PONNUSAMY VENUGOPAL,SALEM vs. ITO, WARD -1(6), SALEM

The only issue in this appeal of the assessee is as regards to order of the ld. CIT(A) confirming the action of the ld. Assessing Officer partly restricting the addition of unexplained cash deposit of Rs.6,30,800/- out of the total cash deposit of Rs.12,61,600/-.

Brief facts of the case are that Department received information that assessee had deposited cash in his Indian Bank Account, Pannapatti Branch, Salem amounting to Rs.12,61,600/- during the year under consideration i.e. financial year 2011-2012. Assessee was asked to explain the source of cash deposits. Assessee explained that he is getting pension from army and also running Popular Indian Gas Services, Salem. He also filed his profit and loss account, capital account, 26AS and bank statements. According to the ld. AO assessee has not provided any documentary evidence regarding the source of cash deposits of Rs.12,61,600/- and hence he added the same to the returned income of the assessee as unexplained. Aggrieved, assessee filed an appeal before the ld. CIT(A).

The ld. CIT(A) after going into the facts of the case restricted the addition to Rs.6,30,800/- by observing in para 9 as under:- ‘’9. Further, the purchases also could not be properly accounted for. The appellant submitted that it was his initial year of business and hence no separate current account was there. The appellant states that Rs.9,10,000/- was from his past savings and earnings during the period. In view of facts and circumstances of the case, it would be reasonable if the disallowance of cash deposits is restricted to 50% at Rs.6,30,800/- as the appellant has not been able to collate and link the earnings of the capital introduced with the said cash deposits by giving any cogent evidence and further, the daily cash book was not furnished to verify the claim and also considering the fact that the sale value of commercial and domestic cylinders sale was not tallying with the stock statement. Reliance is placed on rationale held in the case of Attara Gas Service vs. CIT 50 taxmann.com 445 (Allahabad) (2014) wherein it was held that Section 44AB, read with section 271B of the Income-tax Act, 1961 - Compulsory Tax Audit Assessment year 1999-2000 Whether where assessee was appointed as a distributor on principal to principal basis for sale of gas cylinders to consumers, sale of gas cylinders was to be included in turnover of assessee and when turnover so computed exceeded Rs.40 lakh for relevant year, books of account were required to be audited under section 44AB - Held, yes [In favour of revenue]’’.