S.P. GANDHIRAJAN, SALEM V. ITO, WARD-2(4), SALEM

ITA 2995/CHNY/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8404 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-08-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 22-10-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 44AD

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , . , % BEFORE SHRI V.DURGA RAO , JUDICIAL MEMBER AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.2995/CHNY/2019 ( / ASSESSMENT YEAR: 2010-11) MR. S.P.GANDHIRAJAN 9/1-104-A, PUDUSAMPALLI, RAMAN NAGAR POST, METTUR TK SALEM DIST. VS THE INCOME TAX OFFICER WARD-2(4) SALEM. PAN: AOKPG 6182R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. I.DINESH, ADVOCATE /RESPONDENT BY : MR. SURESH PERIASAMY, JCIT /DATE OF HEARING : 04.08.2021 /DATE OF PRONOUNCEMENT : 18.08.2021 / O R D E R PER G.MANJUNATHA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER PASSED BY THE LEARNED CIT(A), SALEM DATED 20. 08.2019 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT IN THIS CASE I NFORMATION AVAILABLE WITH THE DEPARTMENT SHOWS THAT THE ASSESS EE HAS DEPOSITED CASH EXCEEDING RS.10 LAKHS IN SAVINGS BA NK ACCOUNT DURING THE RELEVANT YEAR, BUT HAD NOT FILED RETURN OF INCOME. HENCE, NOTICE U/S.148 OF THE INCOME TAX ACT, 1961 WAS ISSUED CALLING UPON THE ASSESSEE TO FILE RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11. SUBSEQUENTLY, THE CASE HAS BEEN TAKEN FOR SCRUTINY AND DURING THE COURSE OF ASSESS MENT 2 ITA NO. 2995/CHNY/2019 PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEPOSITED RS.10,44,000/- IN SAVINGS BANK ACCOUN T MAINTAINED AT KARUR VYSYA BANK, METTUR DAM BRANCH, BUT COULD NOT EXPLAIN SOURCE FOR DEPOSIT AND HENCE, CAS H DEPOSITED INTO BANK ACCOUNT HAS BEEN TREATED AS UNEXPLAINED CASH CREDIT AND MADE ADDITION U/S.68 OF THE ACT. 3. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A). BEFO RE LEARNED CIT(A), THE ASSESSEE HAS FILED REVISED WORKING FOR SOURCE OF CASH DEPOSITS INTO KARUR VYSYA BANK ALONG WITH STA TEMENT OF VIJAYA BANK FOR RELEVANT PERIOD AND ARGUED THAT IT HAS WITHDRAWN CASH FROM VIJAYA BANK AND DEPOSITED THE S AME INTO KARUR VYSYA BANK ACCOUNT. DURING THE COURSE OF APPE LLATE PROCEEDINGS, THE LEARNED CIT(A) FORWARDED ADDITIONA L EVIDENCES FILED BY THE ASSESSEE TO ASSESSING OFFICER FOR HIS COMMENTS. THE ASSESSING OFFICER VIDE HIS REMAND REPORT SUBMI TTED THAT ALTHOUGH, THE ASSESSEE CLAIMS TO HAVE WITHDRAWN CA SH FROM VIJAYA BANK AND DEPOSITED INTO KARUR VYSYA BANK, BU T ON PERUSAL OF EXPLANATION FURNISHED BY THE ASSESSEE TH ERE IS A GAP OF 3 TO 4 MONTHS BETWEEN WITHDRAWAL FROM VIJAYA BA NK AND DEPOSIT INTO KARUR VYSYA BANK ACCOUNT FOR WHICH NO PROPER 3 ITA NO. 2995/CHNY/2019 EXPLANATION HAS BEEN OFFERED AND HENCE REITERATED H IS OBSERVATIONS DURING APPELLATE PROCEEDINGS. 4. THE LEARNED CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO TAKEN NOTE OF REMAND REPORT ISSUED BY THE ASSESSING OFFICER OBSERVED TH AT OUT OF TOTAL DEPOSIT OF RS.10,44,000/-, THE ASSESSEE COULD EXPLAINED SOURCE TO THE EXTENT OF RS.3,40,000/- AND HENCE, D IRECTED THE ASSESSING OFFICER TO DELETE ADDITIONS MADE TOWARDS CASH DEPOSITS INTO KARUR VYSYA BANK OF RS.3,40,000/-. IN SOFAR AS BALANCE DEPOSIT OF RS.2,95,000/- EXPLAINED OUT OF O PENING CASH BALANCE, THE LEARNED CIT(A) HAS REJECTED EXPLANATIO N OF THE ASSESSEE THAT IT HAS OPENING CASH BALANCE IN HAND T O EXPLAIN SOURCE OF CASH DEPOSITS. SIMILARLY, OTHER DEPOSIT O F RS.4,09,000/- EXPLAINED OUT OF AVAILABLE WITHDRAWAL FROM VIJAYA BANK WAS ALSO REJECTED ON THE GROUND THAT THERE WA S GAP OF 3 TO 4 MONTHS BETWEEN WITHDRAWAL AND DEPOSITS. AGGRI EVED BY THE LEARNED CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED A.R FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN SUSTAINING ADDITIONS MA DE BY THE ASSESSING OFFICER TOWARDS CASH DEPOSITS WITH KARUR VYSYA BANK ACCOUNT WITHOUT APPRECIATING FACT THAT THE ASS ESSEE HAS 4 ITA NO. 2995/CHNY/2019 SUFFICIENT SOURCE, AS PER WHICH HE HAD WITHDRAWN CA SH FROM VIJAYA BANK AND DEPOSITED INTO KARUR VYSYA BANK ACC OUNT, BECAUSE VIJAYA BANK BRANCH DOES NOT HAVE FACILITY OF ATM. THE AR FURTHER SUBMITTED THAT THE ASSESSEE HAS FILE D CASH FLOW STATEMENT EXPLAINING SOURCE OF CASH AVAILABILITY O N EACH DATE OF DEPOSITS MADE INTO KARUR VYSYA BANK ACCOUNT. THEREF ORE, IN ABSENCE OF ANY FINDING FROM THE ASSESSING OFFICER T HAT CASH WITHDRAWAL ON EARLIER OCCASIONS WAS USED FOR SOME O THER PURPOSES, AVAILABLE SOURCE CANNOT BE IGNORED WHILE MAKING ADDITIONS TOWARDS CASH DEPOSITS INTO BANK ACCOUNT. 6. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUPP ORTED ORDER OF THE LEARNED CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY, THE ASSESSEE WAS NOT REGULARLY F ILING HIS INCOME TAX RETURN FOR EARLIER YEARS. HOWEVER, HE HA S DEPOSITED MORE THAN RS.10 LAKHS INTO SAVINGS BANK ACCOUNT. W HEN THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO EXPLA IN SOURCE, THE ASSESSEE HAS EXPLAINED SOURCE OUT OF OPENING CA SH BALANCE, CASH WITHDRAWAL FROM VIJAYA BANK ACCOUNT O N EARLIER 5 ITA NO. 2995/CHNY/2019 OCCASIONS. THE ASSESSING OFFICER HAS NOT ACCEPTED EXPLANATION FURNISHED BY THE ASSESSEE. HOWEVER, THE LEARNED CIT(A), ON EXAMINATION OF VARIOUS EVIDENCES FILED B Y THE ASSESSEE HAS ACCEPTED SOURCE TO THE EXTENT OF RS.3, 40,000/- BY HOLDING THAT THE ASSESSEE HAS FILED NECESSARY BANK STATEMENTS TO PROVE WITHDRAWAL FROM VIJAYA BANK ON THE SAME DA TE WHEN CASH DEPOSIT WAS MADE INTO KARUR VYSYA BANK. AS R EGARDS REMAINING CASH BALANCE OF RS.7,04,000/-, THE ASSESS EE HAS EXPLAINED THAT A SUM OF RS.2,95,000/- IS OUT OF OP ENING CASH BALANCE AND REMAINING RS.4,09,000/- IS OUT OF CASH WITHDRAWAL FROM VIJAYA BANK ON EARLIER OCCASIONS. INSOFAR AS O PENING CASH BALANCE IS CONCERNED, SINCE THE ASSESSEE HAS NOT FI LED HIS RETURNS FOR EARLIER FINANCIAL YEARS, IT IS DIFFICUL T TO ACCEPT EXPLANATION OF THE ASSESSEE THAT IT HAS DECLARED IN COME TO EXPLAIN CASH DEPOSITS INTO BANK ACCOUNT. SIMILARLY , AS REGARDS REMAINING CASH DEPOSIT OF RS.4,09,000/-, ALTHOUGH T HE ASSESSEE CLAIMS THAT HE HAS WITHDRAWN FROM VIJAYA BANK ACCOU NT ON EARLIER OCCASION, BUT THERE WAS CATEGORICAL FINDING OF THE ASSESSING OFFICER THAT THERE WAS GAP OF 3 TO 4 MONT HS BETWEEN WITHDRAWAL AND CASH DEPOSITS. THE ASSESSEE COULD NO T SATISFACTORILY EXPLAIN REASONS FOR WITHDRAWAL OF C ASH BALANCE 6 ITA NO. 2995/CHNY/2019 FROM VIJAYA BANK AND DEPOSITING INTO KARUR VYSYA BA NK AFTER THE PERIOD OF 3 TO 4 MONTHS. THEREFORE, EXPLANATIO N OF THE ASSESSEE THAT IT HAS SUFFICIENT CASH BALANCE OUT OF WITHDRAWAL FROM VIJAYA BANK ACCOUNT CANNOT BE ACCEPTED. AT THE SAME TIME, IT IS AN ADMITTED FACT THAT THE ASSESSEE IS I NTO BUSINESS OF CIVIL CONTRACT. THE ASSESSEE CLAIMS THAT DURING TH E YEAR IT HAS RECEIVED CONTRACT RECEIPTS OF RS.26,09,652/- FROM M /S. S.THARTIOUS ENGINEERING CONTRACTORS AND OUT OF WHICH HE HAS DEPOSITED CASH INTO BANK ACCOUNT. THE EXPLANATION O F THE ASSESSEE THAT CASH DEPOSITED INTO BANK ACCOUNT IS OUT OF CONTRACT RECEIPTS APPEARS TO BE BONAFIDE. THEREFORE , WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ABLE TO EX PLAIN CASH DEPOSIT INTO BANK ACCOUNT OUT OF CONTRACT RECEIPTS RECEIVED DURING THE YEAR. BUT, FACT REMAINS THAT THE ASSESSE E HAS NOT ADMITTED ANY INCOME FOR THE YEAR UNDER CONSIDERATIO N BY FILING REGULAR RETURN OF INCOME DECLARING CONTRACT RECEIPT S. SINCE THE SOURCE OF CASH DEPOSITED INTO BANK ACCOUNT IS OUT O F CONTRACT RECEIPTS, WE ARE OF THE CONSIDERED VIEW THAT SAID R ECEIPT NEEDS TO BE CONSIDERED FOR THE PURPOSE OF ESTIMATION OF INCOME. IN CONTRACT BUSINESS, GENERALLY THERE IS PROFIT MARGI N OF 8 TO 10% DEPENDING UPON CONTRACTS. EVEN, AS PER THE PROVISIO NS OF 7 ITA NO. 2995/CHNY/2019 SECTION 44AD OF THE ACT, THE STATUTE HAS PROVIDED FOR ESTIMATION OF NET PROFIT @ 8% IN CASE OF SMALL CON TRACTORS WHERE THEY ARE NOT MAINTAINED REGULAR BOOKS OF ACCO UNT. THEREFORE, CONSIDERING FACT THAT ASSESSEE HAVING RECEIVED CONTRACT RECEIPTS AND SOURCE FOR CASH DEPOSIT INTO BANK ACCOUNT OUT OF CONTRACT RECEIPTS, WE ARE OF THE CONSIDERED VIEW THAT A REASONABLE PROFIT NEEDS TO BE ESTIMATED ON TOTAL CA SH DEPOSITS INTO BANK ACCOUNT. THEREFORE, BY TAKING A CLUE FROM SECTION 44AD OF THE ACT, WE DEEM IT APPROPRIATE TO ESTIMATE 8% NET PROFIT ON REMAINING CASH BALANCE RS.7,04,000/- DE POSITED INTO KARUR VYSYA BANK ACCOUNT. HENCE, WE DIRECT THE ASSE SSING OFFICER TO SUSTAIN ADDITIONS TO THE EXTENT OF 8% CA SH DEPOSITS MADE INTO BANK ACCOUNT AND BALANCE SHOULD BE DELETE D. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH AUGUST, 2021 SD/- SD/- ( . ) ( . ) (V.DURGA RAO) ( G.MANJUNATHA ) $ & / JUDICIAL MEMBER & / ACCOUNTANT MEMBER $ /CHENNAI, ) /DATED 18 TH AUGUST, 2021 DS +, -, /COPY TO: 1. APPELLANT 2. RESPONDENT 3. . () /CIT(A) 4. . /CIT 5. , 2 /DR 6. /GF .