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Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI
Before: SHRI H.S. SIDHU & SHRI O.P. KANTShri Dinesh Chand Tyagi,
This appeal by the assessee is directed against order dated 14/08/2015 passed by the Ld. Commissioner of Income-tax (Appeals), Muzaffarnagar [in short the Ld. CIT(A)] for assessment year 2011-12 raising following grounds: “1. That on the facts and in the circumstances of the petitioner's case, the Learned Commissioner of Income tax (Appeals) Muzaffar Nagar, (U.P.) erred in law and on facts in upholding the orders of the learned assessing officer in confirming the addition of Rs.7,70,425/- as income from other sources inspite of the fact that if an assessee has shown his income u/s 44AE of The Income Tax Act, 1961 which stipulates tax on presumptive income, which may be more or less than the actual income earned and no addition can be made even if the assessee is not able to explain discrepancies in the account books as per the law laid down by the jurisdictional High Court of Allahabad in the case of CIT-1, Kanpur v. Nitin Soni reported as (2012) 21 taxmann.com 447(AII.).
2. That on the facts and in the circumstances of the petitioner's case. the Learned Commissioner of Income tax (Appeals) Muzaffar Nagar, (U.P.) erred in law and on facts in upholding the orders of the learned assessing officer in confirming the addition of Rs.7,70,425/- as income from other sources inspite of the fact that no addition could be made with the aid of section 56, i.e. income from other sources as it has no application in the instant case, for the simple reason that it is already held by the Apex Court that where an income can appropriately fall under Section 28 as business income or any other specific head of income no resort can be made to section 56 as per the law laid down by the Apex Court in the case of S.G. Mercantile Corporation (P) Ltd v. CIT reported as (1972) 83 ITR 700 (SC).
3. That the learned assessing officer erred in law in charging interest under section 234A and 2348 of the Act.”
Briefly stated facts of the case are that the assessee filed return of income on 31/03/2012 declaring taxable income of Rs. 5,01, 250/-and agriculture income of Rs. 60,000/-. The case was selected for scrutiny and notice u/s 143(2) of the Income Tax Act, 1961 (in short the Act) was issued and served upon the assessee.
During assessment proceeding, the Assessing Officer observed cash deposits in bank accounts amounting to Rs. 79, 08, 500/-and asked the assessee to explain the source of cash deposits. The assessee explained that he was engaged in plying of trucks for transport activity and the receipt received in cash were deposited in the bank account and expenses were also incurred in cash. The Assessing Officer verified the bank statements and found receipt of 49,00,000/- received by cheque relating to truck plying activity . The Assessing Officer also observed expenses corresponding to the said income. After considering the submission of the assessee, the Ld. Assessing Officer held the cash deposits of Rs. 79,08,500/- as unexplained. The Assessing Officer also made other disallowances/additions to the returned income. On further appeal, the Ld. CIT(A) on the issue of addition of Rs. 79,08, 500/-following the order of the Tribunal in the case of the assessee for assessment year 2009-10, computed the peak credit of the bank account and sustained addition of Rs. 7,70,425/-. Aggrieved with this amount of Rs. 7,70,425/-,the assessee is in appeal before the Tribunal raising the grounds as reproduced above.
Before us, the Ld. Counsel relying on the grounds submitted that the assessee offered income under section 44AE of the Act and hence no addition can be made even if the assessee failed to explain discrepancy in the account books. The Ld. Counsel filed paper book containing pages 1 to 9 which included copy of acknowledgement of filing of the return of income, computation of the income and bank account statement. The Ld. Counsel relied on the decision of the Hon’ble High Court of the Allahabad in the 3 case of CIT, Kanpur Vs Nitin Soni reported in (2012) 21 taxmann.com 447 (All).
On the other hand, Ld. DR relied on the order of the lower authorities.
We have heard the rival submissions and perused the relevant material on record. The Assessing Officer found cash deposits in a bank account of Rs. 79,08,500/-and held that amount as unexplained cash deposits and added the same as income under the head “income from other sources”. We find that the Ld. CIT(A) has followed the decision of the Tribunal in the case of the assessee itself for assessment year 2009-10, wherein also the cash was found deposited in bank account and withdrawn from the bank account by the assessee on various dates. The Ld. CIT(A) worked out the peak credit following the order of the Tribunal for assessment year 2009-10. The relevant finding of the Ld. CIT(A) is reproduced as under : “The facts of the case as well as submissions made by the appellant have been carefully considered. It is observed that the AO had made addition of Rs. 79,08,500/- being unexplained income from other sources on the ground that the appellant had made cash deposits in State Bank of India Account No.30355891045 at Rs.76,63,500/-, Punjab National Bank Account No. 3720000100133530 at Rs.l,20,000/- and Canara Bank Account No. 145610 1001002 at Rs.l,25,000/- totaling to Rs.79,08,500/- and the appellant furnished no justification and working of availability of cash as deposited in banks in different months.
Further, there was abnormal deposit or cash in different months viz. in some months Nil deposits or negligible deposits were made. On the other hand, the appellant has vehemently argued that the AO was not justified to make addition at Rs.79,08,500/- on the ground that the cash deposits were made out of freight receipts from plying of trucks owned by the appellant against which the income was shown u/s 44AE of the Act. As per the appellant the freight receipts deposited in bank account were utilized for the payments of expenses incurred on insurance payments, installments paid to finance companies and for tyres and spare parts etc. It has been argued that the cash deposited at Rs.79,08,500/- was only 43.51% of the total freight receipts of which detailed working was furnished before the AO at the time of assessment proceedings and the AO had made the addition without considering the cash withdrawals made at Rs.56,70,000/- and other payments made towards truck plying business. The appellant has furnished copies of aforesaid bank accounts, details of all bank entries of the aforesaid accounts and also the copy appellate order of Hon 'ble ITAT, New Delhi' dated 22-02-2013 in his own case for AY.2009-10 wherein the Hon'ble ITAT, New Delhi had directed the AO to calculate the peak credit in the bank accounts after considering the deposits and withdrawals made. It has further been argued that the AO was not justified in making addition at Rs.79,08,500/- under the head 'income from other sources' in as much as the appellant had shown income from 5 plying of trucks u/s 44AE of the Act on presumptive basis and he was not required to maintain any books of account and no further addition could be as income from other sources. The appellant has placed reliance on the recent decision of the Hon'ble Allahabad High Court in the case of CIT-l, Kanpur vs. Nitin Soni [2012] 21 Taxrnann.com 447 (All). The appellant has further placed reliance on the decisions of various Hon’ble Courts in support of his claim. I have perused the order of the Hon'ble ITAT, New Delhi dated 22- 02-2013. The Hon 'ble ITAT, New Delhi in the aforesaid order had set aside the addition made on account of cash deposits in the appellant's case for AY 2009-10, the relevant paras are reproduced as under:- “..... The A 0 has also made the addition of total deposits in the bank account without considering the withdrawals. Therefore, in the interest of justice we deem if fit to remand back the case to AO for readjudication. The AO should consider the receipts of assessee on account of truck income after comparing with some similar cases and or on some rational basis and on the basis of such income should consider deposits made by assessee into his bank account and…………… and for rest of unexplained deposits if any, he should calculate peak credit after considering deposits and withdrawals for making any disallowance if any……” (emphasis supplied) It is observed that during the year under consideration, the AO has also made the addition of total cash deposits in the bank accounts without considering the cash withdrawals. The appellant has furnished detailed working of deposits Rs.79,08,500/- and withdrawals at Rs.56,70,000/- and it is gathered that withdrawals have been made exclusively to run the business of the appellant. Therefore, under the facts and circumstances of the case and in the light of the order of the Hon'ble ITAT, New Delhi dated 22- 02-2013, the addition made on account of total cash deposits in the aforesaid bank accounts at Rs.79,08,500/- is held as untenable in principal. However, the peak credit in the aforesaid bank accounts is to be considered for addition, the derailed working is given as under:-