TMI Blog2015 (4) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... imate of profit has to be made in the peculiar facts of the case. We are of the view that in the absence of books of account and other supporting evidence as against the net profit of 3.06 per cent. shown by the assessee the profit at 3.5 per cent. of the total estimated turnover would meet the ends of justice. - Decided partly in favour of assessee. Unaccounted sales - unexplained cash deposits in HDFC Bank - Held that:- It is an undisputed fact that the assessee had not disclosed the bank account in the return of income, however he has stated that the credit in the bank account represents the cash sales. The assessee also stated that the bank account was used for making payments of purchases and as a specimen he has placed on record the copy of confirmation of Poonam Proteins evidencing the payments made for purchases from the aforesaid bank account. The aforesaid confirmation of Poonam Proteins shows that the assessee has made payments from HDFC Bank on various occasions. This factual aspect could not be controverted by the Revenue by bringing any contrary material on record. As far as considering the aggregate credits of ₹ 22,12,915 as sales as submitted by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee carried the matter before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) vide order dated November 6, 2009 granted partial relief to the assessee. Aggrieved by the aforesaid order of the Commissioner of Income-tax (Appeals), the assessee is now in appeal before us and has raised the following grounds : (1) The learned Commissioner of Income-tax (Appeals), Surat has erred in confirming the order of the, Ward 5(1), Surat in making various additions to the extent of ₹ 23,08,949 in aggregate, on misleading, baseless, arbitrary and perverse observations, is contrary to law and facts of the case and hence, liable to be quashed. (2) The learned Commissioner of Income-tax (Appeals), Surat has failed to see that the has made addition purely on estimation of the net profit ratio at 5 per cent. as against 3 per cent. as well as the turnover at ₹ 65,00,000 as against ₹ 53,85,639 offered by the assessee, without considering in the right perspectives the past records of the assessee as well the evidences/documents/materials/explanations furnished through various written submissions (attached as forming part of the statement of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was of the view that the estimation of net profit at 5 per cent. is very reasonable in the line of business of assessee. He thus estimated the assessee's sales at ₹ 65 lakhs and the net profit at 5 per cent. was worked out at ₹ 3,25,000 and added to the income. Aggrieved by the order of the Assessing Officer, the assessee carried the matter before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) after considering the submissions of the assessee granted partial relief to the assessee by holding as under : The second grievance has two points of agitation. In absence of any definitive evidence for turnover-which the appellant himself had given on estimate basis, ostensibly on account of destruction of books and other relevant records-the Assessing Officer show-caused the appellant for enhancement of turnover to ₹ 65,00,000 in place of ₹ 53,85,639 (The claimed precise and accurate amount is surely intriguing in the absence of records). The Assessing Officer noted that in the assessment year 2004-05 the appellant had shown ₹ 60,38,392 as turnover. Secondly new assets and equipment were purchased. The sale of farsan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffered the same as turnover. He therefore submitted that in view of the peculiar facts of the case, the net profit declared by the assessee was fair and did not require any enhancement. The learned Departmental representative on the other hand submitted that though the assessee has claimed to have worked out the income on the basis of figures of sales and purchase shown in the returns filed under Gujarat VAT but the copies of the same were not furnished before the Assessing Officer, though the Assessing Officer had called for the same. He further submitted that when majority of the sales are in cash only the credit in the bank account could not be accepted as the total turnover of the business. He further pointed out that the assessee was also having current account with HDFC Bank but no part of credits from the aforesaid bank has been shown turnover by the assessee. In view of the aforesaid facts, he submitted that the Assessing Officer was fully justified in rejecting the books of account and estimating the profit of 5 per cent. 7. We have heard the rival submissions and perused the material on record. It is an undisputed fact that the books of account were not produced by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 (credits of bank account). He further noticed that the assessee has not substantiated with support of documents that the credits related to his cash sales. He thus by invoking the provisions of section 68/ 69/69A/69B held the amount of deposits of ₹ 21,12,915 to be income of the assessee and made addition thereof. Aggrieved by the order of the Assessing Officer the assessee carried the matter before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) upheld the order of the Assessing Officer by holding as under : The third point relates to an addition of ₹ 22,12,915 treating the turnover/sale of good as unexplained cash credit, appearing in HDFC bank account. The appellant was asked to furnish full details and explain the same. The appellant stated that cash deposited in the bank was used for payment for purchases and also agreed to furnish the confirmation of purchase parties. The appellant also agreed to offer the income at 3 per cent. considering all the credits as his sales. The Assessing officer dissatisfied with appellant's explanation went on to make addition as unexplained cash credit for the detailed reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusively for the payment of bills for purchase of goods to various parties. The bank account was used with a view to make payments by account payee cheque to the parties supplying the goods so that the assessee could make immediate payments. He further submitted that the omission to disclose the bank account was not intentional as the assessee has shown the bank account in the balance sheet in earlier years and subsequent years. The learned authorised representative thus submitted that the entire credits since represents the sales. He further submitted that the entire sales cannot be considered as this income but only the net profit embedded in it can be considered as income. Since the assessee has shown the net profit of 3 per cent. on sales, only the profit portion be considered as income. He further submitted that the Commissioner of Income-tax (Appeals) has noted that Poonam Proteins from whom the assessee had made purchases has not confirmed the transactions and therefore the assessee's submissions of making purchases cannot be accepted. The learned authorised representative pointed out to the confirmation placed at page 53 of the paper book which contains the confirmation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion being of ₹ 3,25,000 which was made by estimating profit on estimated sales of ₹ 65 lakhs and the second addition of ₹ 22,12,915 which was made for unexplained cash deposits in HDFC Bank account. The vide his order dated November 9, 2012 cancelled the penalty on the estimated profits on estimated sales of ₹ 65 lakhs but however upheld the penalty on the cash deposits in HDFC Bank account. 15. Before us the learned authorised representative submitted that the HDFC Bank account were shown regularly by the assessee in the balance sheet in all the earlier years and subsequent years and the omission to disclose the bank account was due to the disturbed state of mind on account of floods. The omission was inadvertent and without any motive to conceal the turnover. He further submitted that during the course of assessment proceedings, the assessee has accepted the credits in bank account to be sales and also offered the same to be taxed at 3 per cent. of the turnover. He thus submitted that there was no mala fide intention on the part of the assessee and therefore the penalty be deleted. 16. The learned Departmental representative on the other hand support ..... 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