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Facts
The assessee, Smt. Navjot Kaur, running a sweet shop cum restaurant, deposited Rs.23.79 Lacs cash in her savings bank account during AY 2012-13. Despite filing income on a presumptive basis u/s 44AD and declaring Rs.1.77 Lacs, the Assessing Officer (AO) made a best judgment assessment u/s 144 r.w.s. 147, adding the entire Rs.23.79 Lacs as unexplained investment/money u/s 69/69A due to the assessee's failure to make representations. The assessee contended that the deposits were from business receipts.
Held
The Tribunal acknowledged the assessee's claim of presumptive income under section 44AD, referencing the principle that individual cash deposits need not be explained if they have nexus to gross receipts when books are not maintained. However, considering the bank account's opening date and the purchase of Fixed Deposit Receipts (FDRs), the Tribunal found that not all receipts could be deemed business receipts. Therefore, the Tribunal confirmed a lump sum addition of Rs.3 Lacs, deleting the remaining addition, and directed the AO to recompute the assessee's income.
Key Issues
Whether cash deposits in a bank account can be added as unexplained investment/money under sections 69/69A, despite the assessee declaring income on a presumptive basis under section 44AD and failing to substantiate the source.
Sections Cited
Section 144, Section 147, Section 69, Section 69A, Section 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AMRITSAR
(निर्धारण वर्ा / Assessment Year: 2012-13) Smt. Navjot Kaur ITO Ward-2 W/o Shri Balwinder Singh Kapurthala बिधम/ Vs. M/s J7 Restaurant, Hamira Subhanpur, Kapurthala – 144802 स्थायीलेखासं./जीआइआरसं./PAN/GIR No. CIMPK-3297-D (अपीलाथी/Appellant) : (प्रत्यथी / Respondent) अपीलाथीकीओरसे/ Appellant by : Shri K.R. Jain (Advocate) – Ld. AR प्रत्यथीकीओरसे/Respondent by : Sh. Charan Dass (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 17-12-2025 घोषणाकीतारीख /Date of Pronouncement 17-12-2025 : आदेश / O R D E R
Aforesaid appeal by assessee for Assessment Year (AY) 2012-13 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 25-08-2023 in the matter of an assessment framed by Ld. Assessing Officer [AO] on best judgment basis u/s 144 r.w.s. 147 of the Act on 09-12-2019. The sole grievance of the assessee is confirmation of addition of Rs.23.79 Lacs u/s 69 / 69A. The Ld. AR advanced arguments with supporting case laws. The Ld. Sr. DR also advanced arguments and filed written submissions. Having heard rival submissions and upon perusal of case record, the appeal is disposed- off as under.
The assessee was found deposited cash of Rs.23.79 Lacs in its savings bank as maintained with IDBI Bank. The assessee filed return of income on 28-03-2014 declaring income of Rs.1.77 Lacs which was not commensurate with the impugned deposits. The assessee failed to make any representation during assessment proceedings and accordingly, Ld. AO added the deposits of Rs.23.79 Lacs as unexplained investment / money to the returned income of Rs.1.77 Lacs and framed the assessment.
During first appeal, the assessee, in statement of facts, stated that the assessee was running sweet shop cum restaurant and business receipts were deposited in the bank account. However, the assessee again failed to substantiate its case before first appellate authority and accordingly, the assessment was confirmed against which the assessee is in further appeal before Tribunal.
The Ld. AR raised legal ground that the Ld. AO failed to specify exact provisions which were applicable to the case of the assessee. It has further been stated that invocation of these provisions was discretionary. However, these arguments are to be rejected at its threshold since the assessee has failed to attend any of the proceedings before lower authorities. Under these circumstances, Ld. AO had no option but to frame the assessment on best judgment basis. The same has rightly been done by Ld. AO.
On merits, it has been reiterated that the deposits were out of business receipts of sweet shop cum restaurant. The Ld. AR stated that the assessee filed return of income on presumptive basis @8% u/s 44AD and declared business income of Rs.1,65,500/- u/s 44AD. The deposits were out of business receipts and therefore, the same could not be considered to be unexplained money of the assessee. Reference has been made to the decision of Hon’ble Punjab & Haryana High court in the case of CIT vs. Surinder Pal Anand (ITA No.156 of 2010 dated 29- 06-2010) holding that once under the special provisions, exemption from maintaining the books has been provided and presumptive tax @8% of gross receipts is the basis for determining taxable income, there was no obligation to explain individual entry of cash deposit unless such entry had no nexus with the gross receipts.
The perusal of assessee’s bank statement would show that this account has been opened by the assessee on 08-12-2011 and the assessee apparently do not hold any other bank account. The cash has been deposited in the said bank account and the assessee has purchased three FDRs of Rs.4 Lacs each on 12-01-2012. Therefore, the whole of the receipts could not be considered to be the business receipts for the assessee. The declared income of Rs.1,65,500/- translates into gross receipts of Rs.20.68 Lacs. Considering the totality of facts and circumstances of the case, we would confirm lump sum addition of Rs.3 Lacs in the hands of the assessee and delete the remaining addition. The Ld. AO is directed to recompute the income of the assessee. No other ground has been urged in the appeal.
The appeal stands partly allowed. Order pronounced on 17th December, 2025.