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Facts
The assessee appealed against the CIT(A)'s order for AY 2012-13. The assessee, engaged in car rental business, declared a turnover and offered income from house property. The AO made an addition for unexplained cash and time deposits. The assessee contended that the deposits were from business turnover and house property income, and that the notice u/s 148 was invalid.
Held
The Tribunal noted that the rental income was offered to tax and explained the source of cash deposit from business turnover. The Tribunal also found the source of time deposit in bank to be explained from business turnover. Therefore, a part of the addition was deleted.
Key Issues
Whether the additions made by the AO for unexplained cash and time deposits were justified, and whether the notice issued under Section 148 was valid.
Sections Cited
148, 139(1), 44AD, 271(1)(b), 250
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.MANISH BORAD
ORDER
PER DR. MANISH BORAD, AM:
This is an appeal filed by the assessee against the order of ld.Commissioner of Income Tax(Appeals)[NFAC] for Assessment Year 2012-13 dated 28.08.2024 passed u/sec.250 of [A] the Income tax Act, 1961. The Assessee has raised the following grounds of appeal : “1. Ld. CIT (A) erred both on facts and Law in rejecting appellant's appeal.
2. Appellant has closed his business before ten years and he never received any physical notice.
3. Appellant being illiterate and old aged person not known about all these email and computerized systems could not know about these notices. 4 Appellant engaged in the business of Cab Operator during FY 2011-12.
5. Appellant received Rs. 12,69,000/- business receipts in cash and also he received Rs. 1,77,800/- in cash as house property income during FY 2011-12 All these cash receipts of Rs. 14,46,800/- (Rs. 12,69,000 Rs. 1,77,800/-) he deposited in his Bank A/c. He has already declared his business turnover of Rs. 27,34,716/- and house property income of Rs. 1,77,800/- in his Income Tax Return of A.Y. 2012-13 filed u/s. 139(1) of 1. Tax Act, 1961 on dt. 16.08.2013
6. Ld ITO had issued notice u/s 148 of 1. Tax Act, 1961
7. Appellant hereby submit that notice u/s. 148 was void ab initio because appellant had declared his business income u/s. 44 AD of the Act and had already filed his ITR of A.Y 2012-13 on dt. 16.08.2013. No new thing noticed by Ld. ITO. Nothing was concealed. Hence, notice u/s. 148 of The Income Tax Act, 1961 is illegal.
8. Appellant hereby submit that Ld ITO made additions in assessee's income as follows: SN. Particulars Rs. 1. Cash Deposits 10,94,000/- 2. Time Deposits in Bank 4,00,000/- 3. Interest on Time Deposit 10,914/- 4. Interest on Saving Bank A/c 765/- Total Additions 15,05,679/- 9. Appellant hereby submit that cash deposit of Rs.10,94,000/- and Time deposit of Rs.4,00,000/- was out of business turnover. Total business receipts was of Rs.27,34,716/- out of which Rs.14,65,900/- was through banking channel and Rs.12,68,816/- was in cash. Also, rent of house property of Rs.1,77,800/- was also in cash. These cash amounts was deposited in cash. Also, time deposit of Rs.4,00,000/- was matured on dt. 24.10.2011 with interest on it of Rs.10,914/. Also, there was cash withdrawals from bank A/c Hence, source of cash deposit was as explained above. Hence, addition of Rs.14,94,000/- in appellant's income is wrong. 10. Appellant herby submit that in the interest of justice appellant should be given one more opportunity to put his say 11. Appellant would herewith like to refer the judgement given by Ld. ITAT, Hyderabad Bench given in the case of Aoipala Linga Reddy vs. ITO. (ITA No. 1855/Hyd./2017 dt. 23.03.2018, Λ.Υ. 2012-13) 12. In view of the submissions made hereinabove, the appellant pray:
1. 1. The Impugned order in original dated 19.12.2019 passed by ITO ward 2(4). Pune be quashed.
2. Additions made by Ld. ITO of Rs.15,05,679/- be deleted.
3. Penaltics u/s 271(1)(b) be deleted.”
The assessee has raised grounds of appeal on merits as well as also legal issue challenging validity of notice under section 148 of the Act.
2.1 At the outset, ld.Counsel for the Assessee requested for not pressing legal issue raised for challenging the validity of notice under section 148 of the Act. Accordingly, Ground Number 6 and 7 raising legal issues are dismissed as not pressed.
As far as remaining grounds which relates to the addition for unexplained cash deposit of Rs.14,94,000/-, the ld.Counsel for the assessee submitted that the assessee has furnished regular Return of Income on 16.08.2013 and has offered Income from House Property at Rs.1,13,780/- and income under presumptive taxation under section 44AD of the Act at Rs.3,96,707/- on the gross turnover of Rs.22,34,716/- and however, assessee failed to appear before both the Lower Authorities.
On the other hand, the ld.Departmental Representative(ld.DR) for the Revenue supported the order of lower authorities.
I have heard rival contentions and perused the record placed before us. I notice that the assessee is into business of Car Rental Tour Operator Taxi Hiring Charges. Apart from a Gross running of Rs.1,77,800/- assessee has also declared business turnover of Rs. 27,34,716/- which the assessee has earned through cash/bank mode. Form 26AS is also placed providing details of Tax Dedicated at Source(TDS) @1% of the gross payments / credits made to assessee. However, admittedly the Assessee had not appeared before the ld.Assessing Officer. Now the impugned addition of Rs.14,94,000/- includes unexplained cash deposit of Rs.10,94,000/- and unexplained time deposit in bank at Rs.4 lakhs. In the Grounds of appeal, assessee stated that the source of [A] alleged sum are from business turnover and that during the year cash turnover of Rs.12,68,816/- was achieved in cash and turnover of Rs.14,65,900/- was through banking channel. It is also claimed rent income of Rs.1,77,800/- was also received in cash and there were certain cash withdrawals during the year. I note that bank statements in support of such claim are not placed on record before me. However, I notice that rental income of Rs.1,77,800/- has been duly offered to tax and therefore to this extent source of cash deposit is explained. Investment in time deposit in bank are from the business turnover received in cash. Considering the fact that assessee is a senior citizen and also earning regularly for past many years and also declared turnover of Rs.27.34 lakhs during the year, I am satisfied that the source of time deposit in bank at Rs.4 lakhs also explained and therefore addition to this extent is also uncalled for. In other words, out of total addition of Rs.14,94,000/-, I delete the addition of [A] Rs.5,77,800/-[Rs.1,77,800/- (+) Rs.4,00,000/-]. So far as remaining addition of Rs.5,16,200/- is concerned, considering the fact that assessee has declared business income of Rs.3,96,707/-, I deem it appropriate to sustain the addition of at Rs.1,00,000/- and partly allow the grounds of appeal raised by the assessee.