2020 (4) TMI 329

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....by the Income Tax Officer, Ward- 3(3)(3)Surat(in short "the AO"). 2. Ground No.1 to 3 states that Ld. CIT (A) has erred in sustaining addition of Rs. 53,32,345 made by the AO treating the entire cash deposits in bank account as unexplained cash deposits, whereas entire cash deposits are sale proceeds of the assessee on which profit can be estimated and without prejudice even if cash deposits is not accepted as business transactions, then also CIT (A) erred in sustaining entire cash deposits in bank account as income of the appellant whereas only peak credit balance of the bank account should be treated as net unexplained cash credit. 3. Succinct facts are that AIR information revealed that the assessee had a bank account in HDFC Varachha ....

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.... extent of addition of Rs. 53,32,345 made by the AO out of above bank accounts. The transaction in said bank account pertains to trading activity only, and in order to overcome any controversy and put an end to the litigation, the deposits in bank account excluding the cash withdrawn from this bank account and cheque returned which amounts to Rs. 45,58,845 may be treated as turnover and profit at the rate of 8%, be estimated as provided under section 44AD of the Act. The assessee has ready to pay tax on the net profit, which is worked out to Rs. 3,64,707. Without prejudice, it was further submitted, that if the above plea of the assessee is not accepted, the addition if any, can be made only in respect of peak credit since cash deposits in ....

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....s, only estimated profit for such turnover could be added. The learned counsel for the assessee also placed reliance on the decision of Hon'ble Gujarat High Court in the case of CIT-VII v. Pradeep Shantilal Patel [2014] 42 taxmann.com wherein it was held that in such case at the most estimated profit of such turnover can be added. Therefore, addition of the entire turnover amount is clearly unjustified. Learned Counsel submitted that though the Department is accepting net profit of 2% to 5% in this line of business , but since the assessee has not maintained books of accounts hence, at the most net profit @8% as per section 44AD can be sustained and not the whole addition made by the AO. The learned counsel for the assessee also filed addit....