SHRI ARUN KUMAR PROP . MAHALAXMI BUILDERS & COLONIZERS,AMRITSAR vs. INCOME TAX OFFICER WARD - 4 (1) , AMRITSAR

Ground no. 1 to 6 of the appeal are relate to confirming the addition of Rs.7,48,462/- made on account of peak credit balance in the saving bank account with Central Bank of India and the deletion of Rs.2,11,574/- by applying 15% read section 44AF of bank transaction of Rs.14,10,495/-.These grounds are interlinked, hence same are being considered together.

Being aggrieved the assessee filed an appeal before CIT(Appeal). Where in same submissions were made, however, CIT(Appeal) has observed that the cash deposits in the bank account are unexplained, therefore is sustained the addition of Rs.7,48,462/- made on account of peak credit balance. However CIT(Appeal) has deleted the addition of Rs.2,11,574/- being estimated profit @ 15% on the cash deposits of Rs.14.10 lacs appearing in the said bank account. However, the CIT(Appeal) has allowed credit of return of income of Rs.1,44,000/- has shown in the return of income.

Being aggrieved the assessee has filed this appeal before this tribunal. Ld. counsel submitted that the bank deposits are related to his business and the assessee is not disclosing income as per the provisions of section of 44AF of the Act, therefore the AO has rightly considered 15% profit on bank deposits of

Per contra the learned Sr. DR relied on the CIT(Appeal).

We have heard the rival submissions and perused the material available on record. We find that the total credits of Rs.14.10 lacs in the saving bank account of the assessee were considered as business receipts although unaccounted by the AO on which 15% profit was estimated and addition of Rs.2,11,574/- was made. Since the AO has considered the same as business receipts, therefore we are of the considered opinion that CIT(Appeal) was not justified in considering and making the addition on account of peak credit when the addition has already been considered on account of profit as per the provisions of section 44AF of the Act. Therefore, the addition to the extent of Rs.2,11,574/- is sustained and balance addition on account of peak credit of Rs.7,48,462/- is deleted. Further we find that the CIT(Appeal) has allowed credit of return of income at Rs.1,44,000/- from the addition of Rs.7,48,462/- sustained by him. In view of these, we are of the opinion that the credit of profit of Rs.97,500/- disclosed u/s 44AF @ 15% on sale of building material of Rs.6.50 lacs is allowable from the addition of Rs.2,11,574/-. In view of these facts the above grounds of appeal are partly allowed.

In the result, the appeal of the assessee is partly allowed.