2015 (9) TMI 1501 - AT - Income Tax

Unexplained deposits made in bank account with ICICI Bank - unexplained business receipts of the assessee - Held that - It is no doubt true that the assessee has been changing his version as to the source of the amounts deposited into his SB Account with ICICI Bank. However, it is evident from the nature of the transactions, with transactions taking place several times on the same day, and deposits made in cash from different locations at the same time, that as correctly held by the CIT(A) in the impugned order, they represent the business receipts of the assessee. That being so, in the absence of proper books or complete details of receipts maintained by the assessee, it is only a reasonable fraction of such receipts which could be brought to tax as the income of the assessee. As against a rate of 8% suggested by the assessee, the CIT(A) has estimated such income of the assessee against the business receipts at 20%, which we find to be quite reasonable. In this view of the matter, we find no merit in the grounds raised by the Revenue in this appeal. We accordingly uphold the order of the CIT(A) and reject the grounds of the revenue in this appeal.

Summary

Issues involved: Appeal against order of Commissioner of Income-tax (Appeals) regarding addition to unexplained deposits in bank account.

Analysis:
1. Issue: Revenue's grievance against relief granted by CIT(A) on unexplained deposits.
- The Revenue appealed against the CIT(A)'s decision to restrict the addition to the unexplained deposits made by the assessee in his bank account.
- The Assessing Officer had observed cash deposits into the assessee's Savings Bank Account and treated it as income from unexplained sources.

2. Issue: CIT(A)'s findings on the nature of transactions and sources of deposits.
- CIT(A) noted that there were no salary credits in the ICICI Bank account and most transactions were in cash with no specific mention of the place of deposits.
- CIT(A) questioned the rationale behind the deposits being made into the assessee's personal account instead of the company's account.
- The CIT(A) directed verification of claims and received affidavits from the assessee and his representative, leading to further investigation.

3. Issue: CIT(A)'s decision to estimate net profit and uphold the relief granted.
- Considering the inconsistent explanations provided by the assessee, CIT(A) estimated the net profit at 20% of total cash deposits.
- CIT(A) concluded that the transactions indicated a business activity and partially allowed the assessee's grounds by restricting the addition made by the Assessing Officer.

4. Issue: Arguments presented by both parties and the Tribunal's decision.
- The Revenue contended that the assessee provided false statements and failed to substantiate claims, while the assessee argued that the deposits represented business receipts.
- The Tribunal acknowledged the changing versions of the assessee but found the nature of transactions indicative of business receipts.
- Upholding CIT(A)'s decision, the Tribunal deemed a 20% estimation of income from business receipts as reasonable, dismissing the Revenue's appeal.

Overall, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to restrict the addition based on the nature of transactions and the lack of proper documentation supporting the assessee's claims.