Sumit Kesarwani Vs ITO (ITAT Lucknow)
ITAT Lucknow held that addition by calculating sales on hypothetical basis and completely ignoring various evidences submitted during course of assessment proceedings is unjustifiable. Accordingly, appeal allowed and addition is deleted.
Facts- Assessee is the proprietor of the firm engaged in carrying on the business of purchases and sales of Match Boxes, Pan Masala, Cigarettes and Agarbattis. Case of the assessee was selected for scrutiny as there was abnormal increase in the cash deposits during the demonetization period. AO noticed that the assessee had made cash deposits, totaling to Rs.50,60,000/- in his Bank Account during the demonetization period. AO worked out the average sales per day made by the assessee excluding the period 01.10.2016 to 08.11.2016, which came to Rs.8,990.58 and applying the same ratio of sales made by the assessee during the period 01.10.2016 to 08.11.2016, he estimated the sales made by the assessee during the period 01.10.2016 to 08.11.2016 at Rs.31,93,527/- (Rs.8,990.58 X 39 days) and added the same to the income of the assessee u/s. 68 of the Act.
First Appellate Authority dismissed the appeal of the assessee. Being aggrieved, the present appeal is filed.
Conclusion-Held that in the present case, the AO was legally not entitled to calculate sales on a hypothetical basis completely ignoring various evidences submitted during the course of assessment proceedings in the form of VAT returns, Purchase Bills and quantitative details, etc. Once the amount has been declared in the VAT return as well and the same has also been accepted by the AO, such sales cannot be considered as concealed income. Accordingly, I set aside the order of the Ld. First Appellate Authority and direct the AO to delete the impugned addition.
