AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 469
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....lhi has erred in confirming 50% addition made by ld. Assessing Officer without considering the fact that impugned amount of cash deposits was from business receipts and income from business was unconditionally accepted u/s.44AD of the Act. 3) The initiation of re-assessment proceedings without fulfilling all necessary conditions is bad in law and on facts. 4) The impugned order is bad in law and on facts. 5) The appellant reserves the right to addition, after or omit all or any of the grounds of appeal in the interest of justice." Also, the assessee has raised an additional ground of appeal which reads as under: "In the facts and circumstances of the case and in law, the initiation of proceedings u/s.147 of the Income Tax Act, 1961 is bad in law, illegal and without jurisdiction." 2. At the very outset I find that the present appeal is time barred by 63 days. The Ld. Authorized Representative (for short 'AR') for the assesee took me through an "affidavit" of the assessee explaining the reasons leading to the aforesaid delay. Elaborating on the facts which had resulted to the delay in filing of the appeal, it was submitted by Ld. AR that as Shri Shankar Lal Agarwal, L....
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....by the assesee that he during the year had a turnover of Rs.18,23,140/-, the corresponding income of which was disclosed by him u/s.44AD of the Act i.e. @8% of the amount of gross receipts. It was the claim of the assesee that the amount of Rs.2,78,832/- credited in his bank account was sourced out of the receipts generated in the course of his business transactions. As the assessee had failed to substantiate his claim on the basis of supporting documentary evidence, the A.O held the entire cash deposits of Rs.10.70 lac (supra) as the unexplained income of the assessee and brought the same to tax within the meaning of Section 115BBE of the Act. Accordingly, the A.O vide his order passed u/ss.144/147 of the Act dated 22.11.2019 determined the income of the assessee at Rs.13,08,220/-. 7. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). It was observed by the CIT(Appeals) that the A.O had not made any efforts to demolish the claim of the assessee that he was indeed engaged in small time business of trading of wheat, agricultural fertilizers and other agro-products and had summarily dubbed the cash deposits in his bank account as his unexplained income for ....
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.... had admittedly during the year generated a turnover of Rs.18,23,140/- from his business of trading in various food items, wheat, agricultural fertilizers etc. and had disclosed his income from the said business as per the deeming provisions of Section 44AD of the Act, i.e, @8% of the amount of the gross turnover, therefore, as per the conditions provided in the aforesaid statutory provision he remained under no obligation to maintain any books of accounts for the said stream of business. Carrying further his aforesaid contention, it was submitted by the Ld. AR that as the cash deposits of Rs.10.70 lac (supra) in his bank account were sourced out of the aforesaid turnover of Rs.18.23 lac, therefore, the A.O was not justified in holding any part of the same as an unexplained income of the assessee. To sum up, it was the claim of the Ld. AR that now when the A.O while framing of the assessment had admitted the turnover of the assessee from his aforesaid small time trading business, therefore, he was not justified in drawing adverse inferences as regards the cash deposits of Rs.10.70 lac which in turn were sourced out of the aforesaid amount of turnover. On the basis of his aforesaid ....
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....r the purpose of streamlining the work of the A.O's, therefore, I am of the considered view that the same can by no means be pressed into service for drawing of adverse inferences as regards the "reasons to believe" recorded by the A.O for initiating proceedings in the hands of the assessee u/s.147 of the Act. 16. At this stage, I may herein observe that it is a settled position of law that the quality of the "reasons to believe" cannot be assailed by an assessee. As the "reasons to believe" recorded by the A.O for initiating proceedings u/s.147 of the Act dated 18.02.2019 clearly reveals a bonafide belief that was arrived at by him on the basis of the material available before him that the income of the assessee chargeable to tax of Rs.10.70 lac had escaped assessment, therefore, the claim of the Ld. AR therein alleging that the "reasons to believe" are not as per the mandate of law do not merit acceptance. Thus, the additional ground of appeal and Ground of appeal No.3 raised by the assessee are dismissed in terms of my aforesaid observations. 17. We shall now deal with the claim of the Ld. AR that both the lower authorities had erred in making/partly sustaining the addition qu....