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Facts
The assessee, a Document Writer, entered into an Agreement to Sell for agricultural land. The assessee received part sale consideration in cash which was deposited in the bank. Subsequently, the transaction failed, and the amount was returned. The AO made an addition under Section 68 for peak credit as the assessee could not substantiate the facts.
Held
The Tribunal noted that the assessee was unrepresented and could not properly explain the transactions before the lower authorities. The documentary evidence suggests the amount was returned. Therefore, the matter was restored to the AO for a denovo assessment.
Key Issues
Whether the addition made under Section 68 on account of peak credit for cash deposits, which were allegedly returned due to a failed transaction, is justified without giving the assessee an opportunity to explain properly.
Sections Cited
68, 144
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Income Tax Appellate Tribunal, DELHI BENCH “C”, DELHI
(A.Y.2011-12) Raju Upadhyay, B-5/19, Yamuna Vihar, Delhi 110053 ...... अपीलाथ�/Appellant PAN: AAQPU-9644-Q बनाम Vs. Income Tax Officer, .....�ितवादी/Respondent Ward-34(2), New Delhi अपीलाथ� �ारा/ Appellant by: S/Shri Shubham Jha & Sahil Upadhayay, Advocates �ितवादी�ारा/Respondent by: Shri B.S. Anand, Sr. DR सुनवाई क� ितिथ/ Date of hearing : 24/06/2025 घोषणा क� ितिथ/ Date of pronouncement : 24/06/2025 आदेश/ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-19, New Delhi (hereinafter referred to as 'the CIT(A)') dated 23.10.2015, for assessment year 2011-12.
Shri Shubham Jha, appearing on behalf of the assessee submits that the assessee is a Document Writer in the District Courts, Delhi. The assessee entered into an Agreement to Sell dated 05.05.2010 with Vardhman Business P. Ltd. for sale of agricultural land admeasuring 68 bigha 10 biswa (14.25 acre approximately) situated at Village Sabhapur, River Belt, Delhi for a total consideration of Rs. 10,45,50,000/-.
(A.Y.2011-12) On the same date the assessee entered into another Agreement to Sell with Maujam Ali for purchase of aforesaid land. The assessee received part sale consideration from Vardhman Business P. Ltd. in cash and the said amount was deposited in bank account of the assessee. However, the agreements entered into between parties by the assessee could not finally materialize and the transactions fell apart. The amount received by the assessee from Vardhman Business P. Ltd. was returned back. The cash deposited in the bank on various dates aggregating to Rs.11,28,00,000/- were returned by the assessee to Vardhman Business P. Ltd. However, during assessment proceedings, the assessee could not substantiate the facts as assessee was not represented by any tax consultant and the assessee was pleading his case himself. The AO made addition of the peak credit Rs.59,50,000/- in the bank account u/s. 68 of the Income Tax Act,1961(hereinafter referred to as ‘the Act’). Thereafter, the assessee carried the issue in appeal before the CIT(A), but remained unsuccessful as the assessee could not explain the nexus between the two transactions and further that the amount received from Vardhman Business P. Ltd. was returned back. The ld. Counsel for the assessee submitted that the bank statements of the assessee were already furnished before the Authorities below and from the bank statement it is evident that the amount received from Vardhman Business P. Ltd. on account of Agreement to Sell was returned back after the transaction failed to mature. The ld. Counsel further submitted that the assessee was representing his own case and since he was not well conversant with tax laws and proceedings he could not explain the transaction. He prayed for an opportunity to explain the transactions before the lower authorities.
Shri B.S. Anand, representing the department vehemently defended the impugned order and submitted that the assessee could neither explain the source of (A.Y.2011-12) cash deposits before the AO nor the CIT(A). No documentary evidence was furnished by the assessee to substantiate that amount received was returned by the assessee. He thus, prayed for upholding the impugned order and dismissing appeal of the assessee.
Both sides heard, orders of the authorities below examined. The solitary issue raised by the assessee in appeal is against the addition of Rs.59,50,00,00/- made u/s. 68 of the Act. A perusal of the assessment order reveals that the AO has invoked the provision of section 144 of the Act and has thereafter, applying peak credit theory has made addition u/s. 68 of the Act. The CIT(A) has upheld the addition. The assessee was not represented by any tax consultant and the assessee made submissions in person before the AO as well as the CIT(A). Ostensibly, the assessee was unable to explain his case before the lower authorities. The assessee has placed before us copies of Bank Statements, copies of Agreement to Sell, cancellation of agreements and sale deeds. Without commenting on merits of the addition and documents furnished by the assessee/appellant, we deem it appropriate to restore this matter back to the AO for denovo assessment after affording reasonable opportunity of making submissions to the assessee, in accordance with law.
The ld. Counsel for the assessee has provided following email id for service of notice to the assessee: “upadhayaysahil@gmail.com” The AO shall serve notice to the assessee on the said email id. The assessee shall respond to the notice(s) served by the AO, without fail.