TMI Blog2010 (7) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... derstanding, in a concise manner, as under: (i) the CIT (A) erred in confirming the order passed u/s 143(3) rws 153C of the Act which was not in accordance with the provisions of the Act and bad in law and, thus, liable to be quashed; (ii) without prejudice, the lower authorities have erred in considering the profit ratio at 7% as against 6% on undisclosed sales; (iii) the authorities below have erred in addition ₹ 20.53 lakhs being highest peak credit in the bank accounts as undisclosed investment u/s 69 of the Act; - the CIT(A) erred in not properly appreciating the submissions and drawn a conclusion that the peak credit was to be added u/s 69 of the Act; (iv) the assessee denies the liability of interest levied u/s 234B, 234C and 234D of the Act. II. ITA NOs: 175 176/10 - A.Ys. 2002-03 03-04: The assessee has raised six identical grounds for these two AYs, out of which ground Nos: 1 and 6 being general, they have been considered as non-consequential. In the remaining grounds, the issues raised are reformulated, in a concise manner, as under: (i) the CIT (A) erred in confirming the order passed u/s 143(3) rws 153C of the Act partially which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit of deletion of the addition for peak credits for the year as the same get subsumed in the earlier year s peak credit and, hence, the confirmation by the CIT(A) of the theory of peak credit was applicable to the facts of the case was wrong since the credits in the bank accounts were out of turnover on which % of profit was separately taxed; (iv) the assessee denies the liability of interest levied u/s 234B of the Act. IV. ITA NO: 179 /10- A.Y. 2006-07 : For this AY, the assessee has raised eight grounds, in which ground Nos: 1 and 8 being general and no specific issues involved, they have naturally become non-consequential. In the remaining grounds, the issues raised are listed out as under: (i) the CIT (A) erred in confirming the order passed u/s 143(3) rws 153C of the Act partially which was not in accordance with the provisions of the Act and bad in law and, thus, liable to be quashed; (ii) without prejudice, the lower authorities have erred in considering the profit ratio at 7% as against 6% on undisclosed sales; (iii) the assessee has got the benefit of deletion of the addition for peak credits for the year as the same get subsumed in the earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and clarity, in this common order. 3. Let us now take up the assessee s appeals for consideration. 4. During the course of hearing, the Ld. A.R reiterated more or less what was put-forth before the first appellate authority. In furtherance, it was urged that - (i) the increase in percentage as was done by the AO had no basis, that the profits as declared by the assessee being reasonable, the same should have been accepted; (ii) the lower authorities have erred in adding ₹ 20.53 lakhs being highest peak credit in the bank accounts as undisclosed investments u/s 69 of the Act. There was no unexplained investment/concealed investment at all; - on proper appreciation of facts and evidence available, the addition being contrary to the facts of the case and law applicable and in fact amounting to taxing of turnover being against the law; - the first appellate authority erred in not properly appreciating the submissions made and drawn a conclusion that the peak credit was to be added as un-explained investments u/s 69 of the Act; (iii) (for the AYs 2006-07 07-08) the lower authorities have erred in holding that the figures of debtors and cash receipts as addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had not come up with any credible documentary evidence to substantiate its claim that the assessment orders under dispute have not been passed in accordance with the provisions of the Act. On the other hand, the stand of the authorities below on this score was in conformity with the provisions of the Act and, thus, we are of the firm view that there is no case for the assessee to agitate on this count. This ground is, accordingly, dismissed for all the AYs under dispute including for the AY 2007-08. 6. The next ground also being identical for all the assessment years under appeal wherein it was contested by the assessee that the AO had grossly erred in adopting the profit rate at 7% as against 6% disclosed by the assessee on undisclosed sales. 6.1. On a glance of the impugned orders of the AO, we find that the AO had estimated the GP at 7% on the unaccounted sales, as rightly highlighted by the Ld. CIT(A), the proceeds of such unaccounted sales were clandestinely deposited in the unaccounted bank accounts of the partners of the assessee and their family members. Such additions made by the AO for the AYs 2001-02 to 06-07 were in the range of ₹ 61194/-, 17171/-, 31,13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thus very little initial investments for purchase of goods; (iii) that additions, if any, on account of possibly in such subsequent year where there was a huge increase in purchases. As the assessee had started is business long back and much before the first year for which the post survey assessment was being done, and, hence, no addition for initial investment was called for; 7.1.1. After due consideration of the assessee s arguments and also the perusal of the assessment order, the Ld. CIT (A) had observed that 2.3.3 It is evident from the facts on record that in the first year i.e., 2001.02 in which the unaccounted trading was made by the appellant by using such bank accounts, the peak credits in the accounts according to the appellant itself is ₹ 24,81,550/- out of which the assessing officer reduced profit @ 7% estimated by him for the assessment year of ₹ 4,28,381/-. Then also the appellant has to explain the source of the investment in the bank accounts to the extent of ₹ 20,53,169/- the appellant only argued that the peak credits were only out of the sale proceeds, but failed to substantiate that the credit in the bank accounts does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... graphs and also diligently considering the reasoning of the Ld. CIT(A), we are of the firm view that the authorities below were justified in adding ₹ 20,53,169/- as unexplained investments u/s 69 of the Act. It is ordered accordingly. 8. The next issue being common for the AYs 2003-04, 04-05 and 05-06 wherein the assessee has submitted that though the appellant has got the benefit of deletion of the addition for peak credits for the year on the ground that the same get subsumed in the earlier year s peak credit, the appellant submits that the confirmation by the CIT(A) of the theory of peak credit is applicable to the facts of the case is wrong since the credits in the bank accounts are out of turnover on which % of profit is separately taxed. 8.1. On a careful reading of the wordings, we find that the assessee had conceded that it had got the benefit of deletion of the additions for peak credits for the AYS mentioned supra on the ground that the same got subsumed in the earlier year s peak credit. Thus, the assessee has no grievance on the issue. Further submission of the assessee on the stand of the CIT (A) was rather clarificatory which, in our considered view, req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd taking a very reasonable view of the matter, the GP ratio to be adopted on those two cash receipts i.e., ₹ 4,77,32,130 and ₹ 83,56,695 is taken to be 7%. As a result, the additional 1% which has been left out of the calculation is now applied on these amounts as detailed below: AY 06-07 1% of ₹ 4,77,32,130 ₹ 477321-/- AY 07-08 1% of ₹ 83,56,695 ₹ 83567 8.1.4. When these issues went before the Ld.CIT (A) who, after considering the assessee s forceful contentions as set-out in the impugned order which is under dispute, had reasoned thus 2.4.3. The argument of the appellant that the debtor list represents the sales which has already been included in the unaccounted turnover covered in the credits in the bank account is not found acceptable in view of the reasons that the appellant failed to substantiate that the amount recovered from the debtors has been received through the cheques or the drafts which have been credited in the bank accounts. The question of double addition will arise only when the amount recovered from the debtors has been credited to the bank account, but, there is no evidence to prove the same. The statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that the CIT(A) erred in confirming the action of the AO in making an addition of ₹ 31.64 lakhs as unexplained cash u/s 69A of the Act. 9.1. It was argued by the Ld. A R that the AO erred in making the addition of ₹ 31.64 lakhs as unexplained cash u/s 69A of the Act holding that the cash found on search was not explained. It was, further, contended that the cash was fully explained and there was no unexplained cash as such. It was vociferously argued that the addition having been made on wrong and improper appreciation of facts and also details filed requires to be deleted in entirety. 9.1.1. On a perusal of the records, it is seen that the assessee argued before the CIT (A) that the cash found during the search has also emerged from the unaccounted transactions. The profits on such unaccounted transactions were taxed in the respective years. Therefore, it was contended that, again taxing the investments out of the income amounts to double addition which requires to be deleted. 9.1.2. After taking into account the arguments of the assessee, the Ld. CIT (A) took a divergent view thus 2.5.3. The above arguments of the appellant is not found acceptable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be income of the assessee for such financial year. 9.1.4. In view of the above, we are of the considered view that no interference is called for in the findings of the authorities below. It is ordered accordingly. 10. Finally, the assessee has agitated over the charging of interest under sections 234B, 234C and 234D of the Act. 10.1. In this connection, we would like to point out that charging of interest under sections 234B and 234C of the Act are mandatory and consequential in nature, and, therefore, these grounds are summarily rejected as not maintainable. 10.1.1. However, charging of interest under section 234D of the Act can be resorted into only from the assessment year 2004-05 onwards as the section itself was inserted by the Finance Act 2003 w.e.f. 1.6.2003. Therefore, interest charged under this section for the AYs 2001-02, 2002- 03 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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