SH. MAHINDRA PAL SINGH,GHAZIABAD vs. ITO, GHAZIABAD

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ITA 5166/DEL/2013Status: DisposedITAT Delhi15 February 2016AY 2009-106 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessee had produced all necessary details before the authorities for the cash credit additions. It also found that the computation of accounts was available and the invocation of Section 44AF was not a new claim. Therefore, the additions made by the CIT(A) were not sustained.

What were the facts?

The assessee, engaged in the business of building material supply, had cash deposits in his bank account. The Assessing Officer treated these as unexplained cash credits under Section 68 and also made additions for unexplained investment under Section 69. The CIT(A) partly allowed the appeal but enhanced the cash credit addition and directed an addition under Section 40A(3).

What were the issues?

Whether the cash deposits in the bank account were unexplained cash credits and whether the disallowance under Section 40A(3) was justified without considering the assessee's accounts.

Which sections of the Income-tax Act were involved?

Section 68,Section 69,Section 40A(3),Section 44AF

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI

Before: SHRI J. SUDHAKAR REDDY & SMT SUCHITRA KAMBLE

For Respondent: Shri Amrit Lal, Sr. DR, Ravi
Hearing: 02.02.2016Pronounced: 15.02.2016

ORDER PER SUCHITRA KAMBLE, JM

This appeal is filed against the order dated 3/6/2013 passed by Ld. CIT (A)’s Ghaziabad.

2.

The grounds of appeal are as follows:-

“1. On the facts and circumstances of the case, the order passed by the Learned Commissioner of Income Tax Appeals [Ld. CIT (A)] is bad both in the eye of law and on facts.

2. On the facts and circumstances of the case, the Ld. CIT (A) has erred, both on facts and in law, in partially confirming the order passed u/s 143, and enhancing the income on some issues.

3.

On the facts and circumstances of the case,, the Ld. CIT (A) has erred both on facts and in law in confirming the addition of Rs.17, 71,500/- made by A.O on account of peak cash credit.

4. On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in enhancing the amount of peak cash credit to Rs.18,25,500/-.

5. On the facts and circumstances of the case,, the Ld. CIT(A) has erred both on facts and in law in making the enhancement by adding Rs. 7,21,748/- on account of disallowance u/s 40A (3) to the income of the assessee arbitrary rejecting the material & evidences brought on record by the assessee.

6.

On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in ignoring the contention of the assessee that the above said additions has been made by A.O by arbitrary rejecting the material & evidences brought on record by the assessee.

3. The assessee is an individual and filed his return on 6/7/2009 for total income of Rs.1, 54,570/-, the assessee is running the business of building material supply in the name and style of M/s Singh Building Material Supplier. The assessee has shown gross receipts of Rs. 9,67,840/-and gross profit of Rs.2,45,960/- and net profit of Rs.1,93,568/-, the Assessing Officer has made an addition related to cash deposits of Rs.17,71,500/- in the bank account of the assessee by holding that the same are unexplained cash credits within the meaning of Section 68, the Assessing Officer also made an addition of RS.24,10,030/- as relates to share of the assessee in the property which is held to be 50% and the 50% amount of investment holding that the same are unexplained investment of the assessee within the meaning of Section 69 of the Act. Aggrieved by the order the assessee went before the Ld. CIT (A). The Ld. CIT(A) partly allowed the assessee’s appeal but enhanced the addition on account of peak cash credit to Rs.18,25,500/-. The Ld. CIT (A) further directed the Assessing Officer to make an addition of Rs.7, 21,748/- u/s 40 A (3) of the Income-tax Act, 1961).

4.

The Ld. AR submitted that pass book cannot be taken as book of account. The profit declared was only to the extent of 20% and the Assessing Officer while making an addition to the extent of 17, 71,500/- has not taken into consideration the statement of account which was produced before him. The Ld. AR further stated that the invocation of Section 40A (3) is not proper as the assessee has given his computation of accounts clearly that the estimated profit as per provisions of Section 44 AF of the Income-tax Act which was at 20% in respect of sale of Rs.9,67,840/-.

5.

The Ld. DR stated that there was no claim at any point by the assessee related to Section 44 AF when the assessee is not maintaining any book of account, there is no question of cash account details given to the Assessing Officer.

6. We have perused all the records and heard both the parties. The Ground Nos. 1 & 2 are general in nature hence dismissed. As related to Ground No. 3 addition of Rs. 17,71,500/- on account of peak cash credit, the assessee has produced all the details before the Assessing Officer and there was no reasoning by the Assessing Officer as well as by the Ld. CIT(A) for rejecting the said details given by the assessee in that respect. Ground No. 3 is allowed. As related to Ground No. 4 the details were given to Ld. CIT (A) by the assessee and also before the Assessing Officer , therefore, the enhancing the amount of peak cash credit to Rs.18,25,500/- does not sustain. Therefore, Ground No.4 is allowed. As related to Ground No. 5, the computation of account was very much before the Assessing Officer as well as Ld. CIT(A), and therefore, the contention of Ld. DR that invocation of Section 44AF was coming for the first time does not survive. Therefore, Ground No. 5 is also allowsed.

7.

In result, appeal is partly allowed.

The order is pronounced in the open court on 15th of February, 2016.

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