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Facts
The Assessing Officer made an addition of Rs. 21,30,416/- under Section 69A of the IT Act, treating bank deposits as undisclosed income for Assessment Year 2011-12, against an assessee engaged in construction/labour activities who had not filed a return of income. The CIT(A) partly allowed the appeal. The assessee contended that the bank deposits were regularly withdrawn and utilized for business expenses or investments, asserting a consistent labour contractor business history.
Held
The Tribunal found that significant debit entries existed in the assessee's bank statement, indicating withdrawals used for either investments or business expenses. Consequently, it was held that the deposits could not be treated as undisclosed income under Section 69A of the IT Act, thereby negating the addition made by the AO.
Key Issues
Whether an addition under Section 69A for bank deposits was justified when the assessee demonstrated consistent withdrawals for business expenses or investments.
Sections Cited
69A, 144, 147, 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Dr. BRR Kumar & Ms. Suchitra Kamble
आदेश/ORDER Per Suchitra Kamble, Judicial Member:
This is an appeal filed against the order dated 25-03- 2025 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2011-12.
The grounds of appeal
are as under:- “1. The Ld. A.O., has erred in making addition of Rs. 21,30,416/- u/s 69A of the IT Act, without properly considering the withdrawal side of the bank statement of the appellant.
2. Ld. CIT(A) has erred in passing the appellate order without properly considering the submission made before him and allowed the appeal in part. Even the plea of the nature of the previous business activities has not been taken into account Maqsudali Makbulali Saiyed, A.Y. 2011-12 though the appellant had filed the return of income before A.Y. 2011-12 under business code 0505 and thereafter from A.Y. 2018-19 to 2023-24.
That the appellant craves leave to add, alter, amend, modify, substitute, delete, or rescind all or any of the GROUND OF APPEAL on or before the final hearing, if necessity so arise.”
3. The assessee is engaged into construction/labour activities and has not filed return of income as his income was below the taxable threshold. The Assessing Officer passed order u/s. 144 r.w.s. 147 of the Act on 08-10-2018 thereby assessing total income at Rs. 21,30,416/- after making addition of Rs. 21,30,416/- u/s. 69A of the Act.
The assessee filed appeal before the CIT(A). The CIT(A) 4. partly allowed the appeal of the assessee.
At the time of hearing, none appeared on behalf of the assessee but as per the submissions quoted from page 6-7 of the order of the CIT(A) made by the assessee, we are proceeding with the appeal. The ld. D.R. relied upon the assessment order and order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. The assessee in para 4 of his submissions before the CIT(A) has categorically mentioned that the assessee filed return of income declaring following receipts from labour contractor business u/s. 44AD from assessment year 2018-19 to 2023-24 and assessee’s business that of labour construction has never changed throughout these years. The assessee has also given the details of the receipts declared which indicate that the assessee is regularly depositing the cash and withdrawing the same. There is considerable debit Maqsudali Makbulali Saiyed, A.Y. 2011-12 entries appearing in the bank statement of the assessee. The withdrawal from the bank has been utilized by the assessee either in the form of very investment or the same has been incurred as an expenses related to assessee’s business. Thus, the deposits cannot be held as undisclosed income of assessee u/s. 69A of the Act.
In the result, the appeal of the assessee is allowed.