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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश आदेश /O R D E R आदेश आदेश
PER MAHAVIR SINGH, VP:
This appeal by the Assessee is arising out of the order passed by the Commissioner of Income Tax (Appeals)-4, Chennai in Appeal No.ITA No.1/2016- 17/A.Y.2009-10/CIT(A)-4; dated 27.10.2017. The Assessment was framed by the Income Tax Officer, Business Ward-XV(3), Chennai for the assessment year
:: 2 :: I.T.A No.:407/CHNY/2018 2009 – 2010, u/s.143(3) of the Income Tax Act, 1961 (hereinafter “the Act”) vide order dated 23.12.2011.
The only issue in this appeal of the Assessee is as regards to the order of the Commissioner of Income Tax (Appeals) in confirming the addition made by the Assessing Officer of Rs.10,21,123/- on account of the cash deposit and confirmed by the Commissioner of Income Tax (Appeals) and also enhanced without any notice at Rs.20,42,247/-. The Assessee has raised various grounds which are not happily worded but the issue is as noted above.
The brief facts of the case are that the Assessee is engaged in the business of sub-agency in transport business. The Assessee had filed his return of income for the relevant Assessment Year 2009 – 2010 on 18.01.2010. The Assessing Officer had completed the assessment u/s.143(3) of the Act and had made an :: 3 :: I.T.A No.:407/CHNY/2018 addition of the cash deposit made at the ICICI Bank amounting to Rs.10,21,123/-. It is to be clarified that the total cash deposit made at the ICICI Bank as per the bank statement was at Rs.20,42,247/- but the Assessing Officer noted that 50% of the transaction is towards the freight payment, the lorry hiring charges business and hence the balance 50% was taken as the income of the Assessee from undisclosed sources and added the same to the total income of the Assessee.
Aggrieved, the Assessee preferred an appeal before the learned Commissioner of Income Tax (Appeals).
The Commissioner of Income Tax (Appeals) noted that the cash deposits made in the ICICI Bank has no business connection with his contractual business with RCC International Freight Services Limited and Vijay Transport. He noted that the transactions entered with these two entities by the Assessee are duly recorded in the books of accounts,
:: 4 :: I.T.A No.:407/CHNY/2018 which do not substantiate the source of the above cash deposit in the ICICI Bank account. Hence, he added the entire cash deposits of Rs.20,42,247/- without giving any notice on the enhancement, as against the addition made by the Assessing Office of Rs.10,21,123/- For this, the Commissioner of Income Tax (Appeals) has recorded his findings in paragraph Nos.30 and 31, as under:
“30. I have considered the above submissions of the Appellant but do not find any force in that. It is factually incorrect to state that the only transaction facilities available with the IOB Bank was either inefficient or non- available which forced the Appellant to transfer funds to his account with the ICICI Bank. Secondly, the contention of the Appellant that the amounts withdrawn in cash from the IOB Bank were immediately deposited in his ICICI Bank is factually incorrect. I have perused the bank accounts and do not find such a situation where the Assessee has withdrawn the amount from the IOB Bank and immediately on the same day or within a deay or two had deposited in his ICICI Bank. Hence, the submissions made by the Appellant are substantiated with any facts and logic.
It is also pertinent to mention her that the cash deposits in the Bank account of the Appellant had no connection with his contractual business with RRC International Freight Services Limited and M/s. Vijay Transport. The transaction is held with these two entities are duly recorded in the respective ledger accounts in the books of accounts of the Assessee which do not substantiate the source of the impugned cash
:: 5 :: I.T.A No.:407/CHNY/2018 deposits in the Bank account of the Appellant. Hence, the entire amount of cash deposit of Rs.20,42,247/- is treated as unexplained cash credit u/s.68 of the Act. The Assessing Officer is directed to add back of this amount to the total income of Rs.6,67,066/- as determined above at paragraph No.26. Accordingly, the total taxable income works out to Rs.27,09,313/- [20,42,247 + 6,67,066/-]. The Assessing Officer is directed to re-calculate the tax payable by the Assessee and issue a fresh notice of demand u/s.156 of the Act.”
Aggrieved, the Assessee is now in appeal before the Tribunal.
We have heard the rival contentions and had gone through the facts and circumstances of the case.
We noted that the Assessee was never in the notice towards the enhancement of the cash deposit made in the bank account by the Assessee from Rs.10,21,123/- to the total cash deposits in the bank account that was treated as unexplained at Rs.20,42,247/- . We noted that, without any show-cause notice or without giving prior notice, the Commissioner of Income Tax (Appeals) should not have enhanced and hence we delete the enhancement.
:: 6 :: I.T.A No.:407/CHNY/2018
Coming to the original addition made by the Assessing Officer of Rs.10,21,123/-, the learned Counsel for the Assessee before us, filed copies of the Assessee’s Bank account maintained with the ICICI Bank and produced the Bank0-book and cash book maintained and that he tried to co-relate many of the transactions, and for the simple basis, he showed us some of the transactions that are co-related with the Assessee’s business transaction. We also noted that the gap between the withdrawal and the redeposit varies from ten days to forty days and not exact amounts but, in any case, in many of the transactions the Assessee could co-relate from the cash book and the Assessee has filed a co-relation chart in his paper- book at Pages 3 and 4.
In view of these facts, we are of the view that since, majority of the transactions matches, hence we restrict the addition at Rs.5.00 lakhs and direct the :: 7 :: I.T.A No.:407/CHNY/2018 Assessing Officer to delete the balance addition. In fact, the addition sustained is Rs.5.00 lakhs in the given facts and circumstances of the case.
In the result, the appeal of the Assessee in I.T.A No.:407/CHNY/2018 is partly allowed.