MARAPPAN JAYALAKSHMI,DHARMAPURI vs. ITO, WARD-1,, DHARMAPURI

On the facts and circumstances of the case, the first appellate authority is not justified in sustaining the order of the AO, Where the AO has assessed the vehicle's received for display as Sales and made addition of Rs.1,27,93,500/- being cash deposits made in the bank account of the assessee as undisclosed sales. The assessee being a commission agent, only income embedded in the above transactions are commission amount and not the entire proceeds and only the commission has to be assessed in the hands of the appellant. The action of the AO on assessing the entire proceeds is bad in law where in as much as, the assessee is a mere intermediary for transactions between buyer and seller.

On the facts and circumstances of the case, the first appellate authority is not justified in sustaining the order of the AO, Where the lower authorities made an addition of Rs. 4, 75,810/- as undisclosed income. The action of the AO is against the principles of natural justice where the above entire commission amount has been offered to taxation and disclosed in the return of income filed which is very much available in the hands of the AO in course of assessment proceedings. The above action leads to double taxation in the hands of the assessee.

On the facts and circumstances of the case, the first appellate authority is not justified in sustaining the order of the AO, Where the assessee is consistently following the above accounting method and filing returns of income, the action of the AO in making above adjustments in the A.Y. in issue where no discrepancy has raised in the previous years is not justified and against the principles of natural justice.

There is a delay in filing the appeal for which delay condonation petition will be filed at the time of appeal hearing.

In view of the above grounds and other submissions to be made at the time of Appeal hearing, the order U/S 250 passed by Commissioner of Income Tax (Appeals), NFAC may be cancelled and justice rendered.

The brief facts of the case are that the assessee individual was amongst the non-filer of return u/s. 139 of the Act. The Revenue was in possession of certain information as mentioned in para-1 of the assessment order reproduced herein below as under:-

Based on the information mentioned (Supra) the case of the assessee was reopened and a notice u/s. 148 of the Act vide dated 27.03.2021 was issued and in response to the same the assessee filed a return vide dated 22.04.2021 declaring total income at Rs. 36, 420/-. After a detailed deliberation between the AO and the assessee, the case of the assessee was ultimately assessed by making addition of Rs. 4, 75, 810/- u/s. 28 of the Act and Rs. 1, 27, 93, 500/- u/s. 69A of the Act. The assessee being aggrieved with this order preferred an appeal before the Ld. CIT (A), who in turn dismissed the appeal of the assessee. Being further aggrieved the assessee preferred the present appeal before us.

We have gone through the order of the AO, the order of the Ld. CIT (A) and the submissions of the assessee along with grounds taken before us. It is observed that the assessee was engaged in the business of selling of automobile parts. During the year the assessee deposited cash of Rs. 1, 27, 93, 500/- and the source of this

To substantiate this version, the assessee had furnished the copy of ledger in the books of Shri Krishna Auto Agency. We have examined the same along with certificate from Shri Krishna Auto Agency, Ledger of Shri Krishna Auto Agency in the books of the assessee and bank statement of the assessee for the F.Y. 2016-17. It is observed that whatever the cash the assessee deposited from the sale of Two Wheelers, back to back transferred to Shri Krishna Auto Agency. We have gone through the copies of Form No. 26AS as furnished before us vide paper book page Nos. 64 to 67 issued by Shri Krishna Auto Agency against the deduction made from the commissions dues of the assessee. In our opinion, the spectrum of the bank account of the assessee and copies of Form No. 26AS issued by Shri Krishna Auto Agency against the deduction made from the commissions dues of the assessee are enough to substantiate the claim of the assessee. It is further observed that all the relevant documents were already on record before the AO and the Ld. CIT (A), but they failed to understand the business model of the assessee and the orders of the authorities below are found to be erroneous.

It is further observed that the assessee had submitted her Profit & Loss Account along with balance sheet of her business operations. It is observed that during the year under consideration the assessee had deployed a sum of Rs. 41.45 lakhs, against this net profit of Rs. 36, 419/- only declared as earnings. Here, the results of the assessee are not in commensuration with the capital deployed and that too when the assessee had bank balance of Rs. 2, 62, 503/- and cash in hand at Rs. 25, 39, 590/-. The assessee had claimed interest on car loan amounting to Rs. 2, 29, 675/- (other than interest on secured loan amounting to Rs. 3, 77, 172/-).