TMI Blog2017 (12) TMI 1352X X X X Extracts X X X X X X X X Extracts X X X X ..... g the same afresh after verifying the claim of the assessee on the basis of material found during the course of search. The appeal of the assessee for A.Y. 2009-10 is accordingly treated as allowed. - I.T.A. No. 214/KOL./2015, I.T.A. Nos. 272 And 273/KOL./2015 - - - Dated:- 22-12-2017 - Shri P.M. Jagtap, Accountant Member And Shri A.T. Varkey, Judicial Member For The Department : Shri Pinaki Mukherjee, Addl. CIT, D.R. For The Assessee : Shri A.K. Tulsian, FCA ORDER Per Shri P.M. Jagtap, Accountant Member : Out of these three appeals, two appeals being ITA No. 214/KOL/2015 (Revenue s appeal) and ITA No. 272/KOL/2015 (assessee s appeal) are the cross appeals for assessment year 2009-10 while the remaining third appeal being ITA No. 273/KOL/2015 is the appeal of the assessee for assessment year 2010-11, which involves a solitary issue that is similar to the one involved in the assessee s appeal for assessment year 2009-10. 2. First we take up the cross appeals for A.Y. 2009-10 being ITA Nos. 214/KOL/2015 and 272/KOL/2015, which are directed against the order of the ld. Commissioner of Income Tax (Appeals)-20, Kolkata dated 27.01.2015. The appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the impugned order that he had no alternative but to estimate the gross profit of the assessee. The decline in the gross profit rate can be no justification for estimating the gross profit. I find from the impugl1ed order that the tax audit report was produced at the assessment stage but the AO has found no specific defect in the audited accounts of the assessee. I also find that the AO has not rejected the books of account of the assessee. The jurisdictional ITAT has in the case of M/s SRK Tea Processing Industries Ltd vs ACIT (ITA No. 1685/Kol/2009) held that the first proviso to section 145( 1) or 145(2) can be invoked only when the elements attracting either of those provisions are found to exist. The AO has to give a categorical finding in that regard and also the material which constituted the basis of such finding. The AO is therefore not competent to make an assessment under first proviso to section 145(1) or 145(2) without rejecting the books of account. I find that there is no finding of the AO in the assessment order in respect to the fact that the method of accounting adopted by the Assessment years : 2009-2010 2010-2011 assessee is not regularly employed or that his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eft with no option but to complete the assessment to the best of his judgment under section 144 as a result of the failure of the assessee to produce the books of account and the ld. CIT(Appeals) was not justified in putting the entire onus on the Assessing Officer to bring any adverse material on record to justify the estimation of income by applying a higher gross profit rate. When the assessee fails to produce the books of account in support of the book results declared by him, the Assessing Officer is entitled or rather is duty bound to complete the assessment under section 144 to the best of his judgment on the basis of material available on record and there is no requirement in such case to reject the books of account which the assessee has not even produced before him for verification. Even the ld. counsel for the assessee has not been able to raise any material contention to dispute this position. He, however, has contended that the gross profit rate of 7.32% as applied by the Assessing Officer on the basis of gross profit rate declared in the immediately preceding year is highly excessive and unreasonable. In this regard, he has invited our attention to the specific submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y him for providing accommodation entries on commission basis. He, therefore, contended that the addition only to the extent of such commission earned by him for providing the accommodation entries could be made. This stand of the assessee was not found acceptable by the Assessing Officer in the absence of any details furnished by the assessee giving names and addresses of the persons to whom the accommodation entries were provided as well as the nature of entries so provided. He accordingly added the entire amount of ₹ 14,25,000/- found to be deposited in the undisclosed Bank account of the assessee. Assessment years : 2009-2010 2010-2011 8. The addition of ₹ 14.25 lakhs made by the Assessing Officer on account of cash deposits made in his undisclosed Bank account was disputed by the assessee in the appeal filed before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), it was contended by the assessee that there was a search conducted in his case on 02.07.2013 and as found during the course of search on the basis of material seized, he was engaged in providing accommodation entries. Even the commission income earned for pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , each cash deposit in the bank account is followed by issue of cheque thereby ruling out the possibility of such money judicial decisions in support of his contention. I have considered the submissions and perused the material on record. The peak credit is assessable where the bank account contains mixed transactions involving frequest deposits as well as withdrawals of cash or cheque. I however find from the bank statement that the undisclosed bank account of the assessee does not reflect such state of affairs. On the contrary, each cash deposit in the bank account is followed by issue of cheque thereby ruling out the possibility of such money returning to the bank account. I am of the considered view that in such factual background, peak theory is not applicable. The AO was therefore justified in adding the cash deposits totaling to ₹ 14.25 lakhs. Ground no. 3 is dismissed . 10. We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. As rightly submitted by the ld. counsel for the assessee, when the assessee was found to have indulged in giving accommodation entries during the relevant years including the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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