Loading judgment…
Facts
The assessee, an individual, initially did not file an income tax return. However, upon receiving AIR information about a cash deposit of ₹27,75,833/- in his bank account, reasons were recorded, and a notice under Section 148 was issued. The assessee subsequently filed a return declaring a total income of ₹2,13,130/- based on sales of ₹14,19,911/-. The Assessing Officer (AO) found that the assessee was engaged in the retail trading of Jeans and that the cash deposit was from sales, but doubted the genuineness of the business due to a lack of evidence. The AO added the unexplained cash credit to the assessee's total income.
Held
The Tribunal observed that the lower authorities had accepted a turnover of ₹14,19,911/- as business income, implying acceptance of the assessee's business activity. It was found that the cash deposit was not necessarily an unexplained cash credit but could be considered business income, especially since the assessee claimed it was from sales. The Tribunal directed the AO to tax the income from the cash deposited at the rate of 8.65%, as offered by the assessee himself, and to delete the remaining addition.
Key Issues
Whether the cash deposit in the bank account can be treated as unexplained cash credit or as income from business, and whether the addition made by the AO was justified.
Sections Cited
143(3), 147, 148, 139, 68, 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM
This appeal is filed by Mr. Mohamadli Shaikh, for A.Y. 2010-11, against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] dated 27th December, 2023, wherein the appeal filed by the assessee against the assessment order passed under Section 143(3) read with section 147 of the Income-tax Act, 1961 (the Act) dated 22nd December, 2017, was dismissed.
Therefore, assessee is in appeal before us, raising following grounds of appeal:-
2) The Assessment order dated 26/11/2018 under section 143 (3) r.w.s. 147 of the Act income tax act 1961 by the income tax officer is against the law and facts on the file in as much as he was not justified to the resont to the reassessment proceedings under section 148 and according the notice issued 148 and according the notice issued under section 148 of the act is bad in law.
3) That the assessment order dated 26/11/2018 passed under section 143 (3) r.w.s. 147 of the income tax act 1961 by the learned income tax officer, ward 21 (2) (3) Mumbai is against the law and facts on the file in as much as he was not justified to add back a sum of Rs. 2775833/- Deposited by Assessee from sales jeans a cash balance available with him, by responding the provisions of section 68 on the ground that genuineness and creditworthiness of the receipts had allegedly not proved.
4) The Assessing Officer Arithmetically not calculated cash Deposit and cash withdraw from the bank to ascertain the peak figure not justified.
6) The Assessee craves to leave or amend or after any of the ground of appeal before or the time of hearing.”
Brief facts of the case is that assessee is an individual who has not filed his return of income but as per AIR information it was noted that assessee has deposited cash of ₹27,75,833/- in his saving bank account with ICICI Bank Ltd. As assessee has not filed return of income the source of the above fund was not known. Accordingly, reasons were recorded and notice under Section 148 of the Income-tax Act, 1961 (the Act) was issued on 30th March, 2017. The assessee filed his return of income declaring total income of ₹2,13,130/- on 27th April, 2017. The assessee was provided with copies of the reasons but assessee did not raise any objection, therefore, notices under Section 143(2) and 142(1) were issued.
During the course of assessment proceedings, it was submitted that assessee is an individual engaged in retail trading of Jeans. Assessee was asked to furnish the source of deposit of cash. According to the learned Assessing Officer the assessee has not furnished any satisfactory explanation therefore, show cause notice was issued on 7th December, 2017. The assessee explained that as the assessee was new in the business, he purchased raw materials from local market without any bill and also sold goods and same was deposited in the bank account without raising the bills. The cash deposited in the bank account is out of sales. Assessee asked the learned Assessing Officer to accept the cash deposit as sale receipt. The learned
Aggrieved by that, assessee preferred the appeal before the learned CIT (A) challenging the reopening of the assessment as well as contesting the addition on the merit. Before the learned CIT (A), the assessee submitted the written submission but the learned CIT (A) confirmed the action of the learned Assessing Officer as assessee failed to furnish any evidences of his trading business. Therefore, the assessee is in appeal before us.
After considering the argument of the rival parties and perusing the orders of the learned lower authorities, we find that assessee though did not file any return of income u/s 139 of the Act , but in response to notice under Section 148 of the
No other grounds were pressed before us.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 29.07.2024.