9911796707
TMI Blog2017 (5) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... ef are that the assessee, an individual, was observed during the course of the assessment proceedings to have cash deposits in his bank account (with Axis Bank, Anna Nagar, Chennai) during the relevant previous year (i.e., from 01.04.2009 to 31.03.2010) at Rs. 23.21 lacs. Form-26AS statement for the relevant year bore contract receipt (of the transport business) from Indian Oil Corporation (IOC) at Rs. 3,36,288/-, on which Rs. 7,438/- had been deducted as tax at source (TDS). The assessee's return of income for the relevant year, however, disclosed income by way of interest and consultancy charges, at Rs. 1,51,350/- and Rs. 1,62,750/- respectively. The assessee, admitting to be not maintaining any books of account, explained to be undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could then the Revenue not accept the same? True, the assessee has not shown to be owning any goods carriages. However, owning the same is not a pre-requisite for being in the transport business which, again, is validated by the IOC receipt. The next question is the quantum of the receipt as well as that of the profit, stated to be in the range of 10% to 15%. The Revenue has not raised any doubt on the profit percentage, which is at a healthy rate, yet ignored the same. In fact, any doubt could only be on the basis of the same being below the normative rate obtaining in the relevant trade, qua which there is even no whisper, much less material. An aspect of the matter shall require being clarified here. The assessee states of earning commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, one may ask, is unacceptable about the explanation, particularly considering the churning of funds (in the assessee's bank account) (as inferred from the assessee's pleading of adopting the peak credit (balance) in the bank account). The assessee pleads for the acceptance of the peak credit balance in his bank account as indicative of the funds therein that are not explained, claiming, thus, a rotation of funds, i.e., in the business/es being undertaken. The interest rates, as stated, are also at a healthy figure, corresponding with the rates obtaining in the unorganized sector, which are markedly higher than that obtaining in the regular bank or organized sector. In other words, both the capital investment and the interest thereon, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42 lacs + Rs. 13.18 lacs). This broadly matches the turnover in the assessee's account, which is at Rs. 26.57 lacs (i.e., Rs. 23.21 lacs (cash deposited) + Rs. 3.36 lacs (IOC receipt)), validating the assessee's claim as regards the receipts being a part of the two businesses afore-stated, as well as the profit rates obtaining therein. The assessment of income may now be made as under: A. Finance Business a. Interest income: Rs. 1,51,350/- b. Capital invested: Rs. 7.25 lacs (assuming a turnover/capital ratio of 2) B. Transport Business a. Profit: Rs. 1,70,188/- (*) b. Capital invested: Rs. 1.25 lacs (assuming a turnover/capital ratio of ~ 12) [(*)Rs. 1,62,750/- plus Rs. 7,438 - on account of TDS] The profit of the two businesses, sav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acs, irrespective of the date on which it obtains, would yield an adjusted peak credit of Rs. 8.80 lacs, so that it is this amount that would stand to be added, and not Rs. 10 lacs. Then, again, there could be a scenario of the adjusted peak credit being below Rs. 8.50 lacs. This would not by itself warrant a reduction in the amount of addition on account of the capital employed in the two businesses. This is as, apart from the bank balance, which the peak credit in a bank account signifies, the assessee has admittedly other working capital assets in the form of trade debtors, and which have not been taken into account. This is as the investment in the trade has been estimated on the basis of a working capital (i.e., cash to cash) cycle, an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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