TMI Blog2015 (7) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. Ad hoc disallowance at 20% of the expenses - Held that:- 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 right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. Dissatisfied with the action of the AO, assessee carried the matter before the CIT(A). He contended that after collecting the complete evidence from the bank including the details of cheque numbers it was gathered by him that he had received cheques from his clients in the business of providing the security. These cheques were discounted by him from the financier an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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) ₹ 1,03,751/-. Total of peak credit of cash deposits ₹ 3,82,685. G.P. on turnover (cash deposits) after 14.07.2006 in current account @ 15.58% on ₹ 18,52,810/- 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 depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ofRs.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 facto ..... X X X X Extracts X X X X X X X X Extracts X X X X
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