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Facts
The revenue appealed an order of the CIT(A) regarding an assessment for AY 2017-18. The assessment was based on a best judgment basis after the assessee failed to provide details for cash deposits totaling Rs. 133.79 Lacs, with Rs. 23.22 Lacs falling during demonetization. The CIT(A) had deleted additions based on the assessee claiming to be a wholesale agent for milk products earning commission.
Held
The Tribunal found that while the assessee's business as a milk products agent was accepted, no business income was estimated against the cash deposits. Considering the lack of accounts and to end litigation, the Tribunal estimated the income at 8% on the cash deposits.
Key Issues
Whether the CIT(A) erred in deleting the addition made by the AO on account of unexplained cash deposits, and if so, what is the correct estimation of income from the alleged agency business.
Sections Cited
69A
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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: HON’BLE SHRI ABY T. VARKEY, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा*रणवष* / Assessment Year: 2017-18) ITO Shri Rajendran Manikandan बनाम Ward -1, 2/105 West Street, Nagapattinam. Vadakudi, Annavasal, Arangakudi, / Vs. Nagapattinam - 609 302. �थायीलेखासं./जीआइआरसं./TAN/GIR No.CXXPM-5154-P (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Ms. R. Anita ( Addl.CIT) -Ld. Sr. DR � थ�कीओरसे/Respondent by : Shri S. Sridhar (Advocate) – Ld.AR सुनवाईकीतारीख/Date of Hearing : 26-09-2024 घोषणाकीतारीख /Date of Pronouncement : 09-10-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)
Aforesaid appeal by revenue for Assessment Year (AY) 2017-18 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 21-02-2024 in the matter of an assessment framed by the Ld.AO u/s.144 on 31-10-2019. The sole grievance of the assessee is assessment of income at Rs.135.24 Lacs. It is evident that the assessment has been framed on best judgment basis.
The Ld. AR advanced arguments and pleaded for reasonable estimation of income. The same has been opposed by Ld. Sr. DR. Having heard rival submissions and upon perusal of case records, our adjudication would be as under.
The assessee deposited cash of Rs.133.79 Lacs in its bank accounts out of which Rs.23.22 Lacs was deposited during demonetization period. There was other credit of Rs.18.13 Lacs. The assessee was required to explain the sources thereof. However, the assessee did not furnish the details. Accordingly, entire cash of Rs.133.79 Lacs was added as unexplained money u/s 69A. On other credits, Ld. AO estimated income of 8% and framed the assessment.
During first appeal, the assessee submitted that it was acting as wholesale agent for Milk / Milk products and derived income by way of commission on sales. The cash deposits represent sale value of the products. The assessee furnished agreement with Hatsun Agro Products. Accepting the submissions of the assessee, the Ld. CIT(A) deleted the impugned addition against which the revenue is in further appeal before us. 5. We find that though it has been accepted by Ld. CIT(A) that the assessee carried on business of milk products and earned commission of sales, yet no business income has been estimated against the aforesaid deposits. It has been accepted that the assessee has entered into an agreement with Hatsun Agro Products, however, the commission on sale has not been brought to tax. Apparently, the assessee has not maintained any books of accounts. Considering the same and with a view to end litigation, we estimate the income of the assessee @8% on cash deposits of Rs.1,33,79.100/-. The same comes to Rs.10,70,328/-, Adding the same to Rs.1,45,097/-, the assessed income would be Rs.12,15,425/-. The Ld. AO is directed to revise the demand as raised against the assessee. 6. The appeal stand partly allowed. Order pronounced on 9th October, 2024