Entire credit in bank accounts cannot be treated as turnover in case of Inter transfers in bank accounts: ITAT

Entire credit in bank accounts cannot be treated as turnover in case of Inter transfers in bank accounts: ITAT 8. The Assessing Officer has made the addition in question by taking into consideration the total sum of the credit side of the three bank accounts of the assessee. From the details of the bank account statement, it is noted that there are various entries of inter-bank account transfers which means transfers are made from one bank account of the assessee to another bank account and vice-versa. The Assessing Officer has taken the total deposits and credits in the bank account of the assessee and has not verified these inter bank transfers for want of necessary record. Though the assessee has claimed that he has submitted the relevant details before the CIT(A) in the faceless proceeding however, the CIT(A) has stated in the order as under:-

“I have also considered the submission of the appellant. Admittedly the purchase bills, sale bills, vouchers and complete bills were not given before AO and before me only part account in tally of intra transaction, bank statement of PNB & HDFC and premium paid certificate has been given. Therefore the A.O. has correctly rejected the books of accounts of the appellant and applied gross profit rate on undisclosed sales. During the assessment the AO worked out the extra profit @ 1.59% as shown by the appellant on total credit entries of the bank account i.e. Rs. 18,97,16,297/- and calculated extra profit of Rs. 30,16,489/-. Thus, the difference in gross profit came to Rs. 4,07,517/- (3016489-2608972) and the same was added to the total income of the appellant is also correct.

Hence, the contention of the appellant the addition of Rs. 4,07,517/- has been made on mere suspicion and surmises which is highly unreasonable and unjustified is not sustainable and liable to be confirmed.

In view of the above discussion the addition made by the AO of Rs. 4,07,517/- on the basis of extra profit is hereby confirmed.”

9. As evident from the impugned order of the CIT(A), it has confirmed the order of the Assessing Officer for any details of purchase bills, sales bills and vouchers. The CIT(A) has turned down the details of inter account transactions as reflected from bank account statement of the assessee on the ground that these are not complete records. It appears that the CIT(A) has even not looked into the details submitted by the assessee as the assessee has not made a compilation of the contra entries with the reference of date of each and every entry. Therefore, in the facts and circumstances of the case, when prima facie there are entries of inter transfers in the three bank accounts of the assessee, then the entire credit in the bank accounts cannot be treated as the turnover of the assessee. Hence, in the facts and circumstances of the case and in the interest of justice, the matter is set aside to the record of the Assessing Officer for fresh adjudication of the issue after verification and proper enquiry of inter transfer entries in the three bank accounts of the assessee. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order. To Read Judgment Download  the pdf Given Below