SMT. SHAH NAZMA IZHARUL HASAN,,RATNAGIRI vs. INCOME-TAX OFFICER,,

The brief facts of the case as emanating from records are : The assessee is engaged in the business of trading of scrap and plying trucks. The assessee filed her return of income for the impugned assessment year on 28-03-2012 declaring total income of Rs.7,90,270/-. Huge amounts were deposited in the saving bank accounts of assessee, thus, on the basis of AIR information the case of assessee was selected for scrutiny under CASS. Accordingly, initial statutory notice u/s. 143(2)/142(1) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was issued to the assessee on 11-09-2012. Thereafter, the assessee filed another return of income for the assessment year 2011-12 on 30-01-2013 declaring total income of Rs.16,97,160/-. During the course of scrutiny assessment proceedings Assessing Officer observed that since original return of income filed on 28-03-2012 was filed beyond the period as mandated u/s. 139(1) of the Act, therefore, the assessee cannot file revised return of income. The second return of income filed by the assessee on 30-01-2013 declaring income of Rs.16,97,160/- was treated by the Assessing Officer as non-est though the assessee had paid taxes as per second return of income filed on 30-01-2013. The Assessing Officer made addition of Rs.6,27,238/- on account of net profit estimated @ 5% on total turnover of Rs.1,25,44,753/-. Apart from above the Assessing Officer made addition of Rs.58,72,000/- on account of peak cash credits u/s. 69 and Rs.77,515 on account of interest income.

The assessee has raised following grounds of appeal assailing the findings of Commissioner of Income Tax (Appeals). “On facts and in law, 1] The learned CIT(A) erred in confirming the addition of Rs.58,72,000/- made by the learned A.O. u/s. 69 of the Act. 2] The learned CIT(A) erred in holding that the assessee had made unexplained cash deposits in four bank accounts and thereby taxing the peak cash deposits of Rs.58,72,000/- as income of the assessee u/s 69 without appreciating the facts of the case. 3] The learned CIT(A) failed to appreciate that the cash deposits in the bank accounts represented business turnover of the assessee and hence, only a reasonable percentage of profit there on could have been considered as income of the assessee. 4] The learned CIT(A) erred in not appreciating that in the asst. order, the learned A.O. had himself held that the cash deposits in bank accounts represented business turnover of the assessee and had also estimated the profits thereon @ 5% and hence, there was no reason to tax the entire cash deposits on peak basis in this year. 5] The learned CIT(A) erred in confirming the addition of Rs.77,515/- on account of interest income on bonds and bank deposits without appreciating that no addition was justified on facts of the case. 6] The appellant craves leave to adduce additional evidences in case, it is required to support the claim of the assessee. 7] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”

Shri M.K. Kulkarni appearing on behalf of the assessee submitted that the assessee is a scrap dealer and has not maintained books of

On the other hand Shri Achal Sharma representing the Department vehemently supported the findings of Commissioner of Income Tax (Appeals) in confirming the additions on account of peak cash credits and interest income.

We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The ground Nos. 1 to 4 raised in appeal by assessee are against the addition of Rs.58,72,000/- on the basis of peak cash deposits. A perusal of assessment order shows that the Assessing Officer has taken peak cash credits in respect of cash deposits of Rs.1,79,86,007/- during the period relevant to the assessment year under appeal. The assessee is maintaining four bank accounts. Two bank accounts are with Vijaya Bank and two in HDFC Bank Ltd. The details of the banks, period of deposits and amount of deposits are as under : Sr. Name of the Period Type of Account & Total Amount of No. Bank Number Cash deposited 1 Vijaya Bank 01.04.2010 Saving Rs.74,49,336/- Ltd; Ratnagiri to 50600101000275 31.03.2011 2 H.D.F.C. Bank -do- Saving Rs.362/- Ltd; Ratnagiri 04301000050213 3 H.D.F.C. Bank -do- Saving Rs.10,29,526/- Ltd; Ratnagiri 04301930001862 4 Vijaya Bank 01.04.2010 Saving Rs.95,06,783/- Ltd; Mumbai- to 500701011001504 400001 31.03.2011 Total Rs.1,79,86,007/-

The Assessing Officer in para 9 of the assessment order has categorically observed that the cash deposits Rs.1,79,86,007/- during the period 01-04-2010 to 31-03-2011 in the above mentioned saving bank accounts are assessee’s total turnover/gross receipts/sales out of her business activity. Having held so no addition on account of peak cash credits in the bank accounts was warranted. We observe that the Assessing Officer in the absence of books of account has estimated net

In ground No. 5 of appeal the assessee has assailed addition of Rs.77,515/- on account of interest income on bonds and bank deposits. The authorities below have held that this amount of Rs.77,515/- earned by assessee is over and above the interest income of Rs.6,49,011/- declared by assessee in original return of income. During the course of scrutiny assessment proceedings the Assessing Officer has observed that the assessee had made investment in bonds and earned interest income of Rs.68,750/- on such investments. Apart from that the assessee has also earned interest income of Rs.8,764/- on cash deposits in various banks. The interest income earned by assessee on bonds and cash deposits aggregating to Rs.77,515/- has not been disclosed by assessee in return of income, thus, does not form part of interest income Rs.6,49,011/- declared in the return of income. The ld. Counsel has not been able to controvert these findings of the authorities below. Thus, we find no merit in ground No. 5 raised in appeal by assessee. Accordingly, the same is dismissed.

Ground Nos. 6 and 7 are general in nature, hence require no adjudication.

In the result, the appeal of assessee is partly allowed in the terms aforesaid.