Tribunal rules on income calculation for Assessee, considering turnover & peak credit balance.

The Tribunal partly allowed the Assessee's appeal for Assessment Years 2006-07 and 2007-08, directing the calculation of income based on peak credit balance and turnover. The Tribunal considered the turnover and provisions of section 44AD of the Act, ruling in favor of the Assessee's argument that not all sales proceeds deposited in the bank account should be treated as income. The Tribunal's decision, pronounced on 18th September 2018, dismissed one ground and partly allowed the other, emphasizing the application of section 44AD in determining taxable income for both assessment years.

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Issues involved:
1. Calculation of peak credit balance for Assessment Years 2006-07 & 2007-08.
2. Calculation of gross profit based on turnover for the same assessment years.

Analysis:
1. The Assessee challenged the Commissioner of Income Tax (Appeals) order regarding the calculation of peak credit balance and gross profit for AY 2006-07. The Assessee argued that the peak balance and gross profit calculations were erroneous. The Assessee's representative cited a previous ITAT order in a similar case to support their argument. The Departmental Representative supported the lower authorities' orders, stating that the addition made by the assessing officer was justified. The Assessee contended that the entire sales proceeds deposited in the bank account should not be treated as income, as it was used for further business transactions. The Tribunal agreed with the Assessee's argument, considering the turnover and provisions of section 44AD of the Act. The Tribunal directed the Assessing Officer to calculate the income based on a reasonable percentage of the turnover, dismissing one ground and partly allowing the other.

2. The Tribunal found the facts and circumstances for AY 2007-08 to be similar to AY 2006-07. Therefore, the Tribunal applied the same conclusion for AY 2007-08, directing the calculation of income based on peak credit balance and undisclosed turnover. The Tribunal partly allowed the Assessee's appeal for both assessment years, emphasizing the application of the provisions of section 44AD of the Act in determining the taxable income. The Tribunal's decision was pronounced on 18th September 2018, partly allowing both appeals of the Assessee.

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