SHRI PHOOLCAHND LALCHAND BAFNA,MUMBAI vs. ITO WARD 3(2), THANE

PER PAWAN SINGH, JUDICIAL MEMBER;

(i) On the facts and in circumstances of the case, and also in law, the Ld. C.I.T. (A), erred in confirming the action of Assessing Officer making addition of Rs. 12,64,000/- u/s 69A, being cash deposit in the bank account/s during the demonetisation period, ignoring the submission and explanations of your appellant that said deposits are made out of the cash balance held as on 08.11.2016. Your appellant, therefore, submits that addition made by the Assessing Officer is invalid, bad in law and prays for full deletion of the same.

(ii) On the facts and in circumstances of the case, and also in law, the Ld. C.I.T. (A), erred in confirming the action of Assessing Officer arbitrarily estimating income of Rs.5,35,024/-, being 'profit and gains of business or profession' on as against the income of Rs.2,48,700/- offered by the appellant, ignoring the submission and explanations of your appellant. Your appellant, therefore, submits that addition made by the Assessing Officer is invalid, bad in law and prays for deletion of the addition made to the income offered under the above head.

(iii) On the facts and in the circumstances of the case, and also in law, the Ld. C.I.T. (A) erred in confirming the action of the Assessing Officer levying interest under chapter XVII-F of the Act. Your appellant, therefore, prays that said levy of interest be deleted.

The learned Authorised Representative (ld. AR) of the assessee submits that assessing officer passed the assessment order under section 144, despite the fact that assessee furnished all required details in time. The assessing officer made a double addition of business receipts. Once, the assessing officer estimated the income of assessee at 8.00 % of certain credit in his bank account by treating it as business total turnover, therefore, no other addition on account of cash deposit during demonetisation is warranted. The ld. AR of the assessee submits that assessee is engaged in the business in the sub- dealership of multi-brand two-wheelers. The assessee was procuring order from prospective buyers on behalf of various dealers. The assessee used to collect advance from such customers and used to deposit/remit the same to various dealers after retaining his service charges and /or commission. The assessee was also arranging transport, arranging insurance of such two wheelers and registration of vehicles with local Regional Transport Office (RTO). The assessee was also storing such vehicles in his go-down till delivery is handed over to customers. The invoice of sale value of two- wheelers was issued directly by various dealers and role of assessee was of mediator. In response to notice under section 142(1), the assessee could not furnish return of income. Though, the assessee furnished complete information required for assessment, as initial notices could not be complied, which may have been considered by assessing officer to pass assessment order under section 144 against the assessee. The assessee vide his reply dated 11.09.2019 furnished note of business activities, computation of his total income and copy of income and expenditure account. The assessing officer has duly considered all such submissions. All such details were also furnished before ld. CIT(A). The assessee also furnished details of bank account of assessee. The assessee maintained current bank account in the name of “Mangalam Motors” though the assessing officer recorded it as Mangala Motors. The assessee also furnished complete details of deposit in bank during demonetization period, pre demonetization and subsequent demonetization period. The deposits in bank is not abnormal during the period from 09.11.2015 to 31.12.2015. During such period, the assessee made cash deposit of Rs. 12,64,000/-only in the form of Specified Bank Notes (SBN). The assessee also furnished copy of bank statement showing continues payment to various authorised dealers of two-wheelers. The assessing officer made two additions, first addition on account of cash deposit during demonetization period, such addition was made of 100% of cash deposit. The assessing officer estimated 8.00% of income on remaining cash and other credit in the bank account of assessee. The ld. AR of the assessee submits that once the income of assessee was estimated, therefore, entire amount including of cash deposit during demonization period which was out of business receipt was to be considered as a part of total turnover.