ANSARI MEHABOOB SHARIF,MUMBAI vs. ITO 22(2)(1), MUMBAI

ORDER PER SHAILENDRA KUMAR YADAV, J.M:

This appeal has been filed by assessee against the order of Commissioner of Income-Tax (Appeals)-33, Mumbai, dated 15.09.2014 for A.Y. 2009-10 wherein addition u/s.68 of the Act of Rs.10,16,824/- and interest A.Y. 09-10 [Shri Ansari Mehboob Sharif vs. ITO] Page 2 addition of Rs.24,11,208/- u/s. 68 of the Act has been opposed.

2.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) confirmed the additions in question.

2.2 Before me, none appeared on behalf of assessee. On other hand, learned Departmental Representative supported the order of CIT(A).

2.3 After going through the arguments of learned Departmental Representative and material on record, I dispose of this appeal as under:

2.4 Assessee is an individual carrying on a small retail business to undertake the repair works of various kinds of leather bags and also makes on contract basis school bags. In his small retail work, his turnover does not cross the A.Y. 09-10 [Shri Ansari Mehboob Sharif vs. ITO] Page 3 limit as set out in Section 44AB of the Act for tax audit purpose. He had never filed his return in his life and was under bonafide belief that once income earned is below taxable limit, it is not necessary to file the return of income likewise claimed that he was never earned any income, which was above taxable limits. Being an uneducated person, he started his carrier as a labourer in a leather factory which was manufacturing soft luggages. The business was located in a slump around Trombay, Mumbai. By working he came to know various dealers and with their advise, he started taking up small repair jobs in his individual capacity and used to make few pieces of designer bags. By taking contract from dealers, individual assessee took contracts to do repair works and manufacturing bags for various dealers who used to pay cash as well as cheques which he deposited in his bank account with ICICI.

2.5 Besides, business related repairs he had no other sources of income to prove anything otherwise. From aforesaid receipts, he withdrew the amount from time to time to meet his various expenses to pay the labourers, to the parties from whom he used to buy materials and also to meet his household requirements. He had not maintained any records. As stated above, he was under bonafide belief that his income is below to limit of taxable income and not liable to be taxed. All his outgoings used to be in cash only, which is evident from his withdrawal from bank through A.Y. 09-10 [Shri Ansari Mehboob Sharif vs. ITO] Page 4 ATM counter. He enclosed entire bank statement for the period of 01.04.2008 to 31.03.2009 and also bank summary for the relevant period. He was basically doing labour work with the help of certain workers and margin was not much enough for maintaining books. Stand of assessee has been that addition u/s.68 of the Act may be deleted.

2.6 The issue before me is with regard to deposit of cash and cheque in the account, which was added under the provisions of Section 68 of the Act. Taking all facts and circumstances into consideration, the application of provisions of Section 68 of the Act is not justified because assessee does not maintain his books of accounts being a roadside retailer being person of minimum means. Nothing is credited in the books of account of assessee as a small labour doing repair job/retail work on selling small school bags on contract basis. All purchases are substantially in cash. The provisions of Section 68 of the Act supports any sum credited in the books of assessee maintained by him. In this case, assessee does not maintain books of account and bank pas book cannot be regarded as books of accounts. Assessee has offered his explanation about deposits and its sources that said deposits are receipts from his customers and payment made to suppliers are in the forms of withdrawals from his bank account. Therefore, in view of above, provisions of Section 68 of the Act are not A.Y. 09-10 [Shri Ansari Mehboob Sharif vs. ITO] Page 5 applicable. Moreover, the whole receipts are of revenue nature and cannot be taxed as deemed addition. Thus, additions in question are not justified. Same are directed to be deleted.

Pronounced in the open Court on this the 30th day of August, 2016.