2018 (4) TMI 997

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the assessee is in liquor business and the same is carried out the name and style of M/s Chakri Bar and Restaurant. The Assessing Officer (AO) has found that the assessee has invested an amount of Rs. 33,75,000/- in the purchase of demand drafts for participating in the auction for issue of excise licence by Govt. of Andhra Pradesh. The AO has taken up the assessment for scrutiny and issued notice u/s 175 of the I.T.Act calling the assessee to file the return of income. During the course of assessment proceedings, the AO has found that the assessee has deposited huge amounts in cash in two bank accounts held by him with UCO Bank, Eluru. The details are as under : (a) Amount deposited in A/c No.9812 - Rs.46,05,760/- (b) Am....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....to contradict the contention of the assessee that the withdrawals made from the bank account maintained with GG bank were also used for making the deposits, the said contentions cannot be altogether ruled out. Accordingly the Ld ClT(A) thought fit to grant credit for the amounts deposited within three days from the date of withdrawaL However, the Ld CIT(A) did not mention the rationale for fixing the time limit of three days. If we extend the theory of the Ld CIT(A), i.e, the time limit to one week, the assessee would get further benefit of Rs. 6.09 lakhs for the following deposits. 31.07.04 25,000 02.08.04 85,000 01.10.04 2,50,000 01.10.04 77,000 04.02.05 48,000 07.02.05 1,24,000 However, as sta....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 5,02,175/-. Accordingly, the AO is directed to make a round sum addition of Rs. 5.00 lakhs and in our opinion it would meet the ends of justice and we order accordingly." Subsequently, the AO has issued a show cause notice and asked the assessee to explain why penalty u/s 271(1)(C) should not be levied. In response to the show cause notice issued by the AO, the assessee has submitted that ultimately, the ITAT directed the AO to estimate the income of the assessee and accordingly, the AO has made the addition of Rs. 5,00,000/- on the basis of estimation, therefore, no penalty can be levied when the AO has estimated the income. The AO after considering the explanation of the assessee has observed that the estimation of income made by the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....hin three days from the date of withdrawals should be given. Accordingly, he has deleted the addition of Rs. 54,45,920/- and sustained the amount of Rs. 8,31,266/-. On appeal, the ITAT in ITA No.476/Viz/2006 has found that there is no scientific basis for fixing the 3 days limit from the date of deposit to date of withdrawal. The ITAT observed and extended the theory of Ld.CIT(A) for the time limit to one week and granted further relief to the assessee. However, the ITAT has observed that there is no scientific basis for the debt spans when there is regular inflow and outflow of the cheques. It is not logical to make addition only in respect of deposits without giving credit to the withdrawals made earlier. Particularly in the absence of an....