2023 (10) TMI 767 - AT - Income Tax

Unexplained money u/s 69A - cash deposit in the Saving Bank Account of the assessee unexplained - assessee explained the source of deposit as turnover of his business of electronic goods however, the AO refused to accept the explanation on the ground that the assessee has shown the sales in the bank account with Oriental Bank of Commerce (OBC) whereas the deposit in question has been made in the Saving Bank Account of the assessee with SBI bank which cannot be accepted as sale proceeds - HELD THAT - As in absence of the complete details of the deposit made in the both bank accounts it cannot be conclusively determined that the deposit made in the SBI account has been declared by the assessee as his turnover. Accordingly, when the frequent deposits and withdrawal transactions are made in the Saving Bank Account throughout the year and almost nil balance was available as on 31.03.2012 then the deposit in the Saving Bank Account in our considered view represents turnover of the assessee. Since the assessee has not disclosed this bank account in the return of income, therefore, deposit in the saving bank account is considered as undisclosed turnover and GP rate on the said turnover would be added to the total income of the assessee instead of the entire deposit. Accordingly, the AO is directed to add only G.P. rate on the deposit made in the Saving Bank Account with SBI of Rs. 16,13,020/-. Appeal of assessee is partly allowed.

Summary

Issues involved:
1. Consideration of cash deposit as unexplained money under section 69A of the Act.
2. Treatment of cash deposit in Saving Bank Account as undisclosed turnover and addition to total income.

Issue 1:
The appeal by the assessee was against the order of the Commissioner of Income Tax(Appeal) for Assessment Year 2012-13. The assessing officer had made an addition of Rs. 16,13,020/- to the income of the assessee, considering it as unexplained money under section 69A of the Act. The assessee contended that the cash deposit was already considered in the net income calculation as it was part of the business transactions and not undisclosed income. The Tribunal observed that the cash deposit was accounted for in the books of accounts and was explained to be from sales proceeds, thus not warranting treatment as unexplained money. The Tribunal directed that only the Gross Profit rate on the deposit be added to the total income.

Issue 2:
The assessee, an individual and proprietor of a business, had declared total income for the year but faced a reopening of assessment due to cash deposits in the Saving Bank Account. The assessing officer added the deposit to the total income, which was upheld by the Commissioner of Income Tax(Appeal). The assessee argued that the deposits were part of the business transactions, duly recorded in the cash book, and were utilized for regular business activities. The Tribunal noted that the deposits and withdrawals in the Saving Bank Account were not fully explained in relation to the business turnover. However, considering the nature of transactions and absence of complete details, the Tribunal directed the addition of only the Gross Profit rate on the deposit as undisclosed turnover to the total income.

Separate Judgement:
The Tribunal, comprising of Shri Vijay Pal Rao and Shri B.M. Biyani, allowed the appeal partly, directing the addition of only the Gross Profit rate on the deposit made in the Saving Bank Account with SBI to the total income of the assessee.