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TMI Blog2018 (5) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer estimated the sales at an enhanced figure and applied a higher rate of Gross Profit. According to Hon’ble High Court the only matter dealt with by the Assessing Officer, in the assessment order, was the estimation of profits of the assessee whereas the AAC expressed doubts about the capacity of the assessee to raise finances for the purchase of goods and to show a huge turnover in the very first year of his business and thus, the enquiry was altogether on a new source of income which, according to the Court, is not permissible under law. It is not in dispute that this information was furnished for the first time and never produced before the Assessing Officer. There is a live link between the statement of the assessee and the turnover declared by the assessee since the turnover of the assessee otherwise was much less which was in fact commented upon by the Assessing Officer in his remand report by stating that sales were shown only to the tune of ₹ 17,13,202/- and it is not possible to claim that she has received advances of huge amounts of cash during the Financial Year 2007-2008 to the tune of ₹ 46,32,200/-. The assessee’s reply on the other hand wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of ₹ 17,20,722/- referrable to unexplained peak credit, by treating it as unexplained investment ; u/s 69 of the Act. 3. During the first appellate proceedings the assessee filed additional evidence under Rule 46A wherein it was submitted that most of the deposits in the bank account were made in October 2007 in connection with obtaining Visa for her son for seeking higher studies. These deposits are pooled up in the form of receiving advances from customers and sales effected in her business. 4. Since this information was furnished for the first time, the Ld. CIT(A) called for remand report from the Assessing Officer who in turn stated that the assessee did not maintain books of account and return was filed as No Account Case . In other words, income was declared on estimate basis as per section 44AA of the Act. It was also stated that the cash book was prepared at a later stage, on the strength of the Savings Bank Account held by the assessee with APCOB. If cash book is really maintained there is no reason as to why the assessee could not furnish the cash book and the ledger, along with the necessary evidences for the expenses claimed, before the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that the assessee is fabricating the material according to her convenience for filing affidavits at a later stage and the authenticity of such affidavit is not proved. 8. As per the AIR data, there are transactions to the tune of ₹ 45,91,700/- in APCOB account which are not limited to the extent of transactions appearing in the month of October 2007 as explained by the assessee in her affidavit. Since the assessee has not complied with the notices, there is no other alternative but to complete the assessment ex-parte. If the assessee has a genuine case she should have explained the sources for the entire deposits in her bank account, at the assessment stage. Had the assessee repaid the amounts in cash, it would amount to payment exceeding the prescribed limits. 9. A.O further maintained that for a person who is carrying on business of running tailoring shop and selling of matching dress material, it is not possible to receive such huge deposits in cash amounting to ₹ 46.32 lakhs and especially a sum of ₹ 14.74 lakhs in the month of October 2007 itself. It was thus submitted that the account copy should be considered as a fabricated material. 10. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate authority to introduce into assessment new sources. ( i) CIT vs. Shapoorji Pallonji Mistry (44 ITR 891) (SC); ( ii) CIT vs. Sardari Lal Co., (120 Taxman 595) (Delhi) ( iii) Bikram Singh vs. DCIT (48 ITR(T) 589) (Delhi-Trib.) 15. In the aforesaid decisions, the Courts have categorically observed that the taxability of income from a new source of income is within the jurisdiction of the Assessing Officer in a proceedings u/s 147 / 149 or of a Revision Authority u/s 263, if requisite conditions are fulfilled but such power cannot be exercised by a first appellate authority. 16. Learned Counsel for the Assessee strongly submitted that the assessee filed her return of income and accepted the assessment u/s 144 of the Act which speaks of turnover whereas in the instant case, the assessee has never stated that the amount received was part of the turnover. In fact there is nothing to indicate that the amount received as advances were part of the turnover or business receipts since it was stated before the Ld. CIT(A) that part of the amount was received as advances but later on either readjusted or returned. The main issue is with regard to the applicabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged before the Tribunal either by filing a cross appeal, cross objection or even in the form of petition under Rule 27 of the IT Rules. 19. I have carefully considered the rival submissions and perused the record. The Assessing Officer made an addition u/s 69 of the Act referable to peak credit closing balance found in the Savings Bank Account. The case of the assessee on the other hand was that temporary advances were taken from the customers and the same was utilised for depositing in the bank account but it was immediately withdrawn. It is not in dispute that on account of non-compliance to the notices issued by the Assessing Officer, A.O. made best judgment assessment and at that stage of the proceedings the assessee has not come forward with regard to source of funds. For the first time, the assessee claimed before the Ld. CIT(A) that the deposits were pooled amounts from advances received from customers and sales effected in her business. Ld. CIT(A) called for the remand report and on two occasions the Assessing Officer categorically stated that there are gaps in the explanation given by the assessee and the assessee would not have maintained cash book and ledger s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvances from the customers in connection with business which indicates that it is a part of the turnover of the assessee. Thus it is an offshoot of the decision taken by the Ld. CIT(A). Having accepted that the source of receipt of money is advances received from the customers it implies that the same has to be taken as the turnover of the assessee. The power of the first appellate authority is coterminous with that of the Assessing Officer and he has got the power of enhancement. In fact while discharging the function as an Officer empowered to calculate the correct tax payable by the assessee, a specific deduction, which was not otherwise claimed from a different source, can also be taken into consideration. The assessee was given sufficient opportunity by the first appellate authority by forwarding the remand report of the Assessing Officer and it is the consistent plea of the assessee that the amounts were taken from customers and sales effected in her business. It is not in dispute that this information was furnished for the first time and never produced before the Assessing Officer. There is a live link between the statement of the assessee and the turnover declared by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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