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Facts
The assessee declared total income of ₹3,80,950/- and disclosed sales of ₹66,03,850/- u/s 44AD. The AO noted bank deposits of ₹1,27,39,400/-, creating a difference of ₹61,35,550/-. This difference was treated as undisclosed turnover and added to the income.
Held
The Tribunal held that the entire difference cannot be treated as income, but it's reasonable to estimate income at the declared rate of 8% on the suppressed turnover. The appellate proceedings being ex-parte and delay not condoned were also noted as incorrect.
Key Issues
Whether the difference between bank deposits and declared turnover can be entirely added as income, or if it should be estimated at the declared profit rate? Propriety of ex-parte assessment and dismissal of appeal due to delay.
Sections Cited
44AD, 139(4), 143(1), 143(3), 142(1), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 18.02.2025 for the AY 2016-17.
The only issue pressed at the time of hearing is against the confirmation of addition of ₹61,35,550/- by the ld. CIT (A) as made by the ld. AO on account of difference between the total deposits found in the bank account with ICICI bank and Axis Bank vis a vis total sales turnover/ gross sales declared by the assessee as per the scheme of Section 44AD of the Act.
In the appellate proceedings also the appeal of the assessee was dismissed by the ld. CIT (A) upholding the assessment order by not condoning the delay.
After hearing the rival contentions and perusing the materials available on record, we find that the assessee in the return of income has declared total turnover of ₹66,03,850/-, whereas the total deposits in two bank accounts namely ICICI bank and Axis bank were ₹1,27,39,400/- and thus, there was a difference of ₹61,35,550/-. We note that AO treated this as undisclosed turnover at page no. 2 second last para in the assessment order and added the said amount to the total income of the assessee, which in our opinion is incorrect
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 10.07.2025.