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TMI Blog2014 (3) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee did not exceed the amount of Rs.40,00,000/- and as such, the provisions of section 40AF of the Act would apply in the case of assessee for the purpose of computing the profit and gains of retail business, which provides that sum equal to 5% of the total turnover in the previous year on account of such business shall be deemed to be the profit and gains of such business – thus, 5% of the profit rate is applied - The AO made addition mainly on the basis of finding given in assessment year 2008-09 in respect of the same bank account – the CIT(A) had correctly followed the order of the Tribunal – thus, there was no infirmity in the order of CIT(A) – Decided against Revenue. Net profit @ 6% on bank deposits made – Held that:- As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income at Rs.5,98,410/- as against returned income of Rs.83,808/-. The assessment was reopened on the basis of findings given in assessment year 2008-09, in which it has been found that certain amounts deposited by the assessee in the bank account maintained with ING Vaishya Bank Ltd. were found to be unexplained and similar deposits in this bank account has been found to be made in this assessment year also. The AO made addition of Rs.5,14,600/- after he found deposit with aforesaid bank was unexplained as was also found unexplained in assessment year 2008-09. Therefore, similar addition was made as was made in the assessment year 2008-09. The assessee challenged the addition before the ld. CIT(A) and apart from other submissions on merit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial year relevant to assessment year under appeal, he had deposited cash in the bank account on different dates, which pertains to his small business. Whatever amounts were received from the business persons were deposited in the said bank account and same amount was paid through cheques to different businessmen from whom he had purchased the goods on credit. He has further explained in answer to question No.9 that since there was loss in this retail business, source of income from such business was not shown. He had also agreed to give names and addresses of the persons with whom such business was conducted. The assessee also moved before the ld. Addl. CIT u/s. 144A of the Act and submitted before him that the amount, which the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee did not maintain any books of account of this business. The details contained in the bank account would clearly support the contention of the assessee that the assessee was involved in Dalali business of selling ladies suits and whatever amount was received against the sale of ladies suits, the assessee deposited the amount in the bank account and thereafter, the amounts were transferred to the concerned parties/businessmen/traders from whom the goods were taken by the assessee on credit. The details noted in the bank account itself support the case of the assessee that this activity has been done by the assessee merely on commission. The assessee filed certain confirmations before the authorities below, copies of which are also f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as income from salary and interest. The authorities below, therefore, should have considered the true nature of the transaction carried out by the assessee. Considering the totality of facts and circumstances, we are of the view that the authorities below are not justified in making addition u/s. 69 of the IT Act against the assessee in sum of Rs.31,62,300/-. When we have held above that total deposits in the bank account are the sale proceeds of the assessee, the profit rate should have been applied instead of considering the entire sales of income of the assessee. We are fortified in our view by the judgments of Hon ble Gujrat High Court in the case of President Industries (supra) and M.P. High Court in the case of CIT vs. Balchand Ajit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the net profit rate of 6% against bank deposits and confirming the addition to the extent of Rs.3,96,974/- only. The assessee in the cross objection stated that the ld. CIT(A) ignored the order of the Tribunal for the assessment year 2008-09. Therefore, instead of applying net profit rate of 6%, the ld. CIT(A) should have applied the profit rate of 5% as is applied by the Tribunal. 8. The facts in this case are same as have been considered in the assessment year 2007-08 above except that in this case apart from the assessee maintained bank account with ING Vaishya Bank, other bank accounts with Kotak Mahendra, HDFC Bank were also considered. The AO on the basis of findings given in assessment year 2008-09 found the deposits in these acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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