Case Law Details
Himanshu L. Shethia (HUF) Vs ITO (ITAT Ahmedabad)
Held that the correct method is applying peak calculation method to compute the profit from the unaccounted cash sales made by the assessee.
Facts-
The appellant is Karta of HUF and running whole-sale trade in cloth in the name and style of “M/s. Himanshu Fabrics”. As per AIR, was seen that the assessee has made cash deposit to the tune of Rs.1,09,30,500/- in the savings bank account. During the course of survey operation, excess stock of cloth to the tune of Rs.51,21,318/- was found pertaining to the assessee and the same was disclosed as an investment out of income from undisclosed source. However, the survey team could not find any excess cash or any other asset or expenditure from the assessee’s premises. Thus, the assessee claimed that whatever he earned in the past are parked as closing stock in the current year. The same has been duly disclosed during the course survey proceedings and the taxes attributable thereto of Rs.16 lakhs have duly been paid in the relevant financial year. Thus, the assessee claimed unaccounted small trading transactions inclusive of capital and profit were duly invested in the stock and the same has duly offered for taxation in the relevant year. Thus, taxing the cash deposits in the OBC Bank will amount to double taxation which is contrary to the basic principle of taxation.
The assessee offered peak credit of the cash transaction Rs. 6,05,000/- as his income.
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