SHRI PRADEEPSINH D. JADEJA,RAJKOT-GUJARAT vs. THE INCOME TAX OFFICER, WARD-1, GANDHIDHAM

आदेश /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. This appeal filed by the Assessee is directed against orderof learned Commissioner of Income Tax(Appeals)-II, Rajkot(in short “the CIT (A)”) dated 29.08.2013pertaining to Assessment Year 2008-09 which in turn hasarisen from order passed by the Income Tax Officer, Ward-1, Gandhidham(in short “the AO”) dated

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30.12.2010under section 143(3)of Income Tax Act,1961 (in short

‘the Act’).

“1 That, the learned CIT(A) has wrongly confirmed part of the total addition out of total addition of Rs.41,85,700/- on account of cash deposited in bank accounts The grounds on individual addition out of total addition confirmed by learned CIT(A) are as under :

2 That, the learned CIT (A) has wrongly considered sales of Rs. 33,99,500/- as against sales shown of Rs. 19,79,205/- u/s 44 AF of the I.T. Act and wrongly confirmed unaccounted cash deposit of Rs. 21,84,032/- as the difference between Rs.33,99,500/ and Rs. 12,15,468/ 3 That, the learned CIT (A) has wrongly disallowed the credit of Rs. 3,25,295/- out of cash received from the opening balance of debtors and deposited in bank accounts. 4 That, the learned CIT (A) has wrongly disallowed the credit of Rs. 11,77,200/-. Out of cash withdrawn from Gandhidham Mercantile Cooperative Bank account and re-deposited in the bank accounts. 5 That, the findings of learned CIT(A) as stated above are not justified and required to be deleted.” 3. Ground No.1 to 4 states that the CIT(A) has wrongly

confirmed part of total addition out of total addition of

Rs.41,85,700/- on account of cash deposit in bank account.

Thereby, the CIT(A) has wrongly confirmed sales of

Rs.33,99,500/- as against sales shown of Rs.19,79,205/- u/s.44AF

and wrongly confirmed unaccounted cash deposit of

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Rs.21,84,032/-as the difference between Rs.33,99,500/- and

Rs.12,15,468/-.

credit Rs.3,25,295/- out of cash received from opening balance

of debtors and deposited in bank accounts and Rs.11,77,200/-

cash withdrawn from Gandhidham Mercantile Bank Account and

re-deposited in the bank account. The above ground no.1 to 4

are inter-linked and co-related, hence, being considered

together.

Rs.11,69,00/- in his bank account with ICICI Bank, Gandhidham

and Rs.29,96,700/- with Gandhidham Mercantile Bank Ltd., total

to Rs.41,65,700/-. These deposits were claimed to be retail

trading of agricultural produce which have been offered as

income u/s.44AF of the Act. Accordingly, the assessee has

shown net income u/s.44AF of Rs.1,85,512/- as against the gross

receipts of retail sales of Rs.37,10,240/-. However, the

explanation provided by the assessee was not found acceptable

by the AO and accordingly the AO has made addition of

Rs.41,65,700/- on account of aforesaid cash deposits in the bank

account.

PradeepsinhDanubhaJadejaVs. ITO, Ward-1, Gandhidham/ITA No.347/RJT/2013/A.Y.2008-09Page 4 of 7

Being aggrieved, the assessee filed an appeal before the 6.

ld.CIT(A). The ld.CIT(A) after considering the explanation of the

assessee noted that the appellant had contended that there were

cash withdrawals of Rs.9 lakhs from ICICI Bank and

Rs.11,77,200/- from Gandhidham Mercantile Co-operative

Bank(GMCB). The contention of the appellant was verified with

respect to the bank statement of respective bank and the

contention in respect cash withdrawals Rs.9 lakhs from ICICI Bank

was found to be correct and properly explained, hence, this

addition was deleted. However, with regard to withdrawals of

Rs.11,77,200/- from GMCB the entry for cash withdrawals reads

as “Pay cash – cheque number” it is thus not clear whether these

cash withdrawals by self or cash payments made to another

parties, accordingly this addition was confirmed. Further, CIT(A)

has also accepted the claim of net agricultural income of

Rs.75,325/-. However, CIT(A) did not accept the explanation

with regard to opening debtors receivable at Rs.3,25,295/- and

gross sale proceeds of Rs.19,79,205/-, accordingly same were

confirmed.

Tribunal. The ld.Counsel for the assessee submitted that opening

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debtors receivable at Rs.3,25,295/- are included in the gross sale

proceeds of Rs.19,79,205/- for which re-conciliation has been

filed which has been placed at paper book, page no.82. The

ld.Counsel further referred PB Page No.79 and submitted that the

amount of Rs.3,25,295/- is sundry credit balance brought forward

as on 01.04.2007 which can be seen from the Trial Balance

appearing at page 79, therefore genuineness and source of cash

deposits to that extent is explained. It was further submitted

that this amount is part of actual sales of Rs.19,79,205/- out of

which sales of Rs.12,15,468/- are already accepted as shown in

the income. Balance amount of Rs.7,63,737/- is to be decided.

With regard to cash withdrawals of Rs.11,77,200/- from GMCB

during the year, it was submitted that the CIT(A) wrongly

presumed the same to be unexplained whereas same are the cash

withdrawals made by the assessee from his bank account from

GMCB for which the ld.Counsel has also filed a certificate from

GMCB dated 14.11.2018 explaining that “pay cash” means cash

withdrawals shown in the above bank account. Therefore, the

CIT(A) not justified in confirming the addition of Rs.11,77,200/-.

Representative (Sr.DR) supported the orders of the Lower

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Authorities and submitted that the assessee could not able to

explain the same before Lower Authorities.

material on record. We find that the amount of Rs.3,25,295/- is

opening debtors receivable as on 01.04.2007 and this amounts

included in the gross sale proceeds of Rs.19,79,205/-. We

further find that the cash deposits in the bank accounts of the

assessee are on account of gross sale proceeds which comes to

Rs.19,79,205/- as against which the assessee has considered gross

sales at Rs.12,15,468/- only under the provisions of section 4AF

of the Act and offered 5% profit thereon. However, the total

gross sale proceeds considering the cash deposits in both the

bank accounts the would work out to Rs.19,79,205/- out of which

the assessee has considered Rs.12,15,468/- as gross sales

whereas the balance amount of Rs.7,63,737/- has not been

considered for working out profit as per provisions of section

44AF of the Act. Accordingly, we are of the considered opinion

that 5% of the balance gross sale of amount of Rs.7,63,737/- is

also required to be considered as income of the assessee.

Accordingly, the AO is directed to calculate the 5% profit on

7,63,737/- and tax the same accordingly. Further, we find that

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the cash withdrawals ofRs.11,77,200/- from GMCB are actually

cash withdrawals made by the assessee, therefore, the addition

sustained by the CIT(A) for this amount is deleted accordingly.

of debtors has been considered in the total gross sale of

Rs.19,79,205/-, hence the addition of this amount is therefore

deleted.

to 4 of the appeal is partly allowed as per the terms indicated

above.

Sd/- Sd/- (सी.एम.गग�/C.M. GARG) (ओ.पी.मीना/O.P.MEENA) �याियकसद�यतथा/JUDICIAL MEMBER लेखासद�यकेसम� /ACCOUNTANT MEMBER राजकोट/ Rajkot, �दनांक Dated: 20th November, 2018/S.Gangadhara Rao, Sr.PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Rajkot