×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-1, Gurgaon, Dated 29.06.2018, for the A.Y. 2015-2016, challenging the addition of Rs.11,22,090/- on account of cash in hand.
2. Briefly the facts of the case are that the return of income was filed declaring income of Rs.9,63,920/- on 13.12.2016. The case was selected for limited scrutiny for the reasons of cash deposit for demonetization period. As per information available with the A.O, during the demonetization period from 09.11.2016 to 30.12.2016, assessee had deposited cash amount in his bank accounts mentioned in para 3.1 of the assessment order i.e., Rs.8,49,000/- in Bank of Maharashtra Palam Vihar, Gurgaon, Rs.9,49,000/- in Syndicate Bank, Kashmiri Gate, Delhi and Rs.10,49,000/- in Andhra Bank, Palam Vihar, Gurgaon. The assessee explained source of Rs.8,49,000/- out of earlier years income and remaining cash were explained to be retail sales made during the year. The A.O. in order to verify cash deposit of Rs.8,49,000/- out of earlier year’s income, issued show cause notice to the assessee. The assessee filed copy of the ITR for A.Y. 2015-2016 declaring income of Rs.9 lakhs under the Head “Profits and gains from Business”. Further, the assessee showed cash in hand of Rs.11,22,000/- as on 31.03.2015 in the balance sheet submitted during the course of assessment proceedings. As per assessee, he was engaged in the business of trading of cloth at a small level. The goods were procured from local market, getting some small work done on the same, and packed nicely to make them look more beautiful and wearable. They were then sold in Gurugram. The assessee submitted that he had sold goods amounting to Rs.15,00,000/- during F.Y. 2014-15 and filed his ITR under section 44AD of the Act. The A O noted that according to assessee he did not maintain bills of purchase as the same were done in cash. All transactions were done in cash. The A.O. further noted that assessee has not furnished even a single bill/voucher in respect of sale and purchase. The assessee submitted a list of suppliers giving their names and addresses, but, no confirmations have been filed. The returns were filed subsequently. The A.O, therefore, inferred that the cloth business of assessee is totally bogus and does not exist at all. The explanation of assessee was called for as to why addition of Rs.15 lakhs should not be made because of absence of any proof of business activity and as to why the sale receipts of Rs.15 lakhs out of which assessee has claimed cash deposits should not be treated as unexplained cash credit under section 68 of the I.T. Act. The A.O. after considering the reply of the assessee noted that assessee has submitted his balance-sheet for the year under consideration which proved that assessee has maintained his books of account, therefore, addition could be made under section 68 of the I.T. Act, 1961. The A.O. treated the same as unexplained cash credit in the shape of bogus sales and addition of Rs.15 lakhs was accordingly made
3. The addition was challenged before the Ld. CIT(A). The assessee also pleaded that A.O. was not justified in making addition of Rs.15 lakhs because this figure has been adopted from assessee’s submissions. At the most, if at all any addition is to be made, it could be made to the extent of cash in hand claimed by the assessee. The Ld. CIT(A), therefore, held that in these circumstances the A.O. was not justified in adopting receipts of Rs.15 lakhs to estimate the income of assessee under section 68 of the I.T. Act at Rs.15 lakhs. The Ld. CIT(A), further made the addition of Rs.11,22,090/- i.e., to the extent of cash in hand