2019 (5) TMI 1863 - ITAT JAIPUR - Income Tax

Head Note / Extract:
Addition u/s 69A - treating cash deposit as unexplained - HELD THAT:- As the assessee has only two sources of income. One is the remuneration, interest, share of profit, and rent from partnership firm, M/s Modern Fashion Textile & Tailoring Co. in which he is a partner and second is business income from his proprietory concern, M/s Modern Tailoring Company. In respect of his proprietory concern, the assessee has declared income u/s 44AD since the turnover of this business does not exceed the threshold limit of ₹ 1 crore. In the assessment order, the AO himself has accepted that the deposit in the bank account represents the realisation of sales. Therefore, even if the explanation of the assessee as to the source of deposits in the bank account is not fully accepted, then also the deposits as such cannot be considered as income. At the most, on such deposit which is accepted as a business deposit, net profit rate of 8% as prescribed u/s 44AD can be assessed. The net profit on the amount of ₹ 36,76,540/- works out at ₹ 2,94,283/-. Therefore, the addition should be sustained only to extent of ₹ 2,94,283/- instead of ₹ 36,78,540/- as done by the lower authorities - Appeal of the assessee is allowed in part.