9911796707
TMI Blog2014 (7) TMI 1383X X X X Extracts X X X X X X X X Extracts X X X X ..... osited in the bank of M/s Glass Plastic Co. of India, from which cash was withdrawn of exact amount of the cheque deposited. In view of the facts and circumstances of the case where the exercise was being carried out from day-to-day, there is no merit in treating the total deposits as unexplained and the theory of peak credit is to be applied to work out the addition in the hands of the assessee. CIT(A) direction that the addition on account of peak credits be made in the hands of the assessee and the benefit of surrendered amount should be given after making total additions in the hands of the assessee upheld - no merit in ground of appeal No. 1 raised by the revenue. - SHRI T.R.SOOD ACCOUNTANT MEMBER AND Ms. SUSHMA CHOWLA, JUDICIAL MEMBER For the Assessee : Shri Rajiv Saldi For the Department : Shri Akarshan Singh, DR ORDER PER SUSHMA CHOWLA, J.M. : The appeal filed by the Revenue is against the order of the Commissioner of Income-tax (Appeals), Patiala dated 17.09.2012 relating to assessment year 2009-10 against the order passed under section 143(3) of the Income Tax Act, 1961 (in short the Act ). The assessee has filed Cross Objections aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee was unable to produce the books of account before the Assessing Officer on the plea that all the office records were destroyed in a fire at the factory on 14.12.2009. The assessee had declared sales at Rs. 1.20 Cr and had also included surrender of Rs. 45 lacs as part of its total receipts in addition to job work of Rs. 791,565/- and shop rent of Rs.90,000/-. During the year under consideration, the Assessing Officer had claimed expenditure of Rs.1.71 Cr as against business receipts of Rs.1.28 Cr and the Assessing Officer was of the view that the said book results were lower than the results shown in the immediately preceding year and the assessee was show caused as to why in the absence of books of account, the book results should not be rejected. Various other defects noted by the Assessing Officer in the explanation filed by the assessee from time to time which are referred to under para 2 at pages 2 to 9 of the assessment order. In view of the said defects, the assessee was show caused to explain as to why the books of account should not be rejected in view of the provisions of section 145(3) of the Act and income estimated in the hands of the assessee. The reply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee with Vijaya Bank which was more than the sales of Rs.1.20 Cr declared by the assessee. The difference in the credit entries was treated as un-accounted sales and an addition of Rs. 23,98,275/- was made on this account. The Assessing Officer further noted that though there was violation of provisions of section 40A(3) of the Act, but no separate addition was made on this account as gross profit was estimated after rejection of books of account. In respect of the payments to M/s Glass Plastic Co. of India to whom payment of Rs. 1.16 Cr was made from the bank account with Vijaya Bank during the period 30.12.2008 to 31.3.2009 against purchases and in the absence of any corroborative evidence and the statement of wife of the proprietor of M/s Glass Plastic Co. of India, sum of Rs.1.16 Cr was treated as unexplained credit. However, since the assessee had already surrendered Rs. 45,00,000/- in the manufacturing and Profit Loss Account, the benefit of the same was given and the remaining sum of Rs. 71,94,000/- was treated as assessee's income from undisclosed sources. Further disallowance was made on account of interest due on advances made to one M/s Saasha Consultancy a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king addition of Rs. 71,94,000/- as against Rs. 1,16,94,000/- being unexplained credits. 9. The issue vide ground No. 2 raised by the revenue is against the direction of Commissioner of Income Tax (Appeals) in giving credit of surrendered income of Rs. 45 lacs while dismissing the addition of Rs. 23,98,275/- on account of suppression of gross profit, though the Assessing Officer had allowed the benefit of the said Rs. 45 lacs while making the disallowance on account of credits being unexplained. 10. The assessee has filed Cross Objection against the rejection of books of account and against addition of alleged suppression of gross profit at Rs. 23,98,275/-. The assessee is also aggrieved by the addition of peak credit alleging that said payments were nothing but payments made against purchases. An alternate plea was raised by the assessee vide ground No. 4 that further benefit of telescoping of both the additions should have been allowed to the assessee. 11. Shri Rajiv Saldi appeared for the assessee and Shri Aakarshan Singh appeared for the revenue and put forward their rival contentions. 12. We have heard the rival contentions and perused the record. The assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence furnished by the assessee, the Assessing Officer found it reasonable to apply the percentage of material assumed as in the last year to work out the income of the assessee for the year under consideration. Consequently, GP rate of 12.93% was applied for working out suppressed income for the year under consideration. The Assessing Officer further noted that there was total credit in the bank account with Vijaya Bank which was more than the sales of Rs. 1.20 Cr declared by the assessee and assessee was failed to explain the credit in the said bank account, the same were assumed to be unaccounted sales. Consequently, the Assessing Officer adopting the cost of material also computed the sales at Rs.1.85 Cr on which GP rate of 12.93% was applied to work out the addition of Rs. 23,98,275/-. 15. The assessee surrendered an income of Rs. 45,00,000/- for the year under consideration and the plea of the assessee was that the addition, if any made in the hands of the assessee should be adjusted first against the surrendered income and no further addition should be made in the hands of the assessee. We uphold the application of the net profit rate of the preceding year to determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-existent party. 18. Before the Commissioner of Income Tax (Appeals), the claim of assessee was that it had made purchases from the said concerns, which were found to be bogus and the Assessing Officer had made addition on account of unexplained credits of the bank account of the assessee. However, during the appellate proceedings, an alternate plea was raised by the assessee that even if the deposit of cash in about four months was taken, then going by the version of Assessing Officer, there were minimum withdrawals from the account of Shri Kaura and hence, only the maximum amount which could be presumed as unexplained would not be more than Rs. 14,00,000/- as it was the same amount which was rotated on day-to-day basis. The Commissioner of Income Tax (Appeals) accepted the alternate plea of the assessee that addition if any, if had to be made in the hands of the assessee, then Assessing Officer should apply peak of credit by making the addition. 19. We are in conformity with the order of Commissioner of Income Tax (Appeals) especially in view of the investigation made by the Assessing Officer that the concern M/s Glass Plastic Co. of India was a bogus party created by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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