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2016 (8) TMI 461 - ITAT PUNE

2016 (8) TMI 461 - ITAT PUNE - TMI - Addition u/s 68 - undisclosed bank account - Held that:- Admittedly, the bank account maintained with HDFC Bank Ltd., which was not disclosed by the assessee in the impugned assessment year, was also not disclosed by the assessee in the immediately preceding assessment year. During the course of assessment proceedings in the preceding assessment year the AO had confronted the same to the assessee and the assessee had prepared a profit and loss account on the .....

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s both debit entries and credit entries. Therefore, we are of the considered opinion that those debit entries cannot be ignored altogether. Since the Ld.CIT(A) after considering the totality of the facts of the case has sustained addition of ₹ 15,30,602/- which is the peak credit in the bank account as on 29-12-2009, therefore, we do not find any infirmity in the order of CIT(A) - ITA No.718/PN/2014 - Dated:- 30-6-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Appellant : Sh .....

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e AO observed that the assessee was having a Savings Bank Account with HDFC Bank Ltd. bearing Account No.01041920001989 which has not been disclosed by the assessee to the Department. The total deposits in the said bank account amounts to ₹ 75,44,655/- out of which ₹ 57,98,000/- has been deposited in cash and ₹ 17,46,655/- by cheque. He, therefore, asked the assessee to explain the source of such cash and cheque deposits made in the said undisclosed savings bank account. It was .....

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/- on the total sales of ₹ 75,44,653/-. The net profit was worked out at ₹ 6,03,973/- which amounts to 8.01% of the turnover. It was accordingly requested that the profit of ₹ 6,03,973/- representing his income from sale proceeds of his undisclosed business may be taxed. 3. However, the AO was not satisfied with the explanation given by the assessee. He observed that the said bank account was never disclosed and the transactions carried out in the bank account was also not disc .....

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lity that the unaccounted profit from the firm has been deposited in the undisclosed bank account. He further noted that the assessee has deposited cash on 146 occasions during the year which shows that the assessee prefers not to hold cash in hand and rather to deposit cash in the bank account as and when raised/earned. Further, the deposits are also in bigger denominations. Rejecting the various explanations given by the assessee and invoking the provisions of section 68 the AO made addition o .....

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O in the assessment proceedings for A.Y. 2009-10 had made total addition of ₹ 5,21,990/- which amounted to 10.79% of the total credits in the bank account amounting to ₹ 48,39,641/-. The above amount was determined by disallowing an amount of ₹ 2,22,717/- being 5% of the purchases over and above the net profit of ₹ 2,99,273/- determined by the assessee on account of such credit entries. Since in the impugned assessment year such profit works out to ₹ 6,03,973/- the .....

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(A) restricted such disallowance to ₹ 15,30,602/- as against ₹ 75,44,655/- added by the AO by observing as under : 12. I have considered the appellant s submissions, the observations of the A.O. in the assessment order and the facts of the case. Admittedly, the bank account with HDFC bearing Account No.01041930001989 was not disclosed in the books of account or in the return of income. The credit entries in the bank account amounting to ₹ 75,44,655/- have been stated to be the .....

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s from his business of sale of timber and plywood in the immediately preceding year but on what basis the AO. had accepted this contention of the appellant has not been mentioned in the assessment order for the A.Y. 2009-10. During the year under consideration also, no documentary evidence or any other details are available on record to show that the credit entries in the appellant's account with HDFC Bank represent the sale proceeds of his business of sale of timber and plywood. Therefore, .....

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should have been made for this amount. Therefore, the addition on account of unexplained entries in the appellant's bank account is restricted to ₹ 15,30,602/-. The A.O. is directed accordingly. 6. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : 1. On the facts and in the circumstances of the case, and in law, the Ld.CIT(A)-I, Thane has erred in restricting the addition of ₹ 75,44,775/- made u/s.68 on account of unexplained .....

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necessary. 7. The Ld. Departmental Representative strongly challenged the order of the CIT(A). He submitted that when the assessee had not disclosed the bank account where substantial deposits were made the Ld.CIT(A) was not justified in bringing to tax only peak amount instead of taxing the entire deposits made in the said bank account which was not disclosed to the Department. Further, the assessee has also failed to explain the source of such cash and cheque deposits in his undisclosed bank .....

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account and thereby had made addition of ₹ 5,21,990/- only as against the total deposits of ₹ 48,39,641/-. 9. Referring to the copy of the bank account he submitted that there were various debit entries and credit entries apart from certain cash deposits. The deposits in the said bank account has been treated as sale proceeds by the same AO in the preceding assessment years. Therefore, under identical facts and circumstances the AO cannot held that the deposits in the impugned assess .....

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s held that bank passbook is not a book maintained by the assessee or at his instructions and therefore the cash credit for the previous year shown in the assessee s bank passbook but not shown in the cash book maintained by the assessee in that year does not fall within the ambit of section 68 of the I.T. Act and therefore the amount so credited is not chargeable to tax as the income of the assessee of that previous year. He accordingly submitted that no disallowance u/s.68 should have been mad .....

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onsidered the various decisions cited before us. We find the assessee in the instant case has not disclosed the bank account maintained with HDFC Bank Ltd., where substantial deposits were made in cash as well as cheque. There are also various withdrawals from the said bank account. We find the AO rejecting the explanation given by the assessee that only profit should be taxed on the deposits, made addition of ₹ 75,44,775/- u/s.68 of the I.T. Act being the unexplained cash credits in the b .....

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