RUPA SANJAY NIGADE,PUNE vs. THE INCOME TAX OFFICER, WARD-6(2), PUNE

This appeal by the assessee arises out of the order dated 22-03-2023 passed by the CIT(A) in National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2017-18.

The first issue raised in this appeal is against the confirmation of addition of Rs.5,74,662/- made by the Assessing Officer (AO) on estimation of income.

Filtering out unnecessary details, the facts of the case are that assessee furnished return declaring total income of Rs.3,57,730/-. The AO observed during the course of assessment proceedings that the Rupa Sanjay Nigade assessee made cash deposits in the bank during the year amounting to Rs.1,48,11,055/- comprising of deposits of Rs.4,64,500/- during the demonetization period and Rs.1,43,46,555/- during other days of the year. Since no books of accounts were maintained, the AO treated Rs.1.43 crore as unrecorded sales and estimated 4% profit thereon resulting into an addition of Rs.5,74,662/-. No relief was allowed in the first appeal, against which the assessee has approached the Tribunal.

After hearing the rival submissions and going through the relevant material on record, it is seen that the assessee could not co- relate the bank deposits of Rs.1.43 crore with actual sales either before the AO or the ld. CIT(A). Same position continues before the Tribunal as well. In the absence of such information, the authorities cannot be held to illogical in treating such amount as unrecorded sales and estimating profit thereon. I, therefore, countenance the view taken by the ld. CIT(A) on this score.

The second ground is against the confirmation of addition of Rs.4,64,500/-, being, the amount deposited by the assessee in the bank account during demonetization period. The AO treated such amount as unexplained u/s.69A and made addition for the same which was Rupa Sanjay Nigade approved in the first appeal. Aggrieved thereby, the assessee has come up in appeal before the Tribunal.

Having heard both the sides and perused the relevant material on record, it is seen that the assessee deposited Rs.1.43 crore in the bank on other days of the year, which was treated by the AO as unrecorded sale. The deposit of Rs.4,64,500/- in the bank account during demonetization period cannot be given a different colour than what was given for the remaining whole of the year. I, therefore, treat Rs.4,64,500/- as deposit of unrecorded sale proceeds in the same manner as has been treated by the AO for the remaining part of the year. The addition thus made is directed to be deleted. However, it is pertinent to note that while estimating income at 4% on the unrecorded sales, the AO excluded Rs.4,64,500/- for consideration.

In the result, the appeal is partly allowed. Order pronounced in the Open Court on 17th May, 2023.