The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has recently held that credit entries appearing in current and saving accounts are gross receipts from business transactions hence 8% profit rate should be applied.
Assesee Gunaseelan Janaki Radha filed the appeal against the order of the Commissioner of Income Tax (Appeals). The assessee has made a cash deposit to the tune of Rs.23 lakhs in a savings bank account during the financial year 2011- 12 relevant to the assessment year 2012-13 and failed to file the return for the assessment year 2012-13. Hence the assessee’s case was reopened under Section 147 of the Income Tax Act, 1961.
The assessee engaged in the business of textiles in the name of ‘Janaki Radha Tex’ and most of the transactions relate to her textile business. The assessee has maintained two accounts in City Union Bank. After verifying the credit entries in both accounts, the Assessing Officer (AO) treated the cash deposits as gross receipts from the business of the assessee. Further estimated the profit rate at 8% on the gross receipt of Rs.2,35,22,880/- being business transactions on account of credit appearing in current account and savings bank account.
Aggrieved by the order, the assessee filed an appeal before the CIT(A) which was rejected and a second appeal was filed before the tribunal.
It was observed by the bench that the assessee could not submit any documentary evidence that the profit rate is lower than 8% as computed by the AO. The assessee has not maintained any books of accounts nor any bills and vouchers. The two-member bench of Mahavir Singh, (Vice President) And Manjunath. G, (Accountant Member) dismissed the appeal filed by the assessee.
S. Sridhar, advocate appeared for the assessee. AR.V. Sreenivasan, an advocate appeared for the revenue.
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