TMI Blog2015 (12) TMI 1612X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of peak cash credit only. AO framed the assessment ex-parte without giving an opportunity to the assessee, whereas the ld.CIT(A) dismissed the appeal of the assessee after rejecting the contentions of the assessee of applying peak credit theory or presumptive tax scheme under section 44AD of the Act. Under the present circumstances, we are of the opinion that ends of justice would be met if the assessee is brought to tax on the basis of peak credit worked out on the basis of deposits and withdrawals. Accordingly, we set aside the order of ld.CIT(A) and direct the AO to assess the income of the assessee on the basis of peak credit theory in the bank account of the assessee after affording a reasonable opportunity of hearing to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eply, the assessee vide his letter dated 19.11.2012 submitted that he was indisposed and could not appear on the appointed date of hearing. Thereafter no response from the assessee whatsoever was brought on record. 3. The assessee was a director of M/s Leader Gas and Petrochem Limited. As facts emerged from the record that as per Annual Information Report (AIR) filed by the Syndicate Bank, Marol, Mumbai-400093, the assessee had deposited cash of ₹ 29,54,385/- in his saving bank account No. 50322030001529/- throughout the year. The AO vide notice dated 27.11.2012 asked the assessee to file the statement of all the bank accounts held along with the narration of each entry of debit and credit to such account. Since assessee failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions and contention of the Ld. AR of the appellant and also carefully gone through the facts and explanation given by the Ld.AR of the appellant as well as the Ld. AO. I find that ld. AO has made an addition u/s 68 of the Act of the cash deposits amounting to ₹ 29,55,106/-, as no explanation was offered to the seventy entries of cash deposits on various dates through out the previous year. The Ld. AO observed that the most of the deposits were less than ₹ 50000/- and were immediately withdrawn again in the form of cash only. During the course of the appellate proceedings it was submitted by the Ld. Counsel of the appellant that the appellant is a scrap dealer and the deposits of cash was on account of sale proceeds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um is found credited in the books of the assessee maintained for any previous year for the source and nature of which either no explanation is offered by the assessee or the explanation offered by the assessee is not satisfactory. Thus, section 68 gets activated only when any sum is found credited in the books of the assessee. Section 68 does not make any distinction between commercial loans and non-commercial loans and as such applies to both the categories of loans. Once the assessee offers no explanation regarding cash credit appearing in his books or the explanation offered by him is not satisfactory, the sum so credited may be charged to tax. In such a context, the Department does not have to prove anything further. 1.3.3 Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and source of such amount and to charge the credits to tax if the assessee's explanation is not satisfactory. 1.3.4 Under section 68, it is necessary for the assessee to prove prima facie the transaction which results in a cash credit in his books of account. Such proof includes proof of the identity of the creditor, the capacity of such creditor to advance the money and lastly, the genuineness of the transaction. Only when the assessee has proper evidence to establish prima facie the aforesaid facts, the onus shifts on to the Department. Where the assessee establishes the identity of the creditor and nothing more, the cash credits would constitute the income of the assessee under section 68. Even though there are a number of cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither assess the assessee on presumptive basis under section 44AD of the Act at the rate of 5% of the total turnover of ₹ 29,79,700/- or alternatively assess the assessee on the basis of peak credit in the bank. The ld. AR finally submitted that the order of ld.CIT(A) was wrong and required to be reversed as the entire amount of deposits into banks were confirmed as income and therefore the AO be directed to assess the assessee either on the basis of peak credit or on presumptive basis under section 44AD of the Act during the year. 5. On the contrary, the ld. DR relied heavily on the orders of authorities below and requested for confirming the same. 6. We have heard the rival submissions and perused the relevant record placed be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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