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Appellant's Appeal Partially Allowed: Restriction on Bank Deposits & Mixer-Grinders Sales The ITAT partially allowed the appellant's appeal by modifying the CIT(A)'s order and directing the AO to restrict the addition related to bank deposits ...
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Provisions expressly mentioned in the judgment/order text.
Appellant's Appeal Partially Allowed: Restriction on Bank Deposits & Mixer-Grinders Sales
The ITAT partially allowed the appellant's appeal by modifying the CIT(A)'s order and directing the AO to restrict the addition related to bank deposits and sale of mixer-grinders to Rs. 4,02,500 for the assessment year 2008-09.
Issues: 1. Estimation of profit from spare parts business 2. Estimation of profit from sale of mixer-grinders
Estimation of profit from spare parts business: The appellant challenged the order passed by the ld. CIT(A) regarding the estimation of profit from spare parts business and sale of mixer-grinders for the assessment year 2008-09. The AO assessed the entire cash deposit of Rs. 10,89,000 as the appellant's income under section 68 of the Act. The ld. CIT(A) estimated the profit from spare parts business at 12% of the deposits made in the bank account, considering them as business transactions. However, the CIT(A) did not explain why he considered the deposits only related to spare parts business and not mixer grinders. The ITAT found the CIT(A) justified in considering the bank deposits as business transactions but disagreed with the selective treatment of spare parts business. The ITAT estimated the profit from sale of mixer-grinders at Rs. 3,37,500 and spare parts business at Rs. 65,000, totaling Rs. 4,02,500, and directed the AO to restrict the addition to this amount.
Estimation of profit from sale of mixer-grinders: The AO estimated the profit from sale of mixer-grinders at Rs. 4,50,000 based on the appellant's statement that he sells approximately 1500 pieces per year with a profit of Rs. 300 per piece. The ld. CIT(A) confirmed this estimation. However, the assessing officer did not inquire about the appellant's expenses. The ITAT noted discrepancies in the CIT(A)'s estimation of spare parts income at Rs. 1,27,560, contrary to the appellant's statement. The ITAT recalculated the profit from sale of mixer-grinders at Rs. 3,37,500 and spare parts business at Rs. 65,000, totaling Rs. 4,02,500. The ITAT directed the AO to limit the addition to this amount, thereby partly allowing the appellant's appeal.
In conclusion, the ITAT modified the ld. CIT(A)'s order and directed the AO to restrict the addition relating to bank deposits and sale of mixer-grinders to Rs. 4,02,500. The appeal filed by the assessee was partly allowed on 3rd Feb, 2016.
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