C.P. PRABAKHARAN,SALEM V. DCIT, CIRCLE-III, SALEM

ITA 1957/CHNY/2024

AI Insights

The case involves C.P. Prabakaran, a contractor, who appealed against the assessment order for the Assessment Year 2011-12, which was confirmed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The A.O had estimated the assessee's income at 10% of contract receipts due to lack of evidence for expenses and made additions for undisclosed interest income and unexplained bank deposits. The Tribunal found the 10% profit estimation excessive and adjusted it to 8%. It also noted that some bank accounts and deposits were incorrectly attributed to the assessee instead of the HUF or other individuals, leading to a restoration of these issues for re-assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107244 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Other Referred Cases: CIT vs. Shri Srinivasan Devendran in TCA No.15 of 2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R. ANITHA
• Assessee Lawyers: S. SRIDHAR; ERODE
• Keywords: Peak credit
• Section: 143(3); 69A

Judgement Text

"आयकर अपीलीय अिधकरण, ‘सी’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0019ी जॉज\u001c जॉज\u001c क े, उपा \u001e\u001f एवं \u0019ी जगदीश, लेखा सद' क े सम\u001f BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1957/Chny/2024 िनधा \u001cरण वष\u001c /Assessment Year: 2011-12 C.P. Prabakaran, No.52, Ram Nagar, Kumarasamipatti, Salem – 636 007. Vs. The Dy. Commissioner of Income Tax, Circle-III, Salem. [PAN: AGIPP 1108J] (अपीलाथ\u0007/Appellant) (\b\tयथ\u0007/Respondent) अपीला थG की ओर से/ Appellant by : Shri S. Sridhar, Advocate (Erode) IJथG की ओर से /Respondent by : Ms. R. Anitha, Addl. JCIT सुनवा ई की ता रीख/Date of Hearing : 18.12.2024 घोषणा की ता रीख /Date of Pronouncement : 12.03.2025 आदेश / O R D E R PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2011-12 arises out of the order of Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter “CIT(A)”] dated 24.05.2024 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Income-tax Act, 1961 (hereinafter “the Act”) on 10.03.2014. ITA No.1957/Chny/2024 :- 2 -: 2. The assessee is a contractor and filed his return of income declaring total income of Rs.5,10,720/-. The assessee has shown contract receipts of Rs.82,57,097/- and filed Form-3CB and Form- 3CD. However, the A.O ignoring the books of accounts has estimated income @ 10% as the assessee has not submitted evidence in support of the expenditure. The A.O also made addition in respect of interest credited in the bank account as the assessee has only shown interest of Rs.45,942/- in the return of income as against Rs.1,46,130/- appearing in the bank statement as under: 3. The A.O also added the balance as on 31.03.2011 in respect of above interest as undisclosed income. 4. The A.O has also made addition of peak credit in two bank accounts of Rs. 14 Lakhs and Rs. 15 lakhs u/s. 69A of the Act as under: Account No. Balance as at 31.03.2011 Interest credited in statement 0200-00186118-11001 -- 4598 0200-00186162-11001 54,638 4030 0200-00186163-11001 45,056 3329 0200-00186232-11001 52,301 3983 0200-00186955-11001 6,94,718 41298 0200-00187373-11001 5,13,256 37094 0200-00186272-11001 7,50,588 30193 0200-02700272-11001 7,50,588 30193 0200-02700320-11001 5,37,093 21605 26,47,650 1,46,130 ITA No.1957/Chny/2024 :- 3 -: Account No. Date Amount 182515 15.06.2010 9,00,000 16.06.2010 8,00,000 25.08.2020 10,00,000 27.08.2010 14,00,000 183455 03.05.2010 15,00,000 13.05.2010 7,00,000 Aggrieved, the assessee filed an appeal before Ld. CIT(A). On appeal, the Ld. CIT(A) has confirmed all the additions. 5. The Ld. Authorized Representative (A.R) on the estimation of income from contracts @ 10% on the gross receipts has submitted that the assessee has maintained regular books of accounts and also filled audit report in Form-3CD. The A.O has estimated the profit @ 10% without rejecting the books of accounts, which is excessive and not in accordance with law. The Ld. AR has submitted that in similar cases, the Hon’ble Madras High Court in the case of CIT vs. Shri Srinivasan Devendran in TCA No.15 of 2023 dated 10.01.2023 has approved the estimation @ 5%. 5.1 As regard to addition of interest income, the Ld. AR has submitted that out of addition of interest of Rs. 1,46,130/-, interest of Rs.88,892/- relates to HUF account and therefore, should not be considered in the hand of the assessee. The Ld. AR has submitted that out of remaining interest of Rs.57,238/-, the assessee has already ITA No.1957/Chny/2024 :- 4 -: offered Rs. 45,942/- and therefore, only addition to that extent can be sustained. 5.2 As regard to addition on account of balance as on 31.03.2011, the Ld. AR has submitted that Rs.18,00,937/- relates to the HUF account and the assessee has already disclosed interest in respect of balance of Rs. 6,94,718/- . Therefore, addition can be made only to the extent of Rs. 1,51,995/-. 5.3 As regard to addition on cash deposit in bank account of Rs. 29 Lakhs, the Ld. AR has submitted that Rs. 15 Lakhs relates to the A/c. No.0200-00183455 which is in the name of HUF. As regard to balance of Rs. 14 Lakhs, the Ld. AR has submitted that the same is given by his wife Smt. Sakunthala and therefore, deposit is explained. 6. The Ld. Departmental Representative (DR), on the other hand, has relied on the orders of lower authorities. 7. We have heard the rival submissions, and perused the materials available on record. The A.O has rejected the books of account for the reason that the assessee has not provided evidence in support of expenses claimed and estimated income @10% of the contract ITA No.1957/Chny/2024 :- 5 -: receipts. In our opinion, the estimation of profit @10 % by the A.O is excessive, therefore we direct A.O to adopt profit @8% of contract receipts. As regards to addition of interest of Rs 1,46,130, balance as on 31.03.2011 of Rs 26,47,650/- and peak credits in the bank accounts of Rs.29,00,000/-, it is evident from the bank statements that some of these accounts are in the name of HUF, but A.O has made the addition in the hand of assessee. Therefore, these issues are restored back to the file of A.O for fresh consideration. We direct the Assessee to submit all necessary evidence in support of his contention before the A.O, who will pass order after affording proper opportunity to the assessee. In view of the above, the appeal filed by the assessee is partly allowed. 8. In the result, the appeal filed by the assessee is partly allowed. Order pronounced on 12th March, 2025. Sd/- Sd/- (जॉज\u001c जॉज\u001c क े) (George George K) उपा \u001e\u001f / Vice President (जगदीश) (Jagadish) लेखा लेखा लेखा लेखा सद\u0011य सद\u0011य सद\u0011य सद\u0011य /Accountant Member चे\u0013नई/Chennai, \u0016दनांक/Dated: 12th March, 2025. EDN/- ITA No.1957/Chny/2024 :- 6 -: आदेश क\u0019 \bितिल\u001cप अ\u001dे\u001cषत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b\tथ\u0007/Respondent 3. आयकर आयु\u000f/CIT, Chennai 4. िवभागीय \bितिनिध/DR 5. गाड\u0018 फाईल/GF "