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Assistant Commissioner of Income Tax, Company Circle I (1) , Coimbatore Versus Shri NB Aathishankar

2016 (1) TMI 72 - ITAT CHENNAI

Income from cash deposits - CIT(A) treated as assessee’s business turnover in part and balance as income from other sources - Held that:- CIT (A) was justified in treating ₹ 20 lakhs of cash deposits as assessee’s business turnover since the assessee admitted income of ₹ 7,69,907/- is accepted by the Ld. Assessing Officer. On a turnover of ₹ 20 lakhs, if ₹ 7,69,907/- is treated as net profit, it amounts to Net Profit ratio of 38.5% (7,69,907 x 100 ÷20,00,000) which is fai .....

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on straight line method in accordance with Section-32(1) Explanation-2 read with Rules 5 (1A) - Held that:- CIT (A) directed the Ld. Assessing Officer to grant depreciation to the assessee as claimed in his return of income filed on 25.05.2009 for the relevant assessment year by following the decision of the Chennai Bench of the Tribunal in the case of M/s.K.K.S.K. Leather Processes P Ltd. Vs. ITO (2009 (11) TMI 556 - ITAT MADRAS-D ) wherein it was held that option under Rule 5(1A) may be exerc .....

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order the Assessing Officer could not bring any evidence on record to say that to cash deposits were from unexplained sources. It cannot be conclusively prove that the cash deposits were from undisclosed sources. It cannot be concluded as concealed income. In view of this the Assessing Officer is directed to delete the penalty levied on cash deposits. - Decided against revenue - I.T.A.Nos.2288 & 2289/Mds. /2013 - Dated:- 15-10-2015 - SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMO .....

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e assessment year 2009- 10. Since the quantum appeal and the penalty appeal are interlinked, they are disposed of by this common order for the sake of convenience. 2. The Revenue has raised eight elaborate grounds in its quantum appeal and four grounds it its penalty appeal, however the cruxes of the issues are concised herein below for adjudication:- Quantum appeal:- i) The Ld. CIT(A) has erred in directing the Ld. Assessing Officer to treat the income of ₹ 20 lakhs resulting from cash de .....

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yoathi in 113 ITR 188. 3. The brief facts of the case are that the assessee is an individual, having income under the head salary, house property and profession, filed his return of income for the assessment year 2009- 10 on 25.05.09 declaring income of ₹ 2,58,180/-, and agricultural income of ₹ 1,80,000/-. The return was taken for scrutiny and assessment U/s.143(3) of the Act was completed on 16.12.2011. 4.1 Ground No.(i) of quantum appeal - treating the income of ₹ 20 lakhs r .....

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hat the assessee had not produced any evidence to establish the money deposited in his bank a/c from his cotton business. On perusing the statement of account for the assessment year 2008-09, it was revealed that the profit from waste cotton business was ₹ 1,69,000/- and the assessee s case was covered U/s.44AF of the Act since the annual turnover of the assessee was less than ₹ 40/- lakhs. It was further noticed that for the assessment years 2007-08 & 2009-10, the income from th .....

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accepted the income admitted by the assessee of ₹ 7,69,907/- as income from waste cotton business and further treated the balance amount of ₹ 35,57,709/- as assessee s income from undisclosed sources. 4.2 On appeal, the Ld. CIT (A) opined that since the Assessing Officer has accepted the admitted income of ₹ 7,69,907/- from the waste cotton business, the amount of ₹ 20/- lakhs can be reasonably treated as cash deposits arising from the turnover of such business and treat .....

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d income of ₹ 7,69,907/- is accepted by the Ld. Assessing Officer. On a turnover of ₹ 20 lakhs, if ₹ 7,69,907/- is treated as net profit, it amounts to Net Profit ratio of 38.5% (7,69,907 x 100 ÷20,00,000) which is fairly acceptable. The Ld. Assessing Officer treatment of ₹ 10 lakhs turnover from the assessee s waste cotton business would mean that the assessee s Net Profit ratio is 77% (7,69,907 x 100 ÷10,00,000) which is totally illogical because such prof .....

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tion @80% the Ld. Assessing Officer allowed the depreciation at 7.69% on straight line method as stipulated in Explanation-2 of Section-32(1) of the Act. On appeal, the Ld. CIT (A) directed the Ld. Assessing Officer to grant depreciation to the assessee as claimed in his return of income filed on 25.05.2009 for the relevant assessment year by following the decision of the Chennai Bench of the Tribunal in the case of M/s.K.K.S.K. Leather Processes P Ltd. Vs. ITO (2010) reported in 126 ITD 215 (Ch .....

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CIT (A) on this issue. Penalty Appeal:- 6.1. Ground No.(i) - deleting the penalty levied against the cash deposit amount of ₹ 35,57,709/- which is against the decision of the Hon ble Jurisdictional High court in the ACIT Vs. Bhyoathi in 113 ITR 188:- In the penalty proceedings the Ld. Assessing Officer levied penalty of ₹ 15,34,125/- being 100% of tax sought to be evaded towards ₹ 10/- lakhs disclosed by the assessee as the loan from his father and ₹ 35,57,709/- being cas .....

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