TaxTMI 
TaxTMI 
2022 (6) TMI 1020
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.... by the assessee are as follows: "1. Ld. CIT(A), Valsad has erred in law and on facts to take G.P. of Rs.12.89 percent on contract receipts of Rs.64,23,832/- and thereby directed to take income @ Rs.8,28,032/- as against A.O's addition of Rs.16,79,548 being 8% N.P. on turnover of Rs.3,08,25,664/-. 2. Ld. CIT(A), Valsad has erred in law and on facts to direct the assessing officer to take income @ Rs.2,35,501/- on peak basis with respect to cash deposits in SBI account by withdrawing cash from 2 bank accounts i.e. ICICI Bank and Axis Bank ignoring the fact that bank account with SBI is specifically opened for transfer of payment to the workers and thereby it is a business bank account. CIT(A), ought to have even telescopic adjustment of peak credits against his G.P/N.P addition. Alternatively, no peak to be added as there is substantial cash withdrawal from 2 bank accounts. 3. Ld. CIT(A), Valsad has erred in law and on facts to upheld A.O's addition u/s 68 of the Act for Rs.2,00,000/- in respect of 12 parties ignoring the fact that small borrowings are from friends and family member ought to be accepted." 4. Now, we shall take ground Nos.1 and 2 raised ....
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....e. The instances noted by the assessing officer from the cash book was Rs.1,40,000/- on 16.04.2010 from Shri D.R. Patel and Rs.1,80,000/- on 22.04.2010 noted in the cash book but these parties denied any cash payment to the assessee. Similarly, cash payment in the name of M/s. S.A. Builders amounting to Rs.1,50,000/- was reflected in the cash payment made to the assessee. Based on these findings, the assessing officer concluded that the assessee's claim of cash deposit in the SBI account out of other bank withdrawal and contract receipts were not acceptable and therefore assessing officer rejected the same. The assessing officer also observed that transaction in the SBI bank statement indicated withdrawals by ATM mostly at Jalpaiguri. The assessing officer also noted that cheque was issued to Shankar Biswas and Naushad from these accounts. All these facts led the assessing officer to conclude that the deposits in the SBI account was unaccounted contract receipts of the assessee. Thus, the receipts of Rs.64,23,832/- and Rs.84,75,415/- were added to the total contract receipts shown in the return of income at Rs.1,59,26,417/-. On the adjusted total contract receipts of Rs.3,08,25,664....
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....not being repeated for the sake of brevity. 10. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that Assessing Officer as well as ld. CIT(A) failed to consider the past history of net profit ratio shown by the assessee, which is very much relevant to make estimated addition.It is well settled that in estimation there is always a certain degree of guesswork. No doubt the authorities concerned should try to make an honest and fair estimate of the income and should not act totally arbitrarily. Department must act judiciously, while making estimated addition and must be guided by judicial consideration and by rule of justice, equity and good conscience. And also that there must be honest and fair estimate of the proper figure of assessment, for which consideration of local knowledge and repute, besides the previous returns an assessment of the assessee concerned, and all other matters must be taken into account for fair and proper estimat....
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....usiness purposes. The assessee is a small businessman and in needy hours, he borrowed money from his friends and relatives, and in subsequent years he has paid to them. We note that there are no findings of the assessing officer that it is assessee`s money which came back to the assessee in the form of cash credit. Hence, a small amount borrowed by assessee to meet the urgent business requirements should not be added in the hands of the assessee, therefore, based on this factual position the addition of Rs.2,00,000/- is hereby deleted. 14.In the result, ground No.3 raised by the assessee is allowed. 15. Now, we shall take Revenue's appeal in ITA No. 137/SRT/2020 for assessment year 2010-11. Grounds of appeal raised by the Revenue are as follows: "1. On the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in quashing the reopening of assessment initiated u/s 147 of the Income -Tax Act,1961 by ignoring and not properly appreciating the facts of the case. 2. It, therefore, prayed that the order of the Ld. CIT(A) be restored. 3. The assessee craves to add, modify or alter any grounds during the course of appeal proceedings." 1....
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....84,75,415/- were to be added under section 68 of the Act. Therefore, it is abundantly clear that in the original assessment order, the assessing officer had discussed and adjudicated these two receipts. The assessing officer adjudicated the issue stating that all these contract receipts should be included in the total turnover of the assessee and then after he computed the estimated income at the rate of 8% of the total turnover. This way, the assessing officer had already considered these two receipts in the original assessment proceedings. Hence, there is no new tangible material to reopen the assessment. Therefore, the current facts of reopening of assessment clearly amounted to change of opinion applying the decision of Hon'ble Supreme court in the case of Kelvinator India Ltd (supra), therefore, the reopening is not sustainable. We note that in the case of CIT vs. Kelvinator of India Ltd. 256 ITR 1, the Full Bench of the Delhi High Court was considering a case of reopening u/s 147 within 4 years from the end of the assessment year. The Court held that when a regular order of assessment is passed in terms of section 143 (3) of the Act, a presumption can be raised that such ....