TaxTMI 
TaxTMI 
2024 (4) TMI 490
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.... 2 2. That the l.d. CIT(A) has erred in confirming the addition of Rs. 1722000/.- without appreciating that the assessee was running a small business of sale purchase of electrical and other allied appliances. That the addition confirmed by the (II (A) is contrary to the fact that the CIT(A) had himself confirmed the action of the AO regarding the applicability of section 44AD to all the receipts other than amount deposited in demonetization period. 3 3. That the Ld. CIT(A) has erred in confirming the addition of Rs. 1722000.'- without appreciating that the Ld. AO has erred in treating a part of the deposits as business income and the balance deposits made during demonetization as unexplained money u/s 69A. 4 4. That the Ld. CIT(A) has erred in confirming the addition under section 69A ignoring the fact that the provisions of section 69A cannot be applied where no books of accounts were maintained. 5 5. That without prejudice to the aforesaid, the Ld. CTT(A) has erred in not appreciating that all the credits in bank are in respect of sales and as such the addition has to be restricted to profit element @ 8% as per the provisions of section 44 AD. ....
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....ion of cash deposit in demonisation period. The correct figure will be amount to Rs. 6,62,400/- and not the amount to Rs. 17,22,000/-. Out of the amount to Rs. 6,62,400/- some cash were deposited in legal note. So, the balance amount to Rs. 4,31,000/- was deposited in demonetisation period in SBN. In appeal order the ld. CIT(A) has accepted the reconciliation but rejected the grounds of the assessee. Being dissatisfied on the appeal order, the assessee filed an appeal before us. 4. The ld. AR filed the written submission which is kept in record. The ld. AR argued and mentioned that the assessee deposited cash in SBN only amount to Rs. 431,000/- not amount to Rs. 17,22,000/-. In this respect the ld. AR submitted the following documents: - Sr. No. Particulars Page APB 1. Copy of Bank statement of Jammu and Kashmir Bank Account No. 0347010100000243. 1-14 2. Copy of Bank statement of Jammu and Kashmir Bank Account no. 3538020100000217 15-52 3 Copy of certificate from Traders Federation J&K 68 4 Copy of certificate that the assessee is an authorized distributor of ALPL Products 69 5 Copy of Vat returns for the period 01.04.2016 to 31....
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....16 2000 78 156000 156000 20.12.2016 2000 5 10000 28400 500 3 1500 100 64 6400 20 50 1000 19 500 9500 TOTAL 652400 652400 7. The ld. AR further argued that the assessee is registered under VAT Act , bearing TIN-01922094101 and declared total turnover in impugned assessment year amount to Rs. 77,36,192.33. The turnover ascertained by the ld. AO is wrong. The ld. AR also placed that the cash was deposited bank out of the sales proceed. The ld. AR further argued that the assessee is whole sellers and in earlier years the assessee had conducted Audit and net profit varies from @1.95% to @2.63%. The relevant part of the assessee's submission is reproduced as below: 12.2 The sales conducted by the assessee, as per the VAT returns submitted to the Sales Tax Department, amount to Rs. 7,736,192. The quarterly breakdown of sales, as per the VAT returns, is tabulated as follows Sales as per Vat Returns Quarter Quarter Amount Page No QI (01.04.2016 TO 30.06.2016) 1670857.63 70 Q2 (01.07.2016 TO 30.09.2016) 430915.42 71 Q3 (01.10.2016 TO 31.12.2016) 2533585.61 72....
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....taining stock register properly and date wise stock position are not given. The Assessing Officer made the said observation without rejecting the books of account form which true profit and loss accounts could be ascertained and there is no quarrel on this issue. The lower authorities cannot place reliance on the circumstantial evidence which is only conjectures and surmises and the said approach of the ld CIT(A) is devoid of merit it deserves to be rejected. Further, the income of the assessee has to be computed by the Assessing Officer on the basis of available material on record and it is very important to have direct evidence to make an addition rather than circumstantial evidence. When the assessee gives any reply or submission or any documents to the Assessing Officer, it is duty of the Assessing Officer to examine the same in the light of the available evidence. In the present case the Assessing Officer and the ld CIT(A) have concluded the findings on the basis of conjectures and surmises. The Assessing Officer has to establish the link between the evidence collected by him and the addition to be made. The entire case has to be dependent on the Rule of evidence, the assessee....
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....able of tax under the head "profits and gains" of business. However, the said provisions are applicable where the gross receipts paid or payable does not exceed Rs. 40 lakhs. 8. Once under the special provision, exemption from maintaining of books of account has been provided and presumptive tax at the rate of 8 per cent of the gross receipt itself is the basis for determining the taxable income, the assessee was not under obligation to explain individual entry of cash deposit in the bank unless such entry had no nexus with the gross receipts. The stand of the assessee before the Commissioner of Income-tax (Appeals) and the ITAT that the said amount of Rs. 14,95,300 was on account of business receipts had been accepted. Learned counsel for the appellant with reference to any material on record, could not show that the cash deposits amounting to Rs. 14,95,300 were unexplained or undisclosed income of the assessee". 8.4. Hon'ble High Court of Punjab And Haryana Commissioner of Income-tax v. Rajinder Parshad Jain [2015] 61 taxmann.com 310 (Punjab & Haryana). The relevant paragraph is reproduced as below: - "8. The Tribunal has applied a net profit rate of 6 per....