RAHIMATHULA ABDUL RAHMAN,SALEM V. ITO, WARD 1(9), SALEM

ITA 1349/CHNY/2024

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The case involves Mr. Rahimathulla Abdul Rahman, a resident individual engaged in trading of iron and steel, who did not file a return of income for the Assessment Year 2017-18. Following information about cash deposits in Specified Bank Notes during the demonetization period, the Income Tax Department scrutinized his accounts. The Assessing Officer (AO) estimated the business income at 8% and added unexplained cash deposits of Rs.10.18 Lacs to his income. The Commissioner of Income Tax (Appeals) upheld this assessment, leading to the current appeal. The Tribunal found that all bank credits, including the cash deposits, were business receipts and should be treated uniformly for income estimation purposes under Section 44AD of the Income Tax Act.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472454 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 06-05-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHWIN D GOWDA LD.
• Assessee Lawyers: S. SRIDHAR LD. ERODE
• Keywords: Business income
• Section: 144

Judgement Text

" आयकर अपीलीय अिधकरण ‘ए’ \u0010ा यपीठ चे\u0015ई म\u0018। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI मा ननीय +ी मनोज क ुमा र अ/वा ल ,लेखा सद4 एवं मा ननीय +ी मनु क ुमा र िग7र, \u0010ा ियक सद4 क े सम8। BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM AND HON’BLE SHRI MANU KUMAR GIRI, JM आयकरअपील सं ./ ITA No.1349/Chny/2024 (िनधा 9रणवष9 / Assessment Year: 2017-18) Mr. Rahimathulla Abdul Rahman 68/47C, Vakil Kitta Musthafa Street Pudupet, Attur-636 141. बना म/ Vs. ITO Ward-1(9), Salem. \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No. ACTPR-3061-P (अपीलाथ\u001c/Appellant) : (\u001f थ\u001c / Respondent) अपीलाथ\u001c कीओरसे/ Appellant by : Shri S. Sridhar (Advocate) - Ld. AR (Erode) \u001f थ\u001cकीओरसे/Respondent by : Shri Ashwin D Gowda (Addl.CIT) - Ld. Sr. DR सुनवाई की तारीख/Date of Hearing : 23-10-2024 घोषणा की तारीख /Date of Pronouncement : 05-11-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order passed by learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 13-03-2024 in the matter of an assessment framed by the Ld. AO on best judgment basis u/s 144 of the Act on 02-12-2019. In the assessment order, Ld. AO estimated business income @8% which came to Rs.9.58 Lacs and also made addition of cash deposits for Rs.10.18 2 Lacs. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us. 2. The Ld. AR advanced arguments and submitted that the only source of cash deposits was business receipts and therefore, income was to be estimated on a reasonable basis. The Ld. Sr. DR supported the orders of lower authorities. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. 3. The assessee being resident individual is stated to be engaged in trading of iron and steel. The assessee did not file return of income. Pursuant to information that the assessee deposited cash in Specified Bank Notes (SBNs), the case was scrutinized. It transpired that the assessee had Bank credit of Rs.129.98 Lacs out of which cash deposited during demonetization period was Rs.10.18 Lacs. The remaining amount of Rs.119.80 Lacs was considered to be the sales turnover of the assessee and accordingly, the same was assessed u/s 44AD @8%. The amount of Rs.10.18 Lacs was held to be unexplained money and fully added to the income of the assessee. The Ld. CIT(A) confirmed the same except for granting a relief of Rs.2.50 Lacs from demonetization cash as deposited by the assessee. Aggrieved, the assessee is in further appeal before us. 4. From the facts, it is clear that the assessee has carried out trading activity. The business receipts have been deposited into the bank account. The assessee has not maintained any books of accounts. In such a case, the presumptive provisions of Sec.44AD have correctly been applied by Ld. AO. However, the artificial distinction as created by Ld. AO between business receipts is without any basis. The only source of cash deposits is business receipts only. Considering the same, we 3 direct Ld. AO to consider the entire credit of Rs.1,29,98,619/- as business receipts only. The income on the same shall be estimated @8% which comes to Rs.10,39,890/-. We order so. 5. The appeal stands partly allowed. Order pronounced on 5th November, 2024 Sd/- (MANU KUMAR GIRI) \u0010ा ियक सद4 / JUDICIAL MEMBER Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद4 / ACCOUNTANT MEMBER चे4ई Chennai; िदनांक Dated : 05-11-2024 DS आदेशकीNितिलिपअ/ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u001c/Appellant 2. \u001f थ\u001c/Respondent 3. आयकरआयु=/CIT Salem. 4. िवभागीय\u001fितिनिध/DR 5. गाडBफाईल/GF "