9911796707
TMI Blog2012 (9) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... car occupied by four persons viz., Shri K.K. Azeez and three others. In the statement given by Shri K.K.Azeez u/s. 131 of the Act, he stated that the cash of Rs.65.00 lakhs belonged to the assessee herein and further stated that it was given to him for purchasing gold biscuits. Thereafter, the assessee herein filed a letter dated 02-01-2003 with DDIT(Inv.), Calicut wherein he admitted that the sum of Rs. 65.00 lakhs belonged to him. In that letter, he also stated that he has given the above amount for purchase of gold bars for the purpose of business to be started by his brother and other persons. He also stated in that letter that he had acted as an agent to transferring funds from Mumbai to Kerala through his bank accounts maintained with Manjeri Co-operative Urban Bank, during the period from 12-12-2001 to 06-04-2002. He further submitted that the peak credit of deposits appearing in the said bank accounts was Rs. 50.00 lakhs. He also volunteered to offer the seized cash as his income. 4. The assessee was served with a notice u/s 158BC r.w.s. 158BD of the Act. In response thereto, he filed a block return declaring an undisclosed income of Rs. 65.00 lakhs for the block period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 7. The Ld. Counsel for the assessee submitted that the transactions found in the bank accounts clearly show that there was rotation of funds, i.e., the amount received by way of H.O. Advice was immediately withdrawn and after the withdrawal, there was another set of deposit and withdrawal and so on. Accordingly, he submitted that it would be justifiable to assess only the peak credits in this kind of repetitive transactions, instead of assessing the entire deposits. He submitted it may not be correct to disregard the withdrawals. He further submitted that assessing the peak credit is one of the acceptable methods of computation of income and in support of the same; he placed reliance on two orders passed by the Tax Settlement Commission and also the commentary given in the book of Sampath Iyengar, which are placed in the paper book filed by the assessee. He further submitted that the assessee has filed a cash flow statement wherein he has clearly shown accumulation of cash balance over the years (including the peak credit of Rs.50.00 lakhs) and the amount so accumulated have been given to Mr.K.K. Azeez f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice that the deposits found in various dates have been credited in the bank account with the narration "H.O. advice", which means that there was transfer of funds from some other branch of the bank. We also notice that the deposits have been immediately withdrawn by way of cash mostly on the very same day or in some cases within couple of days. Like this there were successive deposits and withdrawals. Since there is a deposit followed by a withdrawal which is followed by another set of deposit and withdrawal, the possibility of rotation of funds cannot be altogether discounted with. 11. Once we accept the rotation of funds, the next question that needs to be addressed is whether the said funds belong to the assessee and whether the same is available with him once the rotation of funds stops. For answering these questions, we have to make a reference to the explanations given by the assessee. As pointed out by Ld D.R, the assessee has taken two different stands with regard to the bank transactions. Before DDI, the assessee has stated that he was carrying the activity of transferring funds from Mumbai to Kerala and the transactions found in the bank accounts represented such kin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f last deposit and 21.12.2002, i.e., the date of seizure of cash has also not been explained by the assessee. In view of the above, it is hard to believe that the assessee was carrying on trading in gold. This finding is reinforced by the fact that the assessee has declared a sum of Rs.8.00 lakhs only up to the assessment year 2001-02. Even if it is assumed for a moment that the assessee could have carried on the trading activity by purchasing gold on credit, then he would have got only the margin on such sale, which is usually very low in gold bar trading. The assessee could not have obtained gold on credit. Had it been so, the assessee would have deposited cash initially in the bank and then taken the Demand draft for making payment to the suppliers, which is not the case here. 13. In view of the above discussions, we are of the view that the assessee has failed to properly explain the nature of transactions in the bank. Under these circumstances, the tax authorities have no other option but to tax the deposits, which stand unexplained. However, we have already stated that the possibility of rotation of funds cannot be discounted with. The tax authorities, in our view, cannot s ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
