M/S. M.A. INTERIOR,CHENNAI vs. DCIT, NCC-8(1), CHENNAI

Assessment Years: 2018-19 M/s.M.A.Interior, The Deputy Commissioner of No.104, Kambar Cross Street, Income Tax, Virugambakkam, Non-Corporate Circle-8(1), Chennai-600 092. Chennai. [PAN: ABFFM3223P] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant) अपीलार्थी की ओर से/ Assessee by : Ms.Jharna B. Harilal, C.A प्रत्यर्थी की ओर से /Revenue by : Ms.R.Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 12.06.2025 घोषणा की तारीख /Date of Pronouncement : .06.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M :

This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / NFAC / S / 250 / 2024-25 / 1070533176(1) dated 21.11.2024 of the Learned Commissioner of Income Tax [herein after “CIT(A), National Faceless Appeal Centre(NFAC), Delhi for the assessment year 2018-19. The reference to the word “Act” in this order hereinafter shall mean the Income Tax Act, 1961 as amended from time to time.

2.0 At the outset, the Ld.Counsel for the assessee submitted that the assessee is not contesting the ground of appeal no.6 r.w. the ground of appeal no.2 in respect of addition of Rs.12,36,947/- made by the Ld.AO by applying 8% profit rate in respect of turnover of Rs.1,54,61,833/-. Consequently, the ground of appeal no.6 r.w. the ground of appeal no.2 is dismissed as not pressed. 3.0 The next issue contested by the assessee through its grounds of appeal are regarding the addition of Rs.29,22,400/- u/s 69A r.w.s 115BBE on account of unexplained cash deposits in the bank account of the assessee. The Ld.Counsel for the assessee informed that the Ld.AO has treated the impugned cash deposits on premise that the assessee has not been able to establish the legitimacy of the cash deposits and not adduced any corroborative evidence. The Ld.Counsel informed that the assessee is engaged in the business of interior decoration, painting, maintenance etc. The Ld. AR has contended that the cash deposits pertain to genuine business transaction that that these have been reported in personal income tax return of the assessee vide PAN No.AEUPA7194A and that the same were part of the overall turnover of the assessee’s proprietary business of the same name. The Ld. Counsel alluded that it is imperative in assessee’s line of business to deposit and withdraw cash from ATMs in various locations to facilitate payment to vendors. The Ld. AR informed that the assessee had withdrawn cash in Page - 2 - of 4 furtherance of some proposed projects and subsequently as the same did not materialize, the cash withdrawn was redeposited back in the assessee’s bank account. The Ld.CIT(A) rejected the contention of the assessee as evident from para 6 to 8 of his order. The Ld.CIT(A) concluded that the assessee’s withdrawal of cash is not related to any firm orders but merely to estimates and projections. 4.0 Per contra, the Ld.DR relied upon the order of lower authorities. 5.0 We have heard rival submissions in the light of material available on records. The assessee is engaged in the line of business wherein payments are made in cash to small laborers and for petty material / items and hence the involvement of cash therefore cannot be totally denied. The details of illustration reproduced by the Ld.CIT(A) on page 7 of his order qua two parties M/s. Sathyaveeda and M/s. JRK Enterprises per se confirms this hypothesis. It is an accepted business practice that such kind of works involving manual labour involves cash outlay. Ordinarily, 40% is the component of labour in such transactions. We however also find some force in the arguments of Ld.DR that all the expenses mentioned therein qua details on page 7 would not be expended in cash. Be that as it may be, we are of the view that ends of justice would be met if the component of genuine business cash deposits, out of total project estimates of Rs.35 lakhs(Rs.15 + 20 lakhs) is estimated at Rs.14 lakhs being app. Accordingly, we direct the Ld.AO Page - 3 - of 4 8.0 In the result, the appeal of the assessee is partly allowed.