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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI
Before: SH. BHAVNESH SAINI
PER BHAVNESH SAINI, JUDICIAL MEMBER
This appeal by the assessee has been directed against the order of Ld.CIT(A)-11, New Delhi dated 08.11.2016 for A.Y.2012-13.
I have heard Ld. representatives of both the parties and perused the material available on record.
Ground Nos.1, 4 & 5 are general and need not adjudication.
Ground No.2, the assessee challenged the order of the Ld.CIT(A) in restricting the addition made by the AO of Rs.5,75,000/- to Rs2,38,479/- u/s 68 of the Income Tax Act, 1961 (in short “Act”) on account of the cash deposits in the bank account. It is noted that there are cash deposits in three bank accounts of the assessee totaling to sum of Rs.5,75,000/-. The assessee explained that he is covered u/s 44AD of the Act and declared
Page 2 of 5 profit @ 8% on business receipts. During the year, the assessee has gross receipts of Rs.2,31,844/- on which profit have been declared at Rs.54,548/-. In addition to this, the assessee has rental receipt of Rs.4,20,000/- and net job charges of Rs.2,53,107/-. It was, therefore, submitted that these amounts are sufficient to make cash deposits in the bank account. The Ld.CIT(A) considering the explanation of the assessee noted that the assessee has rental receipt, gross receipt from business, job work charges. The Ld.CIT(A) further noted that Rs.1,26,000/- has been spent on interest on borrowed capital and tax paid at Rs.242,430/- is not available to the assessee. Thus, total cash available to the assessee was found in a sum of Rs.7,36,521/-. In the absence of further details, it was presumed that the assessee has utilized approximately Rs.4 lacs for meeting out his various business related expenses and personal expenses including household expenses etc. Therefore, a sum of Rs.3,36,521/- was available to the assessee to make deposit in cash in various bank accounts, therefore, the source of Rs.3,36,521/- was found explained and balance amount of Rs.2,38,479/- remained unexplained, addition of which was confirmed.
After considering the rival submissions, I am of the view that the addition is excessive. Ld. Counsel for the assessee referred to Paper Book page 2 which is computation of income for assessment year under appeal in which Rs.1,26,000/- have been reduced on account of statutory
Page 3 of 5 reduction u/s 24(a) of the Act and Rs.42,430/- have been deposited as tax on 30.03.2013, therefore, it is available to the assessee. Thus, the counsel for the assessee submitted that a sum of Rs.1,68,430/- is available to the assessee. I find the explanation of the assessee to be correct because Rs.1,26,000/- is not interest as noted by the authorities below and that tax of Rs.42,430/- was not paid in assessment year under appeal. Therefore, these amounts are available to the assessee in cash for the purpose to explain cash deposits in the bank accounts of the assessee. The orders of the authorities below to the extent are modified and the AO is directed to grant further benefit to the assessee in a sum of Rs.1,68,430/- out of the addition of Rs.2,38,479/- maintained by the Ld.CIT(A). The addition shall be reduced to the extent of Rs.1,68,430/-. This ground of appeal of the assessee is allowed partly.
6. On Ground No.3, the assessee challenged the order of Ld.CIT(A) in confirming the addition of Rs.5,30,000/- on account of undisclosed investment. This issue relates to addition of Rs.5,30,000/- on account of undisclosed investment in construction of houses in Dehradun. The assessee was asked to explain source of investment. The details of investment in construction of plot No.56, Dehradun is noted in the orders of authorities below. Ultimately it was found that the assessee has disclosed an investment of Rs.5,30,000/- for purchase of material out of current year income. Since the amount of Rs.5,30,000/- was not Page 4 of 5 explained, therefore, addition to that extent was made. The Ld.CIT(A)
confirmed the addition. The source of the same was not explained.
Ld. Counsel for the assessee referred to Paper Book page 7 which is detail of income available to the assessee as is explained on Ground No.2 i.e rental income, income returned u/s 44AD and job charges. It is also claimed that the assessee has availability of cash seized of Rs.3,00,000/- which were seized from the assessee during the State Assembly election.
After considering the rival submissions, I do not find any justification to interfere with the orders of the authorities below. Ld. counsel for the assessee contended that amount of Rs.3,00,000/- was seized from the assessee is available to the assessee alongwith other income. While considering Ground No.2, the Ld.CIT(A) has considered all source of income of the assessee and granted substantial benefit to the assessee in which also, I have reduced the addition by Rs.1,68,430/-. The Ld.CIT(A) on this ground also noted that the amount of Rs.3,00,000/- seized from the assessee and treated as his income from undisclosed source was not available to the assessee for investment as the same was seized by the authorities. The personal expenses were also estimated alongwith other business expenses, therefore, out of the known source of the assessee, nothing has left with the assessee so as to explain the investment made in the construction of house at Dehradun. Further, when cash of Rs.3,00,000/- was already seized by the police authorities during election,
Page 5 of 5 it would not be available to the assessee for making investment in construction of property. In the absence of any sufficient and cogent evidence available on this issue, I do not find any justification to interfere with the orders of the authorities below, on this ground. This ground of the appeal is dismissed.
In the result, the appeal of the assessee is partly allowed.
The order is pronounced in the open court.