Tribunal limits income addition for Civil Contractor to 25% of undisclosed bank funds

The Tribunal partially allowed the appeal, modifying the addition of unaccounted income made by the Assessing Officer and confirmed by the CIT(A) in the case of the assessee, a Civil Contractor. The Tribunal directed the Assessing Officer to restrict the addition to 25% of the undisclosed income amount found in the undisclosed bank account maintained with Bank of Baroda, considering various factors such as audited income and expenditure details, nature of business, and unverifiable cash expenditure.

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Issues:
Addition of unaccounted income allegedly earned by the assessee as reflected in the undisclosed bank account maintained with Bank of Baroda.

Analysis:

Issue 1: Addition of Unaccounted Income
The assessee, a Civil Contractor, filed a return of income declaring Rs.5,54,910/-. During assessment, a discrepancy of Rs.20,06,800/- in total sales/receipts was noted. The Assessing Officer found Rs.30,53,371/- in an undisclosed bank account, treating it as undisclosed income. The assessee appealed, submitting additional evidence showing unaccounted sales/receipts and business expenses. The Assessing Officer suggested estimating profit at 10% of the undisclosed credit entries, but the CIT(A) disagreed, upholding the addition. The Tribunal considered audited income and expenditure details, revealing Rs.6,02,295/- as net income from the undisclosed bank account. The Tribunal modified the CIT(A)'s order, directing the addition to be restricted to 25% of Rs.30,53,371/-, considering various factors, including the nature of business and unverifiable cash expenditure.

Conclusion:
The Tribunal partially allowed the appeal, modifying the addition of unaccounted income made by the Assessing Officer and confirmed by the CIT(A) in the case of the assessee, a Civil Contractor, based on detailed analysis of the undisclosed bank account maintained with Bank of Baroda and the nature of business transactions, directing the Assessing Officer to restrict the addition to 25% of the undisclosed income amount.

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