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2015 (4) TMI 712 - ITAT AHMEDABADEstimation of net profit - Held that:- It is an undisputed fact that the books of account were not produced by the assessee before the Assessing Officer and the purchase and sales figures were claimed to have been based on the returns filed under VAT but the copies of the same were not submitted before the AO or CIT(Appeals) though the Assessing Officer had asked the assessee to produce the same. It is also a fact that though the assessee has added new business assets, but his turnover is reported to have fallen as compared to the immediately preceding year. It is also a fact that the sales made by the assessee includes sales in cash. In view of these facts the Assessing Officer had estimated the sales at ₹ 65 lakhs and the net profit at 5 per cent. on the sales estimated which was reduced to 4 per cent. by the Commissioner of Income-tax (Appeals). Considering the totality of the facts and finding of the Commissioner of Income-tax (Appeals). we are of the view that in the present case, the fair estimate of profit has to be made in the peculiar facts of the case. We are of the view that in the absence of books of account and other supporting evidence as against the net profit of 3.06 per cent. shown by the assessee the profit at 3.5 per cent. of the total estimated turnover would meet the ends of justice. - Decided partly in favour of assessee. Unaccounted sales - unexplained cash deposits in HDFC Bank - Held that:- It is an undisputed fact that the assessee had not disclosed the bank account in the return of income, however he has stated that the credit in the bank account represents the cash sales. The assessee also stated that the bank account was used for making payments of purchases and as a specimen he has placed on record the copy of confirmation of Poonam Proteins evidencing the payments made for purchases from the aforesaid bank account. The aforesaid confirmation of Poonam Proteins shows that the assessee has made payments from HDFC Bank on various occasions. This factual aspect could not be controverted by the Revenue by bringing any contrary material on record. As far as considering the aggregate credits of ₹ 22,12,915 as sales as submitted by the assessee is concerned, we are of the view that the entire sales cannot be considered as income but only the profit embedded in it can be considered as income of the assessee. Further, while deciding ground No. 2 hereinabove we have estimated the net profit at 3.5 per cent. of the sales, we feel that ends of justice will be met by applying the same rate of 3.5 per cent. in the present case. We therefore direct that 3.5 per cent. of ₹ 22,12,915 be considered as income of the assessee - Decided partly in favour of assessee. Penalty us 271(1)(c) - addition being made by estimating profit on estimated sales and for unexplained cash deposits in HDFC Bank account - Held that:- It is an undisputed fact that the deposits in HDFC account was not considered as income by the assessee while computing the return of income. While deciding the quantum appeal on the aforesaid additionwe have directed the entire credits in the bank account cannot be considered as income but only 3.5 per cent. of the sale is to be estimated as income. Similarly against the estimation of 5 per cent. of the estimated sales of ₹ 65 lakhs made by Assessing Officer we have directed the addition to be estimated at 3.5 per cent. of the estimated sales. Since the quantum of addition on which the penalty has been levied under section 271(1)(c) itself has been reduced by our order hereinabove, we are of the view that the present penalty does not survive and hence direct its deletion. - Decided in favour of assessee.
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