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TMI Blog2020 (12) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Assessee : Shri G. Sathyanarayana, CA For the Revenue : Shri Ganesh R. Ghale, SC to Department ORDER PER CHANDRA POOJARI, AM: This appeal filed by the assesee is directed against the order of the CIT(A) dated 02/01/2019. 2. The assessee has raised the following grounds of appeals: 1. The CIT(A) is not justified in making an addition of ₹ 36,01,384/- as the unexplained cash credits made by the assessee in depositing the cash to the savings bank account under the facts and circumstances of the assessee s case. 3. The facts of the case are that the assessee had a bank account in ICICI Bank and in that Bank the total cash of ₹ 48,57,000/- was deposited. The assessee stated that he had availed jewel loan to the extent of ₹ 12,55,616 and the same was withdrawn and deposited into his account. However, with respect to the balance of ₹ 36,01,384/-, the assessee could not substantiate either with evidence or through a cash flow statement. The AO considered that the assessee had no valid explanations to offer regarding the cash deposits other than the jewel loan and accordingly, the balance of ₹ 36,01,384/- was trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll HC) (2015) 066(1) ITCL 0029 (2015) 376 ITR 0534 CIT vs. saraf Trading Co. wherein it was held that where certain intangible additions were made in the earlier years, that would constitute the source for the credit entry in subsequent year, but a cancelled income which was neither disclosed in the assessment proceedings nor in any other ancillary proceeding for any earlier year can hardly constitute a source for a subsequent credit entry. In the instant case, where all the credits appearing in different accounts were held to be the assessee s own moneys, the assessee would be entitled to set off and a determination of the peak credit after arranging all the credits in the chronological order. 3) 2016 Tax Pub (DT) 4847 (Del . Trib) Shveta Aggarwal vs. ITO wherein it was held that for arriving at a peak credit, the credits and debits be serially arranged, so that a credit following a debit entry may be treated as referable to the later to the extent possible and that not to aggregate but only the peak of the credits be treated as unexplained. 4) (2014) 221 Taxman 0446 Ashok P. Magajikondi v. ITO wherein it was held that the AO has only considered the peak deposits and has giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the assessee to offer the income under the presumptive basis and the same was opted by the assessee for the assessment year under consideration. The Assessing Officer is not entitled to make any guesswork and he has to make the assessment with reference to evidence and material brought on record. There must be something more than suspicion to support the assessment. A suspicion, however, strong may not take place for proof of evidence. The conclusion which are based on surmises and conjectures, cannot take place of proof. Therefore, the assessment made by the Assessing Officer, which are predominantly influenced by suspicion, cannot be upheld. In my opinion, mere surmises and conjectures that the assessee had deposited cash in bank account whenever there is cash shortage to make payment, cannot the basis for a predetermined approach without bringing any specific transactions or evidence brought on record by the Assessing Officer to support his version. If the Assessing Officer wants to assess the income of the assessee under normal procedure, heavy burden on him to bring on record necessary material to show that the assessee is not engaged in contract work of building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid provisions are applicable where the gross receipts paid or payable does not exceed ₹ 40 lakhs. 8. Once under the special provision, exemption from maintaining of books of account has been provided and presumptive tax at the rate of 8 per cent of the gross receipt itself is the basis for determining the taxable income, the assessee was not under obligation to explain individual entry of cash deposit in the bank unless such entry had no nexus with the gross receipts. The stand of the assessee before the Commissioner of Income-tax (Appeals) and the Tribunal that the said amount of ₹ 14,95,300 was on account of business receipts had been accepted. The Ld. AR with reference to any material on record, could not show that the cash deposits amounting to ₹ 14,95,300 were unexplained or undisclosed income of the assessee. 9. In view of the above position, we are unable to hold that any substantial question of law arises in this appeal. 10. The appeal is dismissed. 7.2 The Chandigarh Bench of the Tribunal in the case of Nand Lal Popli vs. DC1T in ITA Nos. 1161 1162/Chd/2013, order dt. 14/06/2016, held as follows:- 9. We have heard the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re may not be 92% of gross receipts, only for the purposes of taxation, it is considered to be so. To take it further, it can be said that the expenditure may be less than 92% or it may also be more than 92% of gross receipts. 12. Further, on the reading on the substantive part of the provision, it is quite clear that an assessee availing the benefit of such presumptive taxation can claim to have earned income @ 8% or above of the gross receipts. In that case, the provisions of sub-section (5) of the said section will be applicable to it, which reads as under: 44AD (5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in subsection (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB. 13. From the combined reading of sub-section (1) and sub-section (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenditure to the extent of 92% of gross receipts, would also defeat the purpose of presumptive taxation as provided under section 44AD of the Act or other such provision. Since the scheme of presumptive taxation has been formed in order to avoid the long drawn process of assessment in cases of small traders or in cases of those businesses where the incomes are almost of static quantum of all the businesses. 7.5 Applying the propositions of law laid down in the above case law cited supra to the facts of the case on hand, I delete the addition in question. 7.6 Even otherwise, in the present case, the Assessing Officer found certain deposits as unexplained in the bank account of the assessee with ICICI Bank, Dharwad branch at ₹ 9.16 lakh. In my opinion, when moneys are deposited in the bank account, the relationship that is constituted between the banker and the customer is one of the debtor and creditor and not of trustee and beneficiary. Applying this principle, the bank statements supplied by the bank to its constituent is only a copy of the constituent s account in the books maintained by the bank. It is not as if the bank statements are maintained bythe bank a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r profession . (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of subsection (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed. 10. The provision of the above section are quite unambiguous to the effect that in case of an eligible business based on the gross receipts/total turnover, the income under the head profits gains of business shall be deemed to be @ 8% or any higher amount. The first important term here is 'deemed to be which proves that in such cases there is no income to the extent of such percentage, however, to extent, income is deemed. It is undisputed that 'deemed' means presuming the existence of something which actually is not. Therefore, it is quite clear that though for the purpose of levy of income tax 8% or more may be considered as income, but actually this is not the actual income of the assessee. This is also the purport of all provisions relating to presumptive taxation. 11. Putting the above analysis, in converse, it can be easily inferred that the same is also true for the expenditure of the assessee. If 8% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB)of section 10. 7.4 The crucial words in the said section for the purposes of present appeal are 'any previous year an A.O. has found any sum credited in the books of account of the assessee. But can I say on the facts and circumstances of the present case that the A.O. has found any sum credited in assessee s books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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