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TMI Blog2022 (6) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... that that the concept of peak theory needs to be applied both in respect of the opening introduction of cash in hand and various transactions of cash deposits and withdrawals during the year under consideration. Now, in the instant facts, it needs to be appreciated that while making the disallowance, the assessee s set of facts and the nature of business he is engaged has to be given due consideration while making any disallowance. In the case of ACIT v. Armee Infotech [ 2022 (1) TMI 649 - ITAT AHMEDABAD] after taking into consideration the assessee s set of facts, the line of business he was engaged in, the typical gross profit earned in such line of business etc. restricted the disallowance on account of bogus purchase to 7%. As considering the assessee s set of facts, in the interests of justice, we are restricting the disallowance to 10% of the deposits made. - Decided partly in favour of assessee. - ITA No. 271/Ahd/2019 - - - Dated:- 17-6-2022 - Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : None For the Revenue : Shri V.K. Singh, Sr. D.R. ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing observations while passing the order: 6. DECISION: I have carefully considered the assessment order and the submissions of the appellant. The grounds no. 4 to 6 are relating to dition made by AO of Rs.23,92,400/- u/s. 68 of the Act. The appellant has submitted as under: 5.During the year appellant had ' withdrawn cash amounting to Rs 23,69,098/- but ITO has erred in making disallowance of the same as Appellant has also deposited the cash amounting to Rs 24,32,4007- as per attached ledger of contra entries in appellant's books of account for your reference. Whereas appellant operates in such market in which appellant has to pay to suppliers in cash and received amount from customer in cash because the laborers who polishes diamond, they are very unorganized and they don't have their sales tax number and even pan number. Due to which appellant has to make payment in cash for which appellant needs to withdraw cash from bank account because he deposit cash which he receives. So as per above explanation your good self may consider the fact that due to necessity of the business appellant needs to transact in cash only which forces him to deposit and withdra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturers make a substantial saving in the income tax in respect of income from sale of unaccounted goods produced and sold by them. His may also be one of the factors due to which the seller may be willing to charge lower rates for unaccounted goods as compared to accounted goods. Keeping all these factors in mind, 25% of the purchase accounted for in the books of account through such fictitious invoices in the name of 33 bogus parties should be disallowed out off the amount of purchases shown to have been made from 33 bogus suppliers. 6.1 In view of the above facts of the case and keeping in mind the observation of the Hon. ITAT, Ahmedabad on this issue mentioned above, out of the questioned purchases(payment made in cash) of Rs.23,92,400/- for which the appellant has no proper documentation as per IT. Act, 1961, 25% of the such purchases i.e. Rs.5,98,100/- is hereby confirmed, which is considered to meet the ends of justice. Therefore, the total addition confirmed is of Rs.5,98,100/- out of total Rs.23,92,400/-. The ground no. 4 to 6 are partly allowed. 5. Before us, none appeared on behalf of the assessee. We note from the above facts that the assessee is working in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed sources u/s 69 of the Act in the hands of the assessee. In the case of ITO v. Shri Rajeev Kumar Gupta ITA No. 273/Agra/2013 , the ITAT held that held that the entire amount of deposit made in the bank account cannot be said to be unexplained because after deposit of the cash amounts, there are withdrawals. In the case of Smt. Satya Bhama Bindal v. ITO ITA No.713/Chd/2012 , ITAT held that that the concept of peak theory needs to be applied both in respect of the opening introduction of cash in hand and various transactions of cash deposits and withdrawals during the year under consideration. The above proposition was also laid down in the case of ITO. Ward-51(4),Kol vs Deb Kumar Jana ITA No.263/Kol/2012 and also in the case of Jagdish N. Thakkar v. ITO ITA No.1475/Mum/2009 . 6. Now, in the instant facts, it needs to be appreciated that while making the disallowance, the assessee s set of facts and the nature of business he is engaged has to be given due consideration while making any disallowance. In the case of ACIT v. ArmeeInfotech [2022] 136 taxmann.com 128 (Ahmedabad - Trib.) , the Ahmedabad ITAT after taking into consideration the assessee s set of facts, the lin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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