LAKHAN BANSIDHAR GUPTA,MUMBAI vs. ITO 24(2)(4), MUMBAI

आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A) for the assessment year 2008-09, in the matter of order passed u/s. 143(3) of the I.T. Act. 2. The following grounds have been raised by the assessee. 1) On the facts and in the circumstances of the case and in law the Commissioner of Income-tax (Appeals) erred in confirming the Original Order without appreciating that: i) the mandatorily binding provisions of the Act were ignored while framing the Order. ii) the principles of "Peak Credit" theory were ignored while making additions u/s 68 of the Act.

M/s. Lakhan Bansidhar Gupta iii) the application of ratio of the several judicial precedents were ignored while framing the Order. 2) The assessee craves leave to add, alter, delete, modify or abandon any of the grounds of appeal

3. Rival contentions have been heard and record perused.

4. Facts in brief are that the assessee is in the Retail Business of selling fast food i.e., Vada Pav from a temporary make shift. During the course of assessment, AO asked regarding source of deposit of cash in bank. The assessee explained the source of the cash deposit in the bank account as that out of cash sale and in evidence, filed cash and bank summary, details of purchases, Profit & Loss account and the Balance Sheet. However, AO did not agree with the same and added the entire amount of cash deposited in the bank which was realised by assessee out of sales proceeds. As per our considered view, assessee is eligible to be assessed u/s.44AF as he satisfies all the conditions of taxation on presumptive basis. He should have been assessed u/s.44AF @ 5% of his total sales. The sales of the assessee is Rs.13,97,704/- therefore, his taxable income u/s.44AF could not exceed 5% of sales i.e., Rs.69885/-. However he had offered a sum of Rs.1,46,405/- for taxation which is 10.47% of the sales.

5. The peak credit in the cash account of the assessee in which cash was deposited was Rs.45424/- on 04/09/2007. Therefore, even if any addition is made, same should have been restricted to Rs.45424/-, being the peak credit in the bank account.

M/s. Lakhan Bansidhar Gupta 6. Keeping in view the totality of facts and circumstances of the case, we confirm addition of Rs.45,424/- as against addition made by the AO on account of entire amount of cash deposit which was actually utilized by assessee for purchasing the material required for his business of Vada Pav. 7. In the result, appeal of the assessee is allowed in part.