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TMI Blog2020 (7) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... ills etc.. Therefore, assessee was engaged in the business of grocery through these undisclosed bank accounts. Next, coming to the trade profit, which the assessee could have made from the undisclosed transaction, I note that the assessee had disclosed Gross Profit oft 8.81% and Net Profit of 4.65% of the turnover from the regular grocery business. Therefore, trade profit of the regular business i.e. G.P rate of 8.81% would be justified. In the light of the aforesaid discussion, the entire addition made by AO/Ld. CIT(A) of the total amount deposited in the two undisclosed bank accounts to the tune of ₹ 21,92,100/- is erroneous. Direct the AO to restrict the addition to two items (i) combined peak credit of two bank accounts, which would take care of the undisclosed investment of the assessee, which is ₹ 2,06,690/- and (ii) trading profit from the undisclosed transaction needs to be added in the hands of the assessee. - ITA No.2062/Kol/2019 - - - Dated:- 8-7-2020 - Shri A. T. Varkey, JM For the Appellant : Shri Miraj D. Shah, ld.AR For the Respondent : Shri Supriyo Pal, Addl. CIT, ld. Sr. DR ORDER This is an appeal preferred by the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese two bank accounts were used for the very same trading business and, therefore, the entire deposit should not have been added which action of AO is wrong and only the GP/NP or peak credit from the two bank accounts can be made and for that proposition he relied on the order of this Tribunal in the case of Ashok Kr. Paul Vs. ITO, ITA No. 647/Kol/2014 dated 02.09.2016 and Ghanshyam Agarwal Vs. ITO, ITA No. 112/Kol/2011 dated 30.12.2011 and contended that in the case of Ashok Kumar Paul the Tribunal relying on the order of the Hon ble Calcutta High Court in the case of CIT Vs. M/s. Royal Security Guarding Pvt. Ltd. whereby the Hon ble High Court upheld the action of the Tribunal in holding that only 10% of the undisclosed receipt which were deposited in the bank account of the assessee should be added as income. The Ld. AR drew my attention to the Tribunal s finding in the said case which is as under: 10. Aggrieved by the order of CIT(A) the assessee has raised ground Nos. 2 and 3 before the Tribunal. At the time of hearing of the appeal the ld. Counsel for the assessee brought to our notice the decision of the Hon ble Calcutta High Court in the case of CIT vs M/s. Royal Secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appears that the opening credit balance as on 1st April, 2005 was ₹ 60,854.88p. and the closing balance as on 30th March, 2006 was Rs..491.97p. It is possible that during the financial year 2005-06 an aggregate sum of ₹ 48,15,614/- was deposited, but it is also a fact that during the aforesaid financial year from time to time various payments were made. There is no finding recorded anywhere that this expenditures were not on account of business expenditure. Therefore, the position which emerges is that the assessee has undisclosed income as well as undisclosed expenditure. Therefore, doing the best, which could be done in the facts and circumstances of the case, CIT (Appeal) held that 10% of the receipts are to be treated as the net profit of the assessee. The aforesaid view has been affirmed by the learned Tribunal. This was wholly an enquiry into the facts of the case. After going into the facts of the case, the aforesaid view was taken. Ms. Bhargava, appearing for the appellant has not drawn our attention to any infirmity in the view taken by them. We are, as such, of the opinion that this appeal is altogether unmeritorious. No question of law is involved in this app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee failed to establish its business activity. However, no other unexplained investments had been found and, therefore, normal presumption would be that the withdrawals from the Bank account were utilized for making various payment and deposits were from sale proceeds since Assessing Officer has not brought on record any other purpose for utilization of withdrawals. The assessee has filed a statement of peak credit contained at pages 5-7 of the paper book and the amount shown dated 02.10.2005 in the statement of ₹ 3,07,727.17 has not been examined by the Assessing Officer. We, therefore, restore the matter to the file of Assessing officer for examining the peak credit statement and if the same is found to be correct, then to restrict the addition to the extent of peak credit. 8. Therefore, according to Ld. AR, action of the Ld. CIT(A)/AO was erroneous since they have made the entire addition of the deposits in the bank accounts without the AO bringing any materials to suggest that the amount withdrawn from the bank accounts were utilized elsewhere other than the business of grocery and so according to ld. AR either peak credit or G.P/N.P % of the deposit can be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Seed Capital Undisclosed Turnover Stock Roration (15/7) 83,730 20 Total (18+9) 276,854 21 Combined Peak of both Accounts 206,690 10. From perusal of the above data, it can be discerned that the assessee had two undisclosed bank accounts i.e i) Allhabad Bank A/c (5017758203) opening balance as on 31-03-2015 is of ₹ 9,599/- and closing balance as on 31-03-2016 is ₹ 5,740/- and (ii) Axis Bank A/c ( 443010004350) opening balance as on 31-03-2015 is of ₹ 3,264/- and closing balance as on 31-03-2016 is ₹ 1,154/- . There has been regular deposits and withdrawal of the amounts in both bank accounts. The peak credit in the Allahabad Bank is ₹ 1,76,281/- and Axis Bank is ₹ 2,06,690/-. According to the ld.AR, the cash flow statement would indicate that the assessee had withdrawn money from one bank and has at times deposited in other bank (Axis Bank) and vice-versa. Therefore, there are crossdeposits and withdrawals. And since the withdrawal from the banks have not been found to have been spent for any other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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