Ratansinh Solanki Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad sets aside additions made under Section 69A; Directs fresh adjudication after admitting additional evidence under Rule 46A
Assessee engaged in a small-scale milk & buttermilk business, appealed against the additions made by AO u/s 69A & 115BBE. The case was triggered by cash deposits of Rs. 56.33 lakhs & Rs. 1.63 crores in two bank accounts, with no return of income filed initially. Based on cash deposits reported via the NMS/INSIGHT portal, reassessment was initiated u/s147. AO treated cash deposits as unexplained money & made best judgment assessment u/s144 due to assessee’s partial & delayed compliance. AO treated Rs56,33,020 as unexplained money u/s 69A & taxed u/s115BBE. Additional income of Rs4,57,314 assessed by applying a 4% GP rate on credits in the SBI account (Rs 1.64 crores), after adjusting declared income.
Assessee furnished additional evidence (cash book, milk society ledger, etc.) & sought admission under Rule 46A, but CIT(A) rejected it, citing lack of reasonable cause & sustained the additions.
Before the Tribunal, Assessee submitted that the additions made by AO & sustained by CIT(A) are unjustified & contrary to the material placed on record. assessee is engaged in a small-scale dairy business involving sale of milk & buttermilk in a rural area of Gujarat, & the cash deposits reflected in the assessee’s bank accounts represent sale proceeds generated from such business. During the course of reassessment proceedings, the assessee had filed its financial statements, including the Profit & Loss Account, Balance Sheet, Trading Account, & computation of income, wherein the business turnover was duly disclosed. Assessee had disclosed income of Rs.2,02,180/- & explained that the cash deposited in the bank accounts was sourced from daily milk sales, collected in cash from local vendors & cooperative society members. However, despite such submissions, AO proceeded to make an addition of Rs.56,33,020/- u/s 69A , treating the deposits in Dena Gujarat Gramin Bank as unexplained money & further computed income at 4% of the total credits of Rs.1,64,87,349/- in the State Bank of India account. CIT(A) failed to appreciate that the assessee, during appellate proceedings, had produced supporting documents such as cash book, milk society ledger, & bank statements which corroborated the flow of funds & the linkage with business operations. However, these were disregarded merely on technical grounds without examining their substance.
