenover one company in the name and styleof R.V. Metals Pvt. Ltd. and that at thetime of takeover of this company, thecompany has number of debtors whichwere only on papers and not genuine.As the assessee was not having anyrelation with these debtors there thesedebtors were to be cleared. Accordinglyamount by way of cheque was obtainedfrom these debtors by the company andthe amount of realization by way ofcheques from these bogus metalIndustries and the money transferred bythe assessee to another company ofgroup M/s. Raguveer Metal IndustriesLtd. It is stated that the amount of cashso received in return from M/s.Raguveer Metal Industries Pvt Ltd.utilized in making payment to thedebtors of M/s. RV Metals IndustriesPvt. Ltd from whom amounts have beenreceived through the cheques. It iscontended that if the aforesaid pageno.19 to 23 are analyzed independentlyall such transaction will stand explainedand there would not be any unexplainedcash. As regards the alleged surrenderby the assessee which was not offeredin the return of income filed with thedepartment, it is submitted that incomehas to be assessed as per provisions of the fact and not account of surrendermade by the assessee on a wrongpresumption. the fact and not account of surrendermade by the assessee on a wrongpresumption. It may be noted that there is no disputeon the fact of availability of incriminatingpapers and their authenticity as perAnnex.A-5 & A-7 which were admitted tobe of unaccounted nature. On the basisof such documents the AO hasgenerated a consolidated cash bookwhich indicated credit balance ofRs.13600655/- on a particular date i.e.10.11.07. It essentially meant that uptoa particular date i.e. 10.11.07 cashpayment to such an extent has beenmade without actual availability of cashof disclosed nature. Therefore the AOtreated such amount as undisclosedcash/income as definitely the paymentwas made by the appellant inunaccounted manner. The appellant hasnot able to rebut such findings of the AOeven during the assessment proceedingsand in facts different explanation hasbeen filed as to how the assessee hastaken over one company in the nameand style of RV Metal Pvt. Ltd and thatthe company was having number ofdebtors which were only in papers andnot genuine. Accordingly to clear suchdebtors, amount by way of cheque wasshown to be obtained from thesedebtors and the amount of realization byway of cash from these debtors weretransferred by the assessee to anothercompany M/s. Raghuveer MetalIndustries and from M/s. RaghuveerMetal Industries the amount was statedto be received in cash by M/s. RV MetalIndustries. It may be noted that suchtype of explanation has neither beenfurnished during the assessmentproceeding nor the same is supportedby any other independent and reliableevidences. In fact prima facie suchexplanation is not found to be relatedwith the present issue. In thisbackground I do not find any fault in thefinding of the AO in taxing such amountof Rs.13600655/- as undisclosedcash/income. Therefore the action of theAO is confirmed. The ground of appeal isdismissed.” 7.However tribunal without considering the evidence which hasbeen considered by the authorities observed as under:- 4.6 The facts apropos to ground no 2are that during assessment proceedings,the assessee submitted that duringsearch no incriminating evidence wasfound which could indicate unrecordedpurchases or sales The existence ofunexplained cash was also not foundduring search. The assessee group hasbeen in dire need of money forexpansion of business and for thatpurpose they would seek the CashCredit Limit from the bank. Duringsearch various documents containingtransactions made in cash were alsofound. These documents were in thenature of ledger accounts and againAshwani C.A. A/c in the books of P.K. &Co-II; Kamdhenu in the books of ShreeKrishna related to Raghuveer Metal;Kamdhenu Co. in the books of ShreeKrishna; Kamdhenu in the books ofShree Krishna; New Co. in the books ofP.K. & Co. II ; P.K. Gaddi etc. Thesetransactions pertain to different periodsof time falling in different financialyears. The statement of Shri VijayKarnwal, one of the employee of theassessee group, was recorded duringsearch. He stated that P.K. Gaddi is codeword for PK-1. Similarly, Shri AshishAgarwal, another employee of theassessee group, stated in his statementwhile reply to question no.19 recordedon oath on 19-11-2008 stated in thecontext of Annexure A-5 andA-7 seizedfrom his residence situated at C-8,Rohini, New Delhi that said documentscontained transactions relating to ShriPradeep Agarwal and his companies etcwhich included both accounted andunaccountedtransactions.Thestatement of Shri Pradeep Agarwal, thisassessee was also recorded on 20-01-2009 and while replying to question no.59 and 60, he stated that thesedocuments found from the residence ofShri Ashish Agarwal belonged to him. Similarly, the documents found from theresidence of Shri Vijesh Karnwalwerealso owned by him. The assessee alsofurnished a letter owning all thesetransactions specifically pertaining tothe name of P.K. &Co.-II etc.Accordingly, all these transactions wereconsidered in the hands of thisassessee. All these accounts wereactually in the books of the assesseehimself. Therefore, the consolidatedcash book containing all the transactionswas prepared. From the cash book, itwas noticed that maximum creditbalance entry of Rs. 1,360,00,655/-appeared on 10-07-2007. Since thecash book cannot have a credit balancei.e. negative cash as it can either have azero balance or have a positive balance,the A.O. proposed to treat maximumcredit balance of Rs. 1,36,00,655/- asassessee's undisclosed income. The A.O.also advised the assessee to offer hiscomments on the cash book furnished tohim. In response to the above show-caused, the assessee furnished his replywhose relevant portion is as under:- ‘’Calculation of peak amount in rotationin various transactions done by thegroup for obtaining accommodationentries and building up of stock. That onthe bass of documents found and seizedfrom the residence of Shri AshishAgarwal the modus operandi of theassessee group is clear and first of allthey obtained purchases bill and madepayment by making LC limits and onreceiving of cash amount either theypaid it for cheque received againstbogussalesorforobtainingaccommodation credit entry. In thiswhole process the cash money utilizedwas outcome of LC limit and theoriginate point is receiving of cash fromthe dealer from where we have obtainedbogus purchase bill. The accountedmoney was converted in unaccountedmoney through this process. But topurchase piece of mind and avoidfurther litigation and reduce thecomplication, we have calculated the peak amount of rotationin all such transaction on the basis offollowing seized documents. (a) Ashwani CA A/c in the books of P.K.& Co.II for the period of 01-04-2007 to07-03-2008. (b) Kamdhenu in the books of ShreeKrishna is related to Raghuveer Metaland it does not relate to the assesseegroup….. Only amount of Rs. 39,50,000/- isrelated to us which we have included inour summary. These amount are Rs.400,000/- on 05-07-06, Rs. 500,000/-on 25-07-2006, Rs. 25,00,000/- on 26-07-2006 and Rs. 5,50,000/- on 27-07-2006. © Kamdhenu Co. in the books of ShreeKrishna period 01-04-2007 to 17-10-2007. (d) Kamdhenu in the books of ShreeKrishna period 01-04-2007 to 17-10-2007. (e) New Co. in the books of P.K. & Co.-IIperiod 01-04-2007 to 19-10-2007. We have put all the above ledgeraccount in single tally data and on thebasis of that calculated the peak amountfor each financial year which are asunder:- 2006-072007-0835000002007-082008-0925500002008-092009-100Total6050000 This surrender amount will cover the allannexure mentioned above and allaccommodation entries in the books ofvarious concerns, companies andindividuals, HUF and others. We will paythe taxes on above surrendered incomein the hands of Shri Pradeep KumarAgarwal subject to the condition that nopenalty proceeding will be initiatedbecause the above rotation is only outof accounted cash withdrawal from LCaccount.’’ (e) New Co. in the books of P.K. & Co.-IIperiod 01-04-2007 to 19-10-2007. We have put all the above ledgeraccount in single tally data and on thebasis of that calculated the peak amountfor each financial year which are asunder:- 2006-072007-0835000002007-082008-0925500002008-092009-100Total6050000 This surrender amount will cover the allannexure mentioned above and allaccommodation entries in the books ofvarious concerns, companies andindividuals, HUF and others. We will paythe taxes on above surrendered incomein the hands of Shri Pradeep KumarAgarwal subject to the condition that nopenalty proceeding will be initiatedbecause the above rotation is only outof accounted cash withdrawal from LCaccount.’’ After considering the above reply, theA.O. found that the assessee has notdisputed the methodology adopted bythe A.O. in estimating the peak amountof cash involved as undisclosed cashtransaction. For this year, the assesseesurrendered an amount of Rs. 25.50lacs which is the approximate differencebetween the maximum debit entry ofRs. 60,50,877/- pertaining to A.Y.2008-09 and maximum debit entry ofRs. 35.00 lacs pertaining to A.Y. 2007-08 thereby giving himself the benefit ofset off. But the methodology adoptedby the assessee in making thissurrender was rejected by the A.O.According to the A.O., negative cash inthe cash book occurred on 10-07-2007of Rs. 1,36,50,000/- being themaximum credit balance in the cashbook and this amount should have beensurrendered by the assessee as perestablished principles. As a result, thisamount has been added back to theassessee's income on account ofundisclosed payment made in cash. Theld CIT(A) has confirmed this addition onmore or less same reasons.” 4.9 After considering the rivalsubmissions, we have found that no direct evidence was found to supportthem fully. The A.O. did not make anyenquiry from the employees fromwhose residence these papers werefound. The A.O. did not make any enquiryfrom the persons mentioned at pages 1to 5 of the seized papers. The copies ofthe cash account prepared were notconfronted to the assessee. Theassessee has not mentioned themethod of making out the working inhis order at page 5 in para 9. There issome substance in the ld DR thatstatement of Shri Vijesh Karnwal andShri Ashish Agarwal, employees of theassessee, were recorded and they hadaccepted that these papers belonged tothe assessee. The assessee alsoaccepted the owning of these papersbut the statement was retracted and nomethodological base for making theworking of the impugned amount isfound to be convincing. In ourconsidered opinion, without examiningthe submission of the assessee and therelevant seized papers, the A.O. hasmade this addition and the ld CIT(A)has confirmed the same. Thesubmissions made before the A.O. weredisregarded on the ground that thesame was notsubmitted. However, it isfound that the assessee had furnishedsimilar replies to all the queries madeby the A.O.. It was not the case of theA.O. that the assessee did notcooperate. Anything done at the back ofthe assessee could not be replied bythe assessee and the same could onlybe explained before the ld CIT(A). Theassessee has in fact supported his casewith evidence. The explanationregarding Annexure B-1 and B-2relating to peak credit was availablebefore the A.O. The assessee hassubmitted the explanation of eachentries seized at paper A-5 and A-7. Inthis regard page 9 of the paper book isrelevant. In our considered opinion, thisimpugned addition is based on guesswork, conjectures and surmises. No linkhas been established by the A.O. between these papers of the assessee.We find that the assessee has explainedthese papers with reference to thecompanies to whom these papersrelated to. Accordingly, we reverse thefindings of the ld CIT(A) and order todelete the entire baseless addition andallow ground no.2 of the assessee'sappeal.” 8.In that view of the matter, the explanation which was given by the assessee with regard to the reference company to whomthe department controverted was accepted by the tribunal andtherefore deleted the addition. 9.In our considered opinion, the explanation which has beengiven by the assessee that the amount was taken for the companyhas since been accepted by the tribunal, no error is shown to becommitted by the tribunal. 10.In that view of the matter, the issues are answered in favourof the assessee and against the department. 11.The appeals stand dismissed. (VIJAY KUMAR VYAS)J. (K.S.JHAVERI)J. Brijesh 183-185.