2015 (12) TMI 1374

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....- (ii) Addition on account of unexplained investment in FDI at - Rs. 2,15,531/- Aggrieved, assessee went in appeal before CIT(A) wherein assessee's appeal was partly allowed and being further aggrieved, assessee is now in appeal before the Tribunal. 3. Ground nos. 1 & 2 being inter related have been taken together and they read as under :- 1. The ld. CIT(A) erred in law and on facts in sustaining addition of Rs. 8,39,832/- from undisclosed ICICI bank account made by AO invoking provisions of section 69 of the Act. Ld. CIT(A) ought to have applied net profit rate on unaccounted transactions though this bank account after having accepted the deposits as trading receipts and granted deduction of expenses incurred. 2. The ld. CIT(A) erred in law and on facts in confirming addition of cash shortage of Rs. 1,03,249/- and payments of Rs. 1,79,481/- treating as capital in nature in this account ignoring the fact that once addition of peak balance is made there is no justification of any separate additions. Ld. CIT(A) ought to have deleted such amount comprising in additions made by AO u/s 69 of the Act. 4. With the assistance of ld. AR and ld. DR and perusing the record available....

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.... date of peak is Rs. 25,64,264/-. The profit from these undisclosed sales is required to be determined at the gross profit disclosed in the return for the year because the appellant is carrying out similar business except that one part is accounted, the other is not. Neither the contention of the AO that profit from undisclosed transactions would be higher than disclosed transactions nor the argument of the assessee that it should be assessed at net profit rates is acceptable. Net profit rates cannot be applied as the appellant has not given any evidence regarding expenses through the account and a presumption can be raised that expenses only in the nature of direct expenses have been incurred. The disclosed gross profit rate of the appellant is 16.78%. Therefore, the profits from transactions would be Rs. 4,30,283/-. 3. Any cash shortage which may occur in the account, i.e. shortage between cash deposit and cash withdrawals as this would signify deposits made by the assessee. From the details provided by the appellant, this cash shortage is seen to be Rs. 1,03,249/-. 4. Any payments made from the account which is not to available for rotation and therefore would not be part ....

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....ddition of cash shortage of Rs. 1,03,249/- and payment of Rs. 1,79,481/- made to G.E. countrywide being capital in nature. Even when the amount of Rs. 1,03,249/- and Rs. 1,79,481/- are forming part of the composite amount of Rs. 8,39,832/- mentioned in ground no.1. 9. From examining the sustained addition by ld. CIT(A) we find that he has rightly sustained addition of Rs. 1,26,750/- being peak of credit less opening balance, interest credit of Rs. 69/-, payment of Rs. 1,79.481/- to GE countrywide as the capital payments do not form part of the business cycle and Rs. 1,03,248/- on account of cash deficit from cash deposit and withdrawal as the source of cash deficit was not ascertainable from the cash flow statement. 10. As regards sustained addition of Rs. 4,30,283/- calculated by ld. CIT(A) @ 16.78% of trading transactions, we find that during the course of assessment proceedings apart from the treatment of undisclosed credits in the undisclosed bank account of Rs. 25,64,264/- Assessing Officer has not raised any objection in the books of account maintained by the assessee and has also not invoked the provisions of section 143 and has accepted the profits disclosed by the assess....

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....and ground no.2 is dismissed. 12. Ground no.3 of the appeal reads as under:- 3. The ld. CIT(A) erred in law and on facts in confirming action of AO in respect of addition made of Rs. 2,25,977/- in respect of account with Surat Peoples Co operative Bank Ltd. Both the lower authorities failed to appreciate that the impugned account was disclosed in the books of the appellant and the closing balance was incorporated in the balance sheet. Ld. CIT(A) ought to have deleted addition made of disclosed account. 13. During the course of assessment proceedings Assessing Officer on verification of the bank account held that Surat Peoples' Co-op. Bank Ltd. found that the closing balance of the bank account was duly reflected in the balance sheet but the transactions entered into this bank account during the year were not shown in the books of account and total of such credit not shown in the books of account is Rs. 2,25,977/- out of which majority are by cash deposit and the withdrawals from this account have been used for issuing cheques to Kotak Securities Ltd. for the purpose of share trading. 14. Appeal before CIT(A) could not bring any relief to the assessee. Assessee is now in appea....