SHRI V. DURAI,CHENNAI vs. ITO, CENTRAL CIRCLE-1(3), CHENNAI

- 2 - The same was admitted by the assessee. The assessee is stated to be engaged in civil construction business and offering income on presumptive basis. The cash seized by the assessee was not admitted in the return of income. During the course of assessment proceedings, the assessee submitted that cash was kept for medical emergencies and the same would not be supported by any books of accounts since the income was offered on presumptive basis. It was also submitted that most of the earnings were in cash. However, rejecting the same, Ld. AO made additions thereof in the returned income. Upon further appeal, Ld. CIT(A), considering the income of the assessee for past 10 years, held that it would be reasonable to hold Rs.7 Lacs as explained money and the balance would be unexplained money. Accordingly, the addition was restricted to the extent of Rs.5.96 Lacs.

Consequently, penalty proceedings were initiated by Ld. AO and penalty of 30% was levied u/s 271AAB on alleged undisclosed income of Rs.5.96 Lacs. Before Ld. CIT(A), the assessee, inter-alia, submitted that the addition was on estimated basis and there was no undisclosed income. However, rejecting the same Ld. CIT(A sustained the penalty against which the assessee is in further appeal before us.

From the fact, it emerges that the assessee is offering income on presumptive basis and most of the earnings are in cash only. In such a case, the assessee would not be maintaining any books of accounts. Considering the same, Ld. CIT(A) restricted the quantum additions, on estimated basis to Rs.5.96 Lacs after allowing partial relief of Rs.7 Lacs. It is very clear that the said addition is on mere estimation which could not be visited with impugned penalty. Therefore, we delete the same. - 3 - 4. The appeal stand allowed. Order pronounced on 01st March, 2023.