RANGACHARI SURENDHIRAN,SALEM vs. ITO WARD 1(2), SALEM

This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals), Salem in Appeal No.123/2017-18 dated 26.02.2019. The assessment was framed by the Income Tax Officer, Ward-1(2), Salem for the assessment year 2015-16 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order of dated 27.12.2017.

The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the addition of peak credit amount of Rs.3,22,763/- as against added by AO at Rs. 10,39,200/- being cash deposit in assessee's bank accounts. For this, assessee has raised various grounds which are argumentative and hence, need not be reproduced.

We have heard rival contentions and gone through facts and circumstances of the case. We noted that the AO during the course of assessment proceedings noticed that the assessee has declared income u/s.44AD of the Act from the business of sliver leg chain. The AO has not disturbed the return filed by assessee u/s.44AD of the Act but, he noted that the assessee has made cash deposit in various bank accounts and the total deposit made in the various bank accounts during the period from 01.04.2014 to 31.03.2015 are as under:- Bank Peak Credit of Cash Deposit (a) A/c 915010009724888 of Axis Bank Rs.1433132/- (b) A/c-0311332753 of Kotak Mahindra Bank Rs.1445300/- (c) A/c-911010053609968 of Axis bank Rs.1540304/- (d) A/c-914010038527116 of Axis bank Rs.4041448/- The AO has taken the peak credit of cash deposit of Rs.28,04, 100/- and added to the returned income of the assessee under:-

The CIT(A) restricted the addition at Rs.3,22,763/- by observing in paras 6 & 7 as under:- 6. I have considered the assessment order and the written submissions of the appellant. The main contention of the Authorized Representative is that the assessee has offered income u/s 44AD and hence no other additions should be made u/s 69. This argument of the assessee cannot be accepted simply for the reason that the Assessing Officer has made additions based on his investigations during the course of assessment proceedings which revealed that the assessee had 3 more bank accounts which were not disclosed to the Department. He has clearly identified the bank accounts which were not disclosed to the Department and has arrived at the peak credit and assessed the same as unexplained cash u/s 69. During the course of appellate proceedings, the Authorized Representative has produced evidence only with respect to the bank account maintained by the assessee with the Kotak Mahindra Bank. He has further submitted that it may be seen from the bank account submitted that the peak credit was only Rs.3,22,763/- and not Rs.10,39,200/- as adopted by the Assessing Officer in the assessment order. This issue is verified from the bank account submitted and the argument is accepted as correct. Hence, the Assessing officer is directed to substitute the peak credit amount as Rs.3,22,763/- instead of Rs.10,39,200/- Thus the assessee gets a relief of Rs. 7, 16,437/. (Rs. 10,39,200/- - Rs.3,22,763/-).

The only argument of assessee's counsel is that once the assessee has declared income u/s.44AD of the Act, no further addition can be made. On a counter query from the Bench, whether in the bank A/c No.0311332753 of Kotak Mahindra Bank, wherein peak credit addition made by AO of Rs.10,39,200/-out of which the CIT(A) has sustained the addition of Rs.3,22,763/- pertains to the assessee's transactions of business or not, the ld.counsel for the assessee could not answer anything nor could not file any evidence. Once, the assessee could not explain that these cash deposits in Kotak Mahindra Bank account of Rs.10,39,200/- pertains to business transactions, the order of CIT(A) making addition of peak credit and restricting the addition to the extent of Rs.3,22,763/- is CIT(A) and hence, the appeal of the assessee is dismissed.

In the result, the appeal filed by the assessee is dismissed.