2015 (6) TMI 1194 - AT - Income Tax

Addition u/s 69A - unexplained cash deposit - assessee has not given any documentary evidence to prove that cash deposit was his business turnover - CIT-A treating the cash deposit as business turnover of the assessee and applying G.P. rate of 13.8% - HELD THAT - Clear finding has been given that on perusal of the entries reflected in the said bank account it was revealed that the cash deposits and withdrawals were made regularly during the year and therefore the AO was not justified in making the addition of 15, 68, 500/-. CIT(A) has held that these receipts should be treated as turnover of the assessee from trading of cloth and has directed the Assessing Officer to make addition of profit from such turnover outside the books at gross profit rate of 13% of this turnover. Cash deposit and withdrawal in the bank account was made regularly by the assessee during the year it is very reasonable to say that the same was business turnover outside books and therefore only gross profit addition is justified in the facts of the present case. Hence we do not find any reason to interfere in the order of CIT(A) and therefore we decline to interfere in the same. - Decided against revenue.

Summary

Issues:
Revenue's appeal against deletion of addition made under section 69A of the Income Tax Act, 1961 for unexplained cash deposit treated as business turnover.

Analysis:
The Revenue appealed against the deletion of an addition made under section 69A of the Income Tax Act, 1961 for an unexplained cash deposit treated as business turnover. The Revenue contended that the Commissioner of Income-tax (Appeals) erred in law by deleting the addition without proper documentary evidence from the assessee. The Revenue further argued that the CIT(A) wrongly treated the cash deposit as business turnover and applied a gross profit rate of 13.8%. The Revenue's appeal was supported by the Departmental Representative, while the assessee's side was supported by their representative.

Upon review, the Tribunal examined the facts and arguments presented. The CIT(A) had determined that the cash deposits and withdrawals were regular, indicating business turnover. The CIT(A) concluded that the entire sale proceeds deposited in the bank account were unrecorded and undisclosed in the books of accounts, leading to undeclared profits. The CIT(A) found that the appellant's transactions were related to trading of cloth, and the deposited amounts constituted turnover from such trading. The Tribunal agreed with the CIT(A)'s decision, stating that the regularity of transactions supported the characterization of the cash deposits as business turnover, justifying the addition of gross profit at a rate of 13.8%.

Based on the detailed analysis of the CIT(A)'s order and the facts presented, the Tribunal upheld the decision, dismissing the Revenue's appeal. The Tribunal found no reason to interfere with the CIT(A)'s ruling, as the transactions clearly indicated business turnover, warranting the addition of gross profit. Consequently, the appeal of the Revenue was dismissed, and the CIT(A)'s order stood affirmed.