2015 (12) TMI 1367

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....aggregate amount of Rs. 11,51,953/- in the account maintained by him with Nashik branch of Bank of Baroda. The said bank account was not disclosed to the department. Before the AO, the assessee submitted that he is carrying on the business of dealing in Soaps and FMCG products on a small scale and the deposits made into the bank account represents the sale proceeds/collection from debtors. Accordingly it was submitted that the profit from the business activities may be estimated @ 5% of the turnover as per the provisions of sec. 44AF of the Act by treating the aggregate amount of deposits as turnover of the assessee. However, the assessee could furnish only few bills to support the purchases. He could not furnish details of registration req....

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....ufacture of soaps. Besides the above the assessee has been carrying on trading in other branded soaps and FMCG products on a small scale in his individual capacity and used to supply them to the customers of the partnership firm. The said customers deposited the funds into his bank account and the impugned deposits represent sales collections. Since the assessee did not maintain regular books of account, he could not furnish all the details that were called for by the assessing officer. Accordingly he submitted that the net profit should have been estimated @ 5% of the aggregate amount of deposits as per the provisions of sec. 44AF of the Act. 5. In the alternative, he submitted that the peak credit of Rs. 1,99,850/- should have been taken....

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....cities only shows that the deposit was related to some other activity carried on by the assessee. Hence, as rightly pointed out by Ld D.R, the peak credit theory shall not have application in such kind of situation. 8. Then the next question that arises is as to what could be the nature of deposit made into the bank account. According to the assessee, the same represents sales collections, but the said claim was not accepted by the tax authorities for the reason that the assessee has failed to prove the same with adequate materials. It is a fact that the assessee could not substantiate his claim with enough materials, but I am of the view that under such circumstances, the nature of deposits should be gathered from the surrounding circumst....

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....of sec. 68 do not have application to the facts of the present case. 10. Once it is held that the impugned deposits may represent sales collection, then the question of estimation of profit would arise. The assessee's claim is that the provisions of sec. 44AF should be applied. However, in my view, the said provisions can be applied only if the assessee maintains some record to show that the business was actually carried on and further he satisfies about the quantum of sales. In the instant case, the assessee has failed to show any record and hence, in my view, the provisions of sec. 44AF shall not have application in the facts and circumstances of the case. 11. I notice that the assessee has put up an alternative contention that the peak....