2013 (7) TMI 800 - AT - Income Tax

Unaccounted cash deposit in the bank account - Held that - The assessee has sufficiently discharged the onus of proving the said deposits in to the bank account. The pattern of deposits and withdrawals made in the bank account which are reproduced by the AO assessment order does not establish the fact that the deposits made of a total amount of Rs.5 lakh on 25-8-2008, 26-8-2008 and on 8-9- 2008 are out of the withdrawals of Rs.4,91,000/- made on 27-5- 2008. Similarly, the assessee s explanation with regard to the deposits of Rs.1 lakh and Rs.4 lakh respectively on 29-1-2009 and on 18-3-2009 are acceptable in view of the fact the AO has not disputed the fact of borrowals of Rs.5 lakhs made from Mr. Rajeev Aurangabadkar on 12-12-2008. Similarly, assessee s explanation with regard to total deposits of Rs.1,44,500/- on different dates as mentioned in CIT (A) s order also cannot be rejected considering the nexus between the deposits and the income and also the fact that the assessee had shown income of Rs.2,61,250/- and agricultural income of Rs.72,630/- which has not been disputed by the AO. Thus no infirmity in the order of the CIT (A) in deleting the additions made by the AO as the assessee has satisfactorily explained the source of such deposits. Assessment of income - AO contested against CIT (A) s direction to determine the net profit at the rate of 5% of the purchases and stock put for sale during the year - Held that - As decided in Income tax Officer-Ward-2, Hyderabad Versus Amaravathi Wine Shop, Hyderabad 2012 (8) TMI 706 - ITAT, HYDERABAD income of the assessee in this particular line of business of liquor has to be estimated at 5% on purchase of stock put for sale. Since the impugned order of the CIT (A) is in consonance with the consistent view taken by the co-ordinate bench of this Tribunal in similar matter appeal filed by the department is dismissed.

Summary

Issues:
1. Appeal against CIT (A)'s order directing net profit determination at 5% of purchases and stock put for sale.
2. Addition of unexplained deposits in bank account by Assessing Officer.

Issue 1: Appeal against CIT (A)'s order directing net profit determination at 5% of purchases and stock put for sale:
The department appealed against the CIT (A)'s direction to the Assessing Officer to determine the net profit at a rate of 5% of the purchases and stock put for sale during the year. Despite no representation from the assessee, the Tribunal reviewed the matter. The Tribunal noted that the issue was consistent with previous decisions where income in the liquor business was estimated at 5% of the stock put for sale. Citing a specific case, the Tribunal upheld the CIT (A)'s order based on the consistent view of the Tribunal in similar matters. Consequently, the Tribunal dismissed the department's appeal, affirming the CIT (A)'s decision.

Issue 2: Addition of unexplained deposits in bank account by Assessing Officer:
The Assessing Officer added unexplained deposits in the assessee's bank account under section 69 of the Act. The CIT (A) reviewed the case and categorized the deposits into three groups based on the assessee's explanations. The CIT (A) accepted the explanations for the first group of deposits, relating to medical treatment and construction activities. For the second group, the CIT (A) found the explanations logical and reasonable, relating to borrowings and project advances. Regarding the third set of deposits, the CIT (A accepted the explanation based on the nexus between deposits and income declared by the assessee. The Tribunal, after considering the submissions and evidence, found that the assessee had sufficiently proven the source of the deposits. The Tribunal upheld the CIT (A)'s decision to delete the additions made by the Assessing Officer, as the explanations provided by the assessee were satisfactory. Consequently, the Tribunal dismissed the department's appeal, confirming the CIT (A)'s order.

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