Sunil Kumar Sawa Vs DCIT/ACIT (ITAT Ranchi)
The Income Tax Appellate Tribunal (ITAT), Ranchi, partly allowed the assessee’s appeal by reducing the estimated net profit rate from 8% to 3% on deposits made in undisclosed bank accounts, holding that the higher rate adopted by the Commissioner of Income Tax (Appeals) [CIT(A)] was excessive considering the nature of the assessee’s business, business volume, and profit margins.
The assessee, engaged in the business of agency and trading of electronic goods under the name M/s Universal Hi-Tech, had originally filed a return declaring income of ₹2,37,660. Following scrutiny assessment under Section 143(3), the taxable income was enhanced, and subsequent appellate proceedings resulted in multiple rounds of adjudication, including a remand by the Tribunal. In the fresh assessment, the Assessing Officer (AO) made additions of ₹35,97,695 towards estimated net profit from undisclosed business, ₹45,09,399 as peak credit in alleged undisclosed bank accounts, and ₹29,893 as interest income earned in those accounts.
The CIT(A) observed that the assessee had maintained audited books only for the disclosed business and had not maintained books of account for transactions routed through two undisclosed bank accounts. According to the assessee, customer advances received in cash were deposited into these accounts and payments were subsequently made by cheque to procure solar energy products. The CIT(A) noted that the assessee had submitted different projected profit and loss accounts at different stages, admitted that no books, ledgers, bills, vouchers, or customer-wise details were available for the undisclosed transactions, and that all explanations were based on estimates.
