TARAKANTA SAHOO,NAYAGARH vs. ITO, KHURDA WARD, KHURDA

This is an appeal filed by the assessee against the order of CIT(A)-

1, Bhubaneswar, dated 21.9.2015 for the assessment year 2011-12.

confirming the addition of Rs.14,14,000/- being undisclosed closing

balance in bank account.

that the closing balance in assessee’s current account

No.04000210000014 with U.Co Bank, Dasapalla as per statement

obtained from the bank was Rs.20,07,490/- whereas in the audited

balance sheet, the closing balance was Rs.5,93,490/-. Hence, there was

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a difference of Rs.14,14,000/-. Therefore, he made addition of

Rs.14,14,000/- u/s.69 of the Act.

observing that Hon’ble A.P. High Court in the case of CIT vs. M.R.Kistaiah,

220 ITR 294 (AP) has held that the Assessing Officer is entitled to treat

the unexplained cash credit as income from undisclosed sources.

excess deposit in the bank account cannot be treated as income of the

assessee. He argued that the only income embedded in the bank deposit

of Rs.14,14,000/- can be assessed as income of the assessee. He relied

on the decision of this Bench of the Tribunal in the case of R.R.Carrying

Corporation, 30 DTR 569 in support of his contention.

lower authorities, I find that the Assessing Officer found that the closing

balance at the end of the year in the current account

No.04000210000014 with U.Co Bank, Dasapalla as per statement

obtained from the bank was Rs.20,07,490/- whereas in the audited

balance sheet, the closing balance was Rs.5,93,490/-. Hence, there was

a difference of Rs.14,14,000/-. The Assessing Officer treated this

difference as undisclosed investment of the assessee in the bank account

and added the same to the income of the assessee u/s.69 of the Act. The

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contention of the assessee is that the entire deposit cannot be treated as

income of the assessee and the income embedded in the receipt of

Rs.14,14,000/- can only be assessed as income of the assessee. He

relied on the decision of this Bench of the Tribunal in the case of

R.R.Carrying Corporation (supra). I find force in the above arguments of

ld A.R. of the assessee. I find that the assessee has disclosed the

turnover of Rs.3,94,24,798/- on which it has shown net profit of

Rs.7,88,496/- , which works out to 2% of the total turnover. The claim of

the assessee is that the receipt is found to be sale of IMFL and Beer,

which is the business of the assessee, which fact is not in dispute. Hence,

I am of the considered view that it will meet the ends of justice if the

income of the assessee is estimated at 5% of the differential amount of

Rs.14,14,000/- deposited in the bank account by the assessee. I,

therefore, set aside the orders of lower authorities and direct the

Assessing Officer to estimate the net profit at 5% of Rs.14,14,000/- and

make addition accordingly.

Order pronounced in the open court on 09/08/2017.

Sd/- (N.S Saini) ACCOUNTANT MEMBER

Cuttack; Dated 09 /08/2017

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B.K.Parida, SPS Copy of the Order forwarded to : 1. The appellant : Sri Tarakanta Sahoo, At/PO: Satpatna, PS: Dasapala, Dist: Nayagarh. 2. The Respondent. ITO, Khurda Ward, Khurda 3. The CIT(A) Bhubaneswar-1 4. Pr.CIT-1, Bhubaneswar 5. DR, ITAT, Cuttack BY ORDER, 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack