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2016 (6) TMI 286 - ITAT DELHI

2016 (6) TMI 286 - ITAT DELHI - TMI - Addition on account of cash deposit in various bank accounts and profit estimated thereon - Held that:- Transactions cannot be considered for estimating the business income of the assessee. Furthermore assessee has given a reconciliation of the amount of cash deposited of ₹ 1,49,27,029/- in ICICI Bank stating that ₹ 82,54,580/- is cash deposit out of cash withdrawals from various banks. It was further stated that ₹ 5,50,000/- is received in .....

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has come into the hands of the assessee when it has only salary income and interest income. Therefore, it is apparent that Ld. AO has considered the total cash deposit as turn over incorrectly. Further before us the AR of the appellant has submitted a CBDT instruction dated 8th September 2010, which also says that the scrutiny in cases selected through AIR, would be restricted to that information only. In case the escapement of total income of more than ₹ 10 lacs then only the case may be .....

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ustice the whole issue of addition of ₹ 6,54,967/- is set aside to the file of the AO with the following direction :-

a) To determine the exact turnover of the assessee based on the letter dated 27.1.2014 and 17.2.2014 with respect to the cash book submitted by the assessee and cash deposited in bank accounts and then estimate profit thereon @ 5% not exceeding ₹ 654967/-

b) In case approval of the administrative Commissioner has not been taken in terms of instru .....

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o. 1285/Del/2016 - Dated:- 2-6-2016 - Shri H. S. Sidhu, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Repudaman, CA For the Deptt. Shri Sharvan Gotru, Sr. DR ORDER Per Prashant Maharishi, Accountant Member 1. This appeal is filed by the assessee against the order of Ld. CIT(A)-32 New Delhi vide order dated 29.12.2015 on the following grounds : On the facts and in the circumstances of the case and in law the action of the CIT(A) - 32, New Delhi, is arbitra .....

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ell as C.B.D.T INSTRUCTION vis-a-vis AIR SCRUTINY [F.No.225/26/2006-ITA.1I (Pt.)], dated the 8th September, 2010; b) Such scrutiny was pretended to be regular scrutiny assessment and hence, the entire informations 1 documentary evidences, being collected, were either ignored or misused; c) The issue, of inconsistency or contradiction in the relevant provisions of the statute and the instruction, is to be decided by the Court and not by an Income-tax Authority u/s. 116 [Say, CIT(A)], being subord .....

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treating the cash deposit of ₹ 1 ,30,99,337/- as additional sales and further estimating profits on such depositing @ 8% u/s. 44AD and considering such profits (Rs.10,47,947/-) as income from undisclosed sources u/s. 68 of the Income-tax Act, 1961; b) in not accepting turnover of ₹ 40,58, 112/- u/s. 44AD; c) in ignoring the statutory provision of Sec.44AD(5), i.e., exemption from maintaining books of account [Sec.44AA(2)(vi)] and audit [Sec.44AB]; d) in not considering that in view .....

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nce, the finding that all credit entries were undisclosed sale & those amounts were income from undisclosed sources u/s. 68 was not based on any evidence or was, for other reasons, perverse, being in total disregard of filing of cash book, bank book, sales book as well as ledgers (being prepared from memorandum record) and hence, such addition must be deleted in toto. 3) That CIT(A) failed to appreciate that the Assessing Officer erred in invoking two deeming provisions [i.e., Sec.44AD & .....

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ie evidence of genuineness of the transaction. 5) That CIT(A) erred in not dismissing the ground of initiating penalty proceedings u/s 271(1)(c) of the Act. 6) That CIT(A) erred in not dismissing the ground of initiating penalty proceedings u/s 271 B of the Act. 7) That the appellant crave leave to take additional ground or grounds of appeal or to alter or vary any or all the grounds of appeal before or at the time of hearing of the appeal. 2. All the grounds of the appeal are relating to single .....

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₹ 5,52,486/- was shown and included business income of ₹ 3,24,649/- was not covered in the original return of income. The business income was computed by the assessee showing his total sales from the business is ₹ 40,58,112/- @ 8% profit thereon u/s 44AD of the Act amounting to ₹ 3,24,649/-. 4. Based on information received on annual information return, it was found that assessee has deposited ₹ 1,50,05,020/- in cash in his two bank accounts maintained with the ICI .....

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ess activities carried out by the assessee during 1.4.2010 to 31.3.2011. Even then the Ld. AO has estimated the total profit @ 8% on ₹ 1,30,99,337/- estimated 8% profit thereon and made addition of ₹ 10,47,947/- to the total income of the assesse and determined assessed income at ₹ 15,88,090/-. Aggrieved by the order of the AO the matter was carried before Ld. CIT(A). Ld. CIT(A) rejected the contention of the assessee and held that cash deposit of ₹ 1,30,99,337/- is unacc .....

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of such cases would be limited only to the aspects of information received through AIR. In the present case, Ld. AO has gone beyond the AIR information without approval of the administrative Commissioner and therefore the addition made should be deleted. He further submitted that assessee has already shown income u/s 44AD of the Income Tax Act where he has already included the sales of ₹ 40,58,112/- and therefore the above deposit of cash is out of sales turnover of the assessee. He furth .....

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d in the books of accounts prepared by the assessee further addition made by the AO is unsustainable. 6. Against this Ld. DR submitted that assessee has deposited cash in the various bank accounts. Ld. AO and Ld. CIT(A) have rightly computed the profit there under and addition is made. He vehemently supported the orders of the lower authority. He further submitted that the profit and loss account and balance sheet submitted was not before AO. 7. We have carefully considered the rival contention. .....

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s. It is an admitted fact that according to the profit and loss account submitted by the assessee at page No. 106 of the paper book sales is only of ₹ 40,58,112/-. However, the assessee has explained the total cash deposit of ₹ 1,58,03.013/- in five bank account. The claim of the assessee is that sales of the assessee is only ₹ 40,58,112/- and other receipts are on account of other cash transactions which are interbank transactions, i.e. cash deposit from one bank is out of cas .....

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from debtor s outstanding. The AO has not verified these claims specifically made before the AO vide letter dated 17.2.2014. Furthermore the Ld. CIT(A) has also not considered this aspect but has merely stating that cash book prepared by the assessee is not reliable cannot lead to the addition of the whole cash deposit as gross sales of the assessee. Furthermore assessee has shown opening balance as on 1.4.2010 in the cash book of ₹ 2,03,550/- which assessee could not explain how it has co .....

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