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2015 (7) TMI 324 - AT - Income TaxUnexplained deposit in bank account - CIT(A) after applying the peak credit theory on the bank account restricted part addition - Held that:- On an analysis of the account ld. first appellate authority had arrived at a conclusion that the account was used for the purpose of some business, because there are debit and credit entries in a systematic manner. The debit of equal or more or less of the same amount of the cash deposit in the bank account at regular interval is available. The total of the cash deposits in such circumstances cannot be considered as unexplained income of the assessee. The ld. CIT(A) has worked out the peak credit in both the accounts. These credits are on 14th July, 2006 in the current account and 27th January, 2007. He worked out the total of the cash deposits and thereafter computed the GP on turnover of cash deposits after 14th July, 2006 in current account and after 27th January, 2007 in savings account. The CIT(A) has worked out the GP element in these transactions. He has added the profit earned by the assessee in the business after working out the peak credit. In other words the maximum amount of the peak deposits is ₹ 3,82,688/-. This was considered as representing the investment in this activity which has been carried out with these two bank and thereafter worked out the profit element. He made an addition of ₹ 9,41,557/- which is total of Rs, 5,58,872/- + ₹ 3,82,685/- i.e. profit on the turnover + alleged initial investment in the shape of peak credit. This factor can take care of both these issues. The assessee in his C.O. has submitted that net profit shown by him is 3.36% in AY 2007-08. The maximum profit shown by him is 5.05% in AY 2010-2011 whereas the lowest is 1.94% in 2014-2015. Considering this subsequent history of the assessee the profit ought to be worked out by adopting a reasonable figure and not as high as 15.50% considered by the CIT(A). However, we do not see any merit in this contention of assessee because he is unable to support his claim with any authentic books of account. It is not discernible whether these net profits have been accepted in the scrutiny assessment or not. Considering the facts and circumstances of the case we do not find any reason to interfere in the order of CIT(A) - Decided against revenue and assessee. Disallowance of telephone and mobile expenditure,vehicle expenses, depreciation and petrol expenses - Held that:- assessee has failed to submit the supporting evidence in respect of these expenditures. The ld. AO has made an ad hoc disallowance at 20% of the expenses. The ld. first appellate authority has confirmed the disallowance. Since the assessee is running a proprietorship concern, element of personal benefits out of the use of these facilities i.e. phone(s) and car cannot be ruled out. The assessee was not maintaining any log book nor produced any other details, in support of his claim. Therefore, ld. revenue authorities have rightly disallowed the expenditure on an estimate basis - Decided against assessee.
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