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2022 (9) TMI 1023 - Income Tax
Reopening of assessment u/s 147 - addition of aggregate of cash as well as cheque deposit in the bank account of assessee - assessee vehemently submitted that assessee was doing a business of ‘Lapsi’ on very small scale and family of assessee is in this traditional business, inherited from his predecessors and that the deposits made in the bank accounts are part of sale proceed or transaction of family business of Lapsi - HELD THAT:- Entire amount of deposits cannot be considered for addition. The frequent deposit and withdrawal shows that the bank account in dispute was used for unreported bossiness transactions. As recorded above the assessee before us claimed that the assessee was doing a small traditional business of lapsi, which the assessee inherited and the surname of the assessee is also derived from their traditional business. We find merit in his submission that the assessee was doing some business activity, though it was not disclosed to the department. In my view, taxing the entire credit is not justified, thus, it would be justified if only profit element in such business activities from where the assessee generated the credit found in the bank account. Therefore, 7% of total addition is considered as profit from such business activities. Accordingly, the AO is directed to consider 7% of total deposit.
Coordinate Bench of this Tribunal in Smt. Krushangi Keyur Bhagat [2018 (9) TMI 2093 - ITAT SURAT] almost on similar set of facts wherein cash credit was found credited in the bank account of that assessee, the assessee took plea before lower authorities that transaction in bank account pertained to her textile business. Assessee claimed that only peak credit appearing in the bank account should be considered which was not accepted and the amount after reducing the cheque deposits, remaining was treated as unexplained.
On appeal before Tribunal, the plea of assessee that amount credited in the bank was a part of textile business and only profit element @ 5% of total deposit including of credit by way of cheque was considered as a profit element on the total deposits. Considering the fact of the case and the legal view taken by Hon’ble High Court as well as by Coordinate Bench of this Tribunal, WE direct the AO to restrict the addition @ 7% of credit in the bank account of assessee.Ground raised by assessee are allowed.