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TMI Blog2024 (7) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... an order of assessment under section 143(3) read with 147 of the Act. 2. That the Learned Assessing Officer has erred both in law and on facts in making an addition of INR 21,51,200 erroneously held to be unexplained credit under section 68 of the Act read with section 115BBE of the Act. 3. That the Learned Assessing Officer after has even otherwise failed to appreciate that cash sales since have already been offered as income by the appellant could not presumptively be rejected and held as unexplained money so as to tax the same under section 68 of the Act, when the section 68 of the Act itself is wholly inapplicable to the income already offered and accepted in the order of assessment as income of trading results by the appellant in the return of income. 4. That the Leaned Assessing Officer has erred in facts and laws in rejecting the fact that Appellant's business nature is such that dealing in cash cannot be ignored. And the Appellant has taken all the credit entries in bank account as sale and offered to tax under section 44AD of the Act. 5. That the Appellant prays for leave to add, amend or vary any ground either before or at the time of hearing of appeal. 3. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO rejected the contentions of the assessee, and made the addition of Rs. 21,51,200/- to the income of the assessee as unexplained cash credit u/s. 68 of the Act, with respect to cash deposit of Rs. 21,51,200/- made by the assessee in its saving bank account number 085104000023913 maintained with IDBI Bank, Memnagar Branch, as the assessee failed to explain the sources of cash deposit to prove the creditworthiness and genuineness of the transaction. 5. Aggrieved, the assessee filed first appeal with Ld.CIT(A), who dismissed the appeal of the assessee. Before Ld.CIT(A), the assessee stated that the assessee is in the business of retail trade of selling of Fruits and Vegetables, and it was explained that in this business sale/trade in cash is normal. The ld. CIT(A) observed that there was a huge cash deposits in the bank account maintained by the assessee with IDBI Bank. The assessee has not filed return of income u/s 139, and the sources of cash deposits remained un-verifiable. The ld. CIT(A) affirmed the action of the AO in invoking provisions of Section 147/148 of the 1961 Act, and dismissed the legal ground raised by the assessee challenging reopening of the assessment u/s 147 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility is to pay income-tax is @ 8% of the total turnover of the assessee. There is no requirement of maintaining books of accounts under the presumptive scheme of taxation. It was submitted that the assessee does not have any evidence of carrying on of the business, and there are no proof available of doing aforesaid business by the assessee. It was submitted that Section 68 of the 1961 Act cannot be invoked when there are no books of accounts maintained and also the assessee claimed that the bank pass book could not be treated as books of accounts, and hence Section 68 could not have been invoked by the AO to make additions to the income of the assessee w.r.t. cash deposit of Rs. 21,51,200/- made by the assessee in his bank account maintained with IDBI Bank. The ld. counsel for the assessee relied upon the following decisions : a) ITAT, Gauhati in the case of Smt. Madhu Raitani v. ACIT, (2011) 45 SOT 231(Gau. TM) b) ITAT, Raipur in the case of Kuldeep Jiwan Mahant v. ITO (2023) 157 taxmann.com 532(Raipur) c) Judgment and order of Hon'ble Bombay High Court in the case of Bahichand N Gandhi v. CIT, (1982) 11 Taxman 52(Bom.) d) ITAT, Mumbai(SMC) in the case of Smt. Manasi Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of filing of return of income is not enclosed by the assessee, but acknowledgment number mentioned in Form No. 35 is 385442400061218 dated 06.12.2018). Thus, as could be seen Return of income was filed on 06.12.2018, and the AO passed reassessment order on 07.12.2018 u/s 143(3) read with Section 147, although notice u/s 148 was issued by AO on 29.03.2018. The assessee could not give any explanation/evidences before the AO regarding the business carried on by the assessee, which led AO to invoke provisions of Section 68 of the 1961 Act and additions to the tune of Rs. 21,51,200/- were made by the AO to the income of the assessee vide reassessment order dated 07.12.2018, being unexplained cash deposits in the saving bank account maintained by the assessee with IDBI bank. In the appellate proceedings before the Ld.CIT(A), the assessee submitted that he was carrying on retail business of fruits and vegetables and has received cash from the trading of fruits and vegetable, which sale proceeds received in cash were deposited in the saving bank account maintained by the assessee with IDBI Bank, but still the assessee did not submitted any evidences before ld. CIT(A) as to actual carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading'. The share trading business is a highly regulated business which is regulated by SEBI, Stock Exchanges, MCA, RBI and other regulatory government authorities. There is a bar on making and receiving of payments towards share trading in cash and the transactions are carried out through registered brokers/sub-brokers( registered and approved by SEBI) who are members of Recognized Stock Exchanges, rather it is regulated to such an extent that there is a bar on share brokers from receiving bank payments even from third party bank accounts other than from the bank account of the person carrying on share trading. Thus, in nut-shell there are stringent regulations which govern share trading. The assessee is not coming out with the clean hands. In order to avail presumptive scheme of taxation u/s 44AD, the assessee has to be in an eligible assessee engaged in the eligible business. Thus, the primary onus is on the assessee to prove that he is an eligible assessee engaged in the eligible business, and revenue authorities are within their right to verify the facts as to nature of the business carried on by the assessee and to see whether the said business is an eligible business as is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he falls within the four corners of the beneficial scheme as is contemplated by the applicable provisions of Section 44AD. Reference is drawn to Constitutional Bench judgment and order of Hon'ble Supreme Court in the case of Commissioner of Customs v. Dilip Kumar, in Civil Appeal no. 3327 of 2007, dated 30.07.2018. Once the primary onus is discharged, then it is for the Revenue to rebut the contentions of the assessee with cogent evidences. In my considered view, based on the facts and circumstances in the instant case, the assessee has not discharged even its primary burden of explaining the nature of its business, his eligibility to avail the beneficial scheme of taxation u/s 44AD and also the admitted transactions in his bank account wrt cash deposits to the tune of Rs. 21,51,200/-, the sources of such cash deposits remained unexplained. The initial and primary burden is on the assessee to explain sources of all the credits in his bank account and to substantiate genuineness of the transactions, creditworthiness and identity of the creditors. The Provisions of Sub-section 5 of Section 44AD as it was prevailing at the relevant time(now there is an amendment) that no books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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