SAYANIYAA KARTHICK,COIMBATORE vs. ITO, NON- CORPORATE WARD-1(3), COIMBATORE, COIMBATORE

The Registry has noted delay of 20 days in the appeal, the condonation of which has been sought by the assessee on the strength of affidavit of the assessee. Considering the period of delay, the delay is condoned and appeal is admitted for adjudication on merits. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. The assessee being residential individual is stated to be engaged in ticketing business under proprietorship concern namely M/s Juzgo Holidays. Proceedings before lower authorities 3.1 During assessment proceedings, it transpired that the assessee made cash deposits in her bank account during the period between 10- 11-2016 to 30-12-2016. The assessee did not file return of income in earlier years. The Ld. AO proceeded to frame the assessment on best judgment basis u/s 144 since no books were maintained by the assessee. The assessee failed to respond to hearing notices. 3.2 The Ld. AO analyzed the pattern of cash deposit which revealed that there was sudden spike in cash deposit during demonetization period. The total cash deposited was Rs.224.34 Lacs out of which an amount of Rs.41.62 Lacs was deposited in Specified Bank Notes (SBN). The assessee, in reply to proceedings u/s 131(1), submitted that during demonetization period, the clients approached with demonetized currency to book tour packages. Such cash was deposited in the bank account. In most cases, the clients opted for travelling at later dates. However, Ld. AO held that old bank notes ceased to be legal tender from midnight of 08-11-2016 and such currencies lost value in money terms and thus could not be used in a transaction. Therefore, the currency deposited in SBN was held to be unaccounted money of the assessee. 3.3 The other deposits in the bank account were Rs.182.71 Lacs on which Ld. AO estimated profits of 5% which worked out to Rs.9.13 Lacs. The deposits of Rs.41.62 Lacs in SBN were treated as unexplained money. The Ld. CIT(A) confirmed the action of Ld. AO since no new material could be placed by the assessee during appellate proceedings. Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 4. From the fact, it emerges that the assessee is engaged in ticketing business under proprietorship concern namely M/s Juzgo Holidays. There is no other source of income for the assessee. The assessee has made cash deposits of Rs.224.34 Lacs out of which an amount of Rs.41.62 Lacs was deposited in Specified Bank Notes (SBN). The Ld. AO has estimated income of 5% on normal deposits whereas SBN has been considered to be the unexplained money u/s 69A despite the fact that the only source of income for the assessee is ticketing business only. The assessee had submitted that during demonetization period, the clients approached with demonetized currency to book tour packages. Such cash was deposited in the bank account. In most cases, the clients opted for travelling at later dates. Thus, such receipts constitute business receipts and nothing else and therefore, the same could not be held to be unaccounted money of the assessee. Under such circumstances, making full addition thereof could not be held to be justified. Considering the fact that Ld. AO has estimated income of 5% on other deposits, the same estimation could be made against demonetized currency of Rs.41.62 Lacs. We order so. The Ld. AO is directed to re-compute the income of the assessee by accepting 5% of demonetized currency as the income of the assessee.

The appeal stands partly allowed in terms of our above order.