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2023 (2) TMI 260 - AT - Income TaxUnexplained cash deposits - GP estimation - not considering the plea of assessee for 8% gross profit addition and in restricting the addition to the peak credit - HELD THAT:- Pattern of deposits in bank account shows that there are certain cheque deposits, deposits in cash and regular withdrawal of amount. The lower authorities have confirmed the entire aggregate of deposits and have not considered the withdrawal - 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 business transactions. As recorded above the assessee claimed that the assessee was doing a small business of mobile, accessories and recharge coupons etc. Thus, after considering the submissions of assessee, find merit in his submission that the assessee was doing some business activity, though it was not disclosed to the department. In CIT Vs Pradeep Shantilal Patel [2013 (11) TMI 1646 - GUJARAT HIGH COURT] held that where assessee admitted that cash deposit pertains to his retail business but details and nature of business were not forthcoming from record, considering the total turnover of assessee, net income had to be determined under Section 44AF As decided in this Tribunal in Smt. Krushangi Keyur Bhagat [2018 (9) TMI 2093 - ITAT SURAT] 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. Thus taxing the entire credit or restricting the addition on peak basis is not justified, and it would be justified if only profit element in such business activities from where the assessee generated the credit found in the bank account to avoid the possibility of revenue leakage. Therefore, 8% of total addition is considered as profit from such business activities. Accordingly, the Assessing Officer is directed to consider 8% of total deposit. We direct the Assessing Officer to restrict the addition @ 8% of credit in the bank account of assessee. In the result, ground No. 2 and 3 of appeal raised by assessee are allowed.
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