SMT SHASHI MUDALIYAR, Nagpur V. A,C.I.T CENT CIR. 1(1), Nagpur

ITA 8/NAG/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2238 (ITAT-NAGPUR)
• Duration Of Justice: 5 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PIYUSH KOLHE
• Assessee Lawyers: SUDESH BANTHIA
• Keywords: Business income
• Section: 132; 44AD; 139; 143(3); 153A; 143(1); 143(2)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SANDEEP GOSAIN, JM & SHRI ARUN KHODPIA, AM I.T.A. NO Asstt Year 8/NAG/2017 2009-10 9/NAG/2017 2010-11 10/NAG/2017 2011-12 11/NAG/2017 2012-13 Smt Shashi Mudaliar 40 F/6 Deshmukh Apartments, Dattatrey Nagar, Nagpur-440024 Vs. ACIT Central Circle 1(1) Nagpur PAN No ADSPM1528J Appellant Respondent Appellant by :Shri Sudesh Banthia CA Respondent by :Shri Piyush Kolhe (CIT-DR) Date of Hearing: 27/04/2022 Date of Order : 28 /06/2022 ORDER PER: SANDEEP GOSAIN, J.M. These are 4 appeals filed by the assessee against the separate orders dated 07/11/2016 and 15/11/2016 of Ld. CIT(A)-3, Nagpur relating to A.Y.2009-10 to 2012-13 in the matter of order passed u/s.153A r.w.s 143(3) of the IT Act. 1. All the appeals involve common issues, except variation in figures, which arose out of same set of facts and circumstances. Thus, for the sake of convenience, the appeals for all the 2 years under consideration were heard together and are being disposed off by this consolidated order. 2. The grounds raised in all the years except for variation in figures are as under: 1. On the facts and in the circumstances of the case and in law, the order passed by the assessing officer u/s 153A r.w.s.143(3) is bad in law and on facts and the Ld. CIT (Appeals) has erred in confirming the same. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) erred in confirming the addition of Rs. 6,02,000/- made by the assessing officer in assessment order passed u/s 153A r.w.s.143(3),though no incriminating evidence/ material was found during search warranting such addition. The addition made is outside the scope of assessment/ reassessment u/s 153A. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) erred in confirming the addition of Rs. 6,02,000/- made by the assessing officer by holding that the assessee had failed to explain the source of cash deposit in banks. On facts, source of bank deposits was duly explained and the assessing officer has brought nothing on record to show that the deposits were made from any source other than the source, the income from which has been declared u/s 44AD and included in assessed income. 4. Without prejudice to our above-mentioned grounds for deletion, the Ld.CIT (Appeals) erred in sustaining the addition of entire cash deposit of Rs. 6,02,000/- made in bank as unexplained income ignoring the fact that only reasonable profit embedded in such receipts can be considered as income and taxed. 3. Brief facts for the assessment years under consideration are that the assessee is engaged in civil construction business and partner in M/s New Viraj Housing Agency. The assessee has been filing her returns regularly by declaring income from construction business u/s 44AD of the I.T. Act for the last several years which has been accepted by the department. 3 Return of income declaring total income of Rs 2,13,070/-for AY 2009-10, Rs. 2,34,010/- for AY 2010-11was filed u/s 139 on 29/03/2011 and Rs 3,30,610/- for AY 2011-12was filed u/s 139 on 29/12/2011. The return for AY 2009-10 was accepted u/s 143(1) on 26/03/2012, for AY 2010-11 u/s 143(1) on 20/04/2011and for AY 2011-12 on 17/02/2012. Search u/s 132 was carried out at the residential premises of the assessee on 19/04/2012. Therefore, notice u/s 153A was served on the assessee on 27/04/2013. In response to the said notice the assessee filed her return of income for all the years on 13/03/2015declaring gross receipts of Rs 20,62,500/-for AY 2009-10, Rs 26,50,000/- for AY 2010-11 and Rs 42,00,000/- AY 2012-13 from her civil construction business and declared8 % of the gross receipts as income under the presumptive scheme of taxation u/s 44AD of the Act. Besides this remuneration from partnership firm and interest income was also declared in the returns for all the years. Thus, gross total income of Rs 2,85,310/- for AY 2009-10, Rs 3,22,425/- for AY 2010-11,Rs 6,62,190/- for AY 2011-12 and Rs 5,20,367/- for AY 2012-13 was declared. The returned income for all the assessment years under consideration was accepted by AO and included in the assessed income framed u/s 153A r.w.s.143(3) on 30/03/2015. At the same time, the Assessing Officer made an addition of Rs. 6,02,000/-in AY 2009-10, Rs 45,000/- in AY 2010- 11 &AY 2011-12 and Rs 8,90,000/- in AY 2012-13 towards cash deposits in the bank account maintained by the assessee. Aggrieved with the said decision, the assessee filed an appeal before the Ld. CIT(A). 4. During the proceedings before the first appellate authority, assessee contended that the assessment for AY 2009-10 & AY 2010-11 was complete and not pending on the date of 4 search. The time limit for the issue of notice u/s 143(2) had also expired. Assessee further contended that the addition of cash deposit in bank has been made solely on the basis of bank statements which were submitted during assessment proceedings and not on the basis of any incriminating evidence / material found during search. Assessee further submitted that since, no incriminating material / evidences were found during the course of search, therefore, no addition can be made u/s 153A of the Act. In this regard, assessee also placed reliance on the decision of the Jurisdictional Bombay High court in M/s Continental Warehousing -ITA No 523, Al Cargo Logistics ITA No 1969 and Murli Agro Products-ITA No 36/2009, ITAT Mumbai,Special Bench in the case of All Cargo Global Logistics Ltd vs. DCIT [2012] 137 ITD (Mum.)(SB) and others. Assessee also contended the merits of the additions made by the AO and explained that the cash deposits in bank are out of the gross receipts from construction business, the income from which has already been accepted and included by the assessing officer in the assessed income. The assessee also argued that perusal of the bank statements shows that the construction receipts have not been received through banking channel and hence it is obvious that the payments were received in cash. After considering the submissions of the assessee, the Ld. CIT (A) sustained the addition. Thus, further aggrieved, the assessee has filed the present appeals before us. 5. During the course of hearing, the Ld. counsel for assessee submitted that source of cash deposits in the bank account is out of assessee’s civil construction business and the assessing Officer has not brought on record any source of income other than the business which was carried on by the assessee. The names of customers from whom construction 5 receipts were received was furnished during assessment proceedings and the fact that the payments received from these customers is not reflected in bank statements, shows that the same was received in cash. It was submitted that once the return of income disclosing gross receipts from civil construction business has been accepted as per provisions of section 44AD of the Act, no separate addition can be made on the basis of bank deposits especially where the credits made in the bank account is less than gross receipts declared in the return of income. In support, the reliance was placed on the decision of the Hon’ble Punjab and Haryana High Court in case of CIT v. Surinder Pal Anand 242CTR 061 & ITAT Kolkatta Bench in Kapil Dev Vs ITO- ITA Nos 854 to 856/kol/2010(Copy already placed on record). 6. Per contra, the ld. DR submitted that it is not disputed that the assessee has declared gross receipts from his civil construction business and return of income has been filed u/s 44AD of the Act. However, during the course of assessment proceedings, the assessee was required to file documentary evidence to substantiate her claim regarding construction business and in absence of any such evidence furnished before the AO, it was not possible to verify that the receipt so declared is from the business of construction. The ld. DR further submitted that assessee has not explained the source of cash deposits and the additions were accordingly made by the AO which were rightly confirmed by the Ld. CIT(A). 6 7. We shall first take ground No 3 relating to addition of Rs 6,02,000/- in AY 2009-10, Rs 45000/- in AY 2010-11 and AY 2011-12 and Rs 8,90,000/- for AY 2012-13 made by AO for unexplained cash deposited in the bank account and confirmed by the Ld. CIT(A). 8. We have heard both the parties and perused the orders of the Revenue Authorities and material on record. It is noted that the assessee is in the civil construction business and has been filing her returns since last several years by declaring income under the presumptive tax provisions of Section 44AD of the act. In pursuance to notice u/s 153A, the assessee had filed all her returns from AY 2007-08 to AY 2012-13 on 13/03/2015. The assessee for all these years except for AY 2011-12 has filed her return of income u/s 44AD declaring gross receipts from construction business amounting to Rs 20,62,500/- in AY 2009-10, Rs 26,50,000/- in AY 2010-11 and Rs 42,00,000/- in AY 2012-13. The returns so filed u/s 44AD has been accepted by the Assessing officer which in effect means the declarations and disclosure so made by the assessee in terms of carrying on construction business, non-maintenance of books of accounts and gross receipts from such business has since been accepted by the Assessing officer. In such a scenario, where there are cash and other credits in the bank account maintained by the assessee which are less than the gross receipts from construction business so declared by the assessee, we find the explanation offered by the assessee that such deposits are from her construction business as a plausible explanation in absence of anything contrary on record in terms of any other source of income. Our view is fortified by the decision of the Hon’ble Punjab and Haryana High Court decision in case of Surinder Pal Anand (supra)and 7 ITAT Jaipur bench in Virendra Kumar Vs ITO in ITA No 1100/JP/2019wherein it was held as under: Once under the special provision, exemption from maintaining of books of account has been provided and presumptive tax @ 8% of the gross receipt itself is the basis for determining the taxable income, the assessee was not under obligation to explain individual entry of cash deposit in the bank unless such entry had no nexus with the gross receipts. The stand of the assessee before Commissioner of Income-tax (Appeal) and the ITAT that the said amount of Rs 14,95,300/- was on account of business receipts had been accepted. Learned counsel for the appellant with reference to any material on record, could not show that the cash deposits were unexplained or undisclosed income of the assessee.” 9. We therefore find force in the contention so advanced by the Ld. counsel for the assessee that the source of cash and other deposits in the bank account is out of assessee’s construction business and gross receipts thereof have already been offered in the return of income. In light of the aforesaid discussion, the addition so made by the Assessing officer for AY 2009-10, AY 2010-11, AY 2011-12 and AY 2012-13 is hereby directed to be deleted. 10. In view of our decision on merits of the additions made by the Assessing Officer, the legal and other grounds raised by the assessee have not been adjudicated upon. 11. In the result, the appeals filed by the assessee for all the years are allowed. Sd/- Sd/- (ARUN KHODPIA) (SANDEEP GOSAIN) Accountant Member Judicial Member Nagpur Dated:- 28 /06 /2022 *Mishra 8 Copy of the order forwarded to: 1. The Appellant- Smt Shashi Mudaliar, Nagpur 2. The Respondent- The ACIT, Central Circle 1(1), Nagpur 3. CIT 4. The CIT(A) 5. DR, ITAT, Nagpur 6. Guard File (ITA No. 8 TO 11/Nag/2017) By order, Asstt. Registrar