Pradeep Kumar Agrawal Vs ITO (ITAT Raipur)
ITAT Raipur held that addition towards unexplained credits on estimated basis should be the average GP rate from the preceding 3 years. In the present case the same is taken as 5% without any basis. Accordingly, matter restored back to file of AO.
Facts- The assessee is engaged in trading business of paddy, rice, other bi-product and transport work. As the assessee was non-responsive, the case was completed u/s 147 r.w.s. 144 r.w.s. 144B of the I T Act on 26/03/2022, the final conclusion by the Ld. AO was that the credits in bank account of the assessee remained unexplained, the assessee is engaged in the business of trading in Paddy, Rice, other by products and transport, thus, the credits are in the nature of business receipts of the assessee, thus, towards total credits of Rs.8,31,02,597/- an estimated addition of 5% has been held as business income of the assessee, which works out to Rs. 41,55,130/-, and the same is added back to the income of assessee.
CIT(A) dismissed the appeal of the assessee. Being aggrieved, the present appeal is filed.
Conclusion- Held that the best ratio for estimation of profit / income of an assessee would be the rate of GP of assessee’s own case to adopt the average GP rate from the preceding 3 years, which is not disputed by the revenue while completing the assessment of the assessee for the years which are picked up for scrutiny assessment, whereas in present case the rate of 5% adopted by the Ld. AO was without any basis. Under such factual matrix of the present case, as the credits in the bank account of the assessee, without any iota of doubt are treated as business receipts of the assessee, which are less than the turnover shown by the assessee in the respective assessment years, therefore, the contention of assessee that the receipts pertain to regular and accounted sales of the assessee as well as from the debtors cannot be distrusted without any cogent material contradicting the same, found to be acceptable.
