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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
Before: Shri Shamim Yahya
This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-40 dated 09.09.2019 and pertains to assessment year 2013-14.
Grounds of appeal
read as under:-
1. The Appellant-Assessee - (hereinafter referred to as 'Appellant') begs to prefer the following amongst other Grounds of Appeal against the Order of the Income Tax Officer Under Section 143(3), Mumbai dated March 2,2016 in the Appellant's case for AY 2013-14.
2. In the facts and circumstance of the case, the Hon’ble CIT(A) erred in considering that the assesse in not under obligation to explain individual entry of cash deposit and he has declared that all cash receipt are out of business receipts falling U/S. 44AD, he is getting special exemption from maintaining of books of accounts.
3. In the facts and circumstance of the case, the Hon'ble CIT(A) has erred in concluding difference between cash withdrawal as per cash summary and bank statement of Rs. 109398/- as unexplained cash credit.
4. In the facts and circumstance of the case, the Hon’ble CIT(A) has erred in disallowing opening cash in hand of Rs. 2,68,866/- as source of cash deposit and has considered it as unexplained cash credit. 5. In the facts and circumstance of the case, the Hon'ble CIT(A) has erred by not applying presumptive taxation scheme under the Income Tax Act and has considered entire receipt of Rs. 4,99,500 /- as unexplained cash credit which is voluntarily submitted during the assessment proceeding when shortfall in turnover is encountered. 6. In the facts and circumstance of the case, the Hon'ble CIT(A) has erred in initiated the penalty proceedings U/S. 271(1)(C) of the Income Tax Act,1961. 7. All the aforesaid Grounds of Appeal
are urged without prejudice to each other.
8. The Appellant reserves his right to add, amend or alter the aforesaid Grounds of Appeal.
9. The Appellant further submits that the decisions relied upon by the Hon'ble CIT(A) are distinguishable on facts, and the Appellant reserves his right to do so at the time of the hearing of the present Appeal.
Brief facts of the case are that assessee is a dealer in second hand bikes. In the assessment order AO noted that assessee has made cash deposit in bank and during the assessment proceedings, assessee was asked to furnish the details of cash deposits along with the bank statement. AO noted the assessee response as under:-
In response, the assessee vide his letter dated 24,02.2015 submitted his reply. The gist of the reply is that he is in the business of resale of second hand bikes. The bikes are acquired and sold to the customers. In this business, generally the payment received is in cash and very few customers make payment in cheque. The assessee further submitted that the vehicle movement register is maintained by him, sample copies of the same were annexed. The assessee has further submitted the copy of the rent agreement and license copy to show the existence of business. The assessee further submitted that due to some mathematical calculatsion error, the total turnover was wrongly determined which, is being recalculated and profit for taxation @ 8 % is offered for taxation accordingly as per the provisions of section 44AD of the Income Tax Act. The assessee has further submitted a cash summary for the year under consideration wherein the cash deposited has been explained against the sources of the same.
AO examined the assessees submissions. AO was not satisfied, he added unexplained deposits as under:-
“To sum up, in totality, the assessee has failed to prove or justify the source of the cash deposits of Rs. 13,27,764/- as under: a. Difference amount as per the cash summary a And bank statement Rs. 5,59,398/- b. Opening cash balance on hand (unexplained) Rs. 2,68,865/- c. Undisclosed cash receipts as per assesee’s Letter dated 24.02.2016 Rs. 4,99,500/- Total Unexplained cash credit Rs.13,27,764/-
Against the above order, assessee appeal before the ld.CIT(A).
The ld.CIT(A) upheld the AO’s order and ld.CIT(A) held as under:-
“The A.R, of the appellant in his submissions, stated that an amount of Rs.559398/- out of which an amount of Rs.450000/- Is cash withdrawn as over draft from HDFC Bank and the same has been confirmed by the Bank vide its letter dt.05.03.2016. Without considering the same the A.O. passed the order on 02.03.2016. Since this is an over draft taken from the HDFC Bank the A.O. should not' have treated the same as unexplained cash deposit and added to the income of the appellant. Out of the total addition made on account of difference between cash withdrawals as per cash summary and as per bank statement of Rs.559398/- a clear bank confirmation regarding over draft amount" taken from HDFC which is also confirmed by the HDFC Bank confirmation letter and the same is treated as explained out of the addition made at Rs.559398/- . The balance amount of Rs. 109398 /- may be treated as unexplained cash deposits and to the extent the addition made by the A.O. is confirmed. The appellant succeeds on this ground of appeal partly. Regarding opening cash balance on hand at Rs.268866/- is concerned the appellant in' his submissions stated that he had withdrawn Rs.4 lakhs on 28.03.2012 from HDFC Bank again from O.D. account. The appellant has not furnished any withdrawals from the bank account subsequent to the date of deposit of cash of 4 lakhs to arrive at opening cash balance of Rs.268866/-. There are no entries in the HDFC bank as on 01.04.2012 for the opening balance claim of the appellant. Hence the A.O. has correctly made the addition at Rs.268866/- and hence the addition made by the A.O. on account of cash on hand is hereby confirmed. This ground of appeal filed by the appellant is hereby dismissed. As far as undisclosed cash receipts as per assessee letter dt.24.02.2016 at Rs.499500/- the assessee's request for considering the same u/s.44 AD at 8% also cannot be acceded to as1 he himself has not taken into account these business receipts. Hence the addition made by the AO is sustained rejecting this ground of appeal as well.”
Against the above order, assessee is in appeal before the ITAT.
I have heard both the parties and perused the records. As regards, the issue of difference that is remaining of cash and bank statement, ld. Counsel of the assessee prayed that an opportunity may be given to the assesse to explain the same before AO. I find the plea reasonable. Further, as regards, the opening balance also, it will be appropriate to remit the issue to the file of AO to examine the same afresh. AO will also elaborate why and how the opening balance is being added and under what provision of law. As regards, the plea of addition of u/s. 44AD for the sum of Rs. 4,99,500/-, the only reason given by ld.CIT(A) in rejecting the assessee’s plea is that assessee has not included the same originally. I am of the opinion that on facts and circumstances of the case, the assessee request is acceptable.
With the above observation, the issues are remitted to the AO to consider the same accordingly. Needless to add, assessee should be granted adequate opportunity of being heard.
In the result, assessees appeal is allowed for statistical purpose.