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Income Tax Appellate Tribunal, CUTTACK
Before: SHRI N.S SAINI
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.
The sole issue grievance in this appeal is that the CIT(A) erred in
confirming the addition of Rs.14,14,000/- being undisclosed closing
balance in bank account.
The brief facts of the case are that the Assessing Officer observed
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.
On appeal, the CIT(A) confirmed the action of the Assessing Officer
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.
Before us, it was argued by ld A.R. of the assessee that the entire
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.
Ld D.R. supported the order of the CIT(A).
After considering the rival submission and perusing the orders of
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.
In the result, appeal filed by the assessee is partly allowed.
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