SH. GAGAN AGGARWAL,DELHI vs. ITO, NEW DELHI

It is a recalled matter inasmuch as the earlier ex parte order passed by the Tribunal was subsequently recalled on 23.3.2018 in MA No. 362/Del/2016.

Briefly stated facts of the case are that the assessee filed his return declaring income of Rs.1.97,800/-. Such return was subsequently revised showing income of Rs.2,98,352/-. In such revised return, the assessee offered a sum of Rs.99,152/- being, income under section 44AF @ 5% of retail trade sale of Rs.19,83,041/-. In addition, the assessee also offered interest from bank to the tune of Rs.1,400/-. On the basis of some information regarding the assessee having deposited cash of Rs.19,83,041/- in a saving bank account maintained to the ICICI bank, the Assessing Officer took up the assessment proceedings. The assessee’s contention that he made retail sales amounting to Rs. 19.83 lac, on which income under section 44AF @ 5% was offered, did not find favour with Assessing Officer. He made the addition of Rs.19,83,041/- being, the amount deposited by the assessee in his bank account apart from interest from bank to the tune of Rs.1,400/-. These additions were made with reference to income originally declared in the return for a sum of Rs.1,97,800/-. The learned CIT(A) approved application 2 of 20% profit rate on sales of Rs.19,19,631/-. In addition, he added a sum of Rs.5,43,946/- being the peak credit on 3.11.2009.The assessee is aggrieved against the additions so sustained in the first appeal.

I have heard both the sides and perused the relevant material on record. As against the relief allowed by the learned CIT(A), the learned DR has not brought any material on record to demonstrate that the Revenue has preferred appeal. As such the view point of the learned CIT(A), to the extent it prejudices the interest of the Revenue, is deemed to have been accepted by the Department. Once the decision of the learned CIT(A) in treating the Rs. 19.19 lac as sales is accepted, then the application of section 44AF as resorted by the assessee, cannot be done away with. The learned CIT(A) has given no reasons for applying profit rate of 20% in gross receipts. If the assessee’s contention of Rs. 19.83 lac being, cash deposited in the bank representing cash sales made from retail trade made is accepted, the natural corollary which has to follow is that the provision of section 44AF, requiring application of 5% net profit rate, are to be accepted. I, therefore, delete the addition sustained by the learned CIT(A) in applying 20% profit rate.

The learned CIT(A) has also added peak credit of Rs.5,43,946/- on 3.11.2009. When the assessee’s contention is accepted that he made cash sales of Rs. 19.83 lacs which amount was deposited in the bank account from time to time, there can be no question of any unexplained cash deposited in the bank requiring addition of peak credit. I, therefore, order to delete the peak addition made by the learned CIT(A). The net effect of above adjudication is that the income declared in the revised return to the tune of Rs.2,98,352/- gets accepted.

In the result, the appeal is allowed.