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2019 (7) TMI 226

opted on the unaccounted sales or the peak credit should be considered - HELD THAT:- A perusal of the bank statement shows that only a part of the deposits and withdrawals have been shown in the regular accounts and the assessee has not disclosed the entire deposits and withdrawals. When there is no evidence with the Revenue that the withdrawals made by the assessee systematically from the bank account, which are not shown to the Revenue, have been utilized for some other purpose other than for the unaccounted business of the assessee, therefore, we find merit in the argument of the Ld. Counsel for the assessee that the assessee should be given the benefit of peak credit theory and only the peak credit has to be sustained. Since, the assessee has calculated such peak credit at ₹ 2,38,737/-, therefore, we set aside the order of the Ld. CIT(A) and direct the AO to sustain only the peak credit of ₹ 2,38,737/- subject to his verification. Deduction u/s 54F - on enquiry the Inspector reported that the plot is lying vacant and there is no construction work carried over the said plot - HELD THAT:- We find neither the assessee has constructed the house property during the year .....

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#8377; 32,22,140/- made by the AO in respect of cash deposits in the saving bank account with ICICI Bank by wrong appreciation of facts and by not following the judgments of the Hon ble High Courts and Apex Court. 3. Facts of the case, in brief, are that the assessee is an individual and is engaged in the business of manufacturing and trading in chemicals and laminations under the name and style of M/s Arihant Industries and M/s Arihant Packaging. He filed his return of income on 30.09.2011 declaring total income of ₹ 16,04,290/-. The AO during the course of assessment proceedings observed that as per the AIR Information the assessee has deposited cash of ₹ 32,22,140/- in the bank account maintained with ICICI Bank. He, therefore, asked the assessee to explain the source of cash so deposited. It was submitted by the assessee that out of the above amount of ₹ 32,22,140/- deposited in ICICI Bank an amount of ₹ 15,39,800/- was deposited by the outstation Debtors. Purchases were made against such sale amounting to ₹ 14,63,984/-. The assessee earned a profit of ₹ 75,816/- which was not shown while filing the return of income and, therefore, the assess .....

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at entire ₹ 32,22,140/- represents unaccounted sales of the assessee. In the letter dated 27/01/2016 the assessee has now changed his stand as far as purchases are concerned. Now the assessee is not claiming that his unaccounted purchase against the unaccounted sale of ₹ 32,22,140/- was of ₹ 14,63,984/-. In the letter dated 27/01/2016 the assessee has mentioned that in absence of complete records his unaccounted income should be computed at 8% of the sales as per the provision of the 44AD of the I.T. Act. The contention of the assessee is not tenable. The assessee has been changing his stand from the very beginning as mentioned above. The total turnover of the assessee is more than ₹ 2 crore much beyond the limit prescribed in section 44AD. The so called business of trading in chemicals done by the assessee through ICICI Bank account was totally unaccounted. Assessee never bothered to disclose the business in his return of income. From the conduct of the assessee it is crystal clear that the assessee wanted this business to remain hidden from tax authorities from the very beginning. He never intended to pay tax on this business. It was only after the AO conf .....

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was only when he was cornered from all directions, he admitted that the entire cash deposits of ₹ 32,22,140/- was unaccounted cash sales. The assessee has himself been claiming that his unaccounted cash purchases were of ₹ 14,63,984/-. The assessee has himself given cash flow statement. The deposits and withdrawals have remained same even after receipt of reply from ICICI Bank. The reply of ICICI Bank made it clear that the cash deposited in ICICI Bank account was not out of earlier cash withdrawal. However, the amount and place of cash of deposits do indicate that these may be sale proceeds of some business carried out by the assessee. It implies that there must be purchases also to enable the assessee to make sales. If the assessee s version of unaccounted purchases of ₹ 14,63,984/- is believed, it will result in unaccounted profit of ₹ 32,22,140 - ₹ 14,63,984 = ₹ 17,58,156/-. In my view the addition on account of unaccounted cash deposits should be restricted to ₹ 17,58,156/-. 5. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. 5.1 The Ld. Counsel for the assessee strongly challenged the order .....

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unt. So far as the argument of the Ld. Counsel for the assessee that peak credit should be allowed he submitted that some circumstantial evidences need to be produced by the assessee for the proposition regarding the peak credit. Since, the assessee could not discharge the onus cast on him, therefore, the assessee cannot be given the benefit of the peak credit. For the above proposition the Ld. DR relied on various decisions. He, accordingly, submitted that since the CIT(A) has given substantial relief to the assessee for which the Revenue is not in appeal before the Tribunal, therefore, the order of the Ld. CIT(A) should be upheld and the grounds raised by the assessee should be dismissed. 7. We have considered the rival arguments made by both the sides, perused the orders of the authorities below and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case made an addition of ₹ 32,22,140/- being the cash deposited in the ICICI Bank account of the assessee on the ground that assessee could not explain the nature and source of such deposits to his satisfaction. While doing so he rejected .....

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the AO to furnish the details of the claim of deduction under section 54F, the assessee submitted that he had purchased the property and made an investment of ₹ 48,63,120/- towards the house property to claim deduction u/s 54F. The assessee furnished an agreement with the contractor for construction of a residential unit along with bills of contractor and ledger account of material suppliers. The AO deputed the Inspector to report on the status of the construction. The Inspector reported that the plot is lying vacant and there is no construction work carried over the said plot. The AO, therefore, confronted the same to the assessee. The assessee replied that the building could not be constructed due to non-sanctioning of the plan although the intention of the assessee were to construct the residential house. The AO rejected the argument of the assessee and held that the assessee has not fulfilled the condition laid down in section 54F. He, therefore, made an addition of ₹ 9,54,544/- to the total income of the assessee. 11. In appeal, the Ld. CIT(A) upheld the action of the AO by observing as under: - Ground no. 3 : is against disallowance of ₹ 9,54,544/- u/s 54F. .....

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nsidered the rival arguments made by both the sides and perused the orders of the authorities below. We have also considered the various decisions relied on by both the sides. We find the AO made addition of ₹ 9,54,544/- by rejecting the claim of deduction made u/s 54F out of the long term capital gain on sale of property on the ground that assessee has not fulfilled the conditions of the said section by not constructing the house property as claimed. We find the CIT(A) upheld the action of the AO, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the Ld. Counsel for the assessee that as per the provisions of section 54(1) of the I.T. Act, 1961, the assessee is entitled to utilize the long term capital gain for construction of a house property within a period of 3 years and, therefore, addition, if any, can be made only in the AY 2015-16 and no addition can be made in this year. For the above proposition, he relied on the decision of the Kolkata Bench of the Tribunal in the case of Mahesh Pal Arora vs. ITO vide ITA No. 206/Kol/2013 order dated 29.03.2016. However, we do not find any merit in the above argument of the Ld. Cou .....

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on to verify the records and restrict the depreciation to the actual amount of excess claim. This ground of assessee is partly allowed. 19. Ground of appeal no. 5 reads as under: 5. That the Ld. CIT(A) erred in law and on facts in confirming the ad-hoc addition of ₹ 80979/- being disallowance @ 1/5th out of expenses claimed under the heads of car insurance, communication expenses, interest on car loan, vehicle running & maintenance expenses and depreciation on car in the facts and circumstances of the case. 20. After hearing both the sides, we find the AO disallowed an amount of ₹ 80,979/- being 20% of the following expenses for want of details and probable personal use: - 1. Car Insurance ₹ 16,054/- 2. Communication Exp. ₹ 57,212/- 3. Interest on car loan ₹ 92,567/- 4. Vehicle running & maintenance Exp. ₹ 45,470/- 5. Depreciation on car ₹ 1,93,590/- Total ₹ 4,04,893/- 21. We find the Ld. CIT(A) upheld the action of the AO for which the assessee is in appeal before the Tribunal. 22. We have heard the rival arguments made by both the sides. It is an admitted fact that the AO disallowed 20% of the above expenses on account of pr .....

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