ITO 16(3)(1), MUMBAI vs. VINOD D MAHAJAN, MUMBAI

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ITA 3371/MUM/2014Status: DisposedITAT Mumbai04 November 2015AY 2009-103 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, finding merit in the assessee's contention that the deposits represented business transactions. The sustained addition was also noted to be more than the normal profit rate for the business.

What were the facts?

The assessee made cash deposits of Rs. 31,17,354/- in their bank account. The assessee claimed these deposits represented unaccounted business transactions, but could not fully substantiate this claim. The AO assessed the entire amount as income, while the CIT(A) reduced the addition to Rs. 8,09,664/- based on peak credit.

What were the issues?

Whether the CIT(A) was justified in reducing the disallowance based on peak credit when the assessee failed to fully substantiate the nature of cash deposits as business transactions.

Which sections of the Income-tax Act were involved?

Not specified

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ F” BENCH, MUMBAI

For Respondent: Shri Jayant Bhatt
Hearing: 4.11.2015Pronounced: 4.11.2015

सुनवधई की तधयीख / Date of Hearing :4.11.2015 घोषणध की तधयीख /Date of Pronouncement:4.11.2015 आदेश / O R D E R

Per B R Baskaran, AM:

1.

The revenue has filed this appeal challenging the order dated 28-02- 2014 passed by Ld CIT(A)-27, Mumbai for assessment year 2009-10, wherein he has partly allowed the appeal of the assessee by reducing the disallowance made by the AO from Rs.31,17,354/- to Rs.8,09,664/-.

2.

We heard the parties and perused the record. The assessee is an individual and is dealing in automobile spare parts in the name and style M/s Premier Motors. From the AIR information, the AO noticed the assessee had made cash deposits in ICICI Bank to the tune of Rs.31,17,354/-. The assessee submitted that the same represents business transactions which were not accounted in the books. Since the assessee could not substantiate the said claim, the AO assessed the entire amount of Rs.31,17,354/- as income of the assessee. The Ld CIT(A), however, computed peak credit of the deposits and accordingly sustained the addition to the extent of Rs.8,09,664/-. Aggrieved the revenue has filed this appeal before us.

3.

The Ld D.R submitted that the Ld CIT(A) was not justified in sustaining peak credit balance, when the assessee could not offer proper explanation with regard to the entire deposits. On the contrary, the Ld A.R submitted that the assessee has contended that the deposits represents his business transactions and accordingly prayed before Ld CIT(A) for adoption of Net profit @ 8%. However, the Ld CIT(A) proceeded to sustain the addition to the extent of peak credit of the deposits, which work out to more than 8%.

4.

Having heard the rival contentions, we are of the view that the order passed by Ld CIT(A) does not call for any interference. Since the assessee is dealing in automobile spare parts and there is some merit in the contentions of the assessee that the deposits made in the bank account represents business transactions. The Ld A.R submitted that the addition sustained by the Ld CIT(A) works out to more than the normal rate of profit from business. Under these set of facts, we confirm the order of Ld CIT(A).

5.

In the result, the appeal filed by the revenue is dismissed.

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