The Gujarat high Court in the case of Commissioner of Income Tax – I vs. Sarwankumar Sharma, Tax Appeal No. 252 of 2014, has held that the total cash deposit in bank account shall be treated as turnover of the assessee.
The appeal was preferred by the Revenue against the order of the Income Tax Appellate Tribunal, Ahmadabad, to decide whether the Tribunal was justified in considering an amount as trading receipt of the assessee although it was not proved by the assessee.
Facts and circumstances of the case:
The Revenue filed the appeal being aggrieved by the impugned judgment dated 14.08.2013 passed by the Income Tax Appellate Tribunal, Ahmadabad in ITA No.2302/Ahd./2011 for the assessment year 2008-09 wherein the Tribunal partly allowed the appeal filed by the assessee setting aside the order of the learned CIT(A) and the Assessing Officer and directed to treat the total deposits amounting to Rs.45,85,861/- made by the assessee in his bank account as his total turnover regarding his undisclosed business of trading in art silk cloth and directed to treat the income of the assessee as 8% of the total turnover. The Revenue preferred the tax appeal to decide some substantial questions of law.
The Tribunal directed the AO to treat the total cash deposit of the assessee in his bank account. The amount was treated as undisclosed income of the assessee who miserably failed to establish that he had the business of art silk cloth and that the cash deposit made in his bank account was regarding his business of trading in art silk cloth, as such no question of making addition based on estimation at the rate of 8% of the total turnover should be made.
It was contended by the assessee that there is no whisper about the reasons assigned by the Tribunal regarding the direction that the income of the assessee should be estimated at 8% of the total turnover. It was further argued that nothing was there on record to show on what basis the Tribunal estimated the income at the said rate. It was contended that the order of the Tribunal directing to estimate the income of the assessee at 8% was not justified.
Issues appearing before the court:
1. Whether according to the facts and circumstances of the case the Hon’ble ITAT was justified in accepting the amount of Rs. 45, 85,861/- as trading receipt of the assessee although it was not proved by the assessee?
2. Whether the Hon’ble ITAT was right in holding that the onus of establishing the source of credit entries in the undeclared bank account was upon the Revenue?
Honorable Mr. Justice M. R. Shah held that the order of the CIT (A) in making addition in his total income of the assessee was justified. As such the same was restored. The appeal was decided in favour of Revenue.