Sh. Manoj Kumar Jain, New Delhi V. ITO, New Delhi

ITA 4517/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5747 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 04-03-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 27-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: STEPHEN GEORGE
• Keywords: Income from undisclosed sources; Principle of natural justice; Peak credit; Corroborative evidences; Accommodation entries
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH E DELHI ] BEFORE SHRI C. L. SETHI, JM SHRI K. D. RANJA N, AM I. T. APPEAL NO. 4517 (DEL) OF 2009. ASSESSMENT YEAR : 2006-07. SHRI MANOJ KUMAR JAIN, THE INCOME-TAX OFFICER, SANJAY AND RAJIV, C. AS., 201 & 203, PRAKASH HOUSE, IIND FLOOR, VS. W A R D : 3 (1), 4379/4B, ANSARI ROAD, DARYA GANJ, N E W D E L H I 110 002. N E W D E L H I. P A N / G I R NO. AVE PS 2916 A. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI RAJIV JAIN, C. A.; DEPARTMENT BY : SHRI STEPHEN GEORGE [CIT] - D.R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 20 06-07 ARISES OUT OF THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VI, NEW DELHI. 2. THE FIRST ISSUE FOR CONSIDERATION RELATES TO ASS UMPTION OF JURISDICTION BY THE ASSESSING OFFICER UNDER SECTION 143(3) / 144 OF THE ACT TO PA SS THE ASSESSMENT ORDER WITHOUT SERVING ANY NOTICE UNDER SECTION 143(2) OF THE ACT. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE RETURN OF INCOME FILED ON 31 ST OCTOBER, 2006 WAS PROCESSED UNDER SECTION 143(1) O N 5/12/2006. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) / 142(1) OF THE ACT WAS ISSUED ALONG WITH QUESTIONNAIRE WHICH WAS SERVED UPON THE ASSESS EE PROPERLY. SINCE THE ASSESSEE DID NOT 2 I. T. APPEAL NO. 4517 (DEL) OF 2009. COMPLY WITH THE REQUIREMENT OF NOTICE THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT UNDER SECTION 144 OF THE ACT. 3. BEFORE THE LD. CIT (APPEALS) THE ASSESSEE SUBMIT TED THAT NOTICE UNDER SECTION 143(2) WAS NOT SERVED UPON HIM AND, THEREFORE, ASSESSMENT FRAM ED UNDER SECTION 144 WAS WITHOUT JURISDICTION. HOWEVER, THIS CONTENTION OF THE ASSE SSEE WAS REJECTED BY THE LD. CIT (APPEALS). HE OBSERVED THAT AS PER THE REMAND REPORT OF THE ASSES SING OFFICER NOTICE UNDER SECTION 143(2) WAS ISSUED AND SENT THROUGH SPEED POST AT THE CORRECT A DDRESS OF THE ASSESSEE AND THE EVIDENCE TO THIS EFFECT HAD BEEN GIVEN IN THE SHAPE OF SPEED POST BO OKING LIST OF THE POSTAL AUTHORITIES. THE LD. CIT (APPEALS) HAS ALSO NOTED THAT NOTICE DATED 27/0 6/2007 WAS SENT THROUGH SPEED POST TO THE ASSESSEE AT HIS ADDRESS E-10B, JAWAHAR PARK, LAXMI NAGAR, NEW DELHI. THE SECOND NOTICE WAS ISSUED ON 15/01/2008. THE ASSESSEE DID NOT RESPOND TO THE NOTICE. THE THIRD NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 7/03/2008 FIXING TH E CASE FOR HEARING ON 28/03/2008 THROUGH SPEED POST AT THE ADDRESS OF THE ASSESSEE. THE ASS ESSEE ONCE AGAIN FAILED TO REPLY. THE 4 TH NOTICE UNDER SECTION 143(2) WAS ISSUED ON 21/07/2008 FIXIN G THE CASE FOR HEARING ON 28/07/2008. THE ASSESSEE AGAIN FAILED TO RESPOND. NOTICE UNDER SEC TION 143(1) OF THE ACT WAS ISSUED ON 6/10/2008 AND WAS SERVED THROUGH PERSONAL SERVICE. THIS NOTICE WAS ALSO NOT COMPLIED WITH BY THE ASSESSEE. THE ASSESSING OFFICER AGAIN ISSUED N OTICE UNDER SECTION 143(2) OF THE ACT ON 7/11/2008 FIXING THE CASE FOR HEARING ON 12/11/2008 . SINCE THERE WAS NO RESPONSE FROM THE ASSESSEE, THE ASSESSING OFFICER PROVIDED FINAL OPPO RTUNITY OF BEING HEARD VIDE LETTER DATED 2/12/2008. THE ASSESSEE FAILED TO REPLY THIS NOTIC E ALSO AND THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 144 OF THE ACT. ON THE BA SIS OF ABOVE FACTS, LD CIT(A) RELYING ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. MADHSY FILMS P. LTD. 301 ITR 69 (DEL) UPHELD THE COMPLETION OF ASSESSMENT UNDER SEC TION 144 OF THE ACT. 4. THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LD. C IT (A) FILED APPEAL BEFORE THE TRIBUNAL CHALLENGING THE ASSUMPTION OF JURISDICTION UNDER SE CTION 143(3) / 144 OF THE ACT. DURING THE COURSE OF HEARING THE LD. AR OF THE ASSESSEE ADMITT ED THAT THE ASSESSEE HAD NO EVIDENCE TO SUPPORT HIS CONTENTION THAT THE NOTICE WAS NOT SERV ED ON THE ASSESSEE. THE ASSESSEE HAS ALSO NOT 3 I. T. APPEAL NO. 4517 (DEL) OF 2009. FILED ANY AFFIDAVIT TO SUPPORT HIS CONTENTION THAT NOTICE WAS NOT RECEIVED BY HIM. ON THE OTHER HAND LD CIT(DR) SUPPORTED THE ORDER OF CIT(A). WE H AVE GONE THROUGH THE MATERIAL ON RECORDS CAREFULLY. FROM THE FACTS STATED ABOVE, IT IS EVID ENT THAT THE ASSESSING OFFICER HAD PROVIDED ALMOST SIX OPPORTUNITIES, BUT THE ASSESSEE HAD NOT AVAILED OF THE SAME. THE NOTICES UNDER SECTION 143(2)/142(1) HAVE BEEN SENT THROUGH SPEED POST AND NONE OF THE NOTICES HAVE BEEN RECEIVED BACK. THEREFORE, IN THE ABSENCE OF ANY CONTRARY EV IDENCE BROUGHT ON RECORD BY THE ASSESSEE, IT HAS TO BE PRESUMED THAT THE NOTICES WERE SERVED ON THE ASSESSEE. ACCORDINGLY, IN OUR CONSIDERED OPINION THE LD. CIT (APPEALS) WAS JUSTIFIED IN REJE CTING THE GROUND RAISED BY THE ASSESSEE. 5. THE NEXT ISSUE FOR CONSIDERATION RELATES TO CONF IRMING THE ADDITION OF RS.3,33,30,600/- REPRESENTING THE CASH DEPOSITED IN THE BANK. THE F ACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSING OFFICER AS PER THE ITS DETAILS RECEIVED F ROM DEPARTMENTAL COMPUTER SYSTEM, THE TOTAL CASH DEPOSITED BY THE ASSESSEE IN JAIN CO-OPERATIVE BANK LTD., DARYA GANJ, DURING THE PERIOD UNDER CONSIDERATION WAS RS.3,33,30,600/-. SINCE TH E ASSESSEE FAILED TO EXPLAIN THE SOURCE AND ACQUISITION OF THE CASH DEPOSITED, THE ASSESSING OF FICER TREATED THE INCOME FROM UNDISCLOSED SOURCES. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMI TTED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRANSPORT AGENCY, JOB WORK AND TRADING IN INDIVIDUAL NAME AS WELL AS THREE PROPRIETORSHIP CONCERNS, M/S. DYNAMIC SOLUTIONS, M/ S. BALAJI FABRICS AND M/S. ROYAL TRANSPORT. IT WAS SUBMITTED THAT THE DEPOSITS MADE IN THE BANK ACCOUNT WERE OUT OF SALE PROCEEDS AND WITHDRAWALS REPRESENTED THE PAYMENT FOR PURCHASES. THE ASSESSING OFFICER WITHOUT IDENTIFYING PEAK OR MAXIMUM BALANCE IN THE BANK ACCOUNT, AND AN ALYZING THE PEAK WITH CAPITAL TREATED THE ENTIRE CASH DEPOSITED IN THE BANK AS INCOME FROM UN DISCLOSED SOURCES INCLUDING THE LOSSES FROM THE TRADING ACTIVITIES WHICH APPEARED AS DEBIT ITEM S IN THE PROFIT AND LOSS ACCOUNT. 6. THE LD. CIT (APPEALS) ASKED THE COMMENTS OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IN HIS REMAND REPORT SUBMITTED THAT THE ASSESSEE HA D FAILED TO EXPLAIN THE SOURCE OF CASH DEPOSIT IN THE BANK ACCOUNT DESPITE REPEATED OPPORTUNITIE S PROVIDED TO HIM DURING THE ASSESSMENT PROCEEDINGS. THUS, HE HAD FAILED TO DISCHARGE THE ONUS CAST UPON HIM UNDER SECTION 69 OF THE ACT. IT WAS ALSO POINTED OUT BY THE ASSESSING OFFI CER THAT THE MAJOR TURNOVER OF THE ASSESSEE IS 4 I. T. APPEAL NO. 4517 (DEL) OF 2009. DISCLOSED IN HIS CONCERN M/S. ROYAL TRANSPORT AT RS .3,39,70,447/- WHILE THE TURNOVER IN OTHER TWO CONCERNS M/S. BALAJI FABRICS AND MANOJ KUMAR JAIN W AS RS.15,47,191/- AND RS.3,11,640/-. HOWEVER THE DEPOSIT OF CASH OF RS.3,33,30,600/- WA S MADE IN THE BANK ACCOUNT IN THE NAME OF M/S. DYNAMIC SOLUTIONS, PROP. MANOJ KUMAR JAIN, WD -123/B, GALI NO. 1, SHAKARPUR, DELHI-92 AND NOT IN ANY OF THE AFORESAID CONCERNS DECLARED B Y THE ASSESSEE IN HIS RETURN OF INCOME. IT WAS ALSO STATED THAT THE ASSESSEE HAD FAILED TO PROVE T HE NEXUS BETWEEN THE SALE PROCEEDS OF THREE DIFFERENT CONCERNS AMOUNTING TO RS.3,58,29,278/- RU N BY HIM AND CASH DEPOSITED IN THE BANK ACCOUNT OF M/S. DYNAMIC SOLUTIONS. I.E. IN THE BAN K ACCOUNT OF 4 TH CONCERN AND THE EXPENSES IN THREE CONCERNS WERE MET OUT OF BANK ACCOUNTS OF M/S . DYNAMIC SOLUTIONS. THUS THE ASSESSEE HAD FAILED TO EXPLAIN THE SOURCE OF CASH. AS REGARDS T HE ASSESSEE'S CONTENTION REGARDING PEAK AND MAXIMUM BALANCE IN THE BANK ACCOUNT, THE ASSESSING OFFICER SUBMITTED THAT THE CONCEPT OF PEAK OR MAXIMUM BALANCE WOULD BE RELEVANT ONLY WHEN THE ASSESSEE PROVES THAT THERE WAS A CYCLE OF DEPOSIT OR WITHDRAWALS I.E. WHERE HE WITHDREW AND D EPOSITED THE SAME CASH. HOWEVER, THE ASSESSEE HAD FAILED TO PROVE SUCH FACT. IN FACT HE ALSO NOTED THAT IN MOST OF THE TRANSACTIONS WHERE MONEY WAS DEPOSITED WAS TRANSFERRED TO DIFFER ENT BANK ACCOUNTS WITHIN THE SAME BANK BRANCH AND SOME CHEQUES WERE ISSUED TO OTHER PARTIE S, BOTH OF WHICH HAVE NOT BEEN IDENTIFIED BY THE ASSESSEE. THE ASSESSEE HAD DEPOSITED RS.3,33,3 0,600/- IN HIS BANK ACCOUNT AND WITHDREW JUST RS.1,00,000/- DURING THE YEAR IN CASH. THEREFORE, NO PART OF THE CASH OF RS.3,33,30,600/- EXCEPT FOR RS.1,00,000/- CAN BE SAID TO BE SOURCED OUT OF WITHDRAWALS. HE ACCORDINGLY REJECTED THE CONTENTION OF THE ASSESSEE FOR TAKING THE PEAK OR M AXIMUM BALANCE. 7. THE REMAND REPORT WAS GIVEN TO THE ASSESSEE FOR HIS COMMENTS WHEREIN SAME ARGUMENTS WERE REITERATED. IT WAS SUBMITTED THAT BEST JUDGEM ENT ASSESSMENT IS TO BE COMPLETED ON CERTAIN PRESUMPTIONS, WHICH SHOULD APPEAR TO BE REASONABLE. THE FACT THAT LOSSES SUFFERED IN TRADING ACTIVITY APPEAR AS DEBIT ITEM IN THE PROFIT AND LOS S ACCOUNT FILED ALONG WITH THE RETURN OF INCOME HAD BEEN IGNORED BY THE ASSESSING OFFICER. FURTHER TRANSACTIONS IN THE BANK ACCOUNT READ WITH AUDITED BALANCE SHEET OF THE ASSESSEE FILED ALONG W ITH THE RETURN OF INCOME DEMONSTRATED THAT THE DEPOSIT IN THE BANK ACCOUNT WERE OUT OF SALE PROCEE DS AND WITHDRAWALS REPRESENTED THE PAYMENT OF PURCHASES. WHATEVER THE RUNNING BALANCE IN THE BANK ACCOUNT OF THE ASSESSEE REMAINED WAS 5 I. T. APPEAL NO. 4517 (DEL) OF 2009. COVERED BY THE CAPITAL BALANCE OF THE ASSESSEE AND AS SUCH, NO ADDITION COULD BE MADE. THE LD. CIT (APPEALS), HOWEVER, REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING AS UNDER :- ' I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND HAVE GONE THROUGH THE ASSESSMENT ORDER AND REPORT OF THE ASSESSING OFFICER. AS REGARDS APPELLANT'S CONTENTION THAT THE ASSESSMENT HAS BEEN FRAMED WITHOUT ADHERING TO THE PRINCIPLES OF NATURAL JUSTICE, I FI ND THAT VARIOUS NOTICES AND LETTERS HAVE BEEN SENT TO THE APPELLANT. THE DETAILS OF TH ESE NOTICES / LETTERS, HAVE BEEN DISCUSSED IN PRECEDING PARAS OF THIS ORDER. IN VIE W OF THE SAME, IT CANNOT BE SAID THAT THE APPELLANT HAS NOT BEEN GIVEN PROPER OPPORT UNITY. THE APPELLANT HAS FURTHER ARGUED THAT THE DEPOSIT OF RS.3,33,30,600/- IN THE BANK ACCOUNT REPRESENTS SALE PROCEEDS AND THE WITHDRAWALS RELATE TO THE PAY MENT FOR PURCHASE AND WHATEVER RUNNING BALANCE IN THE BANK ACCOUNT REMAIN S IS COVERED BY THE CAPITAL BALANCE OF THE ASSESSEE. HOWEVER, THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE ARGUMENTS GIVEN BY HIM. NEITHER THE BOOKS OF A CCOUNTS HAVE BEEN PRODUCED NOR ANY OTHER SUPPORTING EVIDENCE HAS BEEN FILED T O SUBSTANTIATE THE APPELLANT'S CONTENTION. NO SPECIFIC REPLY / EXPLANATION HAS BE EN FILED TO THE OBSERVATIONS OF THE ASSESSING OFFICER THAT THE MAJOR TURNOVER OF TH E ASSESSEE IS DISCLOSED IN HIS CONCERN M/S. ROYAL TRANSPORT (RS.3,39,70,447/-) WHE REAS CASH DEPOSIT IS MADE IN THE BANK ACCOUNT OF M/S. DYNAMIC SOLUTIONS. THE AP PELLANT HAS FAILED TO LINK UP THE TURNOVER WITH THE CASH DEPOSIT OR ANY OTHER DEC LARED SOURCE OF INCOME, NOR ANY SUPPORTING EVIDENCE HAS BEEN PRODUCED TO SHOW T HAT THE TOTAL SALE PROCEEDS OF VARIOUS CONCERNS WERE RECEIVED IN CASH AND WAS D EPOSITED IN THE BANK ACCOUNT OF DYNAMIC SOLUTIONS AND THE EXPENSES WERE BEING ME T FOR ALL THE THREE CONCERNS FROM THE BANK ACCOUNT OF DYNAMIC SOLUTIONS. THE SO URCE OF THE CASH DEPOSITS REMAIN UNEXPLAINED. THE APPELLANT HAS ALSO RAISED THE ISSUE THAT THE ASSESSING OFFICER SHOULD HAVE TAKEN THE PEAK OR MAXIMUM BALANCE. HOWEVER, HE HAS FAILED TO PROVE THAT THERE WAS A CYCLE OF DEPOSITS AND WITHDRAWALS OF TH E SAME CASH. THE CASH DEPOSIT OF RS.3,33,30,600/- WERE MAINLY TRANSFERRED TO DIFF ERENT ACCOUNTS WITHIN THE SAME BANK BRANCH AND SOME CHEQUES WERE ISSUED TO OT HER PARTIES. THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN VARIOUS ENTRIES NOR HA S FILED ANY BASIS FOR WORKING OUT THE PEAK. THE APPELLANT HAS ALSO OBJECTED TO THE NET PR OFIT RATE OF 8 PER CENT. I FIND THAT IN THE ABSENCE OF ANY SUPPORTING EVIDENCE IN FAVOUR OF THE BOOK-RESULTS, THE ASSESSING OFFICER WAS JUSTIFIED AND REASONABLE TO T AKE THE NET PROFIT AT THE RATE OF 8 PER CENT. IT IS PERTINENT TO MENTION HERE THAT THE APP ELLANT HAS TAKEN THE PLEA THAT ALL THE BOOKS AND RECORDS WERE DESTROYED IN FIRE. HOWE VER, NO EVIDENCE HAS BEEN FILED TO SUBSTANTIATE THAT A FIRE TOOK PLACE AND WH AT WAS THE EXTENT OF DAMAGE INCURRED THEREBY. NOT ONLY THIS, NO OTHER SUPPORTI NG EVIDENCE HAS BEEN FILED IN 6 I. T. APPEAL NO. 4517 (DEL) OF 2009. FAVOUR OF VARIOUS ARGUMENTS TAKEN BY THE APPELLANT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE ASSESSIN G OFFICER WAS JUSTIFIED IN MAKING THE ADDITIONS OF RS.3,33,30,600/- AND RS.27,43,716/ - AND THE SAME ARE UPHELD. ' 8. BEFORE US SIMILAR ARGUMENTS HAVE BEEN REITERATED AS WERE MADE BEFORE THE LD. CIT (APPEALS). IT HAS BEEN SUBMITTED THAT THE ASSESSEE WAS PROVIDING ACCOMMODATION ENTRIES. HOWEVER, NO EVIDENCE TO THIS EFFECT WAS PRODUCED. ON THE OTHER HAND, THE LD. CIT( DR) SUPPORTED THE ORDER OF THE LD. CIT (APPEALS). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE BANK ACCOUNT OF M/S. DYN AMIC SOLUTIONS WITH JAIN CO-OPERATIVE BANK LTD. FROM THE COPY OF BANK ACCOUNT WE FIND TH AT THE ASSESSEE HAS DEPOSITED CASH IN THE BANK ACCOUNT. THE CASH DEPOSITED HAS BEEN TRANSFER RED TO VARIOUS ACCOUNTS IN THE SAME BRANCH. THE ASSESSEE HAS NOT EXPLAINED SOURCE OF CASH DEPOS ITED. THE ASSESSEE HAS NOT WITHDRAWN CASH FROM THE BANK ON THE BASIS OF WHICH IT COULD BE ARG UED THAT THE SAME CASH WAS DEPOSITED IN THE BANK ACCOUNT AND, THEREFROM PEAK CREDIT OF DEPOSIT S IN THE BANK ACCOUNT SHOULD HAVE BE WORKED OUT. THEREFORE, THE CONTENTION OF THE ASSESSEE THA T THE ASSESSING OFFICER SHOULD HAVE DETERMINED THE PEAK CREDIT IS NOT SUPPORTED BY ANY EVIDENCE. HOWEVER, WE ALSO FIND THAT ON 10/02/2006 AN AMOUNT OF RS.1,75,000/- HAS BEEN TRANSFERRED IN VID E CHEQUE NO. 568596 AND ANOTHER AMOUNT OF RS.1,750/- VIDE CHEQUE NO. 263276. WE ALSO FIND TH AT ON 29 TH MARCH, 2006 AMOUNT OF RS.18,00,000/- HAS BEEN TRANSFERRED FROM ACCOUNT NO .C-736. THE ASSESSING OFFICER HAD ALSO NOTED THAT AN AMOUNT OF RS.1,00,000/- WAS ALSO WITH DRAWN FROM CASH. THE SOURCE OF THE BALANCE AMOUNT HAS NOT BEEN EXPLAINED. THEREFORE, ADDITI ON MADE BY THE ASSESSING OFFICER EXCEPT THE ABOVE AMOUNT OF RS.19,76,750/- [RS.1,75,000/- PLUS RS.1,750/- PLUS RS.18,00,000/-] HAS TO BE UPHELD. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (APPEALS) CONFIRMING THE ADDITION TO THIS EXTENT. AS REGARDS THE DEPOSIT IN THE BANK ACCOUNT THROUGH TRANSFER BY WAY OF CHEQUE, IN OUR CONSIDERED OPIN ION THE MATTER WOULD REQUIRE THE VERIFICATION WHETHER THE AMOUNT DEPOSITED IN THE ACCOUNT HAVE CO ME OUT OF ANY OTHER AMOUNT WHICH WAS WITHDRAWN/PAID EARLIER BY THE ASSESSEE. WE, THEREF ORE FEEL IT PROPER TO SET ASIDE THE MATTER TO THE FILE OF ASSESSING OFFICER FOR NECESSARY VERIFICATIO N. IF ON VERIFICATION IT IS FOUND THAT THE AMOUNTS 7 I. T. APPEAL NO. 4517 (DEL) OF 2009. REPRESENT OUT OF THE AMOUNT WITHDRAWN/PAID EARLIER OUT OF THE BANK ACCOUNT, THE ASSESSING OFFICER AFTER VERIFICATION WILL DECIDE WHETHER ANY CREDIT FOR THE SAME HAS TO BE ALLOWED OUT OF THE TOTAL ADDITION CONFIRMED BY US. WE, THEREFORE, SET ASIDE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER WITH ABOVE DIRECTIONS. 10. THE LAST ISSUE FOR CONSIDERATION RELATES TO UPH OLDING THE ADDITION OF RS.27,43,716/- MADE BY THE ASSESSING OFFICER UNDER BEST JUDGMENT ASSESS MENT BY ASSUMING THE NET PROFIT RATE AT THE RATE OF 8 PER CENT OF THE TURNOVER OF RS.3,58,29,27 8/-. THE FACTS OF THE CASE RELATING TO THIS GROUND OF APPEAL ARE THAT THE ASSESSEE HAD TOTAL TU RNOVER FROM THREE CONCERNS AT RS.3,58,29,270/- ON WHICH PROFIT OF RS.1,22,626/- WAS ADMITTED BY TH E ASSESSEE. SINCE THE PROFIT ADMITTED REPRESENTED WAS 0.34 PER CENT THE ASSESSING OFFICER APPLIED THE NET PROFIT RATE OF 8 PER CENT ON TOTAL TURNOVER WHICH RESULTED IN AN ADDITION OF RS. 27,43,716/-. 11. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED T HAT APPLICATION OF G.P. RATE AT THE RATE OF 8 PER CENT WAS EXCESSIVE WHEREAS THE ASSESSEE HAD EAR NED THE COMMISSION AT THE RATE OF 2 PER CENT. THE LD. CIT (APPEALS), HOWEVER, IN THE ABSENCE OF S UPPORTING EVIDENCE IN FAVOUR OF BOOK RESULTS UPHELD THE ESTIMATION OF NET PROFIT AT THE RATE OF 8 PER CENT. 12. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD EARNED COMMISSION ON TRANSPORT BUSINESS OF 2 TO 3 PER CENT. THE ASSE SSEE WAS ENGAGED IN BOOKING THE RECEIPTS FOR WHICH COMMISSION VARYING 2 TO 3 PER CENT WAS ALLOWE D TO THE ASSESSEE. THEREFORE, THE LD. CIT (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE NET PRO FIT RATE OF 8 PER CENT. ON THE OTHER HAND, THE LD. CIT(DR) SUPPORTED THE ORDER OF THE LD. CIT (APPEALS ). 13. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. BEFORE US, DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE THAT COMMISSION AT THE RATE OF 2 TO 3 PER CENT WAS EARNED ON TRANSPORT BUSINESS. AT THE SAME TIME, THE ASSESSING OFFICER HAS APPLIED THE NE T PROFIT AT THE RATE OF 8 PER CENT ON TOTAL 8 I. T. APPEAL NO. 4517 (DEL) OF 2009. TURNOVER OF RS.3,58,29,278/-. HOWEVER, KEEPING IN VIEW THE FACT THAT THE ASSESSEE WAS ENGAGED IN TRANSPORT BUSINESS AS WELL AS MANUFACTURING OF F ABRICS ON JOB WORK BASIS, THE NET PROFIT FROM BOTH THE ACTIVITIES CAN BE ESTIMATED AT THE RATE OF 8 PER CENT. WE, THEREFORE, UPHELD THE ADDITION. HOWEVER, THE PROFIT EARNED FROM THE BUSINESS CARRIE D ON BY THE ASSESSEE, WILL HAVE TO BE TELESCOPED AGAINST THE DEPOSITS MADE IN THE BANK AC COUNT OF THE ASSESSEE AT RS.3,33,30,600/- IF THE ASSESSEE MAKES OUT A CASE FOR TELESCOPING. IF T ELESCOPING IS FOUND TO BE ACCEPTABLE, NO SEPARATE ADDITION OF RS.27,43,716/- WILL BE MADE. WE ACCORDINGLY DIRECT THE ASSESSING OFFICER TO VERIFY AND EXAMINE CASE FOR ALLOWING THE CREDIT OF UNDISCLOSED INCOME TO THE EXTENT OF RS.27,43,760/- WHICH COULD HAVE BEEN AVAILABLE WIT H THE ASSESSEE DURING THE YEAR FOR DEPOSIT IN THE BANK ACCOUNT IN THE NAME OF M/S. DYNAMIC SOLUTI ONS. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 26 TH MARCH, 2010. SD/- SD/- [ C. L. SETHI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26 TH MARCH, 2010. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT. 9 I. T. APPEAL NO. 4517 (DEL) OF 2009.