SHRI WASEEM SIDDQUI,MEERUT vs. ITO, MEERUT

Both the parties have been heard. The relevant facts of the case are that the assessee was required to explain the deposit in his bank account with Punjab National Bank by way of notice under Section 148. The assessee in response thereto stated that the original return filed on 31.3.2013 may be treated as having been filed in response to the said notice. Considering the explanation filed, the deposit of Rs. 8,00,000/- in the account was held to be not explainable leading to the addition of the said amount.

The assessee relying upon the submissions before the Assessing Officer submitted before the CIT(A) that the net profit of Rs. 2,45,960/- on the turnover of Rs. 29,00,000/- odd worked out to almost 28.6%. Thus, it was argued that it was much more than the estimated net profit of 8% as per Section 44 AD of the Act. The assessee it was submitted was not maintaining any books of accounts accordingly the addition based on the bank deposits in the circumstances cannot be made. The assessee it was submitted was a trader in cloth / handloom, he had no other source of income. Inviting attention to paper book page no. 9 which though is a letter addressed to the Assessing Officer it was submitted would show that the assessee had completely transferred his business due to disturbances at Srinagar to Meerut. 3.1 Referring to the said letter, it was submitted that apart from the argument that the net profit declared by the assessee is higher than the legislative estimate under Section 44 AD. Even otherwise the assessee had tried to wind up its business in Srinagar and deposited the entire cash in the bank account which was opened specifically for doing business in Meerut. This fact is evidenced from paper book page no. 24 where the address given by the assessee is of Srinagar where the assessee was doing same business. After initially opening the bank account with a deposit of Rs. 500/- amount of Rs. 8,00,000/- accumulated from Srinagar business was deposited out rightly.

The learned Sr. DR relied upon the order of the authorities below. 5. Considering the submissions of the parties and the material available on record, I find that in the peculiar facts where due to peculiar circumstances, the assessee as a one time act relocated part of his business from a disturbed area to Meerut the one time deposits of Rs.8 lacs as having accumulated from similar business in the earlier years in the peculiar facts of the present case can be said to be explained. The assessee as per record admittedly did not have taxable income in the earlier years the fact remains that consistently the assessee is claiming that there was no other source of income. This onetime deposit of Rs. 8,00,000/- in the peculiar facts and circumstances cannot be said to be unexplained. The addition in the hands of the assessee consequently was not warranted in these peculiar facts. The explanation of the assessee is accepted addition is directed to be deleted. 6. In the result, the appeal of the assessee is allowed.