| The Tax Publishers2020 TaxPub(DT) 4064 (Guj-HC) : (2021) 430 ITR 0253 INCOME TAX ACT, 1961
Section 68
Although assessee certainly violated the provisions of law by not maintaining books of account, not furnishing income tax return, etc. but that would not lead to reach the conclusion that cash deposits in her bank accounts would represent the undisclosed income of the assessee and therefore, the only option available would be computation of income on some reasonable estimate.
|
Income from undisclosed sources - Addition under section 68 - Huge cash deposits in bank accounts - Treatment as unexplained cash credits--Assessee claimed that transactions were in connection with her business
AO found that assessee made huge cash deposits in her saving bank accounts. Accordingly, he made addition of the same under section 68 by treating them as unexplained cash credits. CIT (A) directed the AO to delete such addition and to consider the said deposits as the turnover of the assessee. Further, he also directed to adopt the net profit rate of 8% on the turnover. Further, Tribunal directed the AO to estimate the income at the rate of 2% of the cash deposits in the bank. Aggrieved, Revenue was in appeal. Held: Admittedly, there were huge deposits in the bank accounts of the assessee, but on perusal of the bank statements, it was revealed that there were simultaneously withdrawals from the bank accounts. Further, the assessee claimed that she was engaged in business activity and the transactions reflected in the bank statements were in connection with such business. She also discharged her burden by furnishing details such as current bank account in her name in the capacity of proprietor, sale tax assessment order, sales and purchase bills etc. Indeed, the assessee certainly violated the provisions of law by not maintaining books of accounts, not furnishing income tax return, etc. but that would not lead to reach the conclusion that the amount deposited in the bank would represent the undisclosed income of the assessee. Thus, the only option available would be computation of income on some reasonable estimate. CIT (A) thought fit to compute the profit at the rate of 8% of the turnover. However, the Tribunal noticed that such computation was without any basis or materials on record. Accordingly, the Tribunal was justified in directing the AO to estimate the income at the rate of 2% of the cash deposits in the bank.
REFERRED :
FAVOUR : Partly in favour of assessee.
A.Y. : 2003-04
IN THE GUJARAT HIGH COURT
 SUBSCRIBE FOR FULL CONTENT
|