TMI Blog2013 (12) TMI 1714X X X X Extracts X X X X X X X X Extracts X X X X ..... rried out by Income-tax Department on 08-12-2009 and on subsequent dates on Shashi Kant Khetan Group. During the course of search, five bank accounts in the name of assessee's proprietorship concerns, namely M/s. Om Suppliers, Ms. Balaji Garments, M/s. Ambika Traders and M/s. Triangle Trading were found. Apart from the above, assessee was also owned three more bank accounts in the property concern, namely, M/s. Annapurna Trading, M/s. Rajat Enterprises and M/s. Venus Enterprises. During the course of search, the statement of the assessee was recorded and it was admitted by him that all his proprietor concerns were engaged in the business of providing accommodation entries to various parties in lieu of commission income @ 0.50% of the total cash deposit. In these undisclosed bank accounts, the assessee in AY 2009-10 has given the working of peak balance of undisclosed bank account at ₹ 10,81,450/- and the relevant para of the Assessing Officer reads as under:-- Working of peak balance on undisclosed bank accounts The initial cash deposit in the aforesaid account was made out of my past savings. Other than the initial cash deposits, no other deposits in the account re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osits 3. Similarly, for AY 2010-11, the assessee has given the peak working as under:-- Working of peak balance on undisclosed bank accounts The initial cash deposit in the aforesaid account was made out of my past savings. Other than the initial cash deposits, no other deposits in the account represent my money. However, over the period some part of the undisclosed commission income got accumulated in the bank accounts. I categorically submit that no withdrawals in the account represents my own investments or drawings. Thus, peak balance has been considered as higher of initial cash deposits in the bank and the closing balance (being amount seized by the Income Tax Department during the search). Thus the peak balance has been calculated as under:-- Thus my peak balance comes to ₹ 10,81,450-. It can be seen that the bank account contain substantial deposits and withdrawal on difference dates, however, the deposits in a particular account other than the initial deposit referred above was lying in my account for not more than two working days, which is the period of rotation of funds. Thus, my own funds in the account can only be considered as peak balance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be reached to ultimate beneficiaries. In the bank accounts the cheques were also deposited which were received by the appellant from the persons working in the chain of providing accommodation entries. It is claimed by the appellant that he was receiving the commission for the services rendered to the beneficiaries for providing book entries and the commission was charged only on the amount of cash deposits and the rate varies from 25p to 50p. In the course of search operation, the appellant disclosed commission income @ 0.50% on the amount of cash deposited in the undisclosed bank accounts and same was shown in the return of income filed for the year under consideration. During the course of assessment proceedings, the AO asked various details from the appellant like, source of cash deposited in the bank accounts, name and addresses of the immediate and ultimate beneficiaries and the name and addresses of the persons from whom cash and cheques were received by him. The AO also asked as why provisions of section 68 of the Act should not be invoked. In response, it was submitted before the AO that the appellant has not maintained any books of account or records of the persons f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kol 2009, CIT v. Praveen Kumar Agarwal, IT(SS) A. No. 61 74 Kol/2003 and CIT v. Loknath Prasad Gupta, IT(SS)A No. 185 190/Kol/2003, wherein on similar issue the Hon'ble ITAT, Kolkata upheld the addition to the income by combined peak credit theory. I am of the opinion that the AO was justified in rejecting the peak amount worked out by the appellant because it was nothing but the amount of initial deposits made in the undisclosed account. He has not considered all the entries of the bank accounts to arrive on the figure of peak. Under the circumstances, I find no reason to disturb the peak amount arrived by the AO to make the addition to the income of the appellant and, therefore, the action of the AO making addition of ₹ 5,05,000/- is upheld. I am also not inclined to agree with the submission of the appellant that if once the AO has added peak credit, then the commission income cannot be added to the income of appellant. There is no dispute on the fact that the appellant had earned commission income which was admitted by him and accordingly also disclosed in the return of income. In view of above, the addition on account of commission income is also confirmed. The g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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