MR. RAKESH,HARYANA vs. ITO, WARD-18(3), DELHI

At the time of hearing, the ld. AR of the assessee brought to our notice that the present appeal before the ITAT was filed with a delay of 36 days and prayed that the delay be condoned. It was submitted that the assessee was prevented from filing the appeal on time and that the delay was not deliberate. After considering the submissions, we found that the delay deserves to be condoned, as Accordingly, the delay is condoned and the appeal is admitted.

It was further brought to our notice that the case of the assessee was selected for complete scrutiny and notices were issued. The scrutiny was initiated because the assessee had deposited cash of Rs.39,00,000/- in its bank account and cash deposits of Rs.8,15,000/- during the demonetization period. During the assessment proceedings, the Assessing Officer (AO) observed that in the computation of income, the assessee had shown income from business and profession under section 44AD of the Act amounting to Rs.4,35,250/-. Accordingly, notices were issued to the assessee. In response, the assessee submitted that he is engaged in the business of garments and that the source of cash deposits was out of cash sales.

The AO, however, observed from the e-portal that this was the first year of filing return of income by the assessee, which indicated that the assessee attempted to regularize undisclosed income by depositing cash in the bank account in the guise of cash sales and filing a return of income for the impugned assessment year 2017-18. Accordingly, the AO proceeded to make an addition of Rs.47,15,000/- under section 68 of the Act.