MOHMMED ASIM MEHBOOB QURESHI,MUMBAI vs. ITO WARD 31(2)(3), MUMBAI

The assessee has challenged the addition of Rs.10,13,350/- on account of cash deposits in the bank account during demonetization period. 3. The brief facts are that assessee is operating a meat shop. Since assessee did not had any taxable income so he did not filed income tax return for the relevant assessment year (i.e., A.Y. 2017-18). The ld. AO noted that assessee had deposited Rs.10,13,350/- in his bank account during the demonetization period which included old SBN currency for sums aggregating to Rs.7,33,500/- and despite making cash deposits he did not filed his return of income. The bank account was a current account in the name of M/s. Shalimar Chicken Shop and the return was filed by the assessee only from the A.Y.2018-19 onwards. Accordingly, the ld. AO from the analysis of cash deposits and credit entries appearing in pre-demonetization period, demonetization period and post demonetization period, noted that assessee had made deposits during the entire year aggregating to Rs.49,27,202/- as per the following details given in assessment order. S No Period of Deposit Nature AMOUNT

The ld. AO has treated the cash deposit during demonetization period of Rs.10,13,350/- including SBN currency of Rs.7,33,500/- as ‘unexplained money’ and has been added to the income of the assessee. Apart from that, ld. AO has also estimated business profit of Rs.3,91,385/- by taking 10% net profit rate for the entire cash deposits excluding deposit made in the demonetization period.

The ld. First Appellate Tribunal has confirmed the said addition on the ground that assessee has not filed any documentary evidences like cash book, copy of computation of total income etc. 6. Before us, ld. Counsel for the assessee submitted that before the ld. CIT (A) assessee had filed the bank statement, prepared cash book, bank ledger, balance sheet and profit and loss account including the entire amount of cash deposit in the bank account. Assessee had done sales at Rs.44,21,120/- and had declared a net profit of Rs.4,00,720/- which has been offered to tax u/s.44AB. Assessee had declared net profit rate of 9.06%. Thus, when the ld. AO has estimated the net profit for other cash deposits then same should be applied on the deposits made during the demonetization period, because source of deposit is from his business of meat shop. 7. The ld. DR on the other hand relied upon the order of the ld. AO and ld. CIT(A). 8. After considering the relevant finding given in the impugned order as well as material placed before us, we find that ld. AO noticed that assessee has made cash deposits aggregating to Rs. 49,27,202/- during that period. The assessee is running a meat shop and entire sales are in cash. If the ld. AO is estimating net profit for the cash deposits made pre-demonetization period, and post demonetization then, there is no reason as to why the same application of net profit should be made on the cash deposits during demonetization period as noted in the aforesaid chart.