SAJAL BANSAL,KAITHAL, HARYANA vs. INCOME TAX OFFICE, WARD-2, KAITHAL, INCOME TAX OFFICE, AMBALA ROAD, KAITHAL

To examine sources of cash deposits in bank account during demonetization period, the assessee’s return of income was subjected to scrutiny. In the absence of complete information forthcoming from the assessee, Ld. AO rejected the books u/s 145(3) and adopted profit rate of 2% on total turnover of Rs.17.68 Crores and made impugned addition of Rs.35.36 Lacs. The Ld. AO also made separate addition of unexplained cash deposit for Rs.28.30 Lacs which stood deleted in first appeal and the same do not form subject matter of present appeal before us.

During appellate proceedings, the assessee’s submissions were subjected to remand proceedings. The remand report was confronted to the assessee. The assessee objected to rejection of books on the ground that it maintained regular books of accounts which were duly audited under law. It was also submitted that the assessee was a VAT dealer and it furnished copy of accounts, bills, vouchers, bank statements etc. before Ld. AO to substantiate its business income. However, Ld. CIT(A) confirmed addition of Rs.35.36 Lacs against which the assessee is in further appeal before us.

It emerges that the assessee is engaged in wholesale business of Mobile Phones. The assessee has maintained regular books of accounts which are duly audited under law. The assessee has achieved turnover of Rs.17.68 Crores which are subjected to VAT and all the sales transactions have duly been reported to VAT authorities. The sales and purchase transactions are duly evidenced by relevant invoices and there is no adverse finding by Tax Auditor. There is no doubt on the purchases as made by the assessee. The rate of profit as reflected by the assessee over various AYs is as under: - No. AY Turnover GP Rate NP Rate 1. 2018-19 Rs.21.11 Crores 1.14% 0.35% 2. 2017-18 Rs.17.68 Crores 1.20% 0.36% 3. 2016-17 Rs.11.47 Crores 1.21% 0.59% 4. 2015-16 Rs.15.81 Crores 1.20% 0.41% 5. 2014-15 Rs.15.28 Crores 1.22% 0.32% Upon perusal of profitability chart, it could be seen that the GP rate and NP rate as reflected by the assessee in this year is commensurate with corresponding rates of earlier years as well as subsequent year. Apparently, there is no change in the business model of the assessee. No specific defect has been pointed out by Ld. AO in the books of the assessee. On these facts, rejection of books u/s 145(3) and consequential estimation of profit rate could not be upheld. We order so. The impugned addition of Rs.35.36 Lacs stand deleted. The Ld. AO is directed to accept the business income as reflected by the assessee. No other plea has been urged in the appeal.

The appeal stand allowed. Order pronounced on 23-07-2025. Sd/- Sd/- (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 23-07-2025. आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF ASSISTANT REGISTRAR