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Facts
Sunil Bothra, a cloth trader, had total bank deposits of Rs. 54,95,716/-. The Assessing Officer determined profit at 50% of these deposits, leading to an addition of Rs. 30,28,540/-. The assessee contended that he had already declared income under Section 44AD at 8% of a turnover of Rs. 42,52,600/-, and that certain deposits totaling Rs. 14,50,000/- were received from his mother, not part of his business turnover.
Held
The tribunal noted that the assessee had already declared income under Section 44AD of the Income Tax Act. Considering the overall facts and the non-material variation between the income declared and the amounts in question, the tribunal concluded that no further addition was warranted in this case.
Key Issues
Whether the AO was justified in making an addition to the total income based on 50% of bank deposits, despite the assessee having declared income under Section 44AD and asserting that some deposits were not part of business turnover.
Sections Cited
250, 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-SHRI T.R. SENTHIL KUMAR
O R D E R
PER DR. B.R.R. KUMAR, VICE-PRESIDENT :
This appeal has been filed by the assessee against the order of the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as "CIT(A)" for short) dated 01.01.2024, passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2016-17.
The solitary issue raised by the assessee reads as under:- “The Learned AO has erred in confirming the total income that of Rs.32,94,230/- as against that of income returned Rs.2,65,690/- by making addition of Rs.30,28,540/-.”
Briefly stated, the facts of the case are that the assessee is engaged in the business of trading in cloth and maintains two bank accounts, i.e. one with Allahabad Bank, Durgapur Station Bazar Branch and another with Allahabad Bank, Erode Branch, Tamil Nadu. The total deposits in these two bank accounts Sunil Bothra Vs. ITO Asst. Year : 2016-17 - 2– aggregate to Rs.54,95,716/-. The Assessing Officer has determined profit @ 50% of the total deposits, i.e. Rs.27,47,858/-.
Before us, it was argued that the assessee had already offered income under Section 44AD of the Act at 8% of the turnover and had declared a gross turnover of Rs.42,52,600/-. It was submitted that the amount of Rs.10,00,000/- and Rs.4,50,000/- do not constitute part of the turnover as the amounts have been received from Raju Devi Bothra who is mother of the assessee; thus, leaving the turnover of the assessee to Rs.40,40,000/-. The assessee has already declared income @ 8% of the turnover of Rs.42,52,600/-. Considering the non- material variation, we hold that no addition is called for in this case.
In the result, the appeal of the assessee is allowed.
The order is dictated and pronounced in the open Court on 11.03.2026