Madras HC: Minister Regupathy Gave a Mischievous Political Twist to the Thiruparankundram Issue  ||  Jharkhand HC Cautions Officers, Says Citing Proposed SLP in SC to Delay Compliance is ‘In Bad Faith’  ||  Madras High Court Directs Action Against District Collector For Ex-Parte Stance In Govt Land Case  ||  Karnataka High Court Grants Three-Day Emergency Parole To Disabled Life Convict For Sister’s Wedding  ||  Punjab & Haryana HC Grants Bail to Woman in Double Murder Case Filed Two Years After Deaths  ||  Punjab & Haryana HC Grants Bail to Woman in Double Murder Case Filed Two Years After Deaths  ||  Supreme Court: Failure to Recover Murder Weapon is Not Fatal if Other Evidence is Credible  ||  SC: Failure to Pay Balance Within 15 Days Voids Auction under Maharashtra Co-Operative Rules  ||  Bombay High Court: State Cannot Deny Maternity Benefits As More Women Join Workforce  ||  Bombay High Court: Lack of Medical Opinion on Sexual Assault Not Fatal under POCSO Act    

Arul Rathnam, Namakkal vs. Income Tax Officer - (Income Tax Appellate Tribunal) (04 Aug 2023)

When cash deposits in specified bank notes already included in gross receipts, the same needs to be excluded for the purpose of estimation of profit

MANU/IX/0308/2023

Direct Taxation

The assessee is engaged in the business of bore-well drilling, has not filed its return of income for the assessment year 2017-18 within the time allowed under Section 139(1) of the Income-tax Act, 1961 (IT Act). The information with the Assessing Officer reveals that the assessee has made cash deposits of Rs. 10,47,000 into his bank account during demonetization period. In order to verify the genuineness of the cash deposits, notice under Section 142(1) of the Act, was issued, calling the assessee to provide the true and correct return of income. Since, the assessee did not file necessary source and details for cash deposits, the Assessing Officer has made addition of Rs. 10,47,500, under Section 69A of the IT Act as unexplained money and levied tax under Section 115BBE of the IT Act.

The assessee carried the matter in appeal before the first appellate authority. Learned CIT(A), after considering relevant facts partly allowed appeal filed by the assessee, where the CIT(A) confirmed the additions towards cash deposits during demonetization period under Section 69A of the Act, however, allowed relief in respect of additions made by the Assessing Officer towards business income and computed tax under Section 115BBE of the Act. Aggrieved by the CIT(A) order, the assessee is in appeal.

Admittedly, the assessee neither appeared before the AO nor filed any details to justify source for cash deposits during demonetization period in specified bank notes. Further, the assessee not even appeared before the first appellate authority and filed necessary details to justify source for cash deposits. It is very clear that the assessee is not seriously pursuing its case before the lower authorities, but fact remains that the assessee is in the business of bore-well drilling and predominant receipts from his business is in cash going by the nature of the assessee. Further, the assessee has filed a belated return and declared total receipts from business at Rs. 40,18,270 for the impugned assessment year and estimated 8% profit as per the provisions of Section 44AD of the Act.

There is no clarity whether the alleged cash deposit in specified bank notes is included in gross turnover reported by the assessee or not. Even, the Assessing Officer has not verified this aspect. If cash deposits in specified bank notes is already included in gross receipts, then said cash deposits needs to be excluded for the purpose of estimation of profit. Further, the source for cash deposit in specified bank notes is also not explained by the assessee. Therefore, the issue needs to go back to the file of the Assessing Officer for providing one more opportunity of hearing to the assessee. Thus, the order passed by the CIT(A) is set aside and the issue is restored back to the file of the Assessing Officer.

Tags : ASSESSMENT   ADDITIONS   VALIDITY  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved