TMI Blog2015 (10) TMI 2024X X X X Extracts X X X X X X X X Extracts X X X X ..... o partners, the ld. CIT(A) has not examined the provisions of section 184(5) of the Act. Therefore, we are of the view that the findings of the ld. CIT(A) are contrary to the provisions of the Act and we accordingly set aside the order of the ld. CIT(A) in this regard and restore that of the Assessing Officer. - Decided in favour of revenue. Undisclosed income under section 68 - CIT(A) disclosed the addition - Held that:- Details of the cash deposit in the bank be re-examined in the light of the cash book duly maintained by the assessee. Therefore, it requires a proper verification by the Assessing Officer. During the course of hearing, our attention was also invited to the fact that while making addition on account of cash deposit in bank, the Assessing Officer has also examined the sundry creditors of ₹ 29.05 lakhs, but he has not made any addition of ₹ 29.05 lakhs, as he has made an addition of ₹ 42.08 lakhs on account of cash deposit in the bank. Therefore, once the matter is restored back for verification of cash deposits, sundry creditors of ₹ 29.05 lakhs be also verified. Accordingly we set aside the order of the ld. CIT(A) and restore the matter t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income under section 68 of the I.T. Act, 1961. The learned Commissioner of Income Tax (Appeals) has not appreciated the Assessing Officer who made the addition after making enquiries, as the above deposits were the Cash Credits in the bank account of the assessee in Oriental Bank of Commerce and the assessee failed to explain the source of these cash credits during the assessment proceedings. 4. That the order of the learned Commissioner of Income Tax (Appeals) may be cancelled and the order of the Assessing Officer may be restored. 3. Apropos grounds No.1 2, it is noticed that the assessee is a civil contractor and during the year he carried on work for Rajya Krishi Utpadan Mandi Parishad, Shahjahanpur and the Assessing Officer vide notice dated 30.12.2009 required the assessee to furnish/explain various documentary evidence/information, books of account i.e. cash book, ledger, bank accounts wages/salary registers, etc as mentioned in the notice under section 142(1)(ii) of the Income-tax Act, 1961 (hereinafter called in short the Act ). But despite repeated requests made through various notices as well as through order sheet entries, part compliance has been made. The As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 144 of the Act for making best judgment assessment in the case of a firm, no deduction by way of any payment of interest, salary, bonus, commission and remuneration, by whatever name called, made by the firm to any partner of a firm shall be allowed in computing the income chargeable under the heads profit gains of business or profession, and such interest, bonus, commission or remuneration shall not be chargeable to Income-tax Act, under clause (v) of section 28 of the Act. The ld. D.R. further contended that the assessee has not produced complete books of account before the Assessing Officer despite repeated reminders and request, and thereafter the Assessing Officer had no other alternative but to frame the best judgment assessment under section 144 of the Act. The findings of the Assessing Officer, for invoking the provisions of section 144 of the Act, was not disturbed by the ld. CIT(A) also. Once the best judgment assessment is to be framed under section 144 of the Act, no further deduction of interest and salary paid to the partners can be allowed as per provisions of section 184(5) of the Act. 7. The ld. counsel for the assessee, on the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment as a firm was first sought. (4) Where any such change had taken place in the previous year, the firm shall furnish a certified copy of the revised instrument of partnership along with the return of income for the assessment year relevant to such previous year and all the provisions of this section shall apply accordingly. (5) Notwithstanding anything contained in any other provision of this Act, where, in respect of any assessment year, there is on the part of a firm any such failure as is mentioned in section 144, the firm shall be so assessed that no deduction by way of any payment of interest, salary, bonus, commission or remuneration, by whatever name called, made by such firm to any partner of such firm shall be allowed in computing the income chargeable under the head Profits and gains of business or profession and such interest, salary, bonus, commission or remuneration shall not be chargeable to income-tax under clause (v) of section 28. 9. While issuing directions for allowance of interest and salary paid to partners, the ld. CIT(A) has not examined the provisions of section 184(5) of the Act. Therefore, we are of the view that the findings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, he has given credit of the same and made addition of ₹ 42.08 lakhs cash deposit in bank account. 11. Aggrieved, the assessee preferred an appeal before the ld. CIT(A) and the ld. CIT(A) in his entire order has recorded the finding of the Assessing Officer in this regard. Thereafter, he recorded assessee s contentions and finally in few lines he deleted the addition and for the sake of reference, we extract the relevant findings of the ld. CIT(A) as under:- I have considered the Assessing Officer s order and the A.R s submissions. The A.R. has brought enough evidence on record to show that cash balances were available for deposit in bank. In any case, it is a settled issue that once the income was enhanced on estimate, no further addition was called for. The addition is deleted. 12. Aggrieved, the Revenue has preferred an appeal before the Tribunal with the submission that the assessee has made substantial cash deposit in bank account and in addition to that unexplained creditors were also found and the Assessing Officer has made enquiries with regard to the cash deposit in bank and also unexplained cash credits, but the assessee could not furnish any evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of CIT vs. Vijay Constructions, 213 CTR 105 and Hon ble Patna High Court in the case of Shyam Bihari vs. CIT and Another, 345 ITR 283 in support of his contention that once the books of account are rejected and income was estimated, no further disallowance can be made. 14. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that during the course of assessment proceedings, the Assessing Officer has afforded a number of opportunities to produce the complete books of account for verification, but the assessee did not produce the same and ultimately the Assessing Officer had no other option but to proceed under section 144 of the Act for best judgment assessment. When the issue of non-production of complete books of account was confronted to the assessee, the assessee has come out with an offer for estimation of net profit rate @ 8% of the gross receipt. On the basis of this statement of the assessee, the net profit rate was estimated @ 8% of the total receipts. Besides, the Assessing Officer has also examined substantial amount of cash deposits in the bank account of the assessee. The Assessing Officer was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition of the unexplained sundry creditors as income from other sources by the AO, therefore, was held valid. Further, the Hon ble Apex Court in the case of CIT vs. Devi Prasad Vishwanath Prasad; 72 ITR 194 observed that where there is an unexplained credit, it is open to the AO to hold that it is income of the assessee, and no further burden lies on the AO to show that the income is from any particular source. It is for the assessee to prove that, even if the sundry creditors represents income, it is income from a source which has already been taxed. There is nothing in law which prevents the AO in an appropriate case in taxing both the sundry credit, the source and nature of which is not satisfactorily explained, and the business income estimate, by him after rejecting the books of account of the assessee as unreliable. In the view of above discussion and by considering the totality of the facts and circumstances of the case, we set side the impugned order passed by the Tribunal and remit the matter back with a direction to examine the identity, creditworthiness and genuineness of the transactions of the sundry creditors. The Tribunal is further directed to dispose of the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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