9911796707
TMI Blog2012 (9) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... to the GP rate declared by the assessee - in favour of assessee. AY 2007 – 08 - addition of the peak credits - Held that:- As assessee admitted the deposits in the ICICI bank account as representing unaccounted sales proceeds and, accordingly, worked out the total unaccounted income at Rs. 25,45,500/- being the difference of total unaccounted sales including the deposits made in the bank account and the expenditure as recorded in the seized diary AO was bound to give credit for undisclosed income of Rs. 25,45,500/-already arrived at and added to the income of the assessee while making the addition on account of peak credit - same amount cannot be taxed twice once as offered by the assessee being profit on unaccounted sales and again being part of peak credit - in favour of assessee. AY 2008-09 - unexplained money by taking peak cash credit/balance as on 30/12/2007 - Held that:- When the entire transactions recorded in the seized diary were taken into account while computing the profit from unaccounted sales as well as peak credit, then, a further addition on account of peak credit, which is very much part of the entries of the diary already considered cannot be permitted - i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the regular books of account. A small pocket diary was also seized as Annexure A/AS/RES/1, which also contained details of sales made to a party namely M/s K.R. Pearls, Vijayawada. In response to notice under section 153A, the assessee filed return of income for the assessment years under consideration. The assessee declared income in the return of income filed in response to notice under section 153A including the difference of sale and purchase as per the Annexure being the diaries seized during the search and the deposits in the bank account. The assessee admitted that the deposits in the ICICI bank account represents unaccounted sales and therefore the said amount was included in the unaccounted sales while offering the undisclosed income on this account. The assessee offered undisclosed income on account of unaccounted sales by taking the profit at 5% on sales or 5.26% on purchase. The Assessing Officer apart from the income offered by the assessee, also made the addition on account of peak credit as per the diary seized as well as as per the bank account and treated the same as unexplained money and taxed in the hands of the assessee. For the assessment year 2008 2009, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale proceeds deposited in the bank. He has relied upon the order of the Assessing Officer. 5. On the other hand, the Learned AR of the assessee has submitted that the details contained in the diary seized during the search represent the unaccounted sales and purchase made by the assessee. The assessee has offered undisclosed income on account of unaccounted sale being the difference between the sales and the expenditure as recorded in the diary. He has pointed out that for the assessment year 2007-08 the Assessing Officer has accepted the difference of sales and purchase as per the diary and deposits in the bank account at Rs. 25,45,500/-as undisclosed income of the assessee on account of unaccounted sales and purchases. The Learned AR has further submitted that the said undisclosed income has been offered by the assessee being profit at 5% of sales or 5.26% on purchases. The learned A.R. has forcefully contended that once the Assessing Officer has accepted the undisclosed income offered by the assessee being the difference of sale and purchase, then, while making the addition on account of peak credit, the adjustment of the income offered by the assessee is required to be given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. However, the estimation of the profit on account of unaccounted sales cannot be made on the line of profit on accounted sales. Since the assessee has already booked all indirect expenses in the books of account, therefore, the profit from the unaccounted sales is required to be worked out by reducing the direct expenditure relating to the unaccounted sales. Therefore, for computing the profit on unaccounted sale, the gross profit ratio on the accounted sale is a relevant factor. Further, when the addition on account of unexplained investment in purchase of stock has been confirmed by the CIT(Appeals), then, the said amount is also to be taken into consideration for computing the profit ratio of the unaccounted sales. In view of the facts and circumstances of the case, we are of the considered opinion that the GP ratio admitted by the assessee on accounted sales has to be taken as profit ratio for unaccounted sales. The AO is, accordingly, directed to compute the profit on deposits in the ICICI bank by taking the rate equivalent to the GP rate declared by the assessee. II. Assessment year 2006 07: 8. The issue involved in the revenue's appeal for this assessment year is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the seized document being the diary. The CIT(Appeals) deleted the said addition on the ground that when the AO had already considered the peak credit arising out of undisclosed sales recorded in the diary for the assessment year 2007 08, then, the cash balance of Rs. 17,55,842/-is part of the diary which is already considered while working out the peak unexplained money and added in the assessment year 2007 08. As it is clear from the record that the AO made an addition of Rs. 30,40,477/-being the peak credit for the assessment year 2007- 08. The peak credit taken by the AO for the assessment year 2007 08 was the highest credit balance as per the seized diary and, therefore, the cash balance of Rs. 17,55,842/-as on 30/12/2007 is part and arising from the running entries in the seized diary. Further for the assessment year 2007 08 the difference of unaccounted sales and expenditure has already been assessed as profit from the unaccounted sales, therefore, when the entire transactions recorded in the seized diary were taken into account while computing the profit from unaccounted sales as well as peak credit, then, a further addition on account of peak credit, which is very muc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he investment in stock of Rs. 31,85,000/-is made out of income earned in the assessment year 2007-08 being offered by the assessee at Rs. 25,45,500/-. The balance of Rs. 6,39,500/- disclosed as the income towards unexplained investment in stock. It was also explained that the excess stock found during the search of Rs. 15,97,287/- is part of the stock purchased in 2007 08 of Rs. 31,85,000/-and, therefore, the same may be accepted as explained. The Assessing Officer did not accept the contention of the assessee that the unaccounted purchase of the excess stock was from the income earned out of unaccounted sales as offered in the Assessment Year 2007 08. The Assessing Officer examined the details of withdrawal of cash and found that all amounts are withdrawn in cash and paid to self and 3 persons in cash. The AO held that at any stretch of imagination these cash withdrawals are not available to the assessee to make any purchase of stock as claimed by the assessee. Since the assessee did not raise any ground against this addition of unexplained investment in purchase of stock of Rs. 31,85,555/-before the CIT(Appeals), it has not been considered and adjudicated while deciding the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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