Case Law Details
Gunaseelan Janaki Radha Vs ITO (ITAT Chennai)
Introduction: The Income Tax Appellate Tribunal (ITAT) Chennai, in the case of Gunaseelan Janaki Radha Vs Income Tax Officer (ITO), has ruled that credit entries appearing in current and savings accounts should be treated as gross receipts from business transactions, with an 8% profit rate being applicable. This verdict was reached after the assessee failed to provide any evidence that the profit rate should be lower than the stipulated 8%.
Analysis: The case began when Gunaseelan Janaki Radha, a textile business owner, was found to have made cash deposits of Rs. 23 lakhs in a savings account during the financial year 2011-12 without filing a return of income for the assessment year 2012-13. This triggered the reopening of the case under section 147 of the Act.
The Assessee had two accounts in City Union Bank, Erode, one current account and one savings account. The Assessing Officer (AO) noted that the total credit entries in these accounts amounted to Rs. 2,35,22,880. As the assessee couldn’t provide an explanation for the cash deposits, the AO deemed them as gross receipts from her business and applied an 8% profit rate.
Gunaseelan appealed to the Commissioner of Income Tax (Appeals), however, the appeal was dismissed due to the absence of any documentary evidence challenging the 8% profit rate or the treatment of the credit entries as gross receipts from her business.
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