9911796707
TMI Blog2021 (6) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 25.11.2010, the assessee revised the gross receipt amount to Rs. 7,08,320/- and declared profit of Rs. 35,416/- u/s 44AF of the Act and also shown short-term capital gain of Rs. 66,664/- apart from "Income from other sources" of Rs. 11,415/-. The AO, thereafter, asked the assessee to explain the source of cash deposit amounting to Rs. 10,19,000/-. It was explained that the deposits are out of his savings and business receipts, etc. In support of the same, the assessee also filed a cash flow statement. However, the AO did not accept the explanation given by the assessee in absence of any evidence/source of these deposits. He, therefore, adopted the peak balance of Rs. 4,79,369/- as income from unexplained sources and added the same to the total income of the assessee. 3.1 Similarly, from the statement of affairs filed with the letter dated 25.11.2010, he noted that the assessee has invested Rs. 6,36,004/- in shares from which long-term capital gain amounting to Rs. 66,664/- was declared. Since these facts were not reflected in the original return of income, the AO made addition of Rs. 7,02,668/- (Rs. 6,36,004/- + Rs. 66,664/-). 3.2 The AO further noted from the detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,664/- Income from Other Sources REC Bonds Interest 11000 Bank Interest 415 11415 Total Income 1,13,495 Less : Deduction u/s 80C (LIC Premium) 6,279 Net Income Rs. 1,07,216 6.2. The comparison of two computations of income clearly establishes that the reason behind showing business receipts at an odd figure of Rs. 7,08.320/- was specifically to tally the figure of Net Income of Rs. 1,07,216/-. As the appellant had omitted the short term capital gain of Rs. 66,664/- in his return; he reduced the business income from Rs. 1,02,080/- to Rs. 35,416/- in revised computation so that the net income remains unchanged at Rs. 1,07,216/-. The appellant has not offered any independent evidence that supports his claim at a later stage that his turnover was Rs. 7,08,320/- instead of Rs. 1,80,560/- originally declared by him. Using the provisions of section 44AF of the Act to his advantage and its application as a tool to partly cover the unexplained cash deposits in the bank account is not permissible by statute. Therefore, there is no justification to enhance the appellant's receipts and give benefit of section 44AF of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on facts in making the said addition on factually incorrect, irrelevant and, extraneous considerations 2.2 That no show cause notice was issued by the learned Commissioner of Income Tax (Appeals) before enhancing the income and as such the enhancement is without jurisdiction. 2.3 That enhancement by the learned Commissioner of Income Tax (Appeals) in the impugned order has been otherwise made without granting fair and proper opportunity of being heard and as such, in violation of principles of natural justice and therefore, vitiated.` It is therefore, prayed that addition made by the learned Assessing Officer and sustained by the learned Commissioner of Income Tax (Appeals) may kindly be deleted and appeal of the appellant be allowed. It be further held that enhancement made by the learned Commissioner of Income Tax (Appeals) is in excess of jurisdiction." 7. The ld. counsel for the assessee strongly objected to the enhancement made by the CIT(A). The ld. Counsel for the assessee submitted that the solitary issue involved in the appeal relates to the addition of Rs. 7,98,770/- i.e., addition of Rs. 4,79,367/- and an addition of Rs. 3,19,403/- (incorrectly stated as Rs. 3,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 73 years and derives income from agriculture and ancestral land holdings. The land is situated at Fatehpuri Beri. The assessee had also enclosed Khatoni since 1984-85 which shows the landholding. So far as the opening cash of Rs. 2,50,256/- is concerned, he submitted that the assessee had substantial cash withdrawal from F.Y. 2006-07 and the cash balance is a result of both withdrawals and on account of the fact that he is carrying on the business of construction material where the receipts are in cash only. The assessee has also produced the cash book before the AO as well as the CIT(A). Therefore, without proper appreciation of the facts the ld.CIT(A) was not justified in enhancing the income of the assessee. He accordingly submitted that the addition enhanced by the CIT(A) should be deleted and the addition made by the AO also should be deleted. 10. The ld. DR, on the other hand, strongly supported the order of the CIT(A). He submitted that the ld.CIT(A), after going through the various submissions made by the assessee, has passed a very reasoned order. The ld. Counsel is not able to controvert the findings given by the CIT(A). Therefore, under the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opening cash balance of Rs. 2,50,256/-, gifts received from parents of Rs. 2,50,000/- and out of the receipt from supply of building materials, etc. 12. The ld. Counsel for the assessee filed the following reconciliation statement and submitted that if the above is considered, the total cash deficit comes to Rs. 1,66,850/-:- Particulars of Income As per AO As per CIT(A) Submissions of the appellant A) Business Income 7,08,320 1,80,560 Receipt from supply of building material 35,416 (5% of Rs. 7,08,320/-) Net Profit declared in accordance with the provision of section 44AF (5% of Rs. 7,08,320/-) Less: Expense incurred 78,480 78,480 Total 6,29840 1,02,080 35,416 Addition peak balance on account unexplained source 4,79,369 7,98,770 B) Income from capital gain Short Term capital gain 7,02,668 66,664 66,664 C) Income From other sources REC Bond Interest (Rs. 11,000/-) Bond Interest (Rs. 415/-) 11,415 11,415 11,415 Total Income (A+B+C) 18,00,462 8,76,849 1,13,495 Less: Deduction u/s 80C (LIC Premium) -- 6,279 6,279 Net Income 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enior citizens and the father is deriving income from agriculture, at the same time, the gift was received in cash and, therefore, in absence of any other documentary evidence, the source of the parents to extend gift of Rs. 2,50,000/- to the assessee remains doubtful. However, some funds must be available with the parents who are very senior citizens to extend gift to their son. Therefore, gift of Rs. 1 lakh each by both the parents to the assessee under the facts and circumstances may be considered as reasonable to be explained as available to the assessee for deposit. Therefore, the claim of the assessee that he has received gifts from parents to the tune of Rs. 2,50,000/- is not accepted in full and gifts only to the tune of Rs. 2 lakh is accepted as explained for depositing in the bank account. So far as the cash available for deposit in the bank out of earlier withdrawals is concerned, here also the same is on estimation basis. The assessee has given the break-up of such cash available for re-deposit in the bank account to the tune of Rs. 3,92,330/-. However, after going through the same, I am of the considered opinion that an amount of Rs. 3,50,000/- may be accepted for earl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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