Appeal Allowed with Cost for Delay & Negligence, 10% Profit Ratio on Cash Deposits

The appeal was allowed after condoning the delay due to the appellant's health issues, with a cost imposed for the delay and negligent behavior. The Tribunal directed the application of a 10% gross profit ratio on cash deposits, recognizing the business nature of the transactions. Both appeals were treated as allowed for statistical purposes, with the same rationale applied to identical issues in separate judgments.

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Issues Involved:
1. Delay in filing the appeal.
2. Addition of Rs. 59,39,000/- on account of cash deposits in the bank.
3. Application of gross profit ratio on cash deposits.

Detailed Analysis:

1. Delay in Filing the Appeal:
The assessee filed the appeal with a delay of 762 days. The delay was attributed to the appellant's severe health issues, specifically "Infective Hepatitis," which prevented him from contacting his advocate and filing the appeal on time. The appellant provided medical certificates and payment challans as evidence. The Tribunal found the reasons for the delay to be genuine and unintentional. However, due to the unreasonable delay, the Tribunal imposed a cost of Rs. 1,000/- for the delay and an additional Rs. 1,000/- for the negligent approach in pursuing the matter before the AO in AY 2009-10. The total cost of Rs. 2,000/- was to be deposited in the Prime Minister Relief Fund. Consequently, the delay was condoned, and the appeal was heard on merit.

2. Addition of Rs. 59,39,000/- on Account of Cash Deposits in the Bank:
The assessee, engaged in the trading business of fruits, had significant cash deposits in two savings accounts with Axis Bank, totaling Rs. 59,39,000/-. The AO observed a discrepancy between the sales reported in the income tax return (Rs. 14,46,018/-) and the cash deposits, resulting in an addition of Rs. 44,92,982/- as undisclosed income. The assessee claimed that the deposits and withdrawals were made on the advice of the bank to obtain cash credit facilities, suggesting that the same money was being rotated. However, the CIT(A) found that the transactions in the bank accounts, including withdrawals at far-off places and payments to various individuals, were not adequately explained. The CIT(A) upheld the AO’s addition, citing the lack of evidence and the peculiar nature of the transactions.

3. Application of Gross Profit Ratio on Cash Deposits:
The Tribunal noted that the bank statements showed regular cash deposits and withdrawals, indicating that the same amount of money was rotating in the accounts. Despite some withdrawals by individuals and through ATMs in other states, the Tribunal inferred that the transactions were business-related. The Tribunal decided that applying a gross profit ratio to the cash deposits would be appropriate. Given that the AO applied a gross profit ratio of 8.84% in the subsequent assessment year 2009-10, the Tribunal determined that a 10% gross profit ratio would be just. The AO was directed to apply this ratio to the cash deposits, partially allowing the assessee's appeal for statistical purposes.

Separate Judgments:
The issues and decisions for both ITA No. 473/Kol/2016 and ITA No. 640/Kol/2016 were identical, with the only difference being the amounts involved. The Tribunal applied the same rationale and judgment to both cases, allowing the appeals for statistical purposes.

Conclusion:
The appeals were allowed for statistical purposes after condoning the delay and imposing a cost for the delay and negligent behavior. The Tribunal directed the AO to apply a 10% gross profit ratio on the cash deposits, recognizing the business nature of the transactions. Both appeals were treated as allowed for statistical purposes.

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