ITO, Ward-9(2),, Hyderabad v. Sri Mohd Akber,, Hyderabad

ITA 583/HYD/2013 | 2009-2010
Pronouncement Date: 12-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 58322514 RSA 2013
Assessee PAN AGYPA3101A
Bench Hyderabad
Appeal Number ITA 583/HYD/2013
Duration Of Justice 1 year(s) 6 month(s) 17 day(s)
Appellant ITO, Ward-9(2),, Hyderabad
Respondent Sri Mohd Akber,, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 12-11-2014
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 12-11-2014
Assessment Year 2009-2010
Appeal Filed On 25-04-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY JUDICIAL MEMBER ITA NO. 669/HYD/2013 ASSESSMENT YEAR : 2009-10 MOHD. AKBAR HYDERABAD. PAN AGYPA 3101 A INCOME TAX OFFICER CIRCLE 9(2) HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO. 583/HYD/2013 ASSESSMENT YEAR : 2009-10 INCOME TAX OFFICER CIRCLE 9(2) HYDERABAD MOHD. AKBAR HYDERABAD. PAN AGYPA 3101 A (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI S. RAMA RAO REVENUE BY SHRI RAMAKRISHNA BANDI DATE OF HEARING 29-10-2014 DATE OF PRONOUNCEMENT 12 -11-2014 O R D E R PER SAKTIJIT DEY J.M.: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 15/001/2013 PASSED BY THE CIT(A)-VI HYDERABAD FOR THE ASSESSMENT YEAR 2009-10. 2. BRIEFLY STATED ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN WHOLESALE FRUIT BUSINESS. FOR THE AY UNDER CONSIDER ATION ASSESSEE 2 ITA NO. 583 & 669/HYD/2013 SHRI MOHD. AKBAR FILED HIS RETURN OF INCOME ON 13/08/09 DECLARING TO TAL INCOME OF RS. 1 73 400. IN COURSE OF SCRUTINY ASSESSMENT PROCEEDI NG AS MENTIONED BY AO IN THE ASSESSMENT ORDER THOUGH ALL THE REQU IRED NOTICES AND QUESTIONNAIRE WERE ISSUED TO ASSESSEE FOR PRODUCING BOOKS OF ACCOUNT AND OTHER INFORMATIONS AND DETAILS BUT AS SESSEE FAILED TO COMPLY TO EVEN ANY ONE OF THEM. AO THEREFORE HAVI NG NO OTHER OPTION PROCEEDED TO COMPLETE ASSESSMENT EX-PARTE U/S 144 TO THE BEST OF HIS JUDGMENT. AS PER THE INFORMATION AVAILA BLE ON RECORD AO NOTICED THAT ASSESSEE HAS MADE CASH DEPOSITS INTO H IS BANK ACCOUNTS AMOUNTING TO RS. 33 72 365. IN ABSENCE OF ANY EXPLA NATION FURNISHED BY ASSESSEE AO TREATED SUCH CASH DEPOSITS AS UNEXP LAINED CASH CREDITS AND ADDED IT TO INCOME OF ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. AS A RESULT TOTAL INCOME WAS DETE RMINED AT RS. 35 52 365. BEING AGGRIEVED OF SUCH ADDITION ASSESS EE CHALLENGED THE SAME IN APPEAL BEFORE THE CIT(A). 3. IN COURSE OF HEARING OF APPEAL BEFORE THE CIT(A) ASSESSEE SUBMITTED THAT ASSESSEE COULD NOT REPRESENT BEFORE AO AS HE DID NOT RECEIVE ANY SUCH NOTICES ISSUED BY AO DUE TO CHANGE OF ADDRESS. WHILE EXPLAINING THE SOURCE OF CASH DEPOSITS INTO T HE BANK ACCOUNT ASSESSEE BROUGHT IT TO THE NOTICE OF CIT(A) THAT TH OUGH AO HAS EXAMINED ONE BANK ACCOUNT BUT ACTUALLY ASSESSEE I S HAVING THREE BANK ACCOUNTS. IN THIS CONNECTION ASSESSEE SUBMITT ED THAT APART FROM THE ICICI BANK ACCOUNT CONSIDERED BY AO IN THE ASSE SSMENT ORDER PASSED ASSESSEE IS ALSO HAVING SAVINGS BANK ACCOUN T BEARING NO. 30174833939 WITH SBI OLD MALAKPET BRANCH WHEREIN CASH DEPOSITS MADE DURING THE YEAR IS TO THE TUNE OF RS. 1 06 61 370. SO FAR AS THE THIRD ACCOUNT IN ICICI BANK IS CONCERNED IT WAS SU BMITTED BY ASSESSEE THAT THERE IS NO DEPOSITS IN THAT ACCOUNT. EXPLAINING THE SOURCE OF SUCH DEPOSITS IN THE BANK ACCOUNTS ASSES SEE SUBMITTED THAT ASSESSEE INVOLVED IN THE BUSINESS OF FRUIT SAL ES AS A FACILITATOR FOR PARTIES MOSTLY HAILING OUTSIDE OF HYDERABAD AND HIS JOB MAINLY IS SHOWING THE MARKETS TO THE AGENTS OF PARTIES. FURTH ER EXPLAINING 3 ITA NO. 583 & 669/HYD/2013 SHRI MOHD. AKBAR ASSESSEE SUBMITTED THAT MONIES ARE DEPOSITED BY THE PARTIES FOR PURCHASE OF FRUITS AND ON THEIR BEHALF FRUITS ARE P URCHASED AFTER RECEIPT OF MONEY INTO HIS BANK ACCOUNT. HIS SERVICE S ARE CONFINED TO PURCHASE OF GOODS FROM FARMERS AND FACILITATING LOA DING OF GOODS WITH FURTHER RESPONSIBILITY OF PAYING CASH TO THE SUPPLI ERS FOR WHICH HE GETS SERVICE CHARGE OF RS. 500 TO RS. 1000 PER TRUCK WHI CH ONLY CONSTITUTE HIS INCOME. FURTHER ELABORATING ASSESSEE SUBMITTED THAT THE CASH DEPOSITS MADE INTO THE BANK ACCOUNT ARE THE DEPOSI TS MADE BY PARTIES FOR PURCHASE OF FRUITS. THEREFORE THE SAID DEPOSITS BEING MONEY BELONGING TO OTHERS CANNOT BE TREATED AS INCO ME OF ASSESSEE. ALTERNATIVELY IT WAS SUBMITTED BY ASSESSEE THAT EV EN ASSUMING THAT THE CASH DEPOSITS MADE INTO BANK ACCOUNT ARE TRADE RECEIPTS BUT THE ENTIRE AMOUNT DEPOSITED IN TO THE BANK ACCOUNT CANN OT BE CONSIDERED TO BE THE INCOME OF ASSESSEE AS ONLY THE PROFIT ELE MENT IS THE INCOME OF ASSESSEE. ASSESSEE SUBMITTED THAT CONSIDERING TH E ACTUAL PROFIT EARNED IN THIS LINE OF BUSINESS WHICH WILL NOT BE M ORE THAN 1% NET PROFIT RATE OF 1% CAN BE APPLIED. IN SUPPORT OF SUC H CONTENTION ASSESSEE ALSO FILED AN AFFIDAVIT BEFORE CIT(A). 4. ON THE BASIS OF SUBMISSIONS MADE BY ASSESSEE AND INFORMATIONS SUBMITTED IN COURSE OF APPEAL PROCEEDING CIT(A) CA LLED FOR A REMAND REPORT FROM AO. AO IN COURSE OF REMAND AFTER EXAMI NING THE BANK ACCOUNTS FOUND THAT TOTAL CASH DEPOSITS MADE INTO T WO BANK ACCOUNTS AMOUNTED TO RS. 1 40 33 735. HE THEREFORE SUGGEST ED THAT THE ENTIRE CASH DEPOSITS OF RS. 1 40 33 735 SHOULD BE CONSIDER ED AS INCOME OF ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND THE REM AND REPORT AS WELL AS MATERIALS ON RECORD HELD THAT CASH DEPOSIT S MADE INTO THE BANK ACCOUNT DO NOT CONSTITUTE ASSESSEES INCOME DI RECTLY BUT ARE TRADE RECEIPTS OF ASSESSEE. HOWEVER LEARNED CIT(A) WAS OF THE VIEW THAT AS ASSESSEE HAS FAILED TO PRODUCE BOOKS OF ACC OUNT OR ANY OTHER EVIDENCE TO SHOW THAT HIS MARGIN OF PROFIT IS LESS THAN 1% OR ASSESSEE ONLY RECEIVED COMMISSION OF RS. 500 TO RS. 1000 PER TRUCK AS A 4 ITA NO. 583 & 669/HYD/2013 SHRI MOHD. AKBAR FACILITATOR ASSESSEES SUBMISSIONS FOR ESTIMATING PROFIT AT 1% ALSO CANNOT BE ACCEPTED. CIT(A) OBSERVED THAT IN THIS LI NE OF BUSINESS PROFIT GENERALLY IS NOT LESS THAN 10% AND CONSIDERI NG THE LACK OF INFORMATION FURNISHED BY ASSESSEE AND INCORRECT INF ORMATION FURNISHED BY ASSESSEE HE CONCLUDED THAT NET PROFIT RATE OF 1 5% ON THE GROSS RECEIPTS OF RS. 1 40 33 735 WOULD BE REASONABLE. AC CORDINGLY HE WORKED OUT THE PROFIT AT RS. 21 05 060 AND DIRECTED AO TO CONFINE ADDITION TO THAT EXTENT. THE FINDINGS OF THE LEARNE D CIT(A) ARE EXTRACTED BELOW FOR THE SAKE OF CLARITY: 6.5 AS PER THE INFORMATION BROUGHT ON RECORD THE A PPELLANT PRAYS THAT HIS MARGIN OF PROFIT IS LESS THAN 1 % ON SUCH TURNOVER BASED ON THE CALCULATION THAT HE RECEIVES A COMMISSION OF RS. 50 0/- TO 1000/- PER TRUCK WITH THE TURNOVER OF 75 TO 200 TRUCKS CARRIED DURING A YEAR. THIS ARGUMENT IS NEITHER SUPPORTED BY A DOCUMENT NOR THE PRACTICES IN THE SIMILAR TRADE OR ACTIVITIES. FURTHER THE BANK ACCO UNTS OF THE APPELLANT REVEAL THAT THE PEAK CREDITS ITSELF IS MORE THAN TH E AMOUNTS WHAT IS CLAIMED AS HIS INCOME WITH PEAK CREDIT OF RS. 3.7 L AKHS NOTICED IN THE CASE OF SBI ACCOUNT DURING THE YEAR. THESE FACTS DI SPROVE THE CLAIM OF THE APPELLANT REGARDING THE PERCENTAGE OF PROFIT S AS CLAIMED AND AS SUCH THE AFFIDAVIT AS REGARD TO THE PERCENTAGE OF P ROFIT IS NOT RELIABLE. IT IS ALSO A FACT THAT IN A BUSINESS OF THIS KIND THE PROFITS ARE NOT LESS THAN 10% AND WITH THE BACKGROUND OF THE BUSINESS CA RRIED IN CASH AND ALSO THE DENIAL OF THE ASSESSEE ON BANK DEPOSIT S INTO ICICI BANK ACCOUNT AND THE INCORRECT INFORMATION FURNISHED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS AS WELL AS THE A PPELLATE PROCEEDINGS INDICATE THAT THE MARGINS TO THE APPEL LANT ARE MUCH HIGHER THAN WHAT HAS BEEN CLAIMED AND INDICATED. KE EPING ALL THESE FACTS IN MIND I AM OF THE CONSIDERED OPINION THAT THERE WOULD BE A MINIMUM PROFIT OF 15% ON THE GROSS RECEIPTS OF RS. 1 40 33 735/- RELATED TO THE TRADE UNDERTAKEN BY APPELLANT AND TH E SAID RATE OF MARGIN OF PROFIT IS JUSTIFIABLE BY ANY STANDARD AND MAY MEET JUSTICE AT BOTH THE ENDS. ACCORDINGLY THE PROFIT AVAILABLE TO THE APPELLANT ON THE GROSS RECEIPTS OF 1 40 33 735/- IS WORKED OUT TO RS . 21 05 060/- (@ 15 0 /0). THUS THE ADDITION IS CONFIRMED TO THE EXTENT OF RS. 21;05 060/- AS AGAINST THE ADDITION OF RS. 33 72.36 5/- MADE BY THE ASSESSING OFFICER. ON THIS BASIS THIS GROUND OF AP PEAL IS TREATED AS PARTLY ALLOWED. BEING AGGRIEVED OF AFORESAID DIRECTION OF LEARNED C IT(A) BOTH THE DEPARTMENT AND ASSESSEE ARE BEFORE US. 5 ITA NO. 583 & 669/HYD/2013 SHRI MOHD. AKBAR 5. GROUNDS RAISED BY DEPARTMENT ARE AS UNDER: 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS ON FACT S AND IS NOT ACCEPTABLE. 2. THE LD. CIT(A) ERRED IN ACCEPTING THE SUBMISSION S OF THE ASSESSEE THAT THE CASH DEPOSITS MADE INTO BANK ACCO UNT DO NOT CONSTITUTE THE INCOME DIRECTLY BUT IT CONSTITUTES T HE TRADE RECEIPTS OF THE ASSESSEE ON WHICH PERCENTAGE OF THE PROFITS NEEDS TO BE ESTIMATED. 3. THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT AT 15% OF THE GROSS RECEIPTS OF RS. 1 40 33 735 AS NO DETAILS OF THE NATURE OF BUSINESS CARRIED OUT BY THE ASSESSEE ARE AVAILABLE ON RECORD. 6. GROUNDS RAISED BY ASSESSEE ARE AS UNDER: 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS TO THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTIO N OF THE AO IN COMPLETING THE ASSESSMENT WITHOUT PROVIDING PROPER OPPORTUNITY. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISAL LOWANCES MADE BY THE AO U/S 80C OF THE IT ACT. 4. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS. 21 05 060 AS AGAINST THE ADDITION OF RS. 33 72 365. 7. MOSTLY REITERATING THE SUBMISSIONS MADE BEFORE T HE FIRST APPELLATE AUTHORITY LEARNED AR SUBMITTED THAT ASSESSEE ONLY ACTS AS FACILITATOR ON BEHALF OF BUYERS AND SELLERS IN FRUIT MARKET AND EARNS COMMISSION. THEREFORE ESTIMATION OF PROFIT AT 15% IS ON A VERY HIGH SIDE AS ACTUAL PROFIT EARNED BY ASSESSEE WOULD BE 1%. THOUGH LEAR NED AR MADE AN ATTEMPT TO JUSTIFY HIS CLAIM THAT CASH DEPOSITS IN THE BANK ACCOUNTS ARE ACTUALLY NOT HIS INCOME BUT MONEY GIVEN BY PU RCHASERS OF FRUITS BUT ULTIMATELY HE CONFINED HIS ARGUMENT TO THE AD OPTION OF NET PROFIT RATE AT 15% BY LEARNED CIT(A). 8. THE LEARNED DR ON THE OTHER HAND SUBMITTED THA T ASSESSEE NEITHER AT THE STAGE OF ASSESSMENT NOR BEFORE THE C IT(A) HAS EXPLAINED THE SOURCE OF CASH DEPOSITS MADE INTO THE BANK ACCOUNTS. HE SUBMITTED THAT AT THE ASSESSMENT STAGE ASSESSEE EVEN DID NOT BRING TO THE NOTICE OF AO OR FILED ANY INFORMATION THAT APART FROM THE 6 ITA NO. 583 & 669/HYD/2013 SHRI MOHD. AKBAR CASH DEPOSITS MADE IN TO ICICI BANK ACCOUNT HE HAS ALSO MADE CASH DEPOSITS IN THE ACCOUNTS MAINTAINED WITH SBI. LEARN ED DR SUBMITTED THAT THOUGH BEFORE THE FIRST APPELLATE AUTHORITY AS SESSEE MADE AN ALTERNATIVE CLAIM THAT THE CASH DEPOSITS MADE INTO BANK ACCOUNTS CAN BE TREATED AS TRADE RECEIPTS AND ONLY PROFIT ELEME NT CAN BE TAKEN AS HIS INCOME BUT ASSESSEE IN THE RETURN OF INCOME H AS NEVER ADMITTED CASH DEPOSITS AS HIS TRADE RECEIPTS. IN THIS CONNEC TION LEARNED DR DREW OUR ATTENTION TO THE RETURN OF INCOME FILED BY ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR SHOWING A TURNOVER OF RS. 13 11 770. LEARNED DR THEREFORE SUBMITTED THAT AS ASSESSEE H AS FAILED TO EXPLAIN THE SOURCE OF CASH DEPOSITS MADE INTO THE B ANK ACCOUNTS AO IS JUSTIFIED IN TREATING THE ENTIRE CASH DEPOSITS M ADE INTO BANK ACCOUNT AS INCOME OF ASSESSEE. STRONGLY OPPOSING LEARNED A RS CONTENTION FOR REDUCING NET PROFIT RATE ADOPTED BY CIT(A) LEA RNED DR SUBMITTED THAT IN THE RETURN OF INCOME AND COMPUTATION OF INC OME ASSESSEE HAS SHOWN NET PROFIT RS. 1 80 000 ON A TURNOVER OF RS. 13 11 770 WHICH COMES TO 13.72% HENCE NET PROFIT RATE OF 15% ADOP TED BY CIT(A) CANNOT BE REDUCED ANY FURTHER. 9. IN THE REJOINDER LEARNED AR SUBMITTED THAT BEFO RE THE CIT(A) ASSESSEE HAS ADEQUATELY EXPLAINED THE REASONS FOR N OT APPEARING BEFORE THE AO DURING THE ASSESSMENT PROCEEDING. WIT H REGARD TO THE CONTENTION OF THE LEARNED DR THAT ACCOUNT MAINTAINE D WITH SBI IS A CURRENT ACCOUNT LEARNED AR DRAWING OUR ATTENTION T O A COPY OF THE ACCOUNT STATEMENT OF SBI MALAKPET BRANCH COPIES O F WHICH ARE AT PAGE 43 OF PAPER BOOK SUBMITTED THAT THIS IS ONLY T HE SAVINGS BANK ACCOUNT. LEARNED AR FURTHER SUBMITTED THAT WHEN IN ASSESSEES CASE PROFIT IS ESTIMATED IN ABSENCE OF BOOKS OF ACCOUNT BY TREATING CASH DEPOSITS AS TRADE RECEIPTS NO SEPARATE ADDITION CA N BE MADE OF THE DEPOSITS MADE IN BANK ACCOUNTS AS UNEXPLAINED INCOM E. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS ON RECORD AS WELL AS THE ORDERS OF RE VENUE AUTHORITIES. 7 ITA NO. 583 & 669/HYD/2013 SHRI MOHD. AKBAR UNDISPUTEDLY IT IS A FACT ON RECORD THAT ASSESSEE IN COURSE OF ASSESSMENT PROCEEDING NEITHER APPEARED NOR FURNISHE D ANY INFORMATION WITH REGARD TO THE CASH DEPOSITS MADE I NTO THE BANK ACCOUNT FOR WHATEVER MAY BE THE REASON. IN THIS SIT UATION AO HAD NO OTHER OPTION BUT TO COMPLETE THE ASSESSMENT EXPAR TE BY TREATING THE DEPOSITS INTO THE BANK AS UNDISCLOSED INCOME OF ASS ESSEE. HOWEVER BEFORE THE FIRST APPELLATE AUTHORITY AS IT APPEARS FROM RECORD ASSESSEE FURNISHED CERTAIN INFORMATIONS WITH REGARD TO DEPOSITS IN THE BANK ACCOUNTS AND ALSO HAS BROUGHT TO THE NOTICE OF CIT(A) THAT APART FROM THE BANK ACCOUNT CONSIDERED BY AO ASSESSEE AL SO MAINTAINS FEW MORE BANK ACCOUNTS. ON EXAMINATION OF THE SAID ACCOUNTS IT WAS FOUND THAT TOTAL CASH DEPOSITS MADE BY ASSESSEE IN HIS BANK ACCOUNTS DURING THE YEAR AMOUNTED TO RS. 1 40 33 735. ADMITT EDLY ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT BILLS AND VOUCHERS ETC. IN RESPECT OF THE BUSINESS CARRIED ON BY HIM. IT IS FU RTHER EVIDENT FROM THE STATEMENT OF INCOME SUBMITTED BY ASSESSEE ALONG WITH THE RETURN OF INCOME AND A COPY OF WHICH IS AT PAGE 2 OF THE P APER BOOK ASSESSEE HIMSELF HAS STATED THAT HE IS ENGAGED IN W HOLESALE FRUIT BUSINESS. THEREFORE ASSESSEES CLAIM THAT HE IS ON LY ACTING AS A FACILITATOR BETWEEN PURCHASERS AND SELLERS OF FRUIT S IN FRUIT MARKETS IS NOT ACCEPTABLE IN ABSENCE OF ANY SUPPORTING EVIDENC E. FURTHER ASSESSEES CLAIM THAT CASH DEPOSITS MADE IN THE BAN K ACCOUNTS REPRESENT MONIES GIVEN BY BUYERS AND DOES NOT BELON G TO HIM AND FURTHER FACT THAT HE IS ONLY EARNING COMMISSION IS ALSO NOT ACCEPTABLE IN ABSENCE OF ANY CORROBORATIVE EVIDENCE. IN THE AF ORESAID VIEW OF THE MATTER THE CASH DEPOSITS MADE INTO BANK ACCOUNTS H AVE TO BE CONSIDERED AS RECEIPTS FROM FRUIT BUSINESS CARRIED ON BY ASSESSEE. IN FACT ASSESSEE BEFORE CIT(A) HAS ALSO ACCEPTED THIS POSITION WHILE CONTENDING THAT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH RECEIPTS CAN BE ASSESSED AS HIS INCOME. 11. HAVING HELD THE DEPOSITS MADE INTO THE BANK ACC OUNTS AS RECEIPTS FROM THE BUSINESS OF ASSESSEE THE NEXT IS SUE WHICH ARISES 8 ITA NO. 583 & 669/HYD/2013 SHRI MOHD. AKBAR FOR OUR CONSIDERATION IS THE APPROPRIATE NET PROFIT RATE TO BE APPLIED TO SUCH RECEIPTS. AS CAN BE SEEN THOUGH LEARNED CIT( A) HAS OBSERVED THAT MINIMUM PROFIT RATE IN THIS LINE OF BUSINESS I S 10% ULTIMATELY HE ADOPTED NET PROFIT RATE OF 15%. HOWEVER CONSIDERIN G THE FACT THAT ASSESSEE IS IN WHOLESALE BUSINESS IN OUR VIEW THE NET PROFIT ADOPTED AT 15% IS HIGH. IN THE PRESENT CASE ADMITTEDLY AS SESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT THEREFORE PROFIT OF ASSESSEE IN ANY WAY HAS TO BE ESTIMATED ON A REASONABLE BASIS. AS N O COMPARABLE CASE IN SIMILAR LINE OF BUSINESS HAS BEEN BROUGHT O N RECORD PROFIT HAS TO BE ESTIMATED BY ADOPTING SOME PRINCIPLE. IN THIS CONTEXT WE REFER TO THE PROVISIONS OF SECTION 44AF WHICH PROVIDES F OR ESTIMATION OF PROFIT AT 5% IN CASE OF A PERSON ENGAGED IN RETAIL TRADE AND WHO DOES NOT MAINTAIN ANY BOOKS OF ACCOUNT. THEREFORE TAKIN G IT AS AN INDICATOR AND CONSIDERING THE FACT THAT NET PROFIT RATE IN WH OLESALE TRADE WOULD BE LOWER THAN THE NET PROFIT RATE OF RETAIL TRADE WE CONSIDER IT APPROPRIATE TO ADOPT THE NET PROFIT RATE AT 5%. ACC ORDINGLY WE DIRECT THE AO TO ESTIMATE THE PROFIT AT 5% ON GROSS RECEIP TS OF RS. 1 40 33 735 IN STEAD OF 15% AS DIRECTED BY LEARNED CIT(A). 12. SO FAR AS THE ISSUE RAISED IN DEPARTMENTS APPE AL RELATING TO TREATING THE DEPOSITS MADE IN THE BANK ACCOUNTS AS UNEXPLAINED INCOME OF ASSESSEE IT IS THE CONTENTION OF LEARNED AR THAT ONCE THE DEPOSITS ARE TREATED AS TRADE RECEIPTS AND PROFIT I S ESTIMATED IT CANNOT AGAIN BE TREATED AS UNEXPLAINED INCOME OF AS SESSEE. HOWEVER WE ARE UNABLE TO ACCEPT THE SAME. IT IS UN DISPUTED FACT THAT CASH DEPOSITS HAVE BEEN MADE INTO THE BANK ACCOUNTS TO THE TUNE OF RS. 1 40 33 735. NOT ONLY BEFORE AO BUT EVEN BEFO RE CIT(A) ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF SUCH D EPOSITS WITH SUPPORTING EVIDENCE. HAVING FAILED TO EXPLAIN THE S OURCE OF SUCH DEPOSITS ASSESSEE WAS COMPELLED TO MAKE AN ALTERNA TIVE CLAIM BEFORE THE CIT(A) THAT IF THE CASH DEPOSITS ARE TO BE CONSIDERED AS TRADE RECEIPTS THEN ONLY NET PROFIT ON SUCH RECEI PTS CAN BE ASSESSED AS INCOME. EVEN THOUGH CASH DEPOSITS IN THE BANK AC COUNT HAVE BEEN 9 ITA NO. 583 & 669/HYD/2013 SHRI MOHD. AKBAR TREATED AS TRADE RECEIPTS AND PROFIT HAS BEEN ESTIM ATED BUT FACT REMAINS THAT SOURCE OF CASH DEPOSITS INTO THE BANK ACCOUNTS HAVE NOT BEEN EXPLAINED. THEREFORE EVEN IF PROFIT IS ESTIMA TED ON SUCH DEPOSITS BY TREATING THEM AS TRADE RECEIPTS BUT A O CANNOT BE PRECLUDED FROM TREATING SUCH DEPOSITS AS UNEXPLAINE D INCOME OF ASSESSEE U/S 69B OF THE ACT. HOWEVER ON A PERUSAL OF THE CONCERNED SAVINGS BANK ACCOUNTS WE FIND THAT THERE ARE NOT O NLY CASH DEPOSITS BUT THERE ARE CASH WITHDRAWALS ALSO. THEREFORE THE ENTIRE CASH DEPOSITS MADE DURING THE YEAR CANNOT BE TREATED AS INCOME OF ASSESSEE. IN THESE CIRCUMSTANCES THE PEAK CREDIT A PPEARING IN THE BANK ACCOUNTS CAN BE CONSIDERED AS UNEXPLAINED INCO ME OF ASSESSEE. IN COURSE OF HEARING BEFORE US LEARNED A R SUBMITTED THAT ASSESSEE WOULD WORK OUT THE PEAK CREDIT FOR BOTH TH E BANK ACCOUNTS AND SUBMIT IT BEFORE AO. IN VIEW OF SUCH SUBMISSION WE DIRECT AO TO VERIFY BANK ACCOUNTS AND ALSO EXAMINE PEAK CREDITS WORKED OUT BY ASSESSEE AND THEREAFTER MAKE THE ADDITION ON THE BA SIS OF PEAK CREDIT WORKED OUT. THEREFORE THIS GROUND OF THE DEPARTMEN T CAN BE CONSIDERED TO BE ALLOWED FOR STATISTICAL PURPOSES. 13. SO FAR AS GROUND RAISED BY DEPARTMENT WITH REGA RD TO ESTIMATION OF PROFIT IN VIEW OF OUR DECISION IN THIS REGARD W HILE DECIDING ASSESSEES GROUND THIS GROUND BECOMES INFRUCTUOUS AND ACCORDINGLY DISMISSED. 14. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLO WED AND APPEAL OF DEPARTMENT IS PARTLY ALLOWED FOR STATISTICAL PURPOS ES. PRONOUNCED IN THE OPEN COURT ON 12 TH NOVEMBER14. SD/- SD/- (P.M. JAGTAP) (S AKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD DATED: 12 TH NOVEMBER 2014 10 ITA NO. 583 & 669/HYD/2013 SHRI MOHD. AKBAR KV COPY TO:- 1) ITO WARD 9(2) 2 ND FLOOR D-BLOCK IT TOWERS AC GUARDS HYDERABAD. 2) SRI MOHD. AKBAR 18-12-418/8/93/1 HAFEZ BABA N AGAR HYD. 3) CIT(A)-VI HYDERABAD 4) CIT-VI HYDERABAD 5)THE DEPARTMENTAL REPRESENTATIVE I.T.A.T. HYDER ABAD.