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Facts
The Assessing Officer (AO) treated cash deposits of Rs. 33,53,000/- in a disclosed bank account as unexplained income and made an addition. The AO also treated total bank deposits of Rs. 57.70 lakhs in undisclosed accounts as business receipts and made a presumptive addition of 25% of these deposits as income. The CIT(A) confirmed both additions.
Held
The Tribunal found the Departmental Representative's contention for a 12% profit estimation reasonable for the bank deposits. For the cash deposits in the disclosed account, the Tribunal directed the revenue to estimate profit at 12% as these were found to be from the transport business, despite insufficient details provided by the assessee.
Key Issues
Whether cash deposits in a disclosed bank account and deposits in undisclosed bank accounts represent unexplained income or business receipts, and the appropriate estimation of profit on such receipts.
Sections Cited
69A
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-Ms SUCHITRA KMBLE
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
Delay Condoned
This appeal is filed by the Assessee against the appellate order dated 14.10.2025 passed by the Addl/JCIT Commissioner of Income Tax (Appeal), Panaji, relating to the Assessment Year 2016-17.
The assessee has raised the following grounds of appeal:
1. The Ld.CIT(A) has erred in law as well as on facts in uploading addition of Rs.33,53,330/- made by the Ld.AO being entire gross-cash deposit in bank account treated as unexplained income u/s.69A of the Act.
Asst. Year : 2016-17 - 2– 2. The Ld.CIT(A) has erred in law as well as on facts in upholding addition made by Ld.AO amounting to Rs.14,42,518/- which is 25% (assumed gross profit rate) of total bank transactions done by the ssessee.
The assessee is engaged in the business of plying vehicles for transportation purposes for several years. During the assessment proceedings, the Assessing Officer noticed that the assessee had two bank accounts which were not disclosed in the income tax return. The total deposits in these undisclosed bank accounts amounted to Rs. 57.70 lakhs. The Assessing Officer treated these deposits as business receipts and made a presumptive addition of 25% of the total deposits as income of the assessee. Further, the Assessing Officer also noticed cash deposits of Rs.33,53,000/- in a bank account that was disclosed in the return of income. Since the assessee did not furnish sufficient details or supporting evidence regarding these deposits, the AO treated the entire amount as unexplained income and made an addition of Rs.33,53,000/-.
The Ld. CIT(A) confirmed both the additions made by the Assessing Officer. Being aggrieved, the assessee filed an appeal before the Tribunal.
Heard the argument of both the parties and perused the material available on record.
Before us, it was argued by the assessee that the entire receipts represented business income from transportation activities. The Assessing Officer had applied a profit rate of 25% on the deposits in the undisclosed bank accounts, considering them as business receipts. The Asst. Year : 2016-17 - 3– learned Counsel for the assessee contended that 25% profit rate is excessive and not in line with the normal profit margin in the transportation business, and submitted that a profit rate of 8% would be reasonable.
On the other hand, the Learned Departmental Representative (Ld. DR) submitted that if the deposits are to be treated as business receipts, then the profit should reasonably be estimated at 12%.
After considering the rival submissions, we find the contention of the Ld. DR to be reasonable. Since the Assessing Officer has already treated the deposits as business receipts, we deem it appropriate to estimate the net profit at the rate of 12% on such receipts. With regard to the addition made by the Assessing Officer of Rs.33,53,300/- which are been found to be as cash deposit in the disclosed account, the Ld. Counsel submitted this amount are also been part of the transport business. The bank account statement clearly shows that after receipt of income out of the business, the amounts have already been duly paid to the bank for re-payment of instalment of the vehicleS purchased which has been used in the transport business. We find that bank account statement clearly reflects repayment and receipt which are from the transport business. Since assessee could not furnish any details using same analogy, we direct the revenue to estimate profit rate of 12% on the deposits found in the account of disclosed income before the revenue authorities.
The order is pronounced in the open Court on 07.04.2026.