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TMI Blog2024 (4) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of Rs. 1722000/.- without appreciating that the assessee was running a small business of sale purchase of electrical and other allied appliances. That the addition confirmed by the (II (A) is contrary to the fact that the CIT(A) had himself confirmed the action of the AO regarding the applicability of section 44AD to all the receipts other than amount deposited in demonetization period. 3 3. That the Ld. CIT(A) has erred in confirming the addition of Rs. 1722000.'- without appreciating that the Ld. AO has erred in treating a part of the deposits as business income and the balance deposits made during demonetization as unexplained money u/s 69A. 4 4. That the Ld. CIT(A) has erred in confirming the addition under section 69A ignoring the fact that the provisions of section 69A cannot be applied where no books of accounts were maintained. 5 5. That without prejudice to the aforesaid, the Ld. CTT(A) has erred in not appreciating that all the credits in bank are in respect of sales and as such the addition has to be restricted to profit element @ 8% as per the provisions of section 44 AD. Furthermore, the CIT(A) has failed to appreciate that entire sale cannot be pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to Rs. 17,22,000/-. Out of the amount to Rs. 6,62,400/- some cash were deposited in legal note. So, the balance amount to Rs. 4,31,000/- was deposited in demonetisation period in SBN. In appeal order the ld. CIT(A) has accepted the reconciliation but rejected the grounds of the assessee. Being dissatisfied on the appeal order, the assessee filed an appeal before us. 4. The ld. AR filed the written submission which is kept in record. The ld. AR argued and mentioned that the assessee deposited cash in SBN only amount to Rs. 431,000/- not amount to Rs. 17,22,000/-. In this respect the ld. AR submitted the following documents: - Sr. No. Particulars Page APB 1. Copy of Bank statement of Jammu and Kashmir Bank Account No. 0347010100000243. 1-14 2. Copy of Bank statement of Jammu and Kashmir Bank Account no. 3538020100000217 15-52 3 Copy of certificate from Traders Federation J&K 68 4 Copy of certificate that the assessee is an authorized distributor of ALPL Products 69 5 Copy of Vat returns for the period 01.04.2016 to 31.03.2017 70-75 & 79-82 6 Cash deposit certificate of bank account no 0347010100000243 and 3538020100000217 in J&K Grameen Bank along with deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77,36,192.33. The turnover ascertained by the ld. AO is wrong. The ld. AR also placed that the cash was deposited bank out of the sales proceed. The ld. AR further argued that the assessee is whole sellers and in earlier years the assessee had conducted Audit and net profit varies from @1.95% to @2.63%. The relevant part of the assessee's submission is reproduced as below: 12.2 The sales conducted by the assessee, as per the VAT returns submitted to the Sales Tax Department, amount to Rs. 7,736,192. The quarterly breakdown of sales, as per the VAT returns, is tabulated as follows Sales as per Vat Returns Quarter Quarter Amount Page No QI (01.04.2016 TO 30.06.2016) 1670857.63 70 Q2 (01.07.2016 TO 30.09.2016) 430915.42 71 Q3 (01.10.2016 TO 31.12.2016) 2533585.61 72-73 Q4 (01.01.2017 TO 31.03.2017 3100833.67 74-75 TOTAL SALES 7736192.33 12.3 The CIT(A) has erred in applying a net profit rate of 8% on the total credits in the bank account. That the Ld CIT(A) failed to recognize that the assessee is primarily involved in the wholesale distribution of electronic items, where the net profit margin typically does not exceed 3%. This is evidenced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee has to be computed by the Assessing Officer on the basis of available material on record and it is very important to have direct evidence to make an addition rather than circumstantial evidence. When the assessee gives any reply or submission or any documents to the Assessing Officer, it is duty of the Assessing Officer to examine the same in the light of the available evidence. In the present case the Assessing Officer and the ld CIT(A) have concluded the findings on the basis of conjectures and surmises. The Assessing Officer has to establish the link between the evidence collected by him and the addition to be made. The entire case has to be dependent on the Rule of evidence, the assessee in this case explained the source of bank deposits are from cash sales. The Assessing Officer proceeded to disbelieve the explanation of the assessee on the presumption basis without bringing the corroborative material on record. The Assessing Officer is required to act fairly as reasonable person and not arbitrarily capriciously. The assessment should have been made based on the adequate material and it should stand on its own leg. The Assessing Officer without examining any par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry had no nexus with the gross receipts. The stand of the assessee before the Commissioner of Income-tax (Appeals) and the ITAT that the said amount of Rs. 14,95,300 was on account of business receipts had been accepted. Learned counsel for the appellant with reference to any material on record, could not show that the cash deposits amounting to Rs. 14,95,300 were unexplained or undisclosed income of the assessee". 8.4. Hon'ble High Court of Punjab And Haryana Commissioner of Income-tax v. Rajinder Parshad Jain [2015] 61 taxmann.com 310 (Punjab & Haryana). The relevant paragraph is reproduced as below: - "8. The Tribunal has applied a net profit rate of 6 per cent. as it was in consonance with the past history of the assessee. At the time of initial hearing, we had called upon counsel for the appellant-Revenue to apprise the court about the net profit rate applied to the assessee in years previous and subsequent to the assessment year in dispute. Counsel for the appellant fairly concedes, on instructions that in the preceding as well as the following year a net profit rate of 6.75 per cent. and 5 per cent., respectively, was applied by the Assessing Officer and has also pla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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