Entire Bank Deposits Not Income; Only Profit Element Taxable @ 12%

Advertisement Lokendra Mali Vs ITO (ITAT Indore) The ITAT, Indore Bench held that entire cash deposits in bank a/c cannot be treated as unexplained income, when the pattern of deposits & withdrawals shows linkage with small business activity. In this case, the assessee, a petty electrical contractor, had not filed return as income was below exemption limit, and the AO completed ex-parte reassessment u/s 144/147, taxing entire deposits of ₹10.27 lakh as unexplained. The Tribunal noted that deposits were small/moderate amounts spread over the year, accompanied by frequent withdrawals wi...