ASHISH DWIVEDI,ALLAHABAD vs. ITO RANGE-1(1), ALLAHABAD

Ground No. 5 is regarding the addition of Rs. 49,670/- made by the A.O. u/s 69 on account of business income from M/s Ashu Marketing proprietorship concern engaged in the business of trading of clothes. The Assessing Officer made an addition on account of income estimated by applying net profit @ 8% on gross sales. The Ld. AR of the assessee has submitted that the Assessing Officer has rejected the profit and loss account of the assessee whereby the assessee has declared loss of Rs.495.07 and estimated the income of the assessee for year under consideration of section 44AF and consequently an addition of Rs.49,670/- made to the income of the assessee. The said income was added by the Assessing Officer u/s 69 of the Act which is contrary to the facts as well as law because the Assessing Officer has accepted the business activity and the transactions in the bank account of the assessee with the HDFC Bank. Thus the Ld. AR submitted that the said addition cannot be added u/s 69 of the Act as it is only a business income of the assessee. In support of his contention, the Ld. AR has relied upon the decision of Cochin Bench of the Tribunal dated 09.06.2020 in the case of Sm. Honey Rahulan v. Income Tax Officer (ITA No. 150/Coch/2020).

On the other hand, the Ld. DR has relied upon the order passed by the Assessing Officer and submits that since the Assessing Officer has disallowed the entire claim of expenditure and consequently made the addition of Rs.49,670/-. Therefore, the provisions of section 69 of the Income Tax Act are applicable on

I have considered the rival submissions as well as relevant materials available on record. There is no dispute that in the return of income filed by the assessee on 30.09.2013, the assessee has not declared income from the business of M/s Ashu Marketing. The assessee has explained the reasons for not disclosing this income as there was a loss of Rs.495.07 in the said business activity and hence it was not claimed by the assessee in the return of income due to smallness of the amount. The Assessing Officer has not disputed the transactions as recorded in the bank account of the assessee with HDFC Bank in the name of proprietorship concern as well as the gross sales shown by the assessee in the profit and loss account produced before the Assessing Officer. However, the Assessing Officer has rejected the said computation of the loss as per the profit and loss account and estimated the income of the assessee in respect of retail business of cloth. Once the retail business of purchase and sale of cloth is accepted by the Assessing Officer and gross sales as shown by the assessee is not in dispute then the loss of Rs.495.07 not reflected in the return of income would not lead to the re-classification of the income. Since the assessee has not declared this business income/loss in the return of income therefore, the Assessing Officer has rightly invoked the provisions of section 44AF and estimated the income of the assessee of Rs.49,670/-. However, the re-classification of the income by applying the provisions of section 69 of the Act is contrary to the facts as well as law and action of the Assessing Officer is highly unjustified and unreasonable. Accordingly, the said addition of Rs.49,670/- is directed to be treated as business income of the assessee. This ground of the assessee is partly allowed.

Before the Tribunal, the Ld. AR of the assessee has referred to the bank account of the assessee as well as the sale deed dated 27.04.2012 and submitted that the purchase consideration was paid by the assessee from withdrawal made from bank on 23.04.2012. Thus the assessee has explained the source of the investment with supporting evidence of the bank account. Hence, the Ld. AR submitted that the addition made by the Assessing Officer is unjustified and liable to be deleted. On the other hand, the Ld. DR relied upon the order of authorities below and submitted that the Assessing Officer has categorically stated in the assessment order that the assessee has not explained the source of investment made for purchase of immovable property during the year under consideration of Rs.5,30,120/-. Thus explanation of the assessee that the investment is made from the withdrawal of cash of Rs.6,00,000/- from the bank is an afterthought. He has relied upon the order of the authorities below.

I have considered the rival submissions as well as relevant materials available on record. The Assessing Officer has made the addition of Rs.5,30,120/- on account of unexplained investment in immovable property which was

Ground No. 7 is regarding addition of Rs.1,41,800/- made u/s 69 of the Income Tax Act on account of unexplained deposits in the saving bank account of the assessee and his daughter with HDFC Bank and Axis Bank. The Assessing Officer noted that the assessee has shown the current account with United Bank of India but the saving bank account with HDFC Bank in the name of Kumari

Before the Tribunal, the Ld. AR of the assessee submitted that the amounts deposited in the assessee’s own saving account with HDFC Bank and Axis Bank are transferred from the other bank accounts of the assessee. He has referred to the transactions in the bank account of the assessee at page No. 76 to 87 of the Paper Book and submitted that these transactions are from the other bank accounts of the assessee and therefore, cannot be added as unexplained deposits. As regards the deposits of Rs.10,500/- in the bank account of Kumari Kavya Dwivedi the Ld. AR has referred to the cash flow statement placed at page No. 82 to 83 of the Paper Book and submitted that the source of the deposit has been explained as opening cash balance as shown in the cash flow statement. He has also relied upon the decision of the Mumbai Benches of the Tribunal in the case of Adishwar K. Jain v. CIT (2019) 201 TTJ 77 (Mumbai). Thus the Ld. AR submitted that when the deposit was made from the opening cash balance with the assessee the same cannot be treated as unexplained investment u/s 69 of the Act.

On the other hand, the Ld. DR has submitted that no books of accounts are maintained by the assessee and the assessee has not disclosed these bank accounts in the return of income filed by the assessee. The income shown by the assessee in the return of income was computed u/s 44A of the Income Tax Act. Therefore, the cash flow statement prepared by the assessee is not supported by

I have considered the rival submissions as well as relevant materials available on record. The Assessing Officer has made an addition of Rs.1,41,800/- on account of unexplained deposits made in the two saving bank accounts of the assessee and another bank account in the name of Kumari Kavya Dwivedi. The assessee has now explained the source of these deposits as transfer the fund from other bank account of the assessee as well as the opening balance available with the assessee as per the cash flow statement. It is pertinent to note that all these explanations and details as well as evidences were not produce before the Assessing Officer. Therefore, the cash flow statement relied upon by the assessee as well as the explanation that the deposits in the bank account of the assessee are from other banks are to be verified. Hence, in the facts and circumstance of the case and interest of justice this issue is set aside to the record of the Assessing Officer for proper verification and examination of all the relevant facts as well as the evidence relied upon by the assessee in the shape of the transfer from the other bank accounts and availability of opening cash balance as per the cash flow statement. Needless to say the assessee be given an opportunity before passing the fresh order.

Ground No. 8 regarding disallowance of deduction u/s 80TTA of Rs.3,097/-. I have considered the rival submissions as well as relevant materials available on record. The Assessing Officer has made an addition of Rs.3,097/- on account of interest income under the head ‘income from other sources’. Before the CIT(A) the assessee has claimed the deduction u/s 80TTA as the interest income was in respect of saving bank account is less than the threshold limit. The

Once the CIT(A) has directed the Assessing Officer to allow the deduction as per law no grievance is left against the impugned order of the CIT(A). Accordingly, the Assessing Officer is directed to consider the claim of deduction u/s 80TTA and allow the same if the assessee satisfy the requirements of eligibility of deduction.

In the result, the appeal of the assessee is partly allowed.