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Dcit, Rohtak Circle, Rohtak Vs. Sh. Sunil Ahuja, 1175/19, Hari Nagar, Rohtak
June, 19th 2019

                     DELHI BENCH "G", NEW DELHI




                        I.T.A. No. 4666/DEL/2014
                              A.Y. : 2010-11
ROHTAK                                  1175/19, HARI NAGAR,
                                        (PAN: ADUPA1729P)
(ASSESSEE)                              (RESPONDENT)

         Revenue by                :   Sh. N.K. Bansal, Sr. DR.
          Assessee by              :   Sh. Naveen Gupta, Adv.

     The Revenue has filed this Appeal against the impugned Order

dated 27.6.2014 of the Ld. CIT(A), Rohtak relevant to assessment

year 2010-11.

2.   The grounds raised in the appeal read as under:-

          1.      On the facts and in the circumstances of the case,
          the Ld. CIT(A) has erred in law and facts in deleting the
          addition of Rs. 1,41,25,286/-      representing deposits in
          J & K Bank account not disclosed in the books of account
          and has erred in accepting the explanation of the
          assessee, particularly, when she herself has accepted in
          her order that this bank account was undisclosed.

          2.    On the facts and in the circumstances of the case,
          the Ld. CIT(A) has erred in law and facts in directing the
          AO to apply Net Profit of 5% on Sales and 2% on
          investment merely on submission of assessee that the
          same may be done even though she has not accepted
          the   explanation   that       these   transactions   were   HUF

          3.    On the facts and circumstances of the case, the Ld.
          CIT(A) has erred in law and on facts in accepting the
          contention of the assessee who has already been found
          to be maintaining an undisclosed bank account, rather
          than deciding the appeal on merits and without finding
          any lacuna in the AO's findings.

          4.    That the appellant craves for permission to add,
          delete or amend the grounds of appeal before or at the
          time of hearing of appeal.

3.   The brief facts of the case are that the assessee is an

individual and has been earning income from purchase, sale and

supply of medicines on whole sale bases for which he earns business

income or commission. The assessee filed the return of income on

31.10.2010 showing income of Rs. 6,24,320/- which worked out to

approximately 5.3% of the sales. Audit Report in the prescribed

form was also enclosed with the return. The case of the assessee

was selected for scrutiny and every type of information asked for

was readily supplied. The AO asked for copy of the impugned a/c

maintained in J&K Bank Rohtak which was also furnished.                   The

account had been started only this year w.e.f. 27.5.2009 with initial

deposit of Rs. 5,000/-. Receipt and payments reflected therein

pertain to purchase and sale of medicines on whole sale basis. The

credit entries reflecting sale during the year; totaled to Rs.

1,41,05,286/-. The assessee has started this new business as that

belonging   to   the    HUF   for   settling   his   son    separately    and

independently. However, no income accrued and hence, no separate

return was filed. Unfortunately, this fact was not mentioned in the

return filed before the AO by oversight nor a separate return for

HUF could be filed.      The AO noticed several small creditors below

Rs. 20,000/- each. The assessee produced affidavit in respect of

many of them. In cases where proper evidence could not be filed,

the assessee surrendered the amount            through     a letter.   The AO

treated the entire sale proceeds of Rs. 1,41,05,286/- as income of

the assessee on account of unaccounted sales not disclosed in the

books of account.      No separate addition in respect of cash credits

received from several persons (each credit being below Rs. 20,000)

was made as the entire amount of deposits in the said account had

been treated as assessee's income and assessed the income of the

assessee at Rs. 1,17,60,530/- vide order dated 22.3.2013 u/s.

143(3) of the Act. Aggrieved by the assessment order, the assessee

appealed before the Ld. CIT(A), who vide his impugned order dated

27.6.2014 has partly allowed the appeal of the assessee and

Against the order of the Ld. CIT(A), the Revenue is in appeal before

the Tribunal.

4.   Ld. DR relied upon the Order of the AO and reiterated the

contentions raised in the grounds of appeal.    He submitted that on

perusal of the audit report and balance sheet, AO has observed that

assessee has raised petty unsecured loans of amount         below Rs.

20,000/- in       respect of 32 persons during the year under

consideration.     He further submitted that the assessee has not

furnished     reliable   documentary   evidence     to     prove   the

creditworthiness of persons advancing loans.    He further submitted

that on perusal of bank statement it revealed that assessee has

withdrawn cash on various dates from     this   bank     account which

has not been reflected in the books of accounts of the assessee. He

further submitted that it is clear that the assessee has withdrawn

cash which was introduced by him in the shape of these petty

unsecured loans from various persons. It was further stated that

since the entire deposits in the said bank account has been added to

the returned income, no separate addition is      being made on this


5.    Ld. counsel for the assessee relied upon the order of the Ld. CIT(A)

and stated that she has passed a well reasoned order which does not

need any interference on our part.

6.    We have heard both the parties and perused the records especially

the   impugned order. We find that AO has observed that the assessee is

maintaining a bank account with J&K Bank, Bhiwani Stand, Rohtak which

is not   disclosed in the books of account of the assessee. The total

deposits made in this bank account during the year under consideration

are to the tune of Rs. 1,41,05,286 and assessee has no sustainable

explanation to offer regarding amount deposit in the aforementioned bank

account and therefore, the AO made the addition of Rs. 1,41,05,296/- to

the net profit of the assessee as an accounted sales not disclosed in the

books of accounts of the assessee. We further find that the main issue in

this case is relating to addition of a deposit of Rs. 1,41,05,286/- in M/s

J&K Bank by the assessee treating the entire amount as in accounted

sales. This addition had been made because no details were submitted at

the time of assessment proceedings. On the matter being remanded back,

the AO has examined the details of deposits and withdrawals alongwith

copies of supply order, purchase and sales bills. However, the AO has not

pointed out any fault with the explanation regarding the said entries in

the bank account. Therefore, Ld. CIT(A) has rightly held that no adverse

view can be taken in respect of accounts and the net profit needs to be

calculated on a reasonable basis, which in this case, as admitted by the

Assessee can be 5% (for NP) and an additional 2% for investment.

Hence,   the AO    was   rightly   directed   to calculate   the amount of

disallowance on the formula method above as a result thereof the

assessee gets relief on the remaining amount, which does not need any

interference on our part, therefore, we uphold the action of the Ld.

CIT(A) on the issues in dispute and reject the grounds raised by the


7.   In the result, the Revenue's Appeal stands dismissed

     Order pronounced on 18/06/2019.

                  Sd/-                                             Sd/-

    [B.R.R. KUMAR]                                    [H.S. SIDHU]
 ACCOUNTANT MEMBER                                  JUDICIAL MEMBER

Date 18/06/2019

Copy forwarded to: -

1.   Assessee -
2.   Respondent -
3.   CIT
4.   CIT (A)
5.   DR, ITAT                 TRUE COPY
                                                              By Order,

                                   Assistant Registrar, ITAT, Delhi Benches

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