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Facts
The assessee, an individual, did not file a Return of Income for A.Y. 2017-18. Based on information regarding cash deposits during the demonetization period, the Assessing Officer (AO) initiated proceedings and made an addition of Rs.13,74,560/- for unexplained cash deposits. The CIT(A) confirmed the AO's action.
Held
The Tribunal found that the source of deposits in the assessee's bank account were business receipts, supported by documentary evidence. However, since the assessee had not filed an ITR, the Tribunal deemed it appropriate to estimate Net Profit at 8% of the total turnover under section 44AD of the Act, sustaining an addition of Rs.6,00,008/-.
Key Issues
Whether the addition made by the AO for unexplained cash deposits is justified, and if not, what is the appropriate method for estimation of income in the absence of a filed return.
Sections Cited
69A, 142(1), 250, 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
Assessment Year: 2017-18 Balasaheb Janardan Thakur, V The Income Tax Officer, 106, Khairgavhan, Savargaon s Ward-3(1), Nashik. Road, Yeola, Nashik-423401. PAN: AOTPT3955L Appellant/ Assessee Respondent / Revenue Assessee by Shri Pramod S Shingte – AR Revenue by Shri Aviyogi Ambadkar – Addl.CIT Date of hearing 11/03/2025 Date of pronouncement 28/03/2025 आदेश/ ORDER
PER DR. MANISH BORAD, AM:
This is an appeal filed by the assessee against the order of ld.Commissioner of Income Tax(Appeals)[NFAC] for Assessment Year 2017-18 dated 25.10.2024 passed u/sec.250 of the Income tax Act, 1961.
The sole grievance of the assessee is that ld.CIT(A) erred in confirming the addition of Rs.19,74,560/- made by the Assessing Officer under section 69A of the Act.
2.1 Brief facts of the case are that assessee is an individual. No Return of Income has been filed for A.Y.2017-18. Based on the information about cash deposits in the bank account during Demonetization period, ld.Assessing Officer(AO) issued notice under section 142(1) of the Act, but there was no response. The ld.AO proceeded for best judgment assessment. Based on the information, the Assessing Officer observed that the cash deposits in Bank other than the specified period amounting to Rs.64,92,350/- and in the bank account held with Bank of India cash deposit during Demonetization period amounting to Rs.10,03,150/-. The Assessing Officer also observed that Rs.3,71,000/- was deposited in Yeola merchants Cooperative Bank during the Demonetization period. The Assessing Officer concluded the assessment by making the addition only for cash deposits of Rs.13,74,150/- deposited in the bank account held by the assessee during the Demonetization period.
Aggrieved assessee preferred appeal before the ld.CIT(A) and furnished the details including VAT Returns showing turnover of Rs.75,00,094/-. Further, ld.CIT(A) was not satisfied with the submission filed by the assessee and observed that if the assessee has been carrying on the business, then he should have submitted profit and loss account and balance sheet. He must have also explained why he was not liable to file ITR. The ld.CIT(A) thus concluded the appellate proceedings confirming the action of the Assessing Officer.
Now, the assessee is in appeal before this Tribunal. The ld.Counsel for the assessee referring to the paper book running 35 pages submitted that the assessee has license dated 04.03.2016 to carry on the business of dealing in Seeds and Fertilizers and also submitted that alleged cash deposits are on account of cash sales and part of the total turnover. He, however, admitted that the case of the assessee can be decided by applying Net Profit Rate applicable under the Presumptive Taxation Scheme under section 44AD of the Act.
On the other hand, ld.DR for the Revenue supported the order of the Lower Authorities.
We have heard rival contentions and perused the record placed before us. The ld.CIT(A) affirmed the action of the Assessing Office making the addition for unexplained cash deposit of Rs.13,74,500/-. We notice that the Assessing Officer accepted the source of cash deposit Non-Demonetization Period amounting to Rs.64,92,350/-. Assessing Officer has only restricted the addition for the cash deposit during the Demonetization Period. However, facts placed before us demonstrate that the assessee is carrying on the sole propriety business in the name of Samarth Krushi Seva Kendra, Village Khairegavhan, District Nashik. The assessee is also registered under the Value Added Tax Act and has submitted the copy of VAT return. The Assessing Officer has accepted the source of cash deposit during the Non-Demonetization Period in the bank account held with assessee, where the sale proceeds were deposited, but in the very same bank account, the source of cash deposit during the Demonetization Period has not been accepted. Considering the facts of the case, we are satisfied that the source of deposits in the bank account held by the assessee are from business receipts from his sole property concern and the same is duly supported by the documentary evidence. However, considering the fact that assessee had not filed ITR, we therefore, deem it appropriate to estimate the Net Profit @ 8% of the total turnover of the assessee amounting to Rs.75,00,094/- applying the Presumptive Taxation Scheme under section 44AD of the Act and sustain the addition to Rs.6,00,008/- and give part relief to the assessee. Accordingly, grounds of appeal raised by the assessee are partly allowed.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the open Court on 28th March, 2025.