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Income Tax Appellate Tribunal, ‘SMC‘ BENCH
Before: SHRI VIKAS AWASTHY & SHRI M.BALAGANESHSmt. Sonu B Nadar
आदेश / O R D E R PER M. BALAGANESH (A.M):
This appeal in A.Y.2009-10 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-40, Mumbai in appeal No.CIT(A)-40/10282/2013-14 dated 20/08/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 08/03/2013 by the ld. Income Tax Officer-23(1)(4), Mumbai (hereinafter referred to as ld. AO).
The only effective issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the addition made to the extent of Rs 10,07,458/- u/s 68 of the Act towards deposits in bank account , in the facts and circumstances of the case.
We have heard the rival submissions and perused the materials available on record. We find that the assessee is engaged in the business of providing jobwork on fabric and clothes and had filed her return of income on 22.3.2010 declaring gross receipts from labour job at Rs 7,96,506/- and after claiming expenses of Rs 6,74,116/-, net profit of Rs 1,22,390/- was offered for taxation. The ld. AO had observed that AIR information revealed that the assessee had made cash deposits of rs 17,96,635/- during the period 1.4.08 to 31.3.09 in her bank account no. 002601044507 maintained with ICICI Bank. Since the gross receipts of the assessee was only Rs 7,96,506/-, the ld. AO observed that there was escapement of income of the assessee as the cash deposits could not be explained by gross receipts and accordingly reopened the assessment of the assessee by issuance of notice u/s 148 of the Act. In response to the notice u/s 148 of the Act, the assessee filed a return enhancing her gross receipts from labour job to Rs 18,03,964/- and declaring net profit of Rs 2,49,341/-. The assessee pleaded that the sources of cash deposits made in bank account were out of receipts from job work charges received by her from her business. This reply was not found satisfactory by the ld. AO and the ld. AO added the entire cash deposits made in bank account to the tune of Rs 17,96,735/- as unexplained cash credit u/s 68 of the Act while completing the assessment.
3.1. The ld. CIT(A) observed that the ld. AO had asked the assessee to substantiate her claim by producing the bills , vouchers, partywise details of labour charges received and paid etc. However, the assessee could produce the purchase bills only to the extent of Rs 1,93,422/- and receipt of labour charges to the extent of Rs 4,20,100/-. The ld. CIT(A) observed that the assessee had enhanced her gross receipts from Rs 7,96,506/- disclosed in the original return , to Rs 18,03,964/- in the revised return filed in response to notice u/s 148 of the Act. This results in a difference of Rs 10,07,458/- which, in the opinion of the ld. CIT(A) represent receipts suppressed by the assessee. Accordingly, the ld. CIT(A) directed the ld. AO to add only a sum of Rs 10,07,458/- instead of Rs 17,96,735/-. Against this finding of the ld. CIT(A), only the assessee is in appeal before us and revenue had not preferred any appeal.
3.2. Hence the assessee has to explain the source of Rs 10,07,458/- before us. We find that the said sum of Rs 10,07,458/- is nothing but part and parcel of gross receipts already disclosed by the assessee in the revised return filed in response to notice u/s 148 of the Act. We have gone through the entire bank statements produced by the assessee which are enclosed in pages 15 to 22 of the paper book. These bank statements were also filed before the lower authorities. From the perusal of the said bank statements, we find that there were cash deposits made on various dates in small amounts by the assessee and there were also cash withdrawals made from the same bank account. Infact the assessee had also submitted the cash transaction statement which are enclosed in pages 23 to 30 of the paper book. From the said cash transaction statement, we find that the peak negative cash balance is Rs 39,493/- only. In any case, only this sum could be brought to tax by the ld. AO. All said and done, the assessee had indeed disclosed the gross receipts of Rs 18,03,964/- in the revised return filed in response to notice u/s 148 of the Act. Going by the manner in which cash deposits were made in small amounts in the bank account of the assessee , we hold that the argument advanced by the assessee that the said cash deposits were made out of gross receipts of labour charges received by the assessee, is correct and certainly a plausible explanation. In view of this, we hold that the cash deposits in bank account stood clearly proved and explained by gross receipts of the assessee in the revised return filed in response to notice u/s 148 of the Act, subject to negative cash balance of Rs 39,493/- as stated supra. Hence there is no case for making any addition on account of unexplained cash deposits in the bank account u/s 68 of the Act in the instant case. However, the peak credit of negative cash balance of Rs 39,493/- on 4.5.2008 should be added as unexplained cash in the hands of the assessee. Accordingly, we direct the ld. AO to delete the addition made in the sum of Rs 10,07,458/- ; accept the revised return filed in response to notice u/s 148 of the Act and add a sum of Rs 39,493/- towards peak negative cash balance. The ground No. 1 raised by the assessee is partly allowed. Hence the adjudication of other grounds raised by the assessee becomes academic in nature and are left open.
In the result, the appeal of the assessee is partly allowed.
Order pronounced on 14/07/2022 by way of proper mentioning in the notice board.