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Facts
The assessee deposited a substantial amount of cash (Rs. 2,98,00,130/-) in their bank accounts during FY 2016-17. The Assessing Officer (AO) treated these deposits as unexplained money under Section 69A of the Act, as the assessee failed to provide an explanation despite multiple opportunities.
Held
The CIT(A) deleted the addition by treating the cash deposits as business receipts and estimating the income at 30% of gross receipts, following the precedent from earlier assessment years. The Tribunal upheld the CIT(A)'s decision, finding it to be correct and not requiring interference.
Key Issues
Whether the CIT(A) was correct in deleting the addition of unexplained cash deposits, and whether the estimation of income at 30% of gross receipts by the CIT(A) is legally sustainable.
Sections Cited
69A, 144, 143(2), 142(1)
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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’, NEW DELHI
This appeal filed by the Revenue is directed against the order dated 27.10.2023 passed by the NFAC, Delhi in relation to assessment year 2017-18 on the following ground:-
1. Whether on the facts and in the circumstances of the case, Ld. CIT(A) is correct on facts and in law in restricting the addition to 30% of gross business receipts of Rs. 2,98,00,130/- only on the basis of assessment made u/s. 144 of the Act for AYs 2011-12 and 2012-13 in the same case without giving any reasonable findings.
2. Whether on the facts and circumstances of the case, Ld. CIT(A) is correct on facts and in law in deleting the addition of Rs. 2,08,60,091/- (i.e. deleted 70% of gross receipts of Rs. 2,98,00,130/-) on account of unexplained money u/s. 69A of the Act, ignoring the fact that the assessee failed to offer any explanation despite the plethora of opportunities provided during assessment proceedings as well as appellate proceedings.
Brief facts of the care are that on perusal of the information available on ITS data and the bank account statements, AO noticed that during the FY 2016-17 the assessee has deposited an amount of Rs. 2,79,34,630/- in his account with HDFC Bank, Rs. 13,97,500/- in his account and Rs. 4,20,000/- in his account with Punjab National Bank respectively. AO noted that assessee has deposited cash of Rs. 2,98,00,130/- during the FY 2016-17 in his bank accounts with HDFC Bank and Axis Bank. Since the assessee has failed to offer any explanation despite the plethora of opportunities, thus there was no option but only to treat the cash deposited by the assessee during the FY 2016-17 as unexplained money u/s. 69A of the Act. Therefore, an amount of Rs. 2,98,00,130/- was added in the hands of the assessee u/s. 69A of the Act.
Upon assesse’s appeal, Ld. CIT(A) deleted the addition by holding as under:- “5. Perusal of the return of income reveals that the appellant declared receipts of Rs. 9,48,469/- only from sale of services. Further the books of account are not audited and no audit report is filed, alongwith the return. Thus the reply of the assessee is incorrect that the accounts are audited. Notices u/s. 143(2) and 142(1) calling for information were duly served on the email id given by the assessee in the return of income. The assessee did not made any compliance to these notices. Hence, the assessment was completed u/s. 144 of the Act by making an addition of Rs. 2,98,00,130/- on account of unexplained deposits.
5.1 It is noticed that in earlier years i.e. AY 2011-12 and 2012-13, assessment has been framed u/s. 144 of the Act by computing income at 30% of gross receipts. The appellant has claimed that total cash deposits was made in current account, which were receipts on account of business. Considering the above facts, the income for this year is estimated at 30% of Gross receipt as under:-
Gross Average Profit Business receipts Profit % chargeable to tax 2,98,00,130/- 30% 89,40,039/
Hence, an addition of Rs. 89,40,039/- is confirmed as against addition of Rs. 2,98,00,130/- made by the AO. Thus, the appellant gets relief of Rs. 2,08,60,091/- i.e. (2,98,00,130 – 89,40,039).”
Against the above order, Revenue is in appeal before us.
None appeared on behalf of the assessee, despite issue of notice for hearing, hence, we are proceeding exparte qua the assessee, after hearing the Ld. DR and perusing the records.
We have heard the ld. DR and perused the records. We note that CIT(A) has gone into the past records of the assessee and has found that in assessment year 2011-12 and 2012-13 assessment has been framed u/s. 144 of the Act by computing income @ 30% of the Gross Profit. Ld. CIT(A) has treated the cash deposits of Rs.2,98,00,130/- as business receipts and thereafter directed that 30% of the same should be treated as profit and accordingly Rs. 89,40,039/- has been computed as profit chargeable to tax. In our considered opinion, ld. CIT(A) has taken a correct view which does not need any interference on our part, accordingly, we uphold the same.