Assessee's appeal dismissed for unexplained deposits under section 69A after failing to file returns or maintain books

Satish Kumar Madanlal Gupta Versus Income Tax Officer Ward–1, Gondia And (Vice-Versa) And Satish Kumar Madanlal Gupta Versus Income Tax Officer Ward–1, Gondia

Satish Kumar Madanlal Gupta Versus Income Tax Officer Ward–1, Gondia And (Vice-Versa) And Satish Kumar Madanlal Gupta Versus Income Tax Officer Ward–1, ... Issues Involved:
1. Addition of unexplained cash deposits under Section 69A.
2. Application of Gross Profit (GP) ratio versus Net Profit (NP) ratio.
3. Waiver of penalty under Section 271(1)(b).

Detailed Analysis:

1. Addition of Unexplained Cash Deposits under Section 69A:
The primary issue was the addition of Rs. 5,28,35,502 as unexplained cash deposits under Section 69A by the Assessing Officer (AO). The assessee argued that these deposits were business receipts, which were reflected in the books of accounts and bank statements. The CIT(A) partially accepted the assessee's explanation, reducing the unexplained deposits to Rs. 51,58,766. The CIT(A) considered the sales, interbank transfers, and other business-related transactions while arriving at this figure. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had failed to provide sufficient evidence to explain the remaining amount.

2. Application of Gross Profit (GP) Ratio versus Net Profit (NP) Ratio:
The assessee contended that the CIT(A) erred in applying the GP ratio instead of the NP ratio to estimate the profit. The CIT(A) applied a GP ratio of 1.60% for cigarette sales and 3.50% for other items, based on the details provided by the assessee and the information obtained from ITC. The Tribunal upheld the CIT(A)'s application of the GP ratio, noting that the assessee had not provided adequate evidence to support the application of the NP ratio. The Tribunal also referenced the case of Income Tax Officer, Ward 3(1) vs. Om Silk Mills, where the High Court of Gujarat had ruled that the taxable income should be computed based on the NP rate shown by the assessee in the immediate preceding year.

3. Waiver of Penalty under Section 271(1)(b):
The assessee appealed for the waiver of penalty under Section 271(1)(b), arguing that the penalty order pertained to the same assessment year and should have been considered in the appeal. The CIT(A) dismissed this appeal, stating that a separate appeal should have been filed for the penalty order. The Tribunal upheld the CIT(A)'s decision, noting that the assessee's appeal on this ground was not justified.

Conclusion:
The Tribunal dismissed the appeals filed by the assessee for the assessment years 2009-10 and 2011-12, as well as the cross objections filed by the assessee. The Tribunal also dismissed the appeals filed by the Revenue, agreeing with the CIT(A)'s estimation of net profit and reduction of unexplained cash deposits. The Tribunal found the CIT(A)'s order to be detailed, meticulous, and based on a plausible view, thereby upholding the CIT(A)'s decisions on all grounds.

Order:
The cross appeals, appeal filed by the assessee, and cross objections filed by the assessee are dismissed. The order was pronounced in the open Court on 01/08/2024.