Tribunal Adjusts Income Estimation to 8% Due to Inadequate Records; Remands Unexplained Deposits for Further Investigation.

The Tribunal partially allowed the assessee's appeals. It adjusted the income estimation from 10% to 8% of the gross turnover, acknowledging the lack of proper books of accounts. Additionally, the Tribunal remitted the issue of additions under sections 69C/68 for further investigation to establish the link between unexplained deposits and business activities. The challenge to the reopening of assessment under sections 147 and 148 was dismissed as it was not pursued during proceedings.

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Issues:
1. Challenge to reopening of assessment u/s 147 r.w.s. 148 of the Income-tax Act, 1961.
2. Estimation of income at 10% of total turnover.
3. Addition made under sections 69C/68 of the Act.

Issue 1: Challenge to Reopening of Assessment:
The appellant challenged the reopening of assessment u/s 147 r.w.s. 148 of the Income-tax Act, 1961. However, this ground was not pressed during the proceedings, leading to its dismissal in all appeals due to being not pressed.

Issue 2: Estimation of Income at 10% of Total Turnover:
The Assessing Officer estimated the income of the assessee at 10% of the gross turnover, contending that the assessee did not maintain proper books of accounts. The appellant argued that the estimation was too high and should align with the income offered by the assessee, which was more in line with trade norms. The Tribunal, after considering the arguments, held that to meet the ends of justice, it was appropriate to estimate the income at 8% of the gross turnover instead of the 10% adopted by the Assessing Officer.

Issue 3: Addition Made under Sections 69C/68 of the Act:
The appellant contested the addition made under sections 69C/68 of the Act after the income was estimated using section 44AF. The Tribunal noted that the Assessing Officer estimated the income based on VAT returns as the assessee did not maintain proper books of accounts. The Tribunal emphasized that the mere existence of unexplained deposits in the bank account does not automatically imply they are business receipts. The Tribunal remitted the issue to establish the connection between credit card withdrawals and their use for business purposes. Additionally, the Tribunal differentiated the case from precedents cited by the appellant's counsel, emphasizing the unique circumstances of the current case.

In conclusion, the Tribunal partly allowed all three appeals of the assessee, adjusting the income estimation and remitting the issue of additions under sections 69C/68 for further clarification.

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