The AO observed on comparison of assessee’s bank statement with the Profit and Loss account furnished by the assessee that there is a difference of around INR 15.56 lakhs between the two.
The AO, thus, treated the same as undisclosed income of the assessee.
The assessee appealed before the CIT(A), who confirmed the action of the AO
Hence, the assessee has appeared before the tribunal.
Revenue argued that the total deposits in the bank account should be equal to the total turnover disclosed in the profit and loss account.
The difference of INR 15.56 Lakhs between the bank statement and the profit and loss account of the assessee, is undisclosed income.
The CIT(A) was wrong in holding that no explanation was furnished by the assessee explaining the difference in the total deposits and the turnover declared for the relevant assessment year.
CIT(A) did not appreciate the explanation of the assessee regarding the difference between the deposits and the profit and loss account. The assessee’s explanation referred to the withdrawals, the turnover as well re-deposits out of withdrawals in order to match the net profit with reference to the balance of the amount standing to the credit as on 31.03.2015.
The CIT(A) erred in not considering the explanation with regard to cash available out of withdrawal to make re-deposit.
The deposit is part of the turnover and the difference could not have been held as the income of the appellant.
AO traversed beyond the scope of limited scrutiny.
The assessee’s books of account were duly audited and certified by a Chartered Accountant. The Assessing Officer nowhere rejected the books of account.
According to the AO, the total deposits in the bank account should be equal to the total turnover disclosed in the profit and loss account, which is not possible.
The turnover is disclosed in the total sales receipt of the assessee. However, the deposits into the bank account may include cheque/cash from the sales, loans and borrowings, collections from earlier debtors etc. Thus, there is every possibility that total deposit into a bank account may not tally with the total turnover.
The tribunal, hence, directed the AO to verify the number of credits reflected in assessee’s bank account and verify whether this amount really represented the independent business receipts or included other credits arising out of cash turnover of the assessee.
Hence, the tribunal remitted the matter back to the AO.
Charging of interest is consequential in nature and does not require specific adjudication.
Assessee’s appeal was partly allowed.
Another Issue on Undisclosed income Follow on Riverus Telescope