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2016 (10) TMI 844

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..... of an officer. In otherwords, though an element of guess work is involved in best judgement it should not be a wild one, as held by the Hon’ble Supreme Court in the case of State of Kerala vs. Velukutti [1965 (12) TMI 32 - SUPREME Court]. In the instant case, the Assessing Officer ought to have taken into consideration the normal turnover of the assessee, the expected profit in each year, based on the earlier year’s income declared and accepted in order to estimate the income of the current year; while holding that there was some undisclosed income assessable to tax under section 68 of the Act. The assessee having furnished the bank statement Assessing Officer could have verified and noticed that there were credits and corresponding deb .....

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..... re. Therefore, grounds 3 and 4 are not taken into consideration. Ground No.2 is with regard to not giving an opportunity of being heard before the CIT(A). Though the Learned Counsel for the assessee submitted that there are sufficient reasons for non-appearance on the dates fixed for hearing, it could not be substantiated before us and therefore, ground No.1 is rejected. Thus, the only ground survives for our consideration is with regard to the addition of ₹ 18,98,800 referable to the cash deposits in bank account. 2.1. As could be noticed from the assessment order, the assessee is engaged in the business of purchase and sale of general goods and also dealer in gas. For the year under consideration, the assessee admitted total inc .....

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..... nt dates in the savings bank account and the said deposits were made out of earlier withdrawal from the same bank account. In otherwords, the same cash was recycled round the year and it was explained to the Assessing Officer at the time of submitting bank statement. But the Assessing Officer failed to appreciate the same and sought to add all the deposits as unexplained deposits. 4. Even before the CIT(A) the assessee did not appear, despite granting several opportunities. Therefore, the Ld. CIT(A) concluded that the assessee is not interested in prosecuting the appeal and hence it is liable to be dismissed in the light of decision of the Apex Court in the case of B.N. Bhattarjee and others 118 ITR 461. We also observed that the law as .....

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..... sessee has not furnished proof with regard to source of cash more particularly when the deposits were stated to be recycled - in which event only the peak cash credit is assessable to tax which works-out, in this case to ₹ 2,80,154. It is the contention of the Learned Counsel for the assessee that even while making the addition under section 68 of the Act the Assessing Officer has to logically verify as to whether an assessee could have earned such income or not, in the light of principle laid down by the Apex Court in the case of P.K. Noorjahan 237 ITR 570. In the instant case, the assessee is a small time businessman who could not have earned such income in one year and in fact, this fact was brought to the notice of the Ld. CIT(A) .....

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..... while making the addition. Even while computing the assessment to the best of his judgment, under section 144 of the Act, it is the duty of the Assessing Officer to make an addition on the basis of the available material and circumstances of each case. Judgement is a faculty to decide the matters with wisdom, truly and legally and it should not depend on the arbitrary caprice of an officer. In otherwords, though an element of guess work is involved in best judgement it should not be a wild one, as held by the Hon ble Supreme Court in the case of State of Kerala vs. Velukutti 60 ITR 329. In the instant case, the Assessing Officer ought to have taken into consideration the normal turnover of the assessee, the expected profit in each year, ba .....

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