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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeal by assessee for Assessment Year [AY] 2007-08 contest the order of Ld. Commissioner of Income-Tax (Appeals)-17 [CIT(A)], Mumbai, Appeal No. CIT(A)-17/IT-129/2011-12 dated 08/01/2013 qua confirmation of certain additions. The assessment for impugned AY was framed by Ld. Income Tax Officer-17(1)(1), ITA.No.2079/Mum/2013 Amit Balkrishna Tawal Assessment Year- 2007-08 Mumbai [AO] u/s 143(3) of the Income Tax Act,1961 on 31/12/2009 wherein the income of the assessee has been determined at Rs.5.72 Lacs after certain additions / disallowances as against returned income of Rs.1.58 Lacs filed by the assessee on 31/12/2008. None has appeared for assessee despite being provided with several opportunities of being heard. Left with no option, we proceed to dispose-off the same on the basis of material available on record and after hearing Ld. Departmental Representative, Ms. N.Hemalatha.
The assessee has raised argumentative grounds of appeal which are not proper as per rules. However, in sum & substance, the assessee, is aggrieved by addition of Rs.3.99 Lacs u/s 68, addition of Rs.4.27 Lacs u/s 40A(3) and adhoc addition of Rs.0.15 Lacs against telephone and conveyance expenses. 3.1 During impugned AY, the assessee was engaged in labor job contract of painting, plumbing and civil work primarily for small residences. Hence, the assessee’s business was primarily cash business. As per Annual Information Return [AIR] information, it was found that the assessee made cash deposit of Rs.12.84 Lacs in one of the bank account maintained with ICICI Bank Ltd., Mumbai as against job work income of Rs.8.50 Lacs reflected by the assessee in the Profit & Loss Account. Against the same, the assessee reflected net profit of Rs.1,67,281/- which translated into Net profit Rate of 19.6%. 3.2 To substantiate the cash deposit, the assessee submitted cash flow statement which is extracted at page-3 of the quantum assessment order. The assessee also filed cash book summary. After perusing the same, it was found that the assessee made cash withdrawals of Rs.7.13 ITA.No.2079/Mum/2013 Amit Balkrishna Tawal Assessment Year- 2007-08 Lacs from the Bank, out of which Rs.5.89 Lacs were stated to be re- deposited into the Bank account. However, the Ld. AO worked out excess cash of Rs.3.99 Lacs and added the same to the income of the assessee. The adhoc disallowances of Rs.15,000/- were made to account for personal element in Telephone & conveyance expenses.
4. Aggrieved, the assessee contested the same without any success before Ld. CIT(A) vide impugned order dated 08/01/2013 where Ld. CIT(A) while confirming the stand of Ld. AO, enhanced the assessment by Rs.4,27,350/- u/s 40A(3). Aggrieved, the assessee is in further appeal before us. The Ld. DR has placed reliance on the stand of lower authorities.
5. Upon careful consideration, we find that the assessee has withdrawn an amount of Rs.5.79 Lacs from the ATM of the Bank, which has not been considered by Ld. first appellate authority while arriving at cash balances for the simple reason that the same were withdrawn from the ATM. The same, under the circumstances, is not fair since the assessee was small labor contractor and was required to incur petty expenditure for the business. The possibility of re-deposit of the same into the Bank account also could not be ruled out keeping in view the nature of assessee’s business. Therefore, by giving the credit of the same, we delete impugned addition of Rs.3.99 Lacs.
6. So far as the enhancement u/s 40A(3) for Rs.4,27,350/- as made by Ld. CIT(A) is concerned, the same is unwarranted since the material on record reveal that these payment primarily represent petty loans only and do not constitute Business expenditure so as to attract the provisions of Section 40A(3). Therefore, the same stand deleted.