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2016 (4) TMI 422 - ITAT DELHI

2016 (4) TMI 422 - ITAT DELHI - TMI - Undeclared cash deposits - treated as business receipts - Held that:- All the sales of the assessee are made in cash, and the assessee failed to substantiate why cash deposit of ₹ 19,93,152/- were only sales of the business receipts and not entire cash deposits. The explanation of the assessee that the withdrawals were re-deposited was not accepted by the AO as well as by the CIT(A) in absence of any evidence in support of its claim that withdrawals we .....

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bmissions of the assessee in this regard, and in our opinion , the CIT(A) has rightly held entire cash deposits as business receipts of the assessee. - Decided against assessee

N.P. percentage selection - Held that:- We agree with the contention of the ld. AR that when the AO has already rejected the sales figure of the assessee declared in the original letter as being on estimate and without any evidence, there is no justification on the part of the Assessing Officer to adopt the net .....

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siness turnover not exceeding ₹ 60 lacs. As the assessee has also declared its profit from the business under presumptive taxation under section 44AD of the Act, we hold that net profit rate of 8% is appropriate net profit rate and direct the Assessing Officer to apply the net profit rate of 8%, on the business receipt of ₹ 36,05,497/- and compute the net profit of the assessee from business accordingly. - ITA No. 5893/Del/2015 - Dated:- 9-3-2016 - SHRI I.C.SUDHIR, JUDICIAL MEMBER AN .....

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ection 44AD. 2) Agreeing with the AO on total estimated turnover of ₹ 36,05,497/- based on bank deposits whereas these deposits included the amount withdrawn and then again deposited. 3) Ignoring the amount of ₹ 14,47,345/- withdrawn and then redeposited and has erred in adopting the total deposit in the bank at ₹ 36,05,497/- which is incorrect and wrong since these included the amount withdrawn. 4) In not adopting the profit rate as per the provision of section 44AD and applyi .....

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y of the grounds stated above or to add any other grounds. 2. The fact in brief are that the assessee filed return of income declaring total income of ₹ 1,58,250/- on 31.03.2012. In the return of income, the assessee declared profit of ₹ 1,46,290/- from the business of trading of old computer spare parts , under the presumptive taxation scheme for retail business under section 44AD of the Income-tax Act,1961 ( in short the Act ), on the gross sale receipt of ₹ 7,03,450/- , at t .....

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count, declaring sales of ₹ 19,03,150/- and net loss of ₹ 25,880/- from the business activity. The assessee further explained that cash deposits of ₹ 19,03,150/- stood explained by the cash sales and the balance deposits were made out of the withdrawals from the banks on various dates. Further, the Assessing Officer noticed that out of purchase parties shown in re-casted trading account, only one party M/s. S.K.International could be verified and in respect of other parties, th .....

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and computed a profit of ₹ 7,21,099/- from the business activity of the assessee. Aggrieved the assessee filed the appeal before the ld. CIT(A), who upheld the action of the AO both on amount of sales as well as the net profit rate applied. Aggrieved, the assessee is before the Tribunal. 3. The grounds No. 2, 3 and 5 to 7 are in respect of holding entire deposits of 36,05,497/- in bank account as cash sales of the assessee and in grounds No. 1,4, and 8 are in respect of applying the net pr .....

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t, the Revenue had not proved that the assessee has use the money withdrawn any where else and secondly, the Revenue can not challenge the wisdom of the assessee to carry on the business in the manner he likes, relying on the judgement of the Hon ble Supreme Court in the case of CIT Vs Walchand and Company pvt Ltd 65 ITR 381 and JK Woolen Manufactures Vs CIT reported in 72 ITR 612. Further he submitted that the case of the assessee was of no books of accounts and the return was filed u/s 44AD of .....

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es of the assessee cannot be limited to ₹ 19,93,152/- . She further submitted that it was the onus on the assessee to submit evidence in support of his claim of re-deposit of money in bank and in failure to do so, the Assessing Officer has correctly taken the entire cash deposits of ₹ 36,05,497 as sales of the assessee for the year under consideration, which has been duly confirmed by the CIT(A). She also submitted that the assessee has failed to verify its purchases and thus it was .....

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52/- belonged to the business receipt from sale of old computer parts and balance were out of withdrawals made from the same bank accounts. All the sales of the assessee are made in cash, and the assessee failed to substantiate why cash deposit of ₹ 19,93,152/- were only sales of the business receipts and not entire cash deposits. The explanation of the assessee that the withdrawals were re-deposited was not accepted by the AO as well as by the CIT(A) in absence of any evidence in support .....

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n t find any justification in submissions of the assessee in this regard, and in our opinion , the CIT(A) has rightly held entire cash deposits as business receipts of the assessee. The findings of the CIT(A) on the issue of sales receipt are well-reasoned and there is no infirmity in the said findings. Accordingly, we dismiss the grounds No. 2,3, and 5 to 7 of the appeal. 6. In respect of balance grounds No. 1,4 and 8 of the appeal , the assessee has raised that the Assessing Officer has applie .....

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and therefore same may be accepted. He further submitted that the Assessing Officer has rejected the figure of sales declared in the original return of income, whereas, accepted the figure of net profit rate declared in the original return i.e. from the same source, and thus, this action of the AO was not justified. He further submitted that CIT(A) has not given any comparable case having profit rate of 20% in such retail business and ignored the rate of 8% fixed by the legislation for the purpo .....

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