Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Before: Shri S. S. Godara, JM & Shri M. Balaganesh, AM]
This appeal filed by revenue is arising out of order of CIT(A)-9, Kolkata vide appeal No. 423/CIT(A)-9/Wd-32(4)/2014-15/Kol dated 15.05.2016. Assessment was framed by ITO, Ward-32(4), Kolkata u/s. 143(3) of the Income tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2011-12 vide his order dated 25.03.2014.
The only issue to be decided in this appeal is as to whether the ld CITA was justified in deleting the addition of Rs 50,08,005/- towards unexplained cash deposit, in the facts and circumstances of the case.
The brief facts of this issue are that the assessee is an individual running its business of resale of footwear. The return of income for the Asst Year 2011-12 was filed on 29.3.2012 declaring total income of Rs 1,53,363/-. The ld AO stated in his order that the authorized representative of the assessee appeared from time to time and furnished the details as called for. The ld AO observed from AIR information, that the assessee had made huge deposits in various bank accounts as under:-
2 Razi Ahmed., AY 2011-12 Sl. No. Bank Account Amount (Rs.) Cash/Other than Cash 1. State Bank of India Ac No.20020195053 99,58,155/- Cash 2. State Bank of India Ac No.20020195053 7,35,486/- Other than Cash 3. State Bank of India Ac No.31142186492 70,800/- Cash 4. State Bank of India Ac No.31299580679 53,100/- Cash 5. State Bank of India Ac No.31113553594 64,900/- Cash A show cause notice was accordingly issued to the assessee as to why the said deposits be not treated as unexplained income of the assessee. The assessee submitted a reply on 10.12.2013 that out of Rs 99,58,155/- , a sum of Rs 50,08,005/- was deposited from his cash in hand and Rs 49,50,150/- was deposit on account of sale proceeds of the assessee. With respect to items in above table serial numbers 2 to 5, the assessee could not offer any acceptable explanation regarding the source of receipt. The ld AO issued another show cause notice on 13.12.2013 asking the assessee to produce the bills and vouchers from the sale and purchase. There was no response from the assessee to this second show cause notice. The ld AO thereafter gave two reminders to the assessee for compliance. The ld AO accordingly proceeded to complete the assessment based on materials available on record by observing that with regard to deposit of Rs 99,58,155/- in SBI A/c No. 20020195053 in cash, the assessee could not explain the existence of cash in hand as per his accounts to the tune of Rs 50,08,005/- and accordingly rejected the said explanation of the assessee. Hence this sum of Rs 50,08,005/- was added by the ld AO as unexplained cash deposit in the assessment.
3.1. With regard to remaining sum of Rs 49,50,150/- the ld AO accepted the same to be emanating out of trading business of the assessee and accordingly estimated gross profit @ 31.90% and made an addition of Rs 15,79,097/- thereon as net profit from undisclosed trading activity.
3.2. Regarding cheque deposit of Rs 7,35,486/- and cash deposit in recurring deposit accounts to the tune of Rs 70,800/- , Rs 53,100/- and Rs 64,900/- totaling to Rs 1,88,800/-, the ld AO added the same as undisclosed income of the assessee for want of explanations from the assessee.
The assessee made various objections before the ld CITA, who in turn, sought a remand report from the ld AO. The assessee filed objections to the remand report by stating that in the course of hearing, the cash book showing the receipts and payments including sales and purchases was shown before the ld AO and the ld AO was not convinced with the cash book and accordingly ignored the same. It was stated that a sum of Rs 50,08,005/- was not deposited in the bank account in a day but was deposited and withdrawn in tits and bits of Rs 10,000/- to Rs 73,132/- being the maximum amount deposited in the bank. It was stated that the cash book along with the supporting vouchers were produced before the ld AO but he ignored the same and rejected the books of the assessee. The assessee pleaded to consider the peak credit of all the entries in the bank accounts and agreed to offer the same as his income. The assessee requested that the maximum deposit made by the assessee on 28.2.2011 in the sum of Rs 73,132/- may be added as his unexplained income. It was pleaded that the profit rate at 31.90% applied by the ld AO was very unreasonable compared to the actual figures of assessee, in as much as the net profits of the past assessment years , were of retail sales only and the present sales is of wholesale one with lesser profit. The entire bills and vouchers were produced before the ld AO for his verification. The assessee pleaded that the retail sales profit percentage of 28.85% and 32.18% was deduced from the sales of Asst Years 2010-11 and 2009-10 and applied it to the wholesale transactions which normally stands at 2 to 3%.
The ld CITA observed that the entire credits in the bank accounts were only emanating out of trading receipts of the assessee engaged in the business of footwear in an unorganized market. He observed that the ld AO either in the original assessment proceedings or in the remand proceedings was not able to identify any new source of income of the assessee. Accordingly, he held that the credits in the bank accounts are the sale proceeds of chappals and there are withdrwals for purchase of chappals. Hence he directed the ld AO to treat the entire credits in the bank accounts as sale proceeds of the assessee and adopt a net profit of 5% and bring to tax the same as business income
We have heard the rival submissions. We find from the perusal of the bank statements enclosed in the paper book before us, that there are various cash deposits and cash withdrawals made by the assessee. The ld CITA had given a categorical finding that the said deposits and withdrawals represent as one emanating only out of trading activities of the assessee, engaged in the business of footwear. This finding remains uncontroverted by the revenue before us. It is not in dispute that the books of accounts of the assessee were rejected both by the ld AO as well as by the ld CITA. In these circumstances, the ld CITA had resorted to estimation of net profit of 5% to meet the ends of justice. We do not find any infirmity in the said order of determination of net profit at 5% by the ld CITA and accordingly hold that the said order does not call for any interference. Accordingly, the grounds raised by the revenue are dismissed.
In the result, the appeal of the revenue is dismissed.