VELLINGIRI,TIRUPPUR vs. ITO,WARD-2(1), TIRUPPUR

The brief facts are that, the assessee deals with the second hand sales of two wheelers and four wheelers on commission basis and according to the assessee customers who wishes to sell their vehicle, park it in his premises and then he gets the vehicles checked by technicians and gets it cleaned and repairs/replace the parts at his own cost and then sells the vehicle with a small profit. According to him, the buyer of the vehicle hands over cash as sale consideration which in turn he deposits in his bank account; and within one or two days, he withdraws and makes the payments to the owner of the vehicle. Thus, according to the assessee, he makes a small commission from such sale transactions. The Assessing Officer taking note that assessee has deposited cash of Rs.69,89,160/- for assessment year 2013-14 and Rs.75,25,900/- for assessment year 2015-16 reopened the assessment and he treated the entire cash deposits of Rs.69,89,160/- as unexplained money for assessment year 2013-14 and likewise added Rs.75,25,900/- for assessment year 2015-16 u/s. 69A of the Act. Aggrieved, the :-3-: ITA. No: 1456 & 1458/Chny/2023 assessee preferred an appeal before the ld.CIT(A), which was confirmed. Aggrieved, the assessee is before us.

At the outset, the ld.AR of the assessee placed the assessment orders of the assessee for the earlier assessment years 2011-12 and 2012-13 (immediately preceding years) passed by AO u/s. 143(3) of the Act dated 29.12.2018 and 26.12.2019 respectively. The ld.AR submitted that a perusal of the assessment orders would reveal that Assessing Officer reopened the assessments for those years by taking note of similar cash deposits in assessee’s bank account and after scrutiny and verification of the modus operandi of the business of the assessee accepted that assessee received only a small commission from purchase and sale of second-hand two wheelers and four wheelers and after having convinced himself, accepted net profit for assessment year 2011-12 at 1.69% on total deposits at Rs.94,10,150/- and accepted the return filed by the assessee at Rs.1,55,090/-, and likewise for assessment year 2012-13, the Assessing Officer accepted the profit of the assessee of Rs.1,59,390/-, wherein assessee had made deposit of Rs.32,65,520/- (net profit @4.88%). In light of the aforesaid facts, the main plea of the assessee is that since there is is no change in facts or law and the business remaining the same,

Per contra, the ld.DR opposed the prayer of the assessee and submitted that assessee has deposited cash of Rs.69 lakhs in bank account and neither files the return of income nor responds to the Assessing Officer’s notices. Therefore, addition was restored to by Assessing Officer and such action of assessee does not deserve any kind of leniency and therefore wants us to confirm the order of the ld.CIT(A).

We have heard both the parties, perused materials available on record and gone through orders of the authorities below. From the perusal of the material placed on record, we noted that the assessee is into the business of purchase and sale of two wheelers and four wheelers from which he earns a small commission. This fact has been verified and accepted by the Assessing Officer for the earlier two assessment years (AYs 2011-12 & 2012-13) after scrutiny assessments (supra). We note that in those two assessment years also the Assessing Officer had reopened the assessment taking note of the cash deposits in the bank account. We note that in assessment year 2011-12, there was a cash deposit

In the light of the aforesaid facts and since, there is no change in the business activity of the assessee and no change in facts or law could by pointed out by the Ld.DR, we apply the rule of consistency and is of the opinion that the entire cash deposits in the bank account cannot be added in the hands of the assessee as unaccounted money u/s. 69A of the Act. A perusal of the bank statements shows that immediately after the deposits there is withdrawal/payment which shows that the assessee was depositing the sale consideration from the buyers (of second-hand vehicles) and deposits the same in his bank account; and after one or two days withdraws the purchase cost of the vehicle, (after retaining the commission) and hands over same to the owner of the vehicle. Therefore, considering the facts and circumstances of the case, we are inclined to estimate the net profit of the assessee and taking