SABBIRBHAI I KADIWALA,VADODARA vs. THE ITO, WARD-3(1)(4), VADODARA

This appeal filed by the assessee is directed against the order of learned Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [“CIT(A)” in short] dated 29.07.2021 and the solitary issue arising out of the same relates to the addition of Rs.30,53,371/- made by the Assessing Officer and confirmed by the learned CIT(A) on account of unaccounted income allegedly earned by the assessee as reflected in the undisclosed back account maintained with Bank of Baroda.

total sales/receipts as declared by the assessee at Rs.1,24,89,322/- and the total sales/receipts as reflected in Form No.26AS at Rs.1,44,96,122/-. In this regard, it was explained by the assessee that one new current account opened with Bank of Baroda was omitted to be accounted for in the books of accounts and therefore receipts and expenses of business made through the said new account had remained to be accounted for. On perusal of the bank statement of the said account, the Assessing Officer however found that the total receipts/deposits made therein were to the tune of Rs.46,63,371/-. In this regard, the explanation offered by the assessee was found to be partly accepted by the Assessing Officer and accordingly the receipts/deposits in the undisclosed back account to the extent of Rs.30,53,371/- were treated by the Assessing Officer as reflecting the undisclosed income of the assessee. He also did not find the claim of the assessee as regards the various expenses incurred through the said bank account in the absence of relevant bills/vouchers to support and substantiate the same. He accordingly treated the unaccounted receipts/deposits found to be made in the undisclosed bank account of the assessee maintained with Bank of Baroda as his undisclosed income and addition to that extent was made by him to the total income of the assessee in the assessment completed under Section 143(3) of the Act vide an order dated 11.12.2017. 3. Against the order passed by the Assessing Officer under Section 143(3) of the Act, an appeal was preferred by the assessee before the learned CIT(A) challenging the addition of Rs.30,53,371/- made by the Assessing AY : 2015-16 3

his claim that the entries in relevant bank account not only reflected the unaccounted sales/receipts but also the business expenses incurred through the said bank account. The said additional evidence was forwarded by the learned CIT(A) to the Assessing Officer for verification and in his remand report submitted to the learned CIT(A) on 14.08.2020, the Assessing Officer commented that keeping in view the nature and character of assessee’s business as well as the entries appearing in the bank account of the assessee maintained with Bank of Baroda, it would be fair and reasonable to estimate profit earned by the assessee at 10% of the undisclosed credit entries as reflected in the said bank account. The learned CIT(A) did not agree with this comment made by the Assessing Officer in his remand report. According to him, the onus was on the assessee to establish his claim of expenses on the basis of relevant accounts, supporting bills, vouchers etc. which were required to be duly audited and since the assessee, in his opinion, had failed to discharge this onus satisfactorily, he proceeded to confirm the addition of Rs.30,53,371/- made by the Assessing Officer on account of the undisclosed income allegedly earned by the assessee as reflected in his undisclosed bank account maintained with Bank of Baroda. Aggrieved by the order of the learned CIT(A), the assessee has preferred this appeal before the Tribunal.

Rs.13,53,576/- were incurred by the assessee in cash from the withdrawal made from the said bank account and by cheque respectively. He has contended that after deducting the said expenditure incurred in cash as well as by cheque, the net income that was earned by the assessee as reflected in the transactions made through the undisclosed bank account was only Rs.6,02,295/- and therefore the addition of Rs.30,53,371/- made to the total income of the assessee on this issue is liable to be restricted to Rs.6,02,295/-. The learned DR, on the other hand, has contended that this audited income and expenditure account furnished by the assessee for the first time before the Tribunal requires verification and the matter, therefore, may be restored to the file of the Assessing Officer for giving him an opportunity to verify the same. Although this contention raised by the learned DR has some merit, I am of the view that no meaningful purpose will be served by sending the matter back to Assessing Officer for verification keeping in view that the matter was already remanded by the learned CIT(A) to the Assessing Officer earlier and in his remand report the Assessing Officer himself accepted the claim of the assessee of having incurred the expenditure through the undisclosed bank account keeping in view the nature and entries appearing therein as well as the nature and character of the assessee’s business. In the said remand report, the Assessing Officer had also opined that it would be fair and reasonable to estimate the income of the assessee as reflected in the entries appearing in the undisclosed bank account maintained with Bank of Baroda by applying net profit rate of 10%. Now, in the audited income and expenditure account prepared and furnished by the assessee, the net profit as reflected in the transactions appearing in the undisclosed bank account is shown at around 20% and keeping in view all the facts of the case including the fact that expenditure of Rs.10,97,500/- was incurred by the assessee in cash which is not fully verifiable, I am of the view that it would be fair and reasonable to estimate AY : 2015-16 5

the income of the assessee from the transactions as reflected in the undisclosed bank account maintained with Bank of Baroda at 25% of the gross receipt of Rs.30,53,371/-. The impugned order of the learned CIT(A) on this issue is accordingly modified and the Assessing Officer is directed to restrict the addition made on this issue to 25% of Rs.30,53,371/-.

Order pronounced in the open Court on 8th June, 2022 at Ahmedabad. (P.M. JAGTAP) VICE-PRESIDENT Ahmedabad, Dated 08/06/2022 *Bt आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant

आदेशानुसार/ BY ORDER,सहायक पंजीकार (Asstt.