Ita/165/2010 Commissioner Of Income Tax, Central-I, Kolkata v. Pramod Sharma

AFR ORDER O-17 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITA/165/2010COMMISSIONER OF INCOME TAX, CENTRAL-I, KOLKATAVERSUSPRAMOD SHARMA BEFORE :THE HON’BLE JUSTICE SURYA PRAKASH KESARWANIANDTHE HON’BLE JUSTICE RAJARSHI BHARADWAJDate : 5[th] February 2024. Appearance:Mr. Om Narayan Rai, AdvocateMr. Amit Sharma, Advocate…for the appellant. 1.Heard Sri Om Narayan Rai, learned senior standing counsel for theappellant. None appears for the respondent assessee.appellant. None appears for the respondent assessee. 2.Affidavit of service filed today by learned counsel for the appellant, incompliance of the orders dated 17.02.2023 and 15.01.2024, is taken onrecord. Service of notice upon the respondent assessee is found to besufficient.compliance of the orders dated 17.02.2023 and 15.01.2024, is taken onrecord. Service of notice upon the respondent assessee is found to besufficient. 3.This appeal was admitted by order of this Court dated 03.09.2010, on thefollowing substantial questions of law:-following substantial questions of law:- “i)Whether the Learned Tribunal was justified on the facts andcircumstances of this case to follow the ratio decided by thecircumstances of this case to follow the ratio decided by the Facts Learned Tribunal in case of Praveen Kumar Agarwal videorder dated 28.9.2007 in IT (SS) A No.74/Kol/2003, if not,then ii)Whether, on the facts and in the circumstances of the case, theIncome-tax Appellate Tribunal is correct in deleting theaddition of Rs.3,33,18,027, made in accordance with theorder of the Tribunal in case of Sri Praveen Kumar Agarwal,being commission earned @ 2% of the accommodation entriespassed to the extent of Rs.166.59 crores? iii)Whether, on the facts and in the circumstances of the case, theIncome-tax Appellate Tribunal is correct in deleting addition ofRs.166.59 crores made under section 68 of the Income-tax Act,1961 being unexplained cash credits in the bank accounts ofthe assessee, the source whereof was not proved?Income-tax Appellate Tribunal is correct in deleting addition ofRs.166.59 crores made under section 68 of the Income-tax Act,1961 being unexplained cash credits in the bank accounts ofthe assessee, the source whereof was not proved? iv)Whether, on the facts and in the circumstances of the case, theIncome-tax Appellate Tribunal is correct in substituting theincome of Rs.4,07,17,055 as peak credit, on the basis of itsorder in case of Sri Praveen Kumar Agarwal, in place ofadditions on account of commission and cash credits withoutappreciating the difference in the facts of the two cases?”Income-tax Appellate Tribunal is correct in substituting theincome of Rs.4,07,17,055 as peak credit, on the basis of itsorder in case of Sri Praveen Kumar Agarwal, in place ofadditions on account of commission and cash credits withoutappreciating the difference in the facts of the two cases?” 4.Briefly stated facts of the present case are that search and seizure operationunder Section 132 of the Income Tax Act, 1961 (hereafter referred to as the‘Act of 1961’) was conducted in the business and residential premises of oneSri Praveen Kumar Agarwal on 27.7.2019. An order in the case of PraveenKumar Agarwal was passed by the DCIT, Circle – 3, Kolkata under Section158DC of the Act, 1961 for the block period 1.4.1990 to 27.7.1999 andunder Section 132 of the Income Tax Act, 1961 (hereafter referred to as the‘Act of 1961’) was conducted in the business and residential premises of oneSri Praveen Kumar Agarwal on 27.7.2019. An order in the case of PraveenKumar Agarwal was passed by the DCIT, Circle – 3, Kolkata under Section158DC of the Act, 1961 for the block period 1.4.1990 to 27.7.1999 and determining income by way of commission @2% for accommodation entriesprovided by him for Rs.166.59 crores. Additionally, the tribunal applied thepeak balance and added the peak balance amount in the hands of PraveenKumar Agarwal. determining income by way of commission @2% for accommodation entriesprovided by him for Rs.166.59 crores. Additionally, the tribunal applied thepeak balance and added the peak balance amount in the hands of PraveenKumar Agarwal. 5.During investigation by the Directorate of Income Tax (Investigation) Kolkatait was found that the respondent/assessee is the sub-broker of the aforesaidPraveen Kumar Agarwal engaged in providing accommodation entries tovarious companies based at Mumbai who in turn used the said fund forpayments to Madhepura Mercantile Co-operative Bank at Mumbai which issaid to be controlled by one Ketan Parekh. The statement of the director ofthe company based in Kolkata was recorded by the DCIT under Section 131of the Act, 1961 who stated on oath that the transactions with Mumbaibased companies were only accommodation entries oriented transaction. Theassessee was the director of six companies as mentioned in the assessmentorder. He had also formed eight proprietary concerns as mentioned in theassessment order. Separate bank accounts in UTI Bank, Dalhousie Branch,Kolkata in the name of eight proprietary concerns were opened, where theassessee deposited a sum of Rs.166.59 crores and issued cheques to partiesto provide accommodation entries during the assessment year 2005-06relevant to the previous year 2004-05. This cash deposit of Rs.166.59 croresin eight bank accounts of proprietary concerns of the respondent/assesseewas sought to be added in income of the assessee by the assessing officerinvoking Section 88 of the Act, 1961. 6.The assessing officer passed the assessment order dated 31.12.2007under Section 143(3) of the Act, 1961 determining the income ofRs.3,33,18,027/- being brokerage/commission @2% on the aforesaidcash deposits of Rs.166.59 crores. He also added the aforesaid amountof Rs.166.59 crores in the income of the assessee as unexplained cashcredit under Section 68 of the Act, 1961.Aggrieved, therespondent/assessee filed an appeal being Appeal No.107/CC-VII/CIT(A),C-I/07-08 before the Commissioner of Income Tax (Appeals), Central – 1,Kolkata which was dismissed by the CIT(A) by an order dated 30.12.2008.Aggrieved with the order of the CIT(A), the respondent/assessee filed ITA515(Kol) of 2009 before the Income Tax Appellate Tribunal, A-Bench, Kolkatawhich was partly allowed by an order dated 14.10.2009. The tribunaldetermined the income of the assessee at Rs.4,07,17,055/- applying peakcredit principle, which included brokerage. Aggrieved with the aforesaidorder of the ITAT, the department has filed the present appeal. Submission 7.The learned counsel for the appellant submits that the tribunal has erred indeleting the addition under Section 68 of the Act, 1961 and furthercommitted manifest error of law to apply the principle of peak credit. Hesubmits that the cash deposit of Rs.166.59 corres remained totallyunexplained by the respondent/assessee’s income and, as such, the entireamount was correctly added by the assessing officer and upheld by thedeleting the addition under Section 68 of the Act, 1961 and furthercommitted manifest error of law to apply the principle of peak credit. Hesubmits that the cash deposit of Rs.166.59 corres remained totallyunexplained by the respondent/assessee’s income and, as such, the entireamount was correctly added by the assessing officer and upheld by the CIT(A) in the respondent/assessee invoking Section 68 of the Act, 1961. Hereferred to provisions of Section 68 of the Act, 1961 and relied upon thejudgment of Hon’ble Supreme Court in Principal Commissioner of IncomeTax (Central-1) Vs. NRA Iron And Steel Private Limited (2019) 15 SCC 529(paragraphs 9.2 and 9.3) and Division Bench judgment of Allahabad HighCourt in Commissioner of Income Tax Vs. Vijay Agricultural Industries(2007) 294 ITR 610 (Alla). Discussion and Finding 8.We have carefully considered the submissions of the learned counsel for theappellant and perused the paper book.appellant and perused the paper book. CIT(A) in the respondent/assessee invoking Section 68 of the Act, 1961. Hereferred to provisions of Section 68 of the Act, 1961 and relied upon thejudgment of Hon’ble Supreme Court in Principal Commissioner of IncomeTax (Central-1) Vs. NRA Iron And Steel Private Limited (2019) 15 SCC 529(paragraphs 9.2 and 9.3) and Division Bench judgment of Allahabad HighCourt in Commissioner of Income Tax Vs. Vijay Agricultural Industries(2007) 294 ITR 610 (Alla). Discussion and Finding 8.We have carefully considered the submissions of the learned counsel for theappellant and perused the paper book.appellant and perused the paper book. 9.The entire submission of learned counsel for the appellant is with regard tothe applicability of Section 68 of the Act 1961 on facts of the present case.Therefore, before proceeding to consider the submission, it would beappropriate to reproduce Section 68 of the Act 1961, as then existed, asunder:-the applicability of Section 68 of the Act 1961 on facts of the present case.Therefore, before proceeding to consider the submission, it would beappropriate to reproduce Section 68 of the Act 1961, as then existed, asunder:- “68. Where any sum is found credited in the books of an assesseemaintained for any previous year, and the assessee offers noexplanation about the nature and source thereof or theexplanation offered by him is not, in the opinion of the[Assessing] Officer, satisfactory, the sum so credited may becharged to income-tax as the income of the assessee of thatprevious year.”maintained for any previous year, and the assessee offers noexplanation about the nature and source thereof or theexplanation offered by him is not, in the opinion of the[Assessing] Officer, satisfactory, the sum so credited may becharged to income-tax as the income of the assessee of thatprevious year.” 10.We find that while passing the assessment order dated 31.12.2007 underSection 143(3) of the Act 1961, the assessing officer himself noted that theassessee on being enquired about the nature of transaction with the Mumbaicompanies submitted on oath on 15.12.2006 before the DDIT (I&B), Kolkatathat he has got cash of equivalent amount from the companies and againstthe same, cheque has been issued. The assessing officer further noticed thatthe detailed list of cheques issued to various Mumbai based companies ofthe K. Parekh Group, the bank account numbers etc. submitted by theassessee, against which cash were received. The assessee had depositedcash of Rs.166.59 crore in the bank account of his eight proprietaryconcerns during the year in question. The assessing officer found that theoriginal broker for providing accommodation entries is M/s. P.K. Agarwaland Company of which Sri Praveen Kumar Agarwal is the proprietor. Theassessee was found to be sub-broker. On the facts as briefly noted above,the assessing officer has recorded, in the assessment order, the followingfinding:-Section 143(3) of the Act 1961, the assessing officer himself noted that theassessee on being enquired about the nature of transaction with the Mumbaicompanies submitted on oath on 15.12.2006 before the DDIT (I&B), Kolkatathat he has got cash of equivalent amount from the companies and againstthe same, cheque has been issued. The assessing officer further noticed thatthe detailed list of cheques issued to various Mumbai based companies ofthe K. Parekh Group, the bank account numbers etc. submitted by theassessee, against which cash were received. The assessee had depositedcash of Rs.166.59 crore in the bank account of his eight proprietaryconcerns during the year in question. The assessing officer found that theoriginal broker for providing accommodation entries is M/s. P.K. Agarwaland Company of which Sri Praveen Kumar Agarwal is the proprietor. Theassessee was found to be sub-broker. On the facts as briefly noted above,the assessing officer has recorded, in the assessment order, the followingfinding:- “In view of above the assessee’s submission that his brokerage/commission income of 0.15% is not accepted. Considering the orderof Hon'ble Tribunal in the case of assessee’s principal broker,Shri Praveen Kumar Agarwal an amount of 2%of the cashdepositedamounting to Rs.166.59 Crore in the year underconsideration i.e. Rs.3,33,18,027/- is taken as assessee’s incomefrom business by way of commission. 11.Thus, as per assessment order, one Sri Praveen Kumar Agarwal was theassessee’s principal broker and the assessee has earned brokerage /commission @ 2% on the cash deposit of Rs.166.59 crore which comes toRs.3,33,18,027/-. This commission/brokerage of Rs.3,33,18,027/- wasassessed as income of the respondent assessee.assessee’s principal broker and the assessee has earned brokerage /commission @ 2% on the cash deposit of Rs.166.59 crore which comes toRs.3,33,18,027/-. This commission/brokerage of Rs.3,33,18,027/- wasassessed as income of the respondent assessee. 12.In appeal, the CIT(A) upheld the assessment order and dismissed the appealof the assessee, holding as under:-of the assessee, holding as under:- “In order to avoid such speculation, it is held that the commissionincome in the assessment order will be treated as the incomeaccruing to the appellant from making the funds credited to theappellant’s account available for accommodation entries.Consequently, the appeal is dismissed.”income in the assessment order will be treated as the incomeaccruing to the appellant from making the funds credited to theappellant’s account available for accommodation entries.Consequently, the appeal is dismissed.” 13.Since the assessment of the respondent/assessee was based on materialsfound in the matter of aforesaid Sri Praveen Kumar Agarwal and additionmade in the hands of said Sri Praveen Kumar Agarwal who and theDepartment contested the matter upto ITAT, therefore, the Tribunal followedits order in the case of Sri Praveen Kumar Agarwal, after due discussion ofthe fact of the respondent/assessee. The Tribunal noted that on beingenquired about the nature of transaction with the Mumbai based companies,the assessee submitted on oath on 15.12.2008 before the DDIT (Inv), Kolkatathat he has got cash amount from the companies and against the samecheques of equivalent amount were issued. The assessee also gave a detailedlist of cheques issued to various Mumbai based companies of the Ketanfound in the matter of aforesaid Sri Praveen Kumar Agarwal and additionmade in the hands of said Sri Praveen Kumar Agarwal who and theDepartment contested the matter upto ITAT, therefore, the Tribunal followedits order in the case of Sri Praveen Kumar Agarwal, after due discussion ofthe fact of the respondent/assessee. The Tribunal noted that on beingenquired about the nature of transaction with the Mumbai based companies,the assessee submitted on oath on 15.12.2008 before the DDIT (Inv), Kolkatathat he has got cash amount from the companies and against the samecheques of equivalent amount were issued. The assessee also gave a detailedlist of cheques issued to various Mumbai based companies of the Ketan Parekh Group, the bank account numbers etc. against which cash wasreceived by him. In the case of the principal broker i.e., Sri Praveen KumarAgarwal, the ITAT has held that the assessee was involved in the business of entry operation and has earned only commission on suchtransaction.Applying the peak credit principle and brokerage @ 2% earnedby the respondent/assessee on the total deposits, the Tribunal determinedthe income of the respondent/assessee at Rs.4,07,17,055/- . 14.Thus, the assessing officer, the CIT and the ITAT all have recorded a Parekh Group, the bank account numbers etc. against which cash wasreceived by him. In the case of the principal broker i.e., Sri Praveen KumarAgarwal, the ITAT has held that the assessee was involved in the business of entry operation and has earned only commission on suchtransaction.Applying the peak credit principle and brokerage @ 2% earnedby the respondent/assessee on the total deposits, the Tribunal determinedthe income of the respondent/assessee at Rs.4,07,17,055/- . 14.Thus, the assessing officer, the CIT and the ITAT all have recorded a concurrent finding of fact that (i) the respondent/assessee is a sub-broker of the principal broker Sri Praveen Kumar Agarwal and (ii) therespondent/assessee has earned brokerage @ 2% on cash deposit ofRs.166.59 crores. All the aforesaid three fact finding authorities havedetermined/upheld the income of the respondent/assessee frombrokerage/commission @ 2% on cash deposits of Rs.166.59 crores. All thethree authorities have found that the respondent/assessee was engaged inproviding accommodation entries and was earning brokerage/commission @2% in lieu of such accommodation entries. Thus, all the three authoritieshave found that the respondent/assessee was involved in providingaccommodation entries and was earning brokerage/commission @ 2% oncash deposited Rs.166.59 crore. The respondent/assessee has disclosedbefore the authorities all the bank accounts and complete details of chequesissued and cash deposits. 15.In the case of Commissioner of income Tax v. P. Mohannakala reported in AIR2007 SC 2116 (paragraphs 15, 16 and 23), the Hon’ble Supreme Courtexplained the nature and scope of Section 68 of the Act, 1961 and afterreferring to its earlier judgments in Sumati Dayal v. Commissioner of IncomeTax, Bangalore reported in 1999 Supp (2) SCC 453 and several otherjudgements, held as follows:2007 SC 2116 (paragraphs 15, 16 and 23), the Hon’ble Supreme Courtexplained the nature and scope of Section 68 of the Act, 1961 and afterreferring to its earlier judgments in Sumati Dayal v. Commissioner of IncomeTax, Bangalore reported in 1999 Supp (2) SCC 453 and several otherjudgements, held as follows: 15. The question is what is the true nature and scope of Section 68of the Act ? When and in what circumstances Section 68 of the Actwould come into play ? That a bare reading of Section 68 suggeststhat there has to be credit of amounts in the books maintained by anassessee; such credit has to be of a sum during the previous year;and the assessees offer no explanation about the nature andsource of such credit found in the books; or the explanationoffered by the assessee in the opinion of the Assessing Officeris not satisfactory, it is only then the sum so credited may becharged to income tax as the income of the assessee of that previousyear. The expression “the assessees offer no explanation”means where the assessees offer no proper, reasonable andacceptable explanation as regards the sums found credited inthe books maintained by the assessees. It is true the opinion ofthe Assessing Officer for not accepting the explanation offered by theassessees as not satisfactory is required to be based on properappreciation of material and other attending circumstances availableon record. The opinion of the Assessing Officer is required tobe formed objectively with reference to the material availableon record. Application of mind is the sine qua non for formingthe opinion. 16. In Sumati Dayal vs. Commissioner of Income Tax, Bangalore[1995 Supp. (2) SCC 453] this Court held: 16. In Sumati Dayal vs. Commissioner of Income Tax, Bangalore[1995 Supp. (2) SCC 453] this Court held: “In all cases in which a receipt is sought to be taxed income, theburden lies on the Department to prove that it is within the taxingprovision and if a receipt is in the nature of income, “the burden ofproving that it is not taxable because it falls within the exemptionprovided by the Act lies upon the assessee. But, in view of Section68 of the Act, where any sum is found credited in the books of theassessee for any previous year the same may be charged to incometax as the income of the assessee of that previous year if theexplanation offered by the assessee about the nature and sourcethereof is, in the opinion of the Assessing Officer, not satisfactory. Insuch a case there is, prima face, evidence against the assessee, viz.,the receipt of money, and if he fails to rebut, the said evidence beingunrebutted, can be used against him by holding that it was a receiptof an income nature.” . . . . . . . . . 23. It is true that even after rejecting the explanation given bythe assessees if found unacceptable, the crucial aspect whetheron the facts and circumstances of the case it should beinferred the sums credited in the books of the assesseesconstituted income of the previous year must receive theconsideration of the authorities provided the assessees rebut theevidence and the inference drawn to reject the explanation offeredas unsatisfactory. We are required to notice that Section 68 of theAct itself provides, where any sum is found credited in the books ofthe assessees for any previous year the same may be charged toincome tax as the income of the assessees of the previous year if theexplanation offered by the assessees about the nature and source of such sums found credited in the books of the assessees is in theopinion of the Assessing Officer not satisfactory. Such opinion founditself constitutes a prima facie evidence against the assessees, viz.,the receipt of money, and if the assesses fail to rebut the saidevidence the same can be used against the assessees by holdingthat it was a receipt of income nature. In the case in hand theauthorities concurrently found the explanation offered by theassesses unacceptable. The authorities upheld the opinion formedby the Assessing Officer that the explanation offered was notsatisfactory. The assessees did not take the plea that even ifthe explanation is not acceptable the material and attendingcircumstances available on record do not justify the sumfound credited in the books to be treated as a receipt of anincome nature. The burden in this regard was on the assessees.No such attempt has been made before any authority. All thedecisions cited and referred to hereinabove are required to beappreciated and understood in the light of the law declared by thisCourt in Sumati Dayal (supra).” [emphasis supplied] 16.Section 68 of the Act, 1961 provides that where any sum is found credited in the books of an assessee maintained for any previous year and the assesseeoffers no explanationabout thenature and source thereof or theexplanation offered by him is not, in the opinion of the assessing officer,satisfactory, the sum so credited may be charged to income tax as theincome of the assessee of that previous year. In the present set of facts, wefind that the assessee has disclosed complete details of bank accounts,cheques issued and the cash received from those to whom accommodationentries were given, which fact has not been disputed by the appellant/department and, instead, brokerage/commission on the aforesaidcash deposit of Rs.166.59 crores was determined as income of the assesseefor giving accommodation entries. the books of an assessee maintained for any previous year and the assesseeoffers no explanationabout thenature and source thereof or theexplanation offered by him is not, in the opinion of the assessing officer,satisfactory, the sum so credited may be charged to income tax as theincome of the assessee of that previous year. In the present set of facts, wefind that the assessee has disclosed complete details of bank accounts,cheques issued and the cash received from those to whom accommodationentries were given, which fact has not been disputed by the appellant/department and, instead, brokerage/commission on the aforesaidcash deposit of Rs.166.59 crores was determined as income of the assesseefor giving accommodation entries. 17.Thus, once the source of cash deposit was disclosed and in respect of suchcash deposit the respondent/assessee was treated as accommodation entryprovider and accordingly brokerage/commission on aforesaid cash depositwas determined as income of the assessee for providing service in the form ofaccommodation entry, then Section 68 of the Act, 1961 becomesuninvokable on facts of the present case.cash deposit the respondent/assessee was treated as accommodation entryprovider and accordingly brokerage/commission on aforesaid cash depositwas determined as income of the assessee for providing service in the form ofaccommodation entry, then Section 68 of the Act, 1961 becomesuninvokable on facts of the present case. 18.In the present set of facts we find that there being cash deposit of Rs.166.59crores in the bank accounts, there was prima facie evidence against theassessee i.e. receipt of money. The assessee explained it that cash weregiven by those to whom cheques of equal amount were issued.He furnishedcomplete details of cheques issued and the cash deposits. The assessee washeld to be sub-broker of the principal broker Praveen Kumar Agarwalengaged in providing accommodation entries to Ketan Parekh Group. Onthese facts the assessing officer himself has treated the activity of therespondent/assessee as accommodation entry provider on brokerage/commission basis and, accordingly, determined the income of therespondent/assessee @ 2% as brokerage on entire cash deposits ofRs.166.59 crores. Further, the Assessing Officer has not inferred that thesum credited in the books of the assessee constituted income of thecrores in the bank accounts, there was prima facie evidence against theassessee i.e. receipt of money. The assessee explained it that cash weregiven by those to whom cheques of equal amount were issued.He furnishedcomplete details of cheques issued and the cash deposits. The assessee washeld to be sub-broker of the principal broker Praveen Kumar Agarwalengaged in providing accommodation entries to Ketan Parekh Group. Onthese facts the assessing officer himself has treated the activity of therespondent/assessee as accommodation entry provider on brokerage/commission basis and, accordingly, determined the income of therespondent/assessee @ 2% as brokerage on entire cash deposits ofRs.166.59 crores. Further, the Assessing Officer has not inferred that thesum credited in the books of the assessee constituted income of the previous year and instead held that the income of therespondent/assessee is 2% of the cash deposits, as brokerage. Thisleads to an irresistible conclusion that cash deposits of Rs.166.59 crore wasnot receipt of income of the assessee and instead his income wasbrokerage/commission @ 2% of cash deposits as accommodation entryprovider. Under the circumstances, the addition of Rs.166.59 crores in thehands of the respondent/assessee under Section 68 of the Act, 1961 wascorrectly set aside by the ITAT. 19.Learned Counsel for the appellant has heavily relied upon paragraphs 9.2and 9.3 of the judgment of NRA Iron And Steel Private Limited (supra).and 9.3 of the judgment of NRA Iron And Steel Private Limited (supra). previous year and instead held that the income of therespondent/assessee is 2% of the cash deposits, as brokerage. Thisleads to an irresistible conclusion that cash deposits of Rs.166.59 crore wasnot receipt of income of the assessee and instead his income wasbrokerage/commission @ 2% of cash deposits as accommodation entryprovider. Under the circumstances, the addition of Rs.166.59 crores in thehands of the respondent/assessee under Section 68 of the Act, 1961 wascorrectly set aside by the ITAT. 19.Learned Counsel for the appellant has heavily relied upon paragraphs 9.2and 9.3 of the judgment of NRA Iron And Steel Private Limited (supra).and 9.3 of the judgment of NRA Iron And Steel Private Limited (supra). 20.We find that in paragraph 9.2 of the judgment in NRA Iron And Steel PrivateLimited (supra) the Hon’ble Supreme Court has only reproduced Section 68of the Act, 1961. In paragraph 9.3 the Hon’ble Supreme Court has held thatthe initial onus is on the assessee to establish by cogent evidence;genuineness of the transaction and creditworthiness of the investors underSection 68 of the Act, 1961 by submitting proof of identity of the creditors;capacity of creditors to advance money and genuineness of the transaction.On facts of the present case, we find that the facts disclosed by therespondent/assessee before the authorities as briefly noted/discussedabove, regarding cash deposits has not been disputed by the assessingofficer in the assessment order and instead he held that the assessee isengaged in providing accommodation entries by receiving cash and issuing cheques and accordingly he determined the income of therespondent/assessee from brokerage @ 2% on the cash deposits. Under thecircumstances, the addition made by the assessing officer under Section 68of the Act, 1961 was unsustainable. 21.In the case of Praveen Kumar Agarwal (principal broker), the ITAT held thateither 2% of the commission or the peak credits during the block period,whichever is higher, has to be taken as income. Therefore, the assesseesubmitted daily summary of cash for the period from 01.03.2004 to30.09.2005 for all the eight bank accounts before the ITAT which establishedthe peak credit on 7[th]June 2004 to be Rs.4,07,17,055/-.Brokerage/commission @ 2% on cash deposits was Rs.3,33,18,027/-.Therefore, the ITAT applied the ratio of its decision of the case of theprincipal broker to the case of the respondent/assessee (sub-broker) andaccordingly determined the aforesaid sum of Rs.4,07,17,055/- as income ofthe respondent/assessee as against the declared income of Rs.25,00,000/-.It has neither been argued nor shown to us that the decision of the ITAT inthe case of Praveen Kumar Agarwal (principal broker) has been interferedwith by the High Court. Therefore, the peak credit adopted by the ITAT todetermine income of the assessee does not require interference. 22.For all the above reasons afore-stated, all the substantial questions of laware answered in favour of the assessee and against the revenue. The appealbeing without merit, is hereby dismissed.are answered in favour of the assessee and against the revenue. The appealbeing without merit, is hereby dismissed. (SURYA PRAKASH KESARWANI, J.) (RAJARSHI BHARADWAJ, J.) S.Kumar / S.Das / As