IN INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No. 3320/Ahd/2015 (Assessment Year 2011-12) Shri Narendrakumar ITO Bhupendrabhai Patel Vs. Ward 2 (Now Ward-4), Prop. of Nokia Electronics Patan 23-24, Municipal Market, Nr. Unjha Pharmacy, Station Road, Unjha - 384170 PAN/GIR No. ACYPP9591M (Appellant) (Respondent) Appellant by Shri H. V. Doshi, A.R. Shri Virender Singh, Sr.DR Respondent by Date of 09/08/2019 Hearing Date of 11/09/2019 Pronouncement ORDER PER PRADIP KUMAR KEDIA - AM captioned appeal has been filed at instance of assessee against order of Commissioner of Income Tax (Appeals), Gandhinagar (C IT(A) in short), dated 26.10.2015 arising in assessment order dated 31.12.2013 passed b y Assessing Officer (AO) I T N o . 3 3 2 0 / Ah d / 1 5 [ N r e n d r k u m r B . P t e l v s . I T O ] A. Y . 2 0 1 1 - 1 2 - 2 - under s. 143(3) of Income Tax Act, 1961 (the Act) concerning AY 2011-12. 2. grounds of appeal raised b y assessee read as under: 1. Learned CIT (A) has erred in law & facts in confirming addition of Rs. 2,11,513/- made by A.O. in respect of negative differences in closing bank balances in Market yard commercial co-op, bank and balances sheet in consequence of debit balance (Negative balance) in bank statement. 2. Learned CIT (A) has erred in law & facts by confirming addition of Rs. 20,618/- made by A.O.in respect of differences in closing balances in Oriental bank of commerce current accounts. 3. Learned CIT (A) has erred in law & facts by confirming addition of Rs. 6,80,000/- made by A.O. in respect of peak balances of cash deposit in saving bank account of Oriental bank of commerce on basis of remand report of A.O and erred by not considering facts in personal books of accounts produced as additional evidence. 4. Learned CIT (A) has erred in law & facts by confirming addition of Rs. 6,10,000/- made by A.O. in respect of wrongly computed peak balances of current account of Oriental bank of commerce on basis of remand report of A.O and erred by not considering facts in personal books of accounts produced as additional evidence. 3. assessee, proprietor of Nokia Electronics, filed his return of income for AY 2011-12 declaring total income of Rs.1,64,460/-. return filed b y assessee was subjected to scrutin y assessment. In course of scrutin y assessment, AO observed that closing bank balance in balance sheet of Nokia Electronics did not match with closing balance in various bank statements of proprietary concern. AO found difference of Rs.20,618/- in bank balance of Oriental Bank of Commerce (OBC) and Rs.2,11,513/- in Market Yard Commercial Co- operative Bank. AO also found that certain cash deposits amounting to Rs.6,80,000/- in saving bank account of OBC in individual name and Rs.6,10,000/- in current account of OBC. AO did not find explanation towards such differences and deposits to be satisfactory and accordingl y added aggregate amount of Rs.15,22,231/- on account of such differences and deposits. I T N o . 3 3 2 0 / Ah d / 1 5 [ N r e n d r k u m r B . P t e l v s . I T O ] A. Y . 2 0 1 1 - 1 2 - 3 - 4. Aggrieved, assessee preferred appeal before CIT(A) without y success. 5. Further aggrieved, assessee preferred appeal before Tribunal. 6. We have heard rival submissions on reconciliation of differences in bank account and unex plained cash deposits. As pointed out on behalf of assessee, we note that assessee is small trader of electronics items. balance sheet submitted in course of assessment proceedings were based on incomplete accounts and admittedl y man y bank transactions were not incorporated resulting in reconciliation differences. assessee is stated to have recast books of accounts incorporating all entries and filed same before Revenue authorities. According to newl y constructed balance sheet (placed in paper book), capital account of assessee stands at meager amount of Rs.1,65,010/- onl y. total resources including liabilit y stands at Rs.3,80,330/-. assessee has claimed that it is engaged in fringe business of purchase and sale of old television sets and amount deposited have been regularl y withdrawn from time-to-time and recycled in business. aforesaid submission of assessee appears correct from summery of cash statement showing deposits and withdrawals in bank. differences in bank statement has been also reconciled before CIT(A). assessee has also pointed out such facts to AO in remand proceedings. Having regard to meager turnover of less than Rs.40 Lakhs, assessee is not expected to maintain regular books of accounts under presumptive taxation scheme prescribed in Section 44AD of Act. It is also noticed that assessee claims to have submitted cop y of sales register, purchase register and quantitative details before CIT(A). In such circumstances and having regard to smallness of transaction, explanation offered b y assessee is considered to be broadl y satisfactory. Therefore, addition on account of reconciliation differences amounting to Rs.2,11,513/- and Rs.20,618/- stands deleted. As regards cash deposits of Rs.6,80,000/- and Rs.6,10,000/-, we direct AO to estimate income appl ying 5% thereon in tune with Section 44AF of I T N o . 3 3 2 0 / Ah d / 1 5 [ N r e n d r k u m r B . P t e l v s . I T O ] A. Y . 2 0 1 1 - 1 2 - 4 - Act. addition of Rs.64,500/- is thus sustained and remaining addition stands deleted. 7. In result, appeal of assessee is partl y allowed. This Order pronounced in Open Court on 11/09/2019 Sd/- Sd/- (RAJPAL YADAV) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad Dated 11/09/2019 True Copy S. K. SINHA Copy of Order Forwarded to:- 1. Revenue 2. Assessee 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order Narendrakumar Bhupendrabhai Patel v. ITO, Ward-2 (Now Ward-4), Patan