TMI Blog2015 (2) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... below and delete the addition of ₹ 10 lacs, the addition would now be restricted to ₹ 7,35,000/- - Decided partly in favour of assessee. Addition on account of higher closing stock - return filed under section 44AF - Held that:- The addition is wholly unjustified. Since the return is filed under section 44AF of the Act, the assessee need not to maintain any books of account. Whatsoever cash book or ledger was prepared by the assessee, was not believed by the Assessing Officer while making the addition on account of unexplained cash with Kotak Mahindra Bank, Rajpura. In the balance sheet filed with the return of income, lesser closing stock was shown but it appears that inadvertently the assessee has maintained wrong figure in the income tax return of the closing stock. Therefore, on such basis, the addition need not to be made against the assessee. Further when income is declared on presumptive basis under section 44AF of the Act, no further trading addition should be made against the assessee. - Decided in favour of assessee. Interest under section 234B which is mandatory and consequential in nature. This ground of appeal of the assessee is, therefore, dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts case. The assessee explained before the Assessing Officer that he has made total sales of ₹ 39,00,875/- and earned net profit after deducting all expenses. The net profit is about 5.15% approximately, which is higher than the prescribed percentage under section 44AF of the Act for the requirement of books. It is explained that the assessee maintained only cash book and ledger. The assessee did not produce books of account or any other document other than copies of debtors and creditors account. The Assessing Officer obtained copy of the bank account of the assessee with Kotak Mahjindra Bank, Rajpura from the bank and explanation of the assessee was sought to furnish all the entries contained therein. The assessee explained that the bank account with Kotak Mahjindra Bank, Rajpura has been shown in the books of account but due to mistake the balance was transferred to expenses account instead of the balance being taken to balance sheet. The printout of computerized cash book and ledger was also produced. The Assessing Officer noted that the perusal of the same shows that there is credit entry of ₹ 3010/- on 31.3.2008 in the miscellaneous income account with the narrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited in the bank account and also withdrawn the same were shown in the cash book also. Therefore, it was the rotation of money of the assessee only and since the assessee did not maintain any regular books of account and income was offered in the return of income under section 44AF of the Act. Therefore, the assessee need not to maintain books of account and addition is, therefore, wholly unjustified. He has relied upon the decision of the Hon'ble Punjab Haryana High Court in the case CIT Vs. Surinder Pal Anand, 242 CTR 61 in which it was held as under : Assessment being under s. 44AD, the assessee was not under obligation to explain individual entry of cash deposit in the bank unless such entry had no nexus with the gross receipts and therefore no addition under s. 68 was called for. 7. On the other hand, the learned D.R for the Revenue relied upon the orders of the authorities below and submitted that the assessee failed to disclose the bank account maintained with Kotak Mahindra Bank, Rajpura and the source of deposits was also not explained. Therefore, the addition is justified. 8. We have considered the rival submissions. It is not in dispute that the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Pal Anand (supra) would not support the case of the assessee because the assessee has not proved nexus of the cash deposited in the bank with the gross deposits. However, considering the fact that the assessee made small deposits in the bank account with Kotak Mahindra Bank, Rajpura on various dates and after depositing the cash to this account, the assessee also withdrawn the same amount either on the same day or on the next day, would disclose that the assessee was having availability of the cash for further deposit in the same bank account maintained with Kotak Mahindra Bank, Rajpura. The A.O. has not brought any evidence on record to prove that the assessee has spent the amount withdrawn somewhere else. The theory of peak credit is not applicable in the case of the assessee because the assessee never accepted it to be unexplained money. Therefore, in the absence of complete details and considering the fact that the amount of cash was rotating in the bank account of the assessee with Kotak Mahindra Bank, Rajpura by making cash deposits and immediately withdrawing the same would show that the entire cash deposits in the bank account may not be unexplained amount of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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