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2024 (9) TMI 80 - AT - Income TaxUnexplained deposit u/s 69A - difference between bank deposit less inter branch transfer with the total sales - HELD THAT - The assessee never care to file any return of income and not produced any books of account. As before CIT(A), proceedings took a long period of 3 years for adjudication, remand reports were filed on three occasions and appropriate rebuttals were made by the AO, hence, we find no merit in the request of AR. that there was lake of any opportunity. We are also not aggreable to his proposition of suggesting upon remand as he could not adduce any sort of evidence before the Bench to canvas his arguments. CIT(A) has passed a detailed and meticulous order and has strenuously arrived at the computation of the income after getting inputs from the assessee, cross verification from the suppliers, verification by the AO the findings are of course based on a certain assumption and estimate, which cannot be faulted with because the assessee has not been frank enough its true state of affairs. Once the assessee has himself conceded before CIT(A) about the computation of income, he simply cannot turn around and argue against the same before us. Decided against assessee. Estimation of NP on cash deposits - Revenue argued CIT(A) should have confirmed the entire deposit of cash in bank account as done by the AO - As they have not denied the business modal of the assessee. CIT(A) has correctly estimated the net profit which can only be brought into tax. Accordingly, all the grounds raised by the Revenue in its appeal for A.Y. 2009 10 and 2011 12 are dismissed.
Issues Involved:
1. Addition of unexplained cash deposits under Section 69A. 2. Application of Gross Profit (GP) ratio versus Net Profit (NP) ratio. 3. Waiver of penalty under Section 271(1)(b). Detailed Analysis: 1. Addition of Unexplained Cash Deposits under Section 69A: The primary issue was the addition of Rs. 5,28,35,502 as unexplained cash deposits under Section 69A by the Assessing Officer (AO). The assessee argued that these deposits were business receipts, which were reflected in the books of accounts and bank statements. The CIT(A) partially accepted the assessee's explanation, reducing the unexplained deposits to Rs. 51,58,766. The CIT(A) considered the sales, interbank transfers, and other business-related transactions while arriving at this figure. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had failed to provide sufficient evidence to explain the remaining amount. 2. Application of Gross Profit (GP) Ratio versus Net Profit (NP) Ratio: The assessee contended that the CIT(A) erred in applying the GP ratio instead of the NP ratio to estimate the profit. The CIT(A) applied a GP ratio of 1.60% for cigarette sales and 3.50% for other items, based on the details provided by the assessee and the information obtained from ITC. The Tribunal upheld the CIT(A)'s application of the GP ratio, noting that the assessee had not provided adequate evidence to support the application of the NP ratio. The Tribunal also referenced the case of Income Tax Officer, Ward 3(1) vs. Om Silk Mills, where the High Court of Gujarat had ruled that the taxable income should be computed based on the NP rate shown by the assessee in the immediate preceding year. 3. Waiver of Penalty under Section 271(1)(b): The assessee appealed for the waiver of penalty under Section 271(1)(b), arguing that the penalty order pertained to the same assessment year and should have been considered in the appeal. The CIT(A) dismissed this appeal, stating that a separate appeal should have been filed for the penalty order. The Tribunal upheld the CIT(A)'s decision, noting that the assessee's appeal on this ground was not justified. Conclusion: The Tribunal dismissed the appeals filed by the assessee for the assessment years 2009-10 and 2011-12, as well as the cross objections filed by the assessee. The Tribunal also dismissed the appeals filed by the Revenue, agreeing with the CIT(A)'s estimation of net profit and reduction of unexplained cash deposits. The Tribunal found the CIT(A)'s order to be detailed, meticulous, and based on a plausible view, thereby upholding the CIT(A)'s decisions on all grounds. Order: The cross appeals, appeal filed by the assessee, and cross objections filed by the assessee are dismissed. The order was pronounced in the open Court on 01/08/2024.
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