INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Assessee discharged his onus of explaining the source fo deposit in his bank account -

Assessee computed net profit under provisions of section 44AD @ 8% on total turnover. AO noted that there were credits in the bank account of the assessee including cash deposit. AO asked the assessee to explain in respect of the cash deposit in the said bank account, which was more than turnover shown by the assessee. In response, the assessee submitted that part of the cash deposit was representing the sales made by him and part was earlier withdrawals of cash from the bank account. However, the AO was not satisfied with the explanation of the assessee and took the entire credits in the bank account as the turnover of the assessee and applied NP rate of 8% on the same. Held: It was found that assessee explained the source of entire deposit in the bank account as his gross receipts/turnover, salary income, loans from relatives and earlier withdrawals and he substantiated the same by producing various evidences. Further, the assessee had given each and every transaction datewise, bank account details in the narration of the transaction in the ledger and the corresponding entries were also recorded in the cash book and matching with the assessee's bank account statements. Therefore, when the assessee discharged his onus of explaining the source of deposit in the bank account and the AO failed to conduct any further enquiry or bring any contrary material on record to disprove the explanation and evidence produced by the assessee, the addition made by the AO would not be sustainable. Accordingly, the addition made by the AO on account of turnover of the assessee was deleted.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2015-16

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