ARTHANARI MUDALIAR MATHAVAN,SALEM vs. ITO, WARD-1(6), SALEM

We find that this appeal is filed with a delay of 350 days. The assessee filed an affidavit for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said affidavit, we find the reasons stated by the assessee are bonafide, which really prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication.

The assessee raised 6 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the additions made by the Assessing Officer on account of treating cash deposits during demonetization period as unexplained and unaccounted income under section 69A of the Income Tax Act, 1961 [“Act” in short].

The ld. DR Shri C. Murugesan, Addl. CIT opposed the same as he refers to assessment order as well as impugned order and submits that despite having ample opportunities before the authorities below, the assessee did not furnish anything in detail in support of the contention made before the Tribunal. He refer to the impugned order and argued that there was no substantial evidence brought on record by the assessee in respect of his claim of disputed amount in respect of addition made under section 69A of the Act represents business receipt. He pleaded to dismiss the ground raised by the assessee.

Admittedly, there is no dispute with regard to the business of the assessee as it is clear that the Assessing Officer himself given benefit of business receipt in respect of cash deposits made by the assessee other than the deposits made during demonetization period. The ld. CIT(A) held the profit rate at 8% as adopted by the Assessing Officer is not reasonable and directed the Assessing Officer to accept the profit as shown by the assessee in the return of income. Therefore, we find force in the argument of the ld. AR that the amount disputed in respect of addition under section 69A of the Act is also arising out of business receipt, but, however, nothing was brought on record before us to show the same. Further, as rightly pointed out by the ld. CIT(A) in holding that the Assessing Officer in estimating and adopting profit at 8% is not acceptable in the absence of rejection of books of account. Therefore, we accept the argument of the ld. AR in remanding the matter to the file of the Assessing for considering the issue of addition made under section 69A of the Act for verification with reference to the books of account. The finding of the ld. CIT(A) in directing the Assessing Officer to accept the net profit rate as shown in the return of income remains intact. Thus, the grounds raised by the assessee are allowed for statistical purposes.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 07th February, 2025 at Chennai.