TMI Blog2015 (7) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... king 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two bank accounts with Dena Bank, Nanpura, Surat. Account No.CA 25397 was current account and a/c SB No.29271 was a savings bank account. The assessee has made deposits of ₹ 1,12,93,090/- in the current account and ₹ 28,41,085 in the savings bank account. Thus a total deposits of ₹ 1,41,34,175/- was made by the assessee in these two accounts during the accounting period relevant to this AY. On an analysis of the account the ld. AO found that a sum of ₹ 61,79,940/- was deposited by the assessee in cash on various dates. He directed the assessee to explain the source of deposits. The assessee contended that he was running a textile trading business during the accounting years relevant to AYs 2003-04 2004-05. The said business was discontinued and all the debtors and creditors of that business were transferred to his personal balance sheet. He received payment from the debtors during the previous year and also paid the amount to the creditors. The assessee has submitted copy of the profit and loss account, balance sheet, audit report, service tax receipts etc. The AO has directed the assessee to submit the list of creditors as well as debtors and confirmation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the withdrawals made from the two bank accounts show that the cheques have been issued to different parties. The assessing officer has however, while rejecting the above alternate submission of the appellant, has not explained as to how when the cheques have been issued to different parties, representing the debits in the above two accounts the same will have a bearing the peak of the cash deposits, if it is so accepted. 5.3 In view of the discussion made above, I hold that the entire deposits cannot be taken as income of the appellant, as the two bank accounts wherein the cash deposits have been made also show debits of regular intervals. Therefore, in the fitness of things, it will be appropriate to take the peak of the cash deposits in the above two bank accounts and the gross profit declared in the return of income on the cash deposits appearing in the two accounts subsequent to the date of peak credit. The position of the same, as verified during the course of appellate proceedings, is as follows:- (i) CA A/c No.25397 peak credit of cash deposits (14.07.2006) ₹ 2,78,934/-, (ii) Savings A/C No.29271 peak credit of cash deposits (27.1.2007) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival contentions and gone through the record carefully. The ld. first appellate authority has rejected both the contentions of the assessee that he has received the amounts from his debtors from discontinued business in textile trading. The ld. CIT(A) has also rejected the contention that assessee has discounted the cheques from the financiers received in respect of his business of providing security services. However 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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