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2015 (7) TMI 863 - ITAT AHMEDABAD

2015 (7) TMI 863 - ITAT AHMEDABAD - TMI - Unexplained deposit in bank account - CIT(A) after applying the peak credit theory on the bank account restricted this addition - Held that:- 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, 20 .....

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₹ 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% .....

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he 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. We do not find any reason to interfere with the order of CIT(A). Both the grounds are rejected. Decided against assessee. - ITA No. 1399/Ahd/201 .....

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und a single issue which is common groundno.3 of the CO filed by the assessee. The common issue in both these grounds is that ld. AO has made an addition of ₹ 68,51,309/- on account of unexplained deposit in bank account. The ld. CIT(A) after applying the peak credit theory on the bank account restricted this addition to ₹ 9,41,557/-. The Revenue is aggrieved with deletion of addition whereas assessee is aggrieved with confirmation of addition at ₹ 9,41,557/-. 3. The brief fact .....

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he accounts ld. AO has noticed 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 thesavings 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 .....

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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 confirmations from them. He failed to submit. Accordingly ld. AO rejected the contention of assessee. He worked out intra deposits and withdrawals of these bank accounts and made addition of ₹ 68,51,309/- under section 68 of the Income-tax Act, 1961 (hereafter the Act). 4 .....

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t appellate authority has appreciated the contention of the assessee but did not concur with his submissions. The ld. CIT(A) has observed that assessee failed to prove the fact that he has received cash by discounting of his cheques from the financiers. The ld. first appellate authority, however, has observed that the detail analysis of the bank accounts would indicate that these bank accounts were used by the assessee for making payments as well as depositing cheques and cash. According the ld. .....

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ting of cheques, is also not supported by any confirmation from the financiers, however, a detailed study of the two bank accounts show that there is debt of equal or more or less of the same amounts of the cash deposited in the bank accounts at regular intervals, which lends some credence to the submission of the appellant that he has been arranging funds from the financiers in cash against cheques discounted by them. The assessing officer has rejected the alternate submission of the appellant .....

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ave 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 depos .....

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,52,810/- and after 27.1.2007 in savings a/c @ 15.58% on ₹ 17,34,300, that is @ 15.58% on ₹ 35,87,110/- ₹ 5,58,872/-. In view that 'peak'credit of cash deposits in the two accounts has been taken, the G>P. element in the cash deposits (turnover) in the two accounts upto the date of 'peak' credit is included in the amount of ₹ 3,82,685/-. I, therefore, uphold the addition made on account of unexplained cash deposits in the two bank accounts to the extent .....

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ssessee relied upon the order of CIT(A) as well as he put reliance upon the decision of Hon'ble Gujarat High Court in the case of CIT vs. Tirupati Construction Co. 55 taxmann.com 308 (Gujarat). This decision has been rendered on 3rd November, 2014 in tax appeal Nos. 1010 to 1012 of 2014. He placed on record a copy of the Hon'ble High Court'sdecision. In this case during the course of search a paper exhibiting debit and credit entries was found. The CIT(A) applied peak credit theory. .....

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re deposited. There is a complete chain of deposit and withdrawal. 7. On the strength of these details he submitted that ld. CIT(A) has rightly applied the peak theory and has worked out the profit element. 8. We have duly considered the 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 .....

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e. 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 elem .....

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investment in the shape of peak credit. This factor can take care of both these issues. 9. 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 content .....

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