2016 (1) TMI 1190 - AT - Income Tax

Addition u/s 69A - unexplained deposit in the saving bank account with IDBI by applying gross profit rate of 10% - Held that - CIT(A) correctly directed to consider the total income of ₹ 35,23,249/- as undisclosed turnover of the appellant on which gross profit is estimated at 10%. AO is therefore, directed to restrict the addition accordingly. It is further observed that appellant in the revised return filed on 25-04- 2011 has declared additional income of ₹ 2,84,405/- in respect of transactions recorded in IDBI account. AO is directed to give credit of this amount.

Summary

Issues:
- Appeal filed by Revenue against order of CIT(A) restricting addition under section 69A of the Income Tax Act, 1961.
- Assessment of unexplained deposits in the saving bank account with IDBI.
- Consideration of gross profit rate for addition calculation.
- Application of decisions in similar cases by the Tribunal.

Detailed Analysis:
1. The appeal was filed by the Revenue against the order of the ld. CIT(A), Ajmer, for the assessment year 2004-05. The grievance of the Revenue was that the ld. CIT(A) had limited the addition to Rs. 3,52,325 out of the total addition of Rs. 35,23,329 made by the AO under section 69A of the Income Tax Act, 1961 concerning unexplained deposits in the saving bank account with IDBI using a gross profit rate of 10%.

2. The case involved the assessee declaring an income of Rs. 1,03,760 initially, with subsequent cash deposits of Rs. 35,23,249 in the savings bank account as per the Annual Information Return filed by IDBI Kishangarh Branch. The AO issued a notice under section 148, prompting the assessee to file a revised return declaring a total income of Rs. 3,88,165. The AO, unsatisfied with the explanation regarding the deposits, treated the amount as income from undisclosed sources under section 69A, resulting in the addition of Rs. 35,23,249.

3. The ld. CIT(A) partly allowed the appeal by directing the AO to consider the total income of Rs. 35,23,249 as undisclosed turnover of the appellant, estimating a gross profit of 10%. Furthermore, the appellant declared additional income of Rs. 2,84,405 in the revised return, which the AO was directed to credit. The Tribunal considered similar cases and upheld the decision of the ld. CIT(A) based on the principles applied in those cases.

4. During the proceedings, the ld. DR relied on the AO's order, while the ld. AR supported the ld. CIT(A)'s decision and cited judgments of the Coordinate Bench in related cases. The Tribunal, after hearing both parties and reviewing the material on record, found merit in the submissions of the ld. AR and upheld the decision of the ld. CIT(A) based on the precedents cited, ultimately dismissing the Revenue's appeal.

5. The Tribunal's decision was influenced by the application of gross profit rates and the consideration of turnover in similar cases, leading to the dismissal of the Revenue's appeal against the order of the ld. CIT(A) regarding the restricted addition under section 69A of the Income Tax Act, 1961.