TaxTMI 
TaxTMI 
2026 (7) TMI 1389
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....the rate of 5% on the total turnover as against the addition made by the ld. AO of Rs. 10,18,32,200/- u/s. 68 of the Act. 3. The facts in brief are that the assessee filed the return of income on 14.02.2017, declaring total income at Rs. 17,65,260/-, which was processed u/s. 143(1) of the Act. The case of the assessee was selected for scrutiny under CASS and statutory notices along with questionnaire were issued and duly served upon the assessee. The said notice was replied by filing the requisite evidences by the assessee through Shri Anil Kochar, Advocate, who appeared and furnished the details before the AO. The ld. AO noted that the assessee has deposited a cash of Rs. 10,18,32,200/- in the bank accounts during the year. The ld. AO o....
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....onal evidences tendered under Rule 46A, and the remand report dated 21/12/2023 furnished by the Assessing Officer. 8.2 The impugned assessment order is based on the issue that the aggregate cash deposits of Rs. 10,18,32,200/- in the bank accounts constitute unexplained cash credits under section 68, and therefore the entire amount represents taxable income of the assessee. Simultaneously, the Assessing Officer proceeded to apply 8% gross profit rate on the same deposits by treating them as turnover of business. Hence, the assessment proceeds on treating the same receipts both as business turnover and as unexplained cash, which cannot coexist under the scheme of the Act. The addition under section 68 was made primarily because the a....
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....e addition under section 68 automatically loses its foundation. Once deposits are found to be business receipts, they no longer retain the legal character of "unexplained money" u/s. 68. It is trite that the same sum cannot be treated both as business turnover and unexplained income, because these are two mutually exclusive tax treatments. The assessment, therefore, requires modification to eliminate double taxation. 8.6 In view of the evidences now placed on record and the findings in the remand report, I hold that the character of cash deposits is established as business receipts, and that the assessee has successfully discharged the initial burden of proof to demonstrate the source of such deposits. Accordingly, the addition of ....
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....wing credit for income already disclosed by the assessee in the return of income. The addition under section 68 of Rs. 10,18,32,200/- stands deleted in full. 8.10 As regards the levy of interest u/s. 234A, 234B and 234C, it is clarified that such interest is mandatory and consequential and does not warrant separate adjudication. The Assessing Officer shall recompute interest, if any, while giving effect to this appellate order. 8.11 The penalty proceedings under section 271(1)(c) / 270A or 271AAC, if initiated separately, are independent and not a subject of appeal in the present matter. The Assessing Officer is, however, directed to keep in view the findings recorded in this order while considering penalty in accordance w....