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2022 (9) TMI 36 - AT - Income TaxNet profit estimation - total cash deposits treated as the turnover of the assessee - HELD THAT:- It is well settled principle of law that the holder of account is under legal obligation to explain source of cash deposits in his bank account. It is categorically stated by the AO that the assessee grossly failed to furnish supporting evidences in support of its contention that the deposits are related to purchases of live stocks. If it was so, even then burden was on assessee to prove the veracity of such claim. In the absence of supporting evidences, the authorities below are justified in treating the entire cash deposits as turnover of the assessee. However, it is noticed that both the authorities below have applied net profit on estimation basis, without verifying it by making field inquiries. CIT(Appeals) has applied net profit @ 8%. Both the lower authorities have not considered comparable instances from market regarding similarly situated traders.It would sub-serve the interest of substantial justice if 5% is adopted as a net profit. AO is, therefore, directed to adopt 5% as net profit and re-compute the addition accordingly. The grounds of appeal are partly allowed.
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