SRI MAHESH KUMAR,SILIGURI vs. DCIT, CIRCLE - 2, SILIGURI, SILIGURI

The assessee in the present case is an individual who is engaged in the business of distribution of wax of IOC under the name and style of his proprietary concern M/s. Kanchanjunga Wax Distributors. The return of income for the year under consideration was filed by him on 02.10.2010 declaring a total income of Rs. 8,15,807/- and agricultural income of Rs. 5,50,000/-. Although the said return was originally processed by the AO under section 143(1), the assessment was Sri Mahesh Kumar subsequently reopened by him and a notice under section 148 was issued by him on 10.07.2014 after recording the following reasons: “An information was received from the Investigation Wing of Siliguri that in A.Y. 2010-11, the assessee has used two undisclosed bank accounts vide no. 1126049494 with SBI, Zero Point, Gangtok and another bank account vide no. 11126045853 to channel his black money. The assessee is resident of Siliguri and assessed to tax under the jurisdiction of the DCIT, Circle-2, Siliguri. On examination of assessee’s return of income for the said year 2010-11, it is found that the assessee has not disclosed the said bank accounts in his return of income. The assessee has also not shown the said unaccounted receipts which deposited in his own bank account. The said deposited money is found to be more than 1 lakh in A.Y. 2010- 11.”

In response to the notice issued by the A.O. under section 148, the return of income was filed by the assessee on 21.11.2014 declaring a total income of Rs. 14,46,100/-. During the course of assessment proceedings, it was noticed by the A.O. that the assessee has maintained another account in the name of M/s. Ganga Travels in Punjab National Bank, Hill Cart Road Branch, Siliguri which was undisclosed. It was also noticed by the A.O. that the total deposits found to be made by the assessee in all his 3 undisclosed bank accounts were amounting to Rs. 6,63,10,000/-. In the return of income filed in response to a notice under section 148, gross profit of Rs. 6,14,378/- was offered by the assessee on the total deposits of 6,63,10,000/- found to be made in his undisclosed bank accounts by claiming the same to be unaccounted sales of his wax distribution business, besides interest income of Rs. 15,915/- earned on the undisclosed bank accounts. The claim of the assessee that the deposits made in his undisclosed bank account represented the unaccounted sales of his wax distribution business however was not Sri Mahesh Kumar accepted by the A.O. in the absence of any documentary evidence to support and substantiate the same. As per the working prepared and furnished by the assessee, the A.O. found that the consolidated peak credit of the 3 undisclosed bank accounts of the assessee during the year under consideration was Rs. 80,16,039/-. He also noted from the year wise peak credit working that such peak credit at the highest was Rs. 48,88,133/- in the previous year relevant to A.Y. 06-07. Accordingly the incremental peak credit for the year under consideration was taken by the A.O. at Rs. 31,27,906/- (Rs. 80,16,039/- - Rs. 48,88,133/-) and after adjusting the amount of Rs. 6,14,378/- declared by the assessee in the return filed in response to notice under section 148 on account of gross profit, net addition of Rs. 25,13,528/- was made by the A.O. to the total income of the assessee in the assessment completed under section 147/143(3) vide an order dated 31.03.2015.

Against the order passed by the AO under section 147/143(3), an appeal was preferred by the assessee before the Ld. CIT (A) and since the submissions made by the assessee while disputing the addition of Rs. 25,13,528/- made by the A.O. were not found acceptable by the Ld. CIT (A), he proceeded to confirm the said addition made by the A.O. for the following reasons given in paragraph no 6 of his impugned order: “I have perused the assessment order and the submission of the Ld. AR of the appellant. The AR of the appellant is harping the issue that since these undisclosesd bank accounts relate to his business transaction and since in the business the appellant gets credit facilities, therefore, payment for purchases has been made later and prior sales realization has resulted in credit balance in the banks and therefore addition for peak credit is not justified. During course of appellate proceedings the appellant was asked Sri Mahesh Kumar to produce any evidence in support of the fact that the credit in these bank accounts relates to wax business. However, the appellant failed to provide any such evidence. The appellant was also asked to provide party- wise break up of purchase and sales (vide order sheet noting dated 07.12.2016)- Mr. Avijit Dutta, AR attended, asked to furnish following: 1. Party-wise breakup of purchase, name, amount, address, sales tax VAT 2. Same detail for sale 3. Prepare cash book for the unaccounted bank a Case adj. To 28th December at 12.30 P.M. However, the appellant could not produce these details (vide order sheet noting dated 09.03.2017- Shri Avijit Dutta, AR appeared could not file detail as per point No. 1 & 2 w.r.t point No. 3 stated that the consolidated cash book submitted should suffice. Case discussed and heard The appellant has failed to establish that the deposits in these two bank accounts relate to the unaccounted transaction wax trade. Further he has not been able to prove that purchase of wax has been made on credit. Therefore, the plea of the appellant cannot be accepted i.e. buying goods on credit and the deposits with the bank accounts relate to wax trading. In view of the above the A.O. is justified in making addition for peak cash credit. Therefore, the appeal of the appellant is dismissed and all the grounds of appeal

are disposed off accordingly.” Aggrieved by the order of the Ld. CIT (A), the assessee has preferred this appeal before the Tribunal.