S. Ravindra Bhat, J.

1. C.M. No. 12111 of 2013 (delay) For the reasons stated in the application, the delay of 42 days in re-filing the appeal is condoned.

The application stands disposed of.

I.T.A. No. 383 of 2013

The substantial question of law sought to be urged by the Revenue is : Whether, in the circumstances of the case, the Income-tax Appellate Tribunal ("the ITAT") was correct in holding that the addition of Rs. 47,37,120 brought to tax by the Assessing Officer ("the AO") was unwarranted

2. The assessee during the relevant assessment year 2005-06 claimed the benefit of section 44AF of the Income-tax Act, 1961, (hereinafter referred as "the Act"), and had filed a return disclosing income of Rs. 2,15,292. Subsequently, the assessment was reopened under section 147 of the Act. The Assessing Officer framed an assessment under section 144 since no response was forthcoming on the part of the assessee. The Assessing Officer considered the source of a separate cash deposit of Rs. 31,29,880 and further amount of Rs. 16,07,240. After adding these amounts, the Assessing Officer reassessed the income on regular basis bringing them to tax under section 68 on the ground that this amount was the assessees income from undisclosed sources. The assessees appeal was partly allowed restricting to net profit rate of 5 per cent applied on the amount declared under section 44AF, i.e., Rs. 2,36,856. The Income-tax Appellate Tribunal also accepted the assessees contention and rejected the Revenues appeal. After re-accounting the entire facts and circumstances and extracting the findings of the Commissioner of Income-tax (Appeals), the impugned order concludes as follows :

"7. The aggrieved assessee carried the assessment order in appeal before the learned Commissioner of Income-tax (Appeals) who sought remand re-post from the Assessing Officer. The assessee was also provided an opportunity and in turn the assessee filed the rejoinder. The learned Commissioner of Income-tax (Appeals) considered the remand report as well as the rejoinder. We also perused the remand report and the rejoinder of the assessee and the observations made in the impugned order. The learned Commissioner of Income-tax (Appeals) on the basis of the assessment order for the assessment year 2008-09, wherein the cash deposit of Rs. 57,48,067 in Punjab National Bank was claimed to be the sale proceeds of his business of aluminium sections, accepted the claim and considering the past history. At page 15 of the impugned order, there is a submission of the assessee that a separate bank account was maintained by the assessee, which he used to deposit the sale proceeds of the business in the bank, which were not disclosed in the income-tax return. There is a further finding that the bank statement for the relevant period from April 1, 2004, to March 31, 2005, was examined by the Commissioner of Income-tax (Appeals) and it was found that there was a cash deposit on various dates against the sale of material and the withdrawal refers to payment made against such purchases of the material. As per section 44AF, which prescribes the special provision for computing profits and gains of retail business, a sum equal to 5 per cent of the total turnover in the previous year on account of such business, the profit can be qualified. The learned Commissioner of Income-tax (Appeals) on the basis of facts of the assessment year 2008-09 quantified the net profit rate at 5 per cent and ultimately held that the amount of Rs. 2,87,403 was only assessable from undisclosed business. No other material was brought on record by the Revenue to substantiate its version, therefore, we find no infirmity in the stand of the learned Commissioner of Income-tax (Appeals). Therefore, it is upheld.

8. However, keeping in view the totality of facts and the past history of the assessee, we are making it clear that our above decision may not be quoted as a precedent, as the assessee is expected to maintain its books of sale and co-operate with the Department. With this observation, the order of the learned Commissioner of Income-tax (Appeals) is upheld.

9. So far as the cross-objection raised by the assessee regarding issuance/service of notice is concerned, it was not pressed by the learned counsel for the assessee, therefore, the same is dismissed as not pressed."

3. We have heard the counsel for the parties. The assessee urged that the Assessing Officer made no effort to discern as to the character of the amounts and that some of them at least constituted expenses. It is further argued that the assessee had voluntarily disclosed receiving Rs. 16,07,240 during the course of the assessment and under the circumstances was entitled to the benefit of section 44AF. It is, lastly, contended that for other periods the assessees returns were accepted which implied that this method of accounting was also acceptable to the Revenue.

4. As is evident from the proviso to section 44AF, the benefit of presumptive rate of taxation on 5 per cent of the turnover for retail traders and others of such category as are covered by the provision is subject to ceiling for turnover of Rs. 40 lakhs. The underlying principle is that the income-tax authority accepts the entire figures furnished by the assessee at face value and there will be a presumptive rate of the net profit which would be further subjected to taxation.

5. In the present case, the assessee had sought the benefit of that provision but the Revenue found later that the amounts deposited in its account were far and excessive than what was disclosed. That the assessee did not dispute the deposit of Rs. 16 lakhs ipso facto would not absolve him from failing to disclosed it in the first instance. The same reasoning would apply for the other amount of Rs. 31,29,880. So far as the assessees explanation that some of the entries pertained to expenditure goes, the Assessing Officer observed that the assessee did not maintain any books of account and produced any supporting document. His evidence was endorsed by the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals), however, took note of all the circumstances and confined the relief to the extent that the assessee had sought and justified.

6. In our opinion, the Income-tax Appellate Tribunals decision, which has merely stated the Commissioner of Income-tax (Appeals)s finding and does not contain any reasoning, appears to be guided by the decision on the assessment of other years. Furthermore, the Income-tax Appellate Tribunal was conscious of the fact that this decision favouring the assessee was perhaps unsupportable in law, as is evident from its observation in paragraph 8 that the impugned order would not be quoted as a precedent.

7. Having regard to the circumstances, we are of the opinion that Income-tax Appellate Tribunals order cannot be sustained. It is accordingly set aside. The question of law is answered in favour of the Revenue.

8. The appeal is consequently allowed in the above terms.