IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH “A”, LUCKNOW

BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER

ITA No.634/LKW/2014 Assessment year:2005-06

Income Tax Officer-6(4),  Lucknow. (Appellant)

Vs

Shri Vishan Lal, 27, Samar Vihar Colony, Alambagh, Lucknow. PAN:AAGPL3672D (Respondent)

Appellant by Smt. Swati Ratna, D. R.

Respondent by Shri Yogesh Agarwal, Advocate

Date of hearing 16/04/2015

Date of pronouncement 22/06/2015

ORDER

PER A. K. GARODIA, A.M.

This is Revenue’s appeal directed against the order passed by learned CIT(A)-II, Lucknow dated 29/04/2014 for the assessment year 2005-2006.

2. In this appeal the Revenue has raised the following grounds:

“1. The Commissioner of Income-tax (Appeals), Lucknow has erred in law and on facts of the case in deleting the addition made by the Assessing Officer of Rs.15,68,500/- u/s 69A of the Income Tax Act, 1961 on account of unexplained cash deposit treating it as business turnover of the assessee without appreciating the facts that the assessee has not given any documentary evidence to prove that cash deposit was his business turnover.

2. The Commissioner of Income-tax (Appeals)-II, Lucknow has erred in law and on the facts in treating the cash deposit of Rs.15,68,500/- as business turnover of the assessee and applying G.P. rate of 13.8% which worked out to Rs.2,16,453.00.”

3. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A).

4. We have considered the rival submissions. We find that the issue in dispute was decided by learned CIT(A) as per para 8 & 9 of his order, which are reproduced below for the sake of ready reference:-

“8. I have examined the facts of the case, assessment order, written submissions of appellant filed during appellate proceedings and I find that there was some force in the argument of appellant that the AO was not justified in making the addition of Rs.15,68,500/- u/s 69A of the IT Act. The assessing officer has recorded the statement of the appellant and his son mentioned in assessment order also transpire that the cash deposit in the savings bank account of the appellant related to sale proceed of trading of cloth, realized during assessment year under consideration. On perusal of the set of facts mentioned in assessment order and written submission and evidences gathered by AO during assessment proceedings it is beyond doubt that these sale proceeds were unrecorded and same were not recorded in the books of accounts of the appellant or his son. These sale proceeds were not disclosed in the return of income either by the appellant or his son. Since the deposits are in the appellants bank account therefore it is safely concluded that the entire sale proceeds are of the appellant, which was not disclosed in his return and accordingly profit earned thereon was also not disclosed.

9. On perusal of the entries reflected in the said bank account reveals that the cash deposits and withdrawals were made regularly during the assessment year under consideration. Therefore the AO was not justified in making the addition of Rs.15,68,500/-, the entire cash deposits during the assessment year under consideration. On the other hand it cannot be accepted that the appellant has not earned any profit on these receipts of Rs.15,68,500/-. Thus these receipt of Rs.15,68,500/- is treated as the turnover of the appellant from trading of cloth and the realization of sale proceeds were deposited by him in the said bank account on different dates during the assessment year under consideration. As withdrawals have also been made by him throughout the year for payment to suppliers and meeting out other direct and indirect expenses. It has also been noticed that the appellant is partner in firm M/s. Namaskar Textiles from where he is deriving salary and share income. M/s. Namaskar Textile is also dealing in purchase and sale of cloth and has disclosed a GP rate of 13.80% on its turnover. Therefore it can be assumed that the appellant has also earned gross profit @13.8% on sale of Rs.15,68,500/- which works out to Rs.2,16.453/-. Thus the addition is sustained to the extent of Rs.2,16,450/-. The appellant thus gets a relief of Rs.13,52,050/-.”

4.1 From the above Paras from the order of learned CIT(A), it is seen that a clear finding has been given that on perusal of the entries reflected in the said bank account, it was revealed that the cash deposits and withdrawals were made regularly during the year and therefore the Assessing Officer was not justified in making the addition of Rs.15,68,500/-. Considering these facts, learned CIT(A) has held that these receipts should be treated as turnover of the assessee from trading of cloth and has directed the Assessing Officer to make addition of profit from such turnover outside the books at gross profit rate of 13% of this turnover. Considering the facts, as discussed above that the cash deposit and withdrawal in the bank account was made regularly by the assessee during the year, it is very reasonable to say that the same was business turnover outside books and therefore, only gross profit addition is justified in the facts of the present case. Hence, we do not find any reason to interfere in the order of CIT(A) and therefore, we decline to interfere in the same.

5. In the result, the appeal of the Revenue stands dismissed.

Order was pronounced in the open court on the date mentioned on the caption page)

Sd/.                                                                  Sd/.
(SUNIL KUMAR YADAV)                  ( A. K. GARODIA )
Judicial Member                                 Accountant Member
Dated:22/06/2015