P.SIVASHANMUGAM (INDL.),SIVAKASI vs. ACIT, MADURAI

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ITA 2929/CHNY/2019Status: DisposedITAT Chennai17 November 2020AY 2009-105 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer made an addition without considering the withdrawals and deposits and without examining the assessee's sworn statement. The addition was made without proper reasons and justification.

What were the facts?

During a search, cash of Rs. 6,80,242 was found in the assessee's residence. The assessee stated this included cash withdrawn periodically, and his wife's business balance. While Rs. 1,20,000 was accepted as belonging to his wife's separate business, the remaining Rs. 5,60,242 was treated as unexplained.

What were the issues?

Whether the addition of Rs. 5,60,242 as unexplained cash credit under Section 68 was justified without proper examination of the assessee's explanation and sworn statement.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ (SMC

Before: SHRI V. DURGA RAO

Hearing: 17.11.2020Pronounced: 19.11.2020

आदेश / O R D E R

PER V. DURGA RAO, JUDICIAL MEMBER:

1.

This appeal filed by the assessee is against the order of the learned Commissioner of Income Tax (Appeals)-1, Madurai in .I.T.A No.27A/2017-18 dated 30.09.2019 relevant to the Assessment Year 2009 - 2010.

2 -: 2. The brief facts of the case are that there was a search conducted in the group case of M/s. Sri Kaliswari Fire Works and its partners on 21.10.2008. Consequent to the search proceedings, the jurisdiction of Shri P. Sivashanmugam, Sivakasi was transferred to this office vide Commissioner of Income Tax – II at Madurai. Accordingly, a notice u/s.142 and 148 was issued for the Assessment year 2009 – 2010 on 13.11.2009.

3.

In response, the Assessee filed a return of income for the Assessment year 2009 – 2010 admitting a total income of Rs.52,591/-. In the Assessment Order, the Assessing Officer has noted that during the course of the search proceedings, an amount of Rs.6,80,.242/- cash was found available in the residence, inventorised vide Annexure KR/Cash/F dated 21.10.2008. The Assessee in his own statement deposed that this amount represents the cash withdrawn periodically which include the cash balance of his wife’s individual business, since no separate cash books are maintained.

4.

Before the Assessing Officer, during the scrutiny proceedings, it was submitted that Rs.1,20,000/- belonging to Smt. S. Kanchana

3 -: who is doing a separate business in “Tupperware” sale was maintaining proper accounts. The cash book maintained for this purpose is produced and verified. With regard to the balance amount of Rs.5,60,242/-, no separate books were maintained. Hence, the same is treated as un-explained credit u/s.68 of the Income Tax Act, 1961 and an addition was made to Rs.5,60,242/-. The same is confirmed by the learned Commissioner of Income Tax (Appeals).

5.

We have heard both the sides, perused the materials available on record and gone through the orders of the authorities below.

6.

The only issue involved in this appeal is in respect of the addition of Rs.5,60,242/-. During the search proceedings, in the sworn statement he has deposed that the cash found during the search represented the cash withdrawn periodically which includes the cash balance of his wife’s also. So far as his wife is concerned, the cash flow to a tune of Rs.1,20,000/- and the remaining balance is concerned, there is no separate books of accounts maintained by the Assessee and that there are regular deposits and withdrawals

4 -: as submitted before the Assessing Officer as well as the learned Commissioner of Income Tax (Appeals).

7.

However, both the authorities below have not accepted the explanation made by the Assessee. Simply an addition is made. The Assessee during the search proceedings, in a sworn statement has deposed that the cash found during the search represented the cash withdrawn periodically which includes cash balance of his wife also.

8.

The Assessing Officer without considering the withdrawals and deposits, simply made an addition u/s.68 of the Income Tax Act, 1961. Not only that, when the Assessee had given a sworn statement, the Assessing Officer has to examine as to whether the statement given by the Assessee is correct or not? The Assessing Officer simply rejected the explanation given by the Assessee without giving reasons.

9.

In our opinion, the addition made by the Assessing Officer and confirmed by the learned Commissioner of Income Tax (Appeals) cannot survive.

5 -: 10. Accordingly, the order passed by the learned Commissioner of Income Tax (Appeals) stands cancelled and the appeal filed by the Assessee is allowed.

11.

In the result, the appeal of the Assessee in is allowed.

Order pronounced on 19th November, 2020 in Chennai.

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