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The assessee, running a liquor shop, filed a return of income declaring Rs. 3,50,336/-. During scrutiny assessment, the Assessing Officer (A.O) found discrepancies in the books of account and rejected them under Sec. 145(3) of the Income Tax Act. The A.O estimated the income by applying a G.P Rate of 18.33%, the same as the previous year, and made a trading addition of Rs. 69,710/-. Additionally, the A.O added Rs. 1,51,386/- as unexplained investment for purchases made on 22nd February 2012, which were not disclosed in the audit report. The assessee's explanation that the payment was made through the bank account of Ms. Sikha Jaisawal due to personal circumstances was not accepted by the A.O, leading to the addition being upheld by the CIT(A).
Before the Tribunal, the assessee argued that once the books of accounts were rejected and income estimated by applying the G.P Rate, no further addition should be made for unexplained purchases. The payment source was not disputed, as it was made through Sikha Jaisawal's bank account. The Tribunal noted that the A.O did not dispute the sales, which included the alleged unexplained purchases. Therefore, no further addition could be made once the income was estimated by applying the G.P Rate. The Tribunal held that the addition of Rs. 1,51,386/- was not sustainable and deleted it.
Conclusion: The appeal concerning the addition of Rs. 1,51,386/- as unexplained investment in purchases was allowed, and the addition was deleted.
Issue 2: Addition of Rs. 11,05,000/- as Unexplained Investment in Bank DepositsAfter the initial scrutiny assessment, the A.O reopened the assessment under Sec. 147 r.w.s. 143(3) due to unexplained deposits of Rs. 11,05,000/- in the assessee's Bank of Baroda account. The A.O made the addition as the assessee failed to explain the source of these deposits and did not produce supporting evidence. The CIT(A) upheld this addition despite the assessee's detailed explanation and submission of relevant documents.
Before the Tribunal, the assessee contended that the deposits were sale proceeds used for payments to the excise department and were reflected in the books of accounts and balance sheet. The Tribunal noted that the assessee provided a detailed explanation, including bank statements and transactions, showing that the deposits were business receipts and not unexplained investments. The Tribunal found that the A.O did not verify these details properly. Therefore, in the interest of justice, the Tribunal set aside the issue to the A.O for proper verification of the source of deposits and adjudication afresh.
Conclusion: The appeal concerning the addition of Rs. 11,05,000/- as unexplained investment in bank deposits was allowed for statistical purposes, and the issue was remanded to the A.O for re-examination.
Final Order:The appeal in ITA No. 30/Alld/2020 was allowed, and the addition of Rs. 1,51,386/- was deleted. The appeal in ITA No. 31/Alld/2020 was allowed for statistical purposes, and the issue of Rs. 11,05,000/- was remanded to the A.O for fresh adjudication.
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