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Facts
The assessee, engaged in scrap trading, had unexplained cash deposits of Rs. 15,66,472/- in their bank account for Assessment Year 2010-11. The Assessing Officer made a best judgment assessment and added the entire amount to income, which was upheld by the CIT(A).
Held
The Tribunal condoned a 16-day delay in filing the appeal. While acknowledging the assessee's business transactions and bank credits, the Tribunal noted the absence of regular returns and proper details. Consequently, the income was estimated at 8% of the estimated total turnover.
Key Issues
Whether the unexplained cash deposits in the bank account were related to the assessee's scrap trading business, and if not, whether estimation of profit at 8% of turnover was justified.
Sections Cited
144, 148, 142(1), 250, 68, 254, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
Appellant by : Shri Ramesh N Thethe (through virtual) Respondent by : Shri Deepak Kumar Kedia Date of hearing : 10.07.2025 Date of pronouncement : 31.07.2025 आदेश / ORDER The captioned appeal at the instance of assessee pertaining to A.Y. 2010-11 is directed against the order dated 18.03.2025 of National Faceless Appeal Centre (NFAC), Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Assessment Order dated 29.03.2022 passed u/s.144 r.w.s.254 r.w.s144B of the Act.
Registry has informed that the appeal before this Tribunal is time barred by limitation by 16 days. Assessee has filed an affidavit explaining the delay. After hearing both the sides and perusing the averments made in the affidavit, I am satisfied that due to ‘reasonable cause’ assessee failed to file the appeal within the stipulated time limit. I therefore condone the delay of 16 days in light of Judgment of Hon’ble Supreme Court in the case of 2 Amit Ambadas Mete Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107.
In the grounds of appeal Nos. 1 to 3, assessee has raised certain legal issues and on merits the assessee has challenged the addition for unexplained cash deposit of Rs.15,66,472/-.
At the outset, Ld. Counsel for the assessee requested for not pressing the legal issues raised in Grounds of appeal No.1 to 3 . Accordingly, the said grounds are dismissed as ‘not pressed’.
5. The only effective issue remains for my adjudication is regarding addition u/s.68 of the Act for unexplained cash deposit of Rs.15,66,472/-.
6. At the outset, Ld. Counsel for the assessee submitted that the alleged cash deposit is on account of payments received from various customers which they have deposited directly in the bank account of the assessee. He further submitted that assessee is into Scrap trading business and apart from deposits and cash withdrawals, the payment are also made through banking channel for purchase of goods. Reference was made to the bank statement placed at page 128 of the paper book. He further submitted that since the transactions in the bank account are from the business activity, ld. Assessing Officer ought to have estimated the net profit on the total turnover of the assessee.
7. Ld. Departmental Representative on the other hand vehemently argued supporting the order of ld.CIT(A).
I have heard the rival contentions and perused the record placed before me. Assessee is an individual and as per the information with the Assessing Officer cash to the extent of 3 Amit Ambadas Mete Rs.15,66,472/- was found to be deposited in the savings bank account of the assessee. Valid notice u/s.148 of the Act followed by statutory notice u/s.142(1) of the Act issued but there was no compliance from the side of assessee. Ld. AO finally framed the best judgment assessment u/s.144 of the Act and assessed income at Rs.15,67,340/-. Ld. Counsel for the assessee with the help of bank statement and details mentioned in the written submissions has successfully demonstrated that the transactions in the bank account, withdrawals and deposits are in relation to scrap trading which is an unorganised sector and the cash transactions are customary due to nature of trade and involvement of small vendors and buyers. Bank statement also reveals that various payments have been made through banking channel for purchase of goods and one of the concern appearing in the bank statement if Ms. Sai Enterprises. As per the details filed by Ld. Counsel for the assessee, net turnover for the year is Rs.24,83,397/-, however, as per the bank statement the total of the credits for the year are approximately Rs.38,30,178/-. It is claimed that there are certain contra entries. However, considering the facts and circumstances of the case and that the assessee is not filing the regular return of income and not maintaining proper details and even has not filed the return in compliance to notice u/s.148 of the Act, I proceed to estimate the income of the assessee from the scrap trading activity carried out during the year. Alleged cash deposits are also part of the turnover for the year and I proceed to estimate the net profit @8% of the total turnover. Though in the bank statement, the total of the credits during the year are Rs.38,30,178/- but there are certain contra entry transactions which are clearly visible from the perusal of the bank statement amounting to Rs.13,46,781/-.
4 Amit Ambadas Mete Thus, the net amount from the total credits comes to Rs.24,83,397/-. Further in absence of proper details, it cannot be ignored that certain cash sales have not been deposited in the bank account. Therefore, I estimate the total turnover for the year at Rs.30.00 lakh and estimate the profit @8% which comes to Rs.2,40,000/-. Finding of ld.CIT(A) is set aside and ground of appeal raised by the assessee on this issue are partly allowed.
In the result, appeal of the assessee is partly allowed.