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2021 (7) TMI 414 - AT - Income TaxRejection of books of accounts - estimation of income - Unexplained Investment in Purchases - HELD THAT:- Once the income of the assessee is estimated by G.P rate no further addition can be made on account of expenditure which is part of the trading account. As far as the unexplained investment is concerned the source of payment is not in dispute as it is clearly made through bank account of one Sikha Jaisawal and the assessee has explained the reasons for such payment through bank account of Sikha Jaisawal. It is pertinent to note that it is not the isolated transaction of payment for purchases through bank account of Sikha Jaisawal but all the transactions from January, 2012 to February, 2012 were made from the bank account of Sikha Jaisawal A.O has accepted all other transactions of purchases and payment made through bank account of Sikha Jaisawal but pick up this transaction due to the reasons that the same is not recorded in the books of accounts of the assessee. Once, the source of the payment of the purchases is not in dispute then the same cannot be treated as unexplained investment. Accordingly, in view of the fact that the income of the assessee was estimated by the A.O by applying G.P rate after rejection of books of accounts u/s 145(3) of the Act the addition made by the A.O on account unexplained/unaccounted purchases is not sustainable and the same is liable to be deleted. - Decided in favour of assessee. Reassessment proceedings - addition on account of unexplained deposits made in the bank account - HELD THAT:- As manifest from the details and explanation furnished by the assessee that the assessee has shown the deposits made in the bank account on various dates and also the corresponding payment through cheques and demand draft which were subsequently cancelled in some instance. It is pertinent to note that if the sale proceeds of the assessee are not deposits in any other bank account then the explanation of the assessee that the deposits made by the assessee in the bank account maintained with Bank of Baroda cannot be rejected without verifying these details. Accordingly, in the facts and circumstances of the case and in the interest of justice this issue is set aside to the record of A.O for proper verification of the details as well as facts regarding the source of the deposits and then adjudicate the same afresh, after affording an opportunity of hearing to the assessee.
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