MUNNA KHAN,MUMBAI vs. ITO WD 19(3)(3), MUMBAI

In this appeal the assessee is aggrieved for the addition of `8,36,400/- on account of cash deposited in the bank, which was added by the AO under Section 68 of the Act. By the impugned order the CIT(A) confirmed the action of the AO, against which the assessee is in appeal before us.

We have considered the rival contentions and found that the assessee is a small trader engaged in the business of tailoring and sale of cloth. During the year under consideration the assessee’s turnover was below the limit for which audit is required. The assessee has disclosed profit of 10% on the total sale proceedings. However, in addition to the Shri Munna Khan profit the AO has also added the entire cash deposit in the bank account. The AO has not recorded any finding as to any other business having been carried out by the assessee or any other source of receipts. We find that the deposit in the bank was explained out of the sale proceeds which were duly recorded in the Trading and Profit & Loss Account submitted before the AO. Considering the totality of the facts and circumstances of the case and the nature of assessee’s business we direct the AO to restrict the addition to 15% of the cash deposit in the bank account. We direct accordingly

In the result, the appeal filed by the assessee is allowed in part.