THE INCOME TAX OFFCER, WARD-6(4), AHMEDABAD vs. SHRI VIKRAM MOHANLAL RAWAL, AHMEDABAD

By way of this appeal, the Assessing Officer has challenged correctness of order dated 27.08.2015 passed by the CIT(A)-13, Ahmedabad in the matter of assessment under Section 143(3) the Income-tax Act, 1961, for the assessment year 2011-12.

The grievances raised by the Assessing Officer are as follows:- “1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.44,02,687/- made u/s 69 of the Act and directing to treat the cash deposits in bank accounts as pat of the turnover and compute income thereon u/s 44AD of the Act. 2. The Ld. CIT(A) has erred in law and on facts by not appreciating the facts that the assessee failed to explain the source of the cash deposits with relevant evidences. 3. On the facts and circumstances of the case, the Ld. Commissioner of Income-tax (A) ought to have upheld the order of the Assessing Officer.”

The short issue that I am required to adjudicate in this appeal is whether or not the learned CIT(A) was justified in deleting the addition of Rs.44,02,687/- made

To adjudicate on this issue, only a few material facts need to be taken note of. The assessee is engaged in the business of dealing in cloths and as the turnover is less than Rs.1 crore, the assessee is not required to maintain books of accounts. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has made cash deposits of Rs.15,75,187/- in the Axis Bank, Relief Road Branch, Ahmedabad and Rs.28,27,500/- in the Development Credit Bank, Relief Road Branch, Ahmedabad. The Assessing Officer has treated these deposits as unexplained cash credits and brought the same to tax. Aggrieved, the assessee carried the matter in appeal before the learned CIT(A) and submitted that these deposits are out of sale proceeds of the assessee and, as such, it cannot be brought to tax in entirety as unexplained credits. The contention of the assessee was that these amounts can only be taxed under Section 44AD of the Act on presumptive basis as assessee’s turnover. The assessee also filed evidences in support of the contention that the deposits in these two bank accounts are “indeed the sale proceeds of the same business carried on by the assessee”. The ld. CIT(A) accepted the plea of the assessee and noted that it is not required to file details relating to purchase and sales if the income is determined as per provisions of Section 44AD of the Act, following the judicial precedent in the cases of CIT Vs. Surinder Pal Anand, 192 Taxman 264 (P&H) and Abhi Developers Vs. ITO, 12 SOT 444 (Ahd) holding that the impugned additions were unsustainable in law. The Assessing Officer is aggrieved by the relief so granted by the ld. CIT(A) and is in appeal before us.

Learned Departmental Representative’s contention is that even in case of a person covered by Section 44AD of the Act, every deposit in the bank accounts cannot be treated as a part of the turnover. He also submits that no details were furnished before the Assessing Officer. The learned Departmental Representative thus urges me to remit the matter back to the file of the Assessing Officer for verification of the figures with respect to sales with the help of VAT and Sales returns or any other corroborative evidences.

Learned Counsel for the assessee, on the other hand, submits that since the assessee is engaged in the textile business, there is no requirement for filing the VAT and such linkage of sales figures with the statutory returns is not possible on the facts of this case. He also submits that all the requisite evidences were duly placed before the learned CIT(A) and the learned CIT(A) has categorically dealt with such evidences at page no.9 of the impugned order and expressed his satisfaction with the same. It is also pointed out that the Assessing Officer, in the course of remand proceedings, had an occasion to deal with these evidences and no adverse comments were made by him. Learned Counsel also invites my attention to the Tribunal decision in assessee’s own case for assessment year 2009-10 vide ITA

I have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.

I find that there is no dispute to the fact that the assessee is in the business of clothing and his turnover is less than Rs.1 crores. It is also undisputed fact that the assessee’s return has been filed under Section 44AD of the Act and therefore the assessee is not required to be maintained the books of accounts. I have noticed that the CIT(A) has made a categorical observation with respect to his satisfaction with the material on the basis of which the deposits in question can be reasonably treated to be part of assessee’s turnover. I have also noticed that the assessee is undisputedly carried on bonafide business and appropriate registration, etc. are obtained with respect to the same. There is no material brought on record to dislodge the findings of learned CIT(A). In view of the above discussion and bearing in mind the entirety of the case, I deem it fit and proper to uphold the well reasoned findings of the learned CIT(A) and decline to interfere in the matter.

In the result, the appeal is dismissed. Dictated and pronounced in the open court today on the 22nd November, 2017.