TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 1518
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....Income Tax (Appeals)-3, Nagpur ought to have accepted returned income and cash in hand shown by the assessee in the regular return of income and rejecting the contention of the assessee and treated the same as unexplained money U/s. 69A & U/s. 68 is unjustified, unwarranted and excessive. 4. On the fact and circumstances learned Commissioner of Income Tax (Appeals)-3, Nagpur ought to have accepted returned income of Rs. 9,78,300/- were regular income of the assessee and without going into merits of the case treating the same U/s. 69A as unexplained money and confirming the same taxed as per section 115BBE of the Income Tax Act, therefore addition made is unjustified, unwarranted and excessive. 5. On the fact and circumstances learned Commissioner of Income Tax (Appeals)-3, Nagpur without going into merits of the case and not following statutory provision provided U/s. 44AD of the Act rejected the claim of income the assessee by making addition U/s. 69A of the Act, therefore addition confirmed is illegal, invalid and bad in law. 6. On the fact and circumstances learned Commissioner of Income Tax (Appeals)-3, Nagpur ought to have considered opening cash balance shown by assesse....
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....cash of Rs.10,00,000/- was deposited out of the business income of Rs.9,78,300/- and opening balance of previous year. During the year, the assessee has offered income from business at Rs.9,78,300/- under section 44AD of the Act and shown total turnover of Rs.19,32,500/- and out of this, turnover of Rs.9,78,300/- was offered for taxation which is more than 50% of the total turnover. The Assessing Officer noticed that the turnover shown was not supported by any bills and vouchers and has treated as not genuine either in respect of turnover or in respect of quantum of net income shown under section 44AD of the Act. Accordingly, the Assessing Officer rejected the entire amount of Rs.9,78,300/- on account of business income shown by the assessee which was treated as unexplained money under section 69A of the Act in the hands of the assessee. The assessee also submitted the remaining amount, the assessee has estimated income for the assessment year 2019-20 at Rs. 15,00,000, and paid advance tax on the aforesaid income before the action taken by the department. Being not satisfied with order so passed by the Assessing Officer, carried the matter before the first appellate authority. 6. ....
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....ll. Therefore, the AO was correct to come to the conclusion that the appellant is not doing any business activity and has correctly held that the opening balance of Rs. 3,67,000/- is the appellant's unexplained cash credit. Similarly, the AO has correctly held that the business income of Rs.9,78,000/- shown by the appellant is his unexplained money u/s 69A of the Act. Therefore, the grounds of appeal No.2,3,4 & 5 are dismissed." 6.1 The assessee once again being unsuccessful, filed appeal before the Tribunal. 7. Before us, the learned Counsel, ShriManoj G. Moryani alongwith Shri Bhavesh M. Moryani, appearing for the assessee, submitted that the assessee has shown better income as stated in section 44AD of the Act and there is no provision in the Income Tax Act, 1961, to reduce the income of the assessee and the aforesaid income was also supported by sales account a copy of which is placed at Page-5 to 12 of the Paper Book, which were also submitted before the Assessing Officer during the course of assessment proceedings. No mistake has been pointed out by the Assessing Officer in his assessment order and the assessee has filed return of income under the presumptive taxation in or....
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....e deemed to be the income of the assessee for such financial year" 8. The learned Counsel submitted that a plain reading of the aforesaid provisions of section 69A of the Act, depicts that the provisions of the said section are applicable when there is unexplained money, etc., and which are not recorded in the books of account of the assessee maintained by the assessee for any source of income. However, in the present case, the assessee is not maintaining any books of accounts and return of income has been filed under section 44AD of the Act. Therefore, provisions of section 69A of the Act are not applicable in the case of assessee. The learned Counsel, in support of his arguments relied upon the following case laws:- i) CIT v/s Surinder Pal Anand, Surinder Pal Anand, [2011] 242 CTR 0061 (P&H HC) ii) Dinesh Kumar Verma v/s ITO,, [2021] TaxPub(DT) 63 (Mum.Trib.) iii) Virender Kumar v/s ITO, ITA no.1100/Jp./2019, order dated 10.03.2021; iv) KadigariNarasimha Reddy v/s ITO, ITA no.581/Hyd./2013, order dated 30.11.2015; v) Shri Thomas Eapen v/s ITO, ITA no.451/Coch./2019, order dated 19.11.2019; vi) KokkarnePrabhakara v/s ITO, ITA no.1239/Bang./ 2019, order dated 11.09.202....
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.... submitted that the assessee has already paid advance tax. The learned Counsel further has drawn our attention that as per question no.10 of the statement recorded on 26th October 2018, which is placed at Page-49C of the Paper Book, the assessee specifically stated that the aforesaid sum of Rs.21,50,000, belongs to the assessee. 11. The learned Departmental Representative relied upon the order of the authorities below. The learned departmental representative also filed written submission stating that the statement of AnkitTanwani U/s. 132(4) was recorded and same may kindly be considered. In the written submission the department has accepted that the AnkitTanwani has stated in the statement recorded U/s. 131 that the cash of Rs. 87,00,000/- were belongs to following family members S.No. Name of Family Members Relation with assessee Amount 1. Santosh C. Tanwani Uncle 50,00,000/- 2. M/s. Shiv Agencies Prop. business of Uncle 15,00,000/- 3. AshaShankarlalTanwani Mother 50,000/- 4. AnkitShankarlalTanwani Assessee 21,50,000/- 12. The main contention of the department is that the assessee has shown the abnormal amount of profit U/s.....
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....res were shown at Rs. 9 lakhs only and assessee had also filed Trading and Profit and loss account in the balance sheet with VAT return. It was held that Assessee filed an income tax return showing gross receipts of Rs. 9 lakhs and there were cash deposits of more than Rs. 37 lakhs in saving bank account. Though assessee tried to explain the source of cash deposits by taking a stand that actual sales were Rs. 29 lakhs instead of Rs. 9 lakhs, in absence of any evidence furnished by assessee, the same deserves rejection. The said case law is clearly distinguishable from the Appellant's since, the Appellant has filed return of income under section 44AD whereas in the caselaw relied upon by departmental representative the assessee has filed normal return of Income wherein it was mandatory for the assessee to maintain books of account and documents whereas as per section 44AD, Appellant is not under obligation to maintain books of accounts or documents. It was a fact that the appellant had not maintained books of account and that is why he had opted for 8% income as per section 44AD.The section also did not put obligation on the assessee to maintain books of account, in view of the fact....
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.... had been made, had been given by Assessee. It was held that Tribunal was perfectly right in holding that the value of the gold was liable to be included in the income of Assessee as the source of investment in the gold or of its acquisition was not explained and that Assessee was not entitled to claim that value of the gold should be allowed as a deduction from his income. The facts laid down are not applicable to Appellant's as can be inferred from the facts. e) In the case of Hon'ble Delhi High Court in case of CIT v/s ArunMalhotra (2014) 47 taxmann 385, AO made addition under section 69A, keeping in view that purchase transactions from ST and RC were not genuine and export transactions relating to ball pens were bogus. The said transactions were related to assessment year 1994-95, in which assessee had filed no return. AO observed that deduction under section 80HHC(4) was not available to assessee on failure to submit Form No. 10CCAC. CIT(A) held that purchase transactions were bogus, but export transactions were genuine and directed AO to recompute deduction under section 80HHC on basis of return filed by IGI successor company for assessment year 1995-96 and to determine dis....
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....s assigned by the Tribunal and other authorities were in the realm of surmises, conjectures and suspicions. In appeal to the Supreme Court, the revenue contended that re-appreciation of evidence and substitution of the findings by the High Court was impermissible and that when once explanation offered by the assessee's was found unsatisfactory, the sums credited in the books were to be charged to income-tax as the income of the assessee's. It was held by Hon'ble Supreme Court that the opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion. The factual matrix of the case is distinguishable since, the Appellant has submitted its return of income by showing opening cash balance at Rs. 3,65,000/- as per capital position. That the addition was made merely on the basis of suspicion. Also, the caselaws speaks about gift received from undisclosed sources as not real and genuine and the same cannot be applied to Appellant's case on the basis of distinguishable facts. g) In the case of Hon'ble High Court of Allahabad (Lucknow Bench) of Commissioner of Income Ta....
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....spired from section 44AD and applied the 8 percent net profit rate and made the addition on estimate basis on gross contract receipts. The assessee has shown the sundry creditors to the tune of Rs. 23,14,417. No information, as required by law, was furnished by the assessee pertaining to the sundry creditors. When it is so then further examination of the material is required. Further, as already mentioned above the assessee's case falls under section 44AD and hence, no obligation is there to maintain the books of accounts or documents. Therefore, the case law relied upon cannot be used against assesse. 15. We have considered the rival contentions perused the order of the authorities below and the material available on record. Following case laws have been relied upon by the learned Counsel for the assessee in support of his arguments:- i) CIT v/s Surinder Pal Anand, Surinder Pal Anand, [2011] 242 CTR 0061 (P&H HC) Assessment being made under s. 44AD, 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 and therefore no addition under s. 68 was called for. ii) Dinesh Kumar Verma v....
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.... in view of the fact that his income has been assessed as per section 44AD of the Act. vi) KokkarnePrabhakara v/s ITO, ITA no.1239/Bang./2019, order dated 11.09.2020; The similar issue also came for consideration before coaching bench of the tribunal in case of ThomosEapen in ITA No 451/Coch/2019 wherein it has been held that since scheme of presumptive taxation has been found in order to avoid long drawn crosses of assessment in cases of small traders or in cases of those businesses where incomes are almost are static quantum of all businesses assessing officer could have made addition under section 69A once he had carved out case out of glitches of provisions of section 44AD-In view of above decision once assessment of assessee was completed under section 44AD, there can not be any application of section 68/69A. Being so court direct the AO to delete the addition made by the AO and confirmed by the CIT(A)- Assessee's ground allowed. vii) Mr.Pradeep Jain v/s ITO, ITA no.8001/Del./2018, order dated 04.06.2019; Since assessee is involved in small business activity and filed return ofincome under presumptive provisions under section 44AD of the I.T. Act, there was no justific....
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....support of his arguments further relied upon the following case laws:- i) Girish V. YalakkishettarSujatha Buildings v/s ITO [2020] 58 CCH 0073 (Bang.Trib) ii) Honey Rahulan v/s ITO, ITA No. 150/Coch/2020 dated 09/06/2020 iii) Syed Khalid Saifullah v/s. ITO, [2020] TaxPub(DT) 2006 (Del-Trib); iv) SaurabhMalhotra v/s. ITO, ITA No. 72/Agra/2016 dated 28/02/2018; v) Syed Maqsoodulla v/s. ITO, ITA No. 397/Bang/2019 dated 11/09/2020 vi) Om PrakashKarnani v/s. ACIT [2021] TaxPub(DT) 0841 (JP-Trib); vii) DineshkumarVerma v/s. ITO, ITA No. 1183/Mum/2019, dated 28/12/2020 16. It is admitted fact on record that the assessee has not been maintaining any books of account and opted to file return of income u/s 44AD of the Act. The assessee had already submitted copy of sale account before the Dy. Director of Income Tax (Hqs.) and also before the Assessing Officer as well as before the learned CIT(A). Provisions of section 44AD of the Act do not put obligation on the assessee to maintain the books of account, as the income has been assessed as per section 44AD of the Act. The addition made by the Assessing Officer under section 69A of the Act and there is no bar under section 44AD ....
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....relied upon by the learned Counsel for the assessee also support the case of the assessee and the income determined under section 69A of the Act is directed to be treated as regular return of income of the assessee and returned income shown by the assessee is hereby directed to be accepted. Consequently, the grounds no.2, 3, 4, 5 and 7, are allowed in terms indicated above. 18. Regarding ground no.6, the Assessing Officer has made addition of Rs.3,67,000/- shown as opening balance as on 1st April 2017, in the capital position filed by the assessee before the Assessing Officer. The Assessing Officer stated that no supporting document was filed by the assessee regarding opening balance of Rs.3,67,000/- and, therefore, added the same under section 68 of the Act. 19. The learned CIT(A) has also supported the order of the Assessing Officer and stated that the assessee is not doing any business activity and has added the opening balance of Rs.3,67,000/- as unexplained cash credit under section 68 of the Act. 20. The learned Counsel for the assessee submitted before us that the assessee had shown opening balance of Rs.3.67 lakh. The learned has drawn our attention that the assessee has....
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....e deleted. I hold so. 21. The leaned Departmental Representative relied upon the order of the authorities below on not submitted any reason for not considering of the fact. 22. We have considered the rival submissions, perused the order of the authorities below and the material available on record in the light of the decisions relied upon by the learned Counsel for the assessee. Ongoing through the arguments of the learned Counsel in the light of the facts stated above and the case laws relied upon, we find that there is no merit in making the addition of Rs.3,67,000/- on account of opening capital in the case of the assessee under section 68 of the Act, as we are of the considered opinion that the aforesaid provisions of section 68 of the Act are not applicable to the present case of the assessee. We further find that the assessee has also filed copy of computation of income, acknowledgement of income and copy of capital position which are placed at Page-1 to 7 of the Paper Book. We also note that the assessee had filed return of income under section 44AD of the Act showing income of Rs.2,65,700, for the assessment year 2017-18, and paid taxes accordingly. The aforesaid return o....