PONGIYANNAN THANGAVEL,TIRUCHENGODE vs. ACIT, CIRCLE 1, ERODE, ERODE

The facts of the case emanating from the records are that the assessee an individual, did not file his Return of Income for this year. Noticing that he had deposited cash of Rs.41,22,300/- in his Indusind Bank account and Rs.3,73,322/-

Aggrieved by the order, assessee was in appeal before the ld.CIT(A) and the assessee submitted that the credits in his bank account were out of the turnover in his lorry plying business and prayed that his income be assessed as per section 44AE of the Act. In support of his submissions, the assessee filed proof for owning and hiring lorries on rent, in the form of registration certificates of the lorries and confirmation letters from the owners of the lorries. He also uploaded his bank account statement to prove that he had incurred expenses for maintenance of his lorries by making payments to various automobile stores. The assessee further stated that sale of 2 of his trailors and agricultural income also formed source for cash deposited into bank account.

These evidences were forwarded by the ld.CIT(A) to the AO for furnishing a remand report. The remand report of the AO dated 31.10.2023 has been extracted at page 3 of the ld.CIT(A)’s order. In his remand report, the AO has stated that the assessee has failed to prove that the credits in the bank account are out of the lorry plying business. He then proceeds to observe that the assessee has made payments of Rs.21,35,094/- to various automobile stores for maintenance of his lorries and has stated that these payments, along with credit of life insurance maturity of Rs.44,275/- and from Sivasakthi Finance of Rs.47,350/- may be reduced from the total assessed income.

The assessee also submitted with the ld.CIT(A), a copy of the order of assessment u/s.143(3) r.w.s.147 of the Act dated 30.09.2019 in his own case for the A.Y.2012-13, where the assessment was reopened under similar circumstances to assess the cash deposits. In the proceedings for the A.Y.2012- 13, the assessee filed his ROI declaring income of Rs.1,80,000/- u/s.44AE of the

However, the ld.CIT(A) did not consider the same, and proceeded to pass the order by deleting the addition to the extent of Rs.22,26,719/- towards expenditure spent by the assessee and sustained the remaining addition of Rs.50,76,400/-. Aggrieved by the order of the ld.CIT(A), challenging the same, the assessee is in appeal before us.

The Ld.AR for the assessee submitted that during the F.Y.2010-11 relevant to the A.Y.2011-12, the assessee owned 1 lorry and took on lease 3 lorries. He submitted that the proof for the same were submitted before the ld.CIT(A) and in the paper-book filed before us, in the form of registration certificates for all 4 lorries and confirmation letters from the owners of the 3 lorries that the assessee had taken the same on rent and plied the lorries. He also submitted that the AO and the ld.CIT(A) have accepted the fact that the assessee had incurred expenses of Rs.22,26,719/- for repairs and maintenance of his lorries which proved that he had actually plied lorries. He then drew our attention to the order of assessment order in the assessee’s own case for the A.Y.2012-13 (the succeeding year) wherein the AO has accepted the fact that the assessee had owned one tractor bearing registration no.TN 30 T 7608 and leased two lorries bearing registration nos.HR 47 B 6499 & TN 28 AE 1788. The AO has also recorded that each lorry can generate turnover of Rs.16 to 16.20 lakh and had thus accepted the sources for credits in bank account to the tune of Rs.48,60,450/-. He then submitted that in respect of the remaining credits of Rs.16,20,150/-, the AO had estimated business income @ 8% out of the assessee’s lorry booking business and prayed that the same be adopted for this year.

Countering his arguments, the Ld. DR submitted that the assessee had failed to prove that the credits in the bank account, that were out of the lorry

We have heard both the parties, perused the materials on record and gone through the orders of the authorities along with the paper book filed. From the remand report of the AO and the order of the ld.CIT(A), it is clear that both the authorities have accepted the fact that the assessee had incurred expenses of Rs.21,35,094/- for maintenance and repair of his lorries by making payments to automobile stores. The authorities have thus accepted the fact that the assessee is in possession of lorries and earns income from the same. The ld.AR has prayed that the method adopted by the AO to assess the assessee’s income for the A.Y.2012-13 also be adopted in the present case. The ld.DR on the other hand objected to the same as recorded above.

We find that the assessee has produced the registration certificate for the lorry owned by him [KA 21 C 3389] and furnished copy of registration certificates of 3 lorries taken on lease along with confirmation letters from the owners. The ld.DR pointed out that the confirmation letters were for the F.Y.2009-10 and not the F.Y.2010-11. However, we observe that 2 of the lorries taken on lease during this year, were the same lorries which the assessee had taken on lease during the F.Y.2011-12 and the same was accepted by the AO in the assessment for the A.Y.2012-13 [lorries bearing reg. Nos.HR 47 B 6499 & TN 28 AE 1788]. The AO has recorded these registration nos. at para 5.2 of his order of assessment. Thus, it is seen that the assessee has continued to taken on lease these lorries right from the F.Y.2009-10 till F.Y.2011-12, including the F.Y.2010-11 relevant to the A.Y.2011-12.

In the present facts and circumstances of the case, we deem it appropriate to estimate the income of the assessee for this year by following the approach

In light of the above, we set aside the order of the ld.CIT(A) and direct the AO to assess the assessee’s income as directed above.

In the result the appeal of the assessee is partly allowed. Order pronounced in the open court on 17th March, 2026 at Chennai.