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Facts
The assessee's appeal for AY 2012-13 arose from proceedings under section 147/144 of the Income Tax Act, 1961. The lower authorities initiated proceedings based on cash deposits and sales, treating cash deposits by peak balance and applying section 44AD to business sales.
Held
The Tribunal noted that the assessee conceded the legal ground challenging the validity of the reopening. It was held that once Section 44AD was invoked for assessing turnover, the cash deposits should be considered derived from business activity. The Assessing Officer was directed to assess the peak credit balance at 8%.
Key Issues
Whether the reassessment proceedings initiated under Section 147 were valid and whether the cash deposits were rightly treated by the lower authorities.
Sections Cited
147, 144, 44AD, 148
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Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: Sh. Satbeer Singh Godara & Sh. M. Balaganesh
ORDER
Per Satbeer Singh Godara, Judicial Member:
This assessee’s appeal for Assessment Year 2012-13, arises against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2022-23/1047941422(1) dated 12.12.2022, in proceedings u/s 147 r.w.s. 144 of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
It emerges during the course of hearing that the assessee is aggrieved against both the learned lower authorities’ action setting into motion section 148/147 proceedings against him culminating in the assessment order dated 25.11.2019 inter alia ./2023 Chandra Shekhar Bhadouriya treating his cash deposits of Rs.20,07,354/- going by “peak” balance and further applying section 44AD for treading his business sales of Rs.35,95,000/-, coming to Rs.2,87,600/-, respectively.
It is in this factual backdrop that the assessee fairly concedes his legal ground challenging validity of the impugned reopening. So far as correctness of both the foregoing addition on merits is concerned, we are of the considered view that there could be hardly any fault found with the latter impugned addition once section 44AD has been invoked for the purpose of assessing the assessee’s turnover @8% (supra). We further conclude that once the learned lower authorities have themselves have assessed the assessee at the above presumptive rate, the necessary inference which would arise is that these cash deposits have been derived from the business very activity only. We thus direct the learned Assessing Officer to assess the assessee’s impugned “peak” credit balance of Rs.20,07,354/- @ 8% in very terms. Necessary computation shall follow as per law.