RAHIMATHULA ABDUL RAHMAN,SALEM vs. ITO, WARD 1(9), SALEM

Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order passed by learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 13-03-2024 in the matter of an assessment framed by the Ld. AO on best judgment basis u/s 144 of the Act on 02-12-2019. In the assessment order, Ld. AO estimated business income @8% which came to Rs.9.58 Lacs and also made addition of cash deposits for Rs.10.18 Lacs. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us.

The Ld. AR advanced arguments and submitted that the only source of cash deposits was business receipts and therefore, income was to be estimated on a reasonable basis. The Ld. Sr. DR supported the orders of lower authorities. Having heard rival submissions and upon perusal of case records, our adjudication would be as under.

The assessee being resident individual is stated to be engaged in trading of iron and steel. The assessee did not file return of income. Pursuant to information that the assessee deposited cash in Specified Bank Notes (SBNs), the case was scrutinized. It transpired that the assessee had Bank credit of Rs.129.98 Lacs out of which cash deposited during demonetization period was Rs.10.18 Lacs. The remaining amount of Rs.119.80 Lacs was considered to be the sales turnover of the assessee and accordingly, the same was assessed u/s 44AD @8%. The amount of Rs.10.18 Lacs was held to be unexplained money and fully added to the income of the assessee. The Ld. CIT(A) confirmed the same except for granting a relief of Rs.2.50 Lacs from demonetization cash as deposited by the assessee. Aggrieved, the assessee is in further appeal before us.

From the facts, it is clear that the assessee has carried out trading activity. The business receipts have been deposited into the bank account. The assessee has not maintained any books of accounts. In such a case, the presumptive provisions of Sec.44AD have correctly been applied by Ld. AO. However, the artificial distinction as created by Ld. AO between business receipts is without any basis. The only source of cash deposits is business receipts only. Considering the same, we direct Ld. AO to consider the entire credit of Rs.1,29,98,619/- as business receipts only. The income on the same shall be estimated @8% which comes to Rs.10,39,890/-. We order so.

The appeal stands partly allowed. Order pronounced on 5th November, 2024 Sd/- Sd/- (MANU KUMAR GIRI) (MANOJ KUMAR AGGARWAL) �ाियक सद4 / JUDICIAL MEMBER लेखा सद4 / ACCOUNTANT MEMBER चे4ई Chennai; िदनांक Dated : 05-11-2024 DS आदेशकीNितिलिपअ/ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. � थ�/Respondent 3. आयकरआयु=/CIT Salem. 4. िवभागीय�ितिनिध/DR 5. गाडBफाईल/GF