Madan Lal Gupta Vs ITO (ITAT Cuttack)
The Income Tax Appellate Tribunal (ITAT), Cuttack Bench, partly allowed the appeal of Madan Lal Gupta, a wholesale dealer of Britannia Biscuits, resolving disputes over a cash deposit addition during the demonetization period and the estimated net profit rate for the Assessment Year (A.Y.) 2017-18.
Deletion of Cash Deposit Addition
The Assessing Officer (AO) had made an addition of ₹15.45 lakh concerning a cash deposit made into the assessee’s bank account on December 5, 2016, alleging it constituted unexplained demonetized currency. The assessee submitted his cash book, which showed an adequate opening cash balance of ₹15,50,000 as of November 9, 2016, covering the deposit amount. Crucially, the assessee furnished a categorical letter from his bank confirming that no demonetized currency was deposited in the account on the specific date of December 5, 2016.
The ITAT accepted the bank’s confirmation. Furthermore, the Tribunal observed that since the AO had already rejected the assessee’s books of account, no separate addition could be made for transactions already recorded within those books. Consequently, the addition of ₹15.45 lakh made in respect of the alleged demonetized currency deposit was deleted.
Net Profit Estimation
The AO had rejected the assessee’s books of account and estimated his income at 1.5/%of the total turnover, against the 0.62/% net profit declared by the assessee. The assessee’s representative referred to the ITAT’s own decision in the assessee’s case for A.Y. 2009-10, where the net profit was estimated at 0.39/%based on prior years’ averages ranging between 0.25/% and 0.45/%
