M. KADIRVELU,SALEM vs. ITO, WARD - 1 (2), SALEM

आदेश / O R D E R

PER INTURI RAMA RAO, ACCOUNTANT MEMBER

ITA No.1334 /2019 :- 2 -:

The Assessee raised the following grounds of appeal: 2.

‘’1.1 The order of the Commissioner of Income Tax (Appeals) disposing of the appeal in a summary manner without adverting to the materials on record and the submissions made in the proper perspective is wrong and illegal.

1.2 The CIT(A) completing the Appellate Proceedings in a mechanical manner without giving any findings of his own and merely reiterating the order of Assessment is untenable and bad in law.

2.1 The CIT(A) erred in upholding the addition of Rs.12,17,000/- as unexplained cash credits u/s.69 of the Act.

2.2. The CIT(A) erred in considering the fact that the assessee had offered income from lorries u/s. 44AE on presumptive basis and that he is not legally required to maintain regular books of account under the provisions of section 44AA of the Income Tax Act.

2.3. The CIT(A) ought to have appreciated that the appellant had disclosed loan repayments and the savings bank was only a passage way for loan account.

2.4 The CIT(A) erred in not considering the depreciation allowance workings on lorries; submitted by the Appellant before the Assessing Officer.

3.1 The CIT(A) ought not to have confirmed the levy of interest u/ss. 234A & 234B.

3.2 In any event, the CIT(A) failed to see that the interest levied is high, exorbitant and arbitrary.

The brief facts of the case are as under: 3.

The appellant is an individual engaged in the business of hiring and plying of lorries. The return of income for the AY 2010-11 was not filed by the assessee voluntarily u/s.139 (1) of the Income Tax Act, 1961 (in short ‘’the Act’’). Based on the information received by the Assessing Officer that assessee had deposits in two bank accounts

ITA No.1334 /2019 :- 3 -: namely Karnataka Bank, Salem Branch and SBI Bank , Salem Branch formed an opinion that income got escaped assessment to tax and accordingly a notice u/s.148 of the Act dated 30.03.2017 was issued and served on the assessee on 06.04.2017. In response to which, the return of income was filed on 02.05.2017 admitting total income of �3,60,010/-.

Against the said return of income, the assessment was completed by the Income Tax Officer, Ward 1(2) Salem vide order dated 27.12.2017 passed u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (for short ‘the Act’) at total income of Rs.15,77,010/-. While doing so, the Assessing Officer made addition of �12,17,000/- as unexplained cash deposits in the said bank accounts rejecting the explanation of the assessee that deposits were made out of gross receipts earned from the business of hiring and plying of lorries and he further submitted that the income was offered to tax under presumptive provisions u/s.44AE of the Act and therefore no addition can be made.

4. Being aggrieved, an appeal was preferred before ld. CIT(A), who vide impugned order had confirmed the action of the Assessing Officer.

Being aggrieved by the order of the ld. CIT(A), the appellant is 5. in appeal before us in the present appeal. The ld. Counsel reiterated that the cash deposits in the said two banks accounts were made out of the gross receipts from the business of hiring and plying of lorries. Since

ITA No.1334 /2019 :- 4 -: the return of income was filed under the provisions of Section 44AE of the Act i.e. under presumptive rate of tax, the question of any further addition does not arise. In support of this, he placed reliance on the judgment of Hon’ble High Court of Allahabad in the case of CIT vs. Nitin Soni (2012) 21 taxmann.com 477.

On the other hand, ld. Departmental Representative submitted 6. that assessee had failed to disclose these two bank accounts and therefore the cash deposited in the SB accounts has no nexus with the receipts from the business carried on by him and the addition was made under the head ‘’income from other sources’’ and therefore decision of Hon’ble High Court of Allahabad in the case of Nitin Soni (supra) relied upon by the assessee have no application to the facts of the present case.

We heard the rival submissions and perused the material on 7. record. Admittedly, assessee offered income from business of plying and hiring of lorries under presumptive rate of tax under the provisions u/s.44AE of the Act. There is no gain saying that once the assessee opts for presumptive rate of tax u/s.44AE, no further addition can be made in respect of business of plying and hiring of lorries. However, apparently, in the present case, the addition relates to unexplained deposits made in SB accounts which falls under the head ‘’income from other sources’’. The explanation of the assessee was that cash deposits

ITA No.1334 /2019 :- 5 -: are made out of business receipts requires to be established by proving nexus between cash deposited on the bank accounts and business receipts. The Assessing Officer had not rebutted the submissions of the assessee by cogent findings. Therefore, we remand the matter back to the file of the Assessing Officer with a direction to examine whether or not, there is nexus between business receipts and deposits made in the SB accounts. In the absence of any such nexus the Assessing Officer could be justified in making the addition. Thus, this matter is restored back to the file of the Assessing Officer for denovo assessment.

In the result, the appeal filed by the assessee is partly allowed 8. for statistical purpose.

Order pronounced on 4th day of December, 2019, at Chennai.