Bhaiyalal Shyam Behari v. CIT

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The Tax Publishers2005 TaxPub(DT) 1235 (All-HC) : (2005) 006 (II) ITCL 0035 : (2005) 276 ITR 0038 : (2006) 202 CTR 0515 Bhaiyalal Shyam Behari v. CIT () INCOME TAX --Income from undisclosed source----ADDITION UNDER SECTION 68Benefit of peak credit--Certain amount of cash credits standing in the name of various persons were added in the income of the assessee by invoking section 68. Before the Tribunal an alternative plea was taken by the assessee that in the event of cash credits are treated to be unexplained then only peak credit is to be added. The Tribunal negativated the said plea. Held: For adjudicating upon the plea of peak credit, the factual foundation has to be laid by the assessee. He has to own all cash credit entries in the books of account and only thereafter the question of peak credit can be raised. Income Tax Act, 1961 s.68 Bhaiyalal Shyam Behari v. CIT In the Allahabad High Court R.K. Agrawal & Prakash Krishna, JJ. ITR No. 226 of 1988 19 January, 2005 Counsel : Krishna Agrawal, for the Assessee Shambhu Chopra, for the Commissioner JUDGMENT By the Court 1. The Income Tax Appellate Tribunal, Allahabad, has referred the following question under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), for the opinion to this court 'Whether in view of the fact that the additions towards unexplained deposits have been made by treating the transactions as non-genuine and as such by implication the deposits have been treated to have been made by the applicant and in these circumstances on the consideration of the entries of deposits and payment the peak amount should only be added ? 2. The reference relates to the assessment year 1979-80. 3. Briefly stated the facts giving rise to the present reference are as under : 4. During the assessment year in question certain amount of cash credits standing in the names of various persons were added in the income of the applicant by invoking the provision of section 68 of the Act. Before the Tribunal the alternative plea was taken by the applicant that in the event deposit/cash credits are treated to be unexplained then only peak credit is to be added. The submission has been negatived by the Tribunal in the following words : '13. Let us suppose that in the account of A, there was shown a deposit of Rs. 10,000 on 1-4-1978, and in the account of B there was a deposit of Rs. 10,000 on 1-12-1978. The assessee has not established the genuineness of these two deposits. Now according to the assessee in case there was a withdrawal of Rs. 10,000 in the account of A prior to the deposit of Rs. 10,000 in the account of B then no separate addition should be resorted to on account of unexplained deposit in the account of B. According to the assessee, it should be presumed that the deposit in the account of B was made out of the funds which were available to the assessee after the withdrawal of the amount from the account of A. We cannot subscribe to this point of view. According to us, if the assessee is not able to prove the genuineness of the deposit in the account of B, a separate addition in respect of that will be required to be made. As per the provisions of section 68, where any sum is found credited in the books of an assessee, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory, the sum so credited is to be charged to income-tax as the income of the assessee. Hence, it is for the assessee to establish the source of the deposit in the account of B. If the assessee admits that the alleged deposit in the account of A was not genuine and, in fact, it was the assessees own money which had been introduced in the books in the garb of a loan from A and hence when this amount was available to the assessee for being introduced as a fresh deposit in the account of B then it may be possible to accept the contention of the assessee. But in case the assessee all along maintains that the various loans are genuine then we fail to understand as to how the assessee can put forward the claim that separate additions for the unexplained cash credit in different accounts should not be made. When the assessee himself does not contend that the deposit made in the account of B is out of prior withdrawal made in the account of A' how does the assessee expect the department to subscribe to this point of view. We hence reject this contention of the assessee.' 5. Heard Sri Krishna Agrawal, learned counsel for the applicant and Sri Shambhu Chopra learned standing counsel for the revenue. 6. The applicant submitted that as the amount of cash credit has been treated to tax by invoking the provisions of section 68 of the Act and the said amount have been treated as income from the unexplained source, the applicant was entitled to take up a plea of addition of the aforesaid peak credit as the entire deposits have been treated to be income of the applicant. The contention is wholly misconceived. For adjudicating upon the plea of peak credit the factual foundation has to be laid by the assessee. He has to own all cash credit entries in the books of account and only thereafter the question of peak credit can be raised. As in the present case the amount of cash credits were standing in the names of different persons which all along the applicant had been claiming to be genuine deposit, withdrawal/payment of the amount to different set of persons during the previous years would not at all entitle the applicant to claim benefit of peak credit. 7. In this view of the matter we do not find any legal infirmity in the order of the Tribunal. We answer the aforesaid questions referred to us in the negative, i.e, in favour of the revenue and against the assessee. There will be however, no order as to costs. OPEN SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2005 TaxPub(DT) 1235 (All-HC) : (2005) 006 (II) ITCL 0035 : (2005) 276 ITR 0038 : (2006) 202 CTR 0515

Bhaiyalal Shyam Behari v. CIT ()

INCOME TAX

--Income from undisclosed source----ADDITION UNDER SECTION 68Benefit of peak credit--Certain amount of cash credits standing in the name of various persons were added in the income of the assessee by invoking section 68. Before the Tribunal an alternative plea was taken by the assessee that in the event of cash credits are treated to be unexplained then only peak credit is to be added. The Tribunal negativated the said plea. Held: For adjudicating upon the plea of peak credit, the factual foundation has to be laid by the assessee. He has to own all cash credit entries in the books of account and only thereafter the question of peak credit can be raised.

Income Tax Act, 1961 s.68

Bhaiyalal Shyam Behari v. CIT

In the Allahabad High Court R.K. Agrawal & Prakash Krishna, JJ.

ITR No. 226 of 1988 19 January, 2005

Counsel : Krishna Agrawal, for the Assessee Shambhu Chopra, for the Commissioner

JUDGMENT

By the Court

1. The Income Tax Appellate Tribunal, Allahabad, has referred the following question under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), for the opinion to this court

'Whether in view of the fact that the additions towards unexplained deposits have been made by treating the transactions as non-genuine and as such by implication the deposits have been treated to have been made by the applicant and in these circumstances on the consideration of the entries of deposits and payment the peak amount should only be added ?

2. The reference relates to the assessment year 1979-80.

3. Briefly stated the facts giving rise to the present reference are as under :

4. During the assessment year in question certain amount of cash credits standing in the names of various persons were added in the income of the applicant by invoking the provision of section 68 of the Act. Before the Tribunal the alternative plea was taken by the applicant that in the event deposit/cash credits are treated to be unexplained then only peak credit is to be added. The submission has been negatived by the Tribunal in the following words :

'13. Let us suppose that in the account of A, there was shown a deposit of Rs. 10,000 on 1-4-1978, and in the account of B there was a deposit of Rs. 10,000 on 1-12-1978. The assessee has not established the genuineness of these two deposits. Now according to the assessee in case there was a withdrawal of Rs. 10,000 in the account of A prior to the deposit of Rs. 10,000 in the account of B then no separate addition should be resorted to on account of unexplained deposit in the account of B. According to the assessee, it should be presumed that the deposit in the account of B was made out of the funds which were available to the assessee after the withdrawal of the amount from the account of A. We cannot subscribe to this point of view. According to us, if the assessee is not able to prove the genuineness of the deposit in the account of B, a separate addition in respect of that will be required to be made. As per the provisions of section 68, where any sum is found credited in the books of an assessee, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory, the sum so credited is to be charged to income-tax as the income of the assessee. Hence, it is for the assessee to establish the source of the deposit in the account of B. If the assessee admits that the alleged deposit in the account of A was not genuine and, in fact, it was the assessees own money which had been introduced in the books in the garb of a loan from A and hence when this amount was available to the assessee for being introduced as a fresh deposit in the account of B then it may be possible to accept the contention of the assessee. But in case the assessee all along maintains that the various loans are genuine then we fail to understand as to how the assessee can put forward the claim that separate additions for the unexplained cash credit in different accounts should not be made. When the assessee himself does not contend that the deposit made in the account of B is out of prior withdrawal made in the account of A' how does the assessee expect the department to subscribe to this point of view. We hence reject this contention of the assessee.'

5. Heard Sri Krishna Agrawal, learned counsel for the applicant and Sri Shambhu Chopra learned standing counsel for the revenue.

6. The applicant submitted that as the amount of cash credit has been treated to tax by invoking the provisions of section 68 of the Act and the said amount have been treated as income from the unexplained source, the applicant was entitled to take up a plea of addition of the aforesaid peak credit as the entire deposits have been treated to be income of the applicant. The contention is wholly misconceived. For adjudicating upon the plea of peak credit the factual foundation has to be laid by the assessee. He has to own all cash credit entries in the books of account and only thereafter the question of peak credit can be raised. As in the present case the amount of cash credits were standing in the names of different persons which all along the applicant had been claiming to be genuine deposit, withdrawal/payment of the amount to different set of persons during the previous years would not at all entitle the applicant to claim benefit of peak credit.

7. In this view of the matter we do not find any legal infirmity in the order of the Tribunal. We answer the aforesaid questions referred to us in the negative, i.e, in favour of the revenue and against the assessee. There will be however, no order as to costs.

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