THANGAVEL KANDASAMY,COIMBATORE vs. ITO, NCW 4(1), COIMBATORE

The only effective ground of appeal in this appeal of assessee is against addition of cash deposit during demonetization period of Rs. 16,40,500/- and estimation of income @ 30% in the bank deposit.

The assessee is individual and has total credit of Rs. 1,21,31,504 in his bank account including cash deposit of Rs.

16,40,500/- during demonization period but has not filed return of income. The A.O therefore issued notice u/s. 142(1) of the Act to file the return. However, the assessee did not file return of income. The A.O therefore passed order u/s. 144 of the Act making addition of cash deposit during demonization period of Rs.16,40,500/- and estimating income @ 30% of the total credit minus cash deposit in the bank account. The assessee during assessment proceedings had contended that he was employed in Somus Properties and was paid a salary of Rs. 15,000/- per month and the deposit in his bank account was of his employer Shri B. Somasundaram, regarding land deals of his business as land developer and promoter. The assessee has submitted that only deposit of Rs. 4,38,504/- is relating to him from his security service business and balance is relating to his employer, which is evident that there has been withdrawn immediately after deposit. The Ld. CIT(A) has confirmed the addition as the assessee has not furnished any confirmation or acceptance from Shri B.

The Ld. Authorized Representative (A.R) of the assessee has submitted that deposit in the back account does not belong to him as all deposits are followed by withdrawn and all credit are money received on behalf of Shri B. Somasundaram . The Ld AR submitted that money credited has been immediately withdrawn and paid to his employer.

The Ld. Departmental Representative (DR), on the other hand, has relied on the orders of lower authorities.

We have heard the rival submissions, and perused the materials available on record. The A.O has estimated the income @ 30% of the total credit in the bank account minus cash deposit of Rs. 16,40,500/- during demonetization period. The assessee has explained that the credit in the bank account is followed by the withdrawal which clearly shows that money does not belong to him. The AO has estimated the income @30% of credit in the bank account. We are of the opinion that 20% of credit in the bank account will be correct estimate of the income considering the status and nature of work of the assessee. The above estimate will cover the deposit of cash during demonetization period also. In view of the above, we direct the A.O to compute the income @ 20% of the total credit of Rs.1,21,31,504/-. Thus, the appeal filed by the assessee is partly allowed.

In the result, the appeal filed by the assessee is partly allowed.