ACIT, CENTRAL CIRCLE-2, NEW DELHI vs. VGRM INFRASTRUCTURE & AMUSEMENT P.LTD, NEW DELHI

ORDER

PER ANUBHAV SHARMA, JM:

1. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the order of assessment framed u/s 143(3) of the Act by the Income Tax Officer, Ward-26(3), New Delhi at an income of Rs. 62,98,970/- as against returned income of Rs. 2,85,720/-.

2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the order of assessment by failing to appreciate that assessment framed was without jurisdiction as notice issued u/s 143(2) of the Act was beyond the period stipulated under the Act.

3. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the addition of Rs. 60,13,252/- u/s 68 of the Act by failing to appreciate that: 3.1 Sum of Rs. 60,00,000/- was received by assessee from M/s Optiemus Infracom Ltd. through banking channels as advance for syndication of land from various agriculturists. 3.2 During the course of the assessment, appellant has duly furnished complete documentary evidences in form of copy of ITR, computation of income, bank statement, cash flow statements showing withdrawal and deposit in his bank account and also the copy of the ITR, balance sheet and confirmation of the parties from whom it has received the advance. 3.3 The assessee had duly discharged his initial onus and in the absence of any adverse material brought on record in rebuttal, the addition made was untenable and unsustainable in law.

3.4 Addition made is entirely arbitrary and is based on mere speculation, surmises and conjectures and without there being any adverse material, in rebuttal to the evidence tendered by the assessee, as such, addition made and sustained is per-se legally invalid and is vitiated. 3.5 The deal with the agriculturists could not materialize as such, sum withdrawn from the bank account was deposited in the bank account of the assessee and sum was refunded through banking channels to the persons from whom advance has been received.

3. Heard and perused the record. The relevant findings of the ld.CIT(A) bring forth the case of the Revenue as well as of the assessee and the same is reproduced below:-

“6. I have considered the facts of the case and gone through the submissions of appellant. As it is clear from the perusal of bank statement that in addition to cash deposits of Rs.3,49,50,000/-, there are several entries of deposits and withdrawals through cheques and RTGS in the appellant's saving bank account. As mentioned by AO in his report, appellant firstly claimed these entries of bank account as loans and advances from different persons but later on changed his stand by claiming these amounts as advances from his clients for syndication of land from various agriculturists. As per appellant, money in the form of advances were given to different persdns but the deals/transactions could not be materialized because the market was badly down due to various reasons, therefore, money was deposited back. As per AO, the appellant failed to submit any evidence/details/copy of agreements or contracts which he would have made with his clients and agriculturists in support of his claim that he was a land syndicator and the deposits in his saving bank account were re-deposited by him after withdrawal of the same. On the other hand, appellant has been regularly claiming that he was land syndicator and all transactions of bank account have been made on account of syndication of land from the various agriculturists. However, appellant could not produce any documentary evidence in support of his claim that the transactions were made in connection with land syndication. All through the remand proceedings and appellate proceedings, appellant has failed to adduce a single documentary evidence for any transaction out of several transactions as claimed by him. Some examples can be given in this regard. From the entries of cash deposits and withdrawals in the bank, it can be seen that huge amounts to the extent of Rs.50,00,000/- each (withdrawals on 17.08.2010 and Rs.21,12,2010) and Rs.44,00,000/- (deposit on 13.10.2010) have been transacted for alleged land syndication but no supporting evidence such as copy of agreement, area of land, location of land, rates as decided, name and address of the corresponding party, land documents etc. have been furnished by appellant. Similarly, from the details, it can be seen that from the date of 01.07.2010 to 06.09.2010, total amount of Rs.1,03,50,000/- was withdrawn by appellant but not a single detail, as above, has been furnished by appellant to substantiate that these amounts were given for the purpose of land syndication. Similar is the position in the case of deposits made by appellant in his bank account. However, during the appellate proceedings, appellant has tried to explain the entry of Rs.60,00,000/- claiming it as advance received from M/s Optiemus Infracom Ltd. But except the name of the entity, no other evidence or details have been filed or submitted by appellant. In view of these facts, it is clear that the story made by appellant that he was land syndicator and transactions of bank account are related to this business, cannot be believed being just an afterthought. Therefore, in my opinion, the conclusions drawn by AO are fully justified. The credit entries of the bank account of appellant remain unexplained. Since there are unexplained withdrawals also along with unexplained deposits, the AO has adopted right course of action by taking only the peak balance for making addition. I, therefore, confirm the addition made by AO and dismiss the grounds taken by appellant.

4. As with regard to the addition of Rs. 60.13.252/- being peak credit in the bank account of the Assessee, ld. Counsel has submitted that the AO as well as the CIT(A) erred in making an addition of Rs.60,13,252/- under section 68 of the Act, treating it as peak credit in the assessee’s bank account as it was not part of peak credit because this is a credit through RTGS. In this regard there is no dispute to the proposition that only cash entries can be considered while calculating peak credit. In case of the assessee, the peak credit was computed out of cash withdrawals and deposits it was an amount of Rs. 1,21,60,000/- which was treated as explained and no addition was made by Ld. AO in respect of this amount. The credit of Rs.60,13,252/- dated 15.06.2010 arose from an RTGS receipt of Rs.60,00,000/- from M/s Optiemus Infracon Ltd. (P. No. 15 of PBK). Hence, the peak credit of Rs.60,13,252/- determined by the authorities was not on account of any cash deposit. Ld. Counsel has shown that the assessee submitted confirmations, bank statements, and ITRs of all parties, including M/s Optiemus, evidencing withdrawals and re-deposits (P. No. 23-54 of PBK). However, we find the AO ignored these documents in his order dated 31.03.2014, but he acknowledged them in the remand report dated 05.06.2015 (P. No. 63-64 of PBK). It is also not disputed that the AO did not doubt the genuineness, creditworthiness, or identity of the parties who advanced the funds.