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TMI Blog2020 (10) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... 145(3) of the Income Tax Act, 1961 thereby applying the NP rate @ 8% on enhanced turnover of Rs. 79,74,414/- for making addition of Rs. 5,50,329/-. 2. The assessee craves your indulgence to add, amend or alter all or any grounds of appeal before or at the time of hearing." 2. The assessee is an Individual and proprietor of M/s. Mahaveer Chemicals and engaged in the business of retail trading of grocery items and spices etc. The assessee filed his return of income on 17.12.2015 declaring total income of Rs. 5,00,400/-. The assessee has computed Net Profit under the provisions of section 44AD @ 8% on the total turnover of Rs. 10,95,300/- which comes to Rs. 87,624/-. During the assessment proceedings, the AO noted that there was total cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee is maintaining cash book, ledger, journal, purchases and sales vouchers. All the entries in the bank account are matching with the cash book as well as ledger account maintained by the assessee, therefore, the assessee has reconciled all the transactions of deposit in the bank account through cash as well as cheque. He has further submitted that the assessee produced the cash book, ledger account as well as bank account statement before the AO. Once the entries in the cash book, ledger account and the bank account are duly matching and no discrepancy is found, then the AO is not justified in treating the deposits and credits in the bank account as turnover of the assessee. He has pointed out that the assessee has explained t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire credit in the bank account of the assessee. Hence the ld. A/R has also challenged the net profit of 8% applied by the AO and submitted that the Coordinate Bench of this Tribunal in the case of Shri Gopal Mundra vs. ITO in ITA No. 1296/JP/2018 vide order dated 2nd April, 2019 has applied the Net Profit at 6%. 4. On the other hand, the ld. D/R has submitted that this case was taken for limited scrutiny in the bank account of the assessee. The assessee has not submitted satisfactory explanation about the source of deposits made in the bank account to the tune of Rs. 79,74,414/-. The AO has noted that the assessee is making purchases in cash and also sales in cash, therefore, the withdrawals from the bank account would have been utilize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the deposit made in the bank account through cheque is selfexplanatory and could have been verified from the details. The AO has accepted this fact that the entire sale of the assessee is in cash. Therefore, the deposit in the bank account through cheque is otherwise not on account of not representing the turnover of the assessee. The assessee has explained the source of entire deposit in the bank account as under :- Gross receipts/Turnover declared by the assessee Rs. 10,95,300/- Salary income Rs. 3,87,118/- These two amounts are not in dispute as declared by the assessee in the return of income. The assessee has also explained loan of Rs. 16,89,100/- taken f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, once the assessee has explained the source of deposit of cash in the bank account, then taking the entire credit in the bank account as turnover of the assessee is highly arbitrary and unreasonable on the part of the AO. The assessee has explained that a sum of Rs. 12,18,000/- is transferred from assesee's own savings bank account to another account, and therefore, the same cannot be treated as a turnover of the assessee or unexplained deposit. The AO has not conducted the bare minimum enquiry even to exclude such transactions which are inter-transfer of bank account of the assessee. The assessee has also explained the deposit to the extent of Rs. 29,81,967/- being the prior cash withdrawal by the assessee though the said amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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