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2015 (12) TMI 1367 - ITAT MUMBAI

2015 (12) TMI 1367 - ITAT MUMBAI - TMI - Additions of Bank deposits made u/s 68 - applicability of provisions of sec. 44AF - Held that:- In view of the fact that the deposits were found to have been made into the bank account from various cities, the theory of unexplained cash credit may not be applicable in view of the explanations furnished by the assessee. Hence, inclined to accept the claim of the assessee that the same represents business receipts. Accordingly, in my view, the provisions of .....

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case, the assessee has failed to show any record and hence, in my view, the provisions of sec. 44AF shall not have application in the facts and circumstances of the case.

Peak credit amount taken as income of the assessee - Held that:- As in the instant case, the assessee has not come out with details of actual sales and hence it cannot be said that the amount of ₹ 11,51,953/- represents the actual sales. The possibility of higher sales cannot be altogether ruled out. The asses .....

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(A) is set aside and the assessing officer is directed to sustain the addition to the extent stated above.In the result, the appeal filed by the assessee is partly allowed. - I.T.A. No.6262/Mum/2014 - Dated:- 6-8-2015 - SHRI B.R.BASKARAN, J. For The Appellant : Shri Suboth Ratnaparkhi For The Respondent : Shri K P R R Murty ORDER PER BENCH: The appeal filed by the assessee is directed against the order dated 01-08-2014 passed by Ld CIT(A)-22, Mumbai and it relates to the assessment year 2009-10. .....

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of dealing in Soaps and FMCG products on a small scale and the deposits made into the bank account represents the sale proceeds/collection from debtors. Accordingly it was submitted that the profit from the business activities may be estimated @ 5% of the turnover as per the provisions of sec. 44AF of the Act by treating the aggregate amount of deposits as turnover of the assessee. However, the assessee could furnish only few bills to support the purchases. He could not furnish details of regist .....

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ed that the peak credit amount of ₹ 1,99,850/- may be assessed as income, if the claim of business transactions are not accepted. The Ld CIT(A) noticed that the assessee did not disclose the impugned bank account in his return of income. Further, full details relating to purchases and sales were also not furnished by the assessee. Hence, the Ld CIT(A) rejected the claim that the deposits represent business receipts. The claim of assessment of peak credit amount was also rejected by the Ld .....

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gaged in the manufacture of soaps. Besides the above the assessee has been carrying on trading in other branded soaps and FMCG products on a small scale in his individual capacity and used to supply them to the customers of the partnership firm. The said customers deposited the funds into his bank account and the impugned deposits represent sales collections. Since the assessee did not maintain regular books of account, he could not furnish all the details that were called for by the assessing o .....

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that the assessee has furnished only few purchase bills, which form only miniscule percentage. He submitted that the assessee has claimed to have dealt in Medimix brand soap, which is manufactured in south India. Further, the assessee has not furnished any other verifiable evidences like, sales tax registration etc., to prove the claim of carrying on of the business. The assessee has also not maintained books of account. Accordingly, the Ld D.R submitted that the Ld CIT(A) has rightly rejected t .....

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w that the deposit into the impugned bank account has been made from various cities, i.e., it is not a case that the assessee himself has deposited money and withdrawn the same and again deposited money. The very fact that the money has been deposited from various cities only shows that the deposit was related to some other activity carried on by the assessee. Hence, as rightly pointed out by Ld D.R, the peak credit theory shall not have application in such kind of situation. 8. Then the next qu .....

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nding circumstances. The impugned deposits were found to have been made into the bank account from various cities, which mean that there is some connection between the assessee and the persons who had deposited into the bank account from various cities. However, identify of those persons has not been established and hence they cannot be treated as Capital receipts. Since the assessee has furnished certain purchase bills and since the assessee is also a partner in a firm carrying on soap business .....

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ound fault with. 9. I notice that the assessing officer has examined the deposits from the angle of the provisions of sec. 68 of the Act. However, in view of the fact that the deposits were found to have been made into the bank account from various cities, the theory of unexplained cash credit may not be applicable in view of the explanations furnished by the assessee. Hence, I am inclined to accept the claim of the assessee that the same represents business receipts. Accordingly, in my view, th .....

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