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2023 (7) TMI 133 - AT - Income TaxReopening of assessment u/s 147 - cash deposit made by the assessee in his bank account - reason to believe - whether there was prima-facie some material on the basis of which the Department could reopen the case? - HELD THAT:- We observe that in the instant set of facts, there was a substantial cash deposit made by the assessee in his bank account. Assessee has been non-filer of income tax return. It is a well-settled principle of law that for initiation of proceedings u/s 147 of the Act, only a prima facie belief has to be formed by the assessing officer that the income has escaped assessment. In the case of Raymond Woollen Mills Ltd. [1997 (12) TMI 12 - SUPREME COURT] observed that the Court has only to see whether there was prima-facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. In the instant case AO had sufficient material to form a prima facie belief that there was escapement of income in the instant set of facts. Therefore, we find no infirmity in the order of Ld. CIT(Appeals) when he held that proceedings u/s 147 of the Act were validly initiated, looking into the facts of the instant case. Decided against assessee. Unexplained cash deposits in bank account - As considering the well-established legal proposition that was only the profit element embedded in any receipts which may be taxed in the hands of the assessee, it would be fair to estimate profit @10% of the total cash deposits in the hands of the assessee, which may be subject to tax in the hands of the assessee. In the case of President Industries [1999 (4) TMI 8 - GUJARAT HIGH COURT] held that the entire cash deposit should not be added to the income of the assessee had only the element of profit element should be considered as the taxable income of the assessee. The above proposition was also followed in the case of Dineshbhai Mathai Vala [2015 (4) TMI 712 - ITAT AHMEDABAD] - Accordingly, in the interest of justice 10% of the total deposits may be taken as a taxable income and thus taxed in the hands of the assessee.
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