2015 (10) TMI 1709 - AT - Income Tax

Unexplained cash deposits in the savings account - Assessing Officer held that the appellant is not engaged in any kind of business - Held that - Sale in Cash is deposited with Bank and all Cash Deposited is withdrawn at the time of payment within one or Two day of Deposits. Cash is deposited into Bank to avoid Loot/Theft. Assessee is regularly filing the income tax return from his business income and from LIC commission being agent, hence, it cannot be said that the assessee is not engaged in the business of supply of rice, grain etc. We also find considerable cogency in the assessee s contention that no the details of vouchers and bills were not produced before the AO as well as before the Ld. CIT(A) for reasons mentioned above. Therefore, in our considered opinion, there is a need to examine in detail that how much the undisclosed income of the assessee is from his business or from the LIC commission being agent, after verifying the documents, bills and vouchers. Therefore, in the interest justice the issues in dispute are remitted back to the Assessing Officer to decide the same denovo. Needless to add that the assessee should be given adequate opportunity of being heard. Assessee is also directed to cooperate with the AO and submit all the details, bills and vouchers in support of his contention. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Addition of peak deposit as income from undisclosed sources.
2. Double taxation of the same income.
3. Failure to produce evidence of being engaged in business.
4. Consideration of business income and LIC commission.

Analysis:
1. The case involved the addition of peak deposit as income from undisclosed sources. The Assessing Officer held that the appellant had deposited cash out of undisclosed sources, adding the peak deposit as income. The Ld. CIT(A) confirmed a balance amount of the addition after directing a reduction of declared business income from the peak deposit to avoid double taxation.

2. The issue of double taxation arose as the Assessing Officer did not reduce the declared business income from the peak deposit. The Ld. CIT(A) recognized this error, directing the reduction of the declared income to prevent double taxation, as it is not allowed under the Income Tax Act.

3. The appellant failed to produce evidence of being engaged in the business of supply of rice, grain, etc., both before the Assessing Officer and the Ld. CIT(A). The absence of bills, vouchers, or books supporting the claim led to the conclusion that the appellant was not engaged in any business, resulting in the addition of income from undisclosed sources.

4. The appellant contended that he was a Retail Trader of Food Grains and filed returns under section 44AF. He detailed the cash transactions in purchasing and selling rice and channa, emphasizing the lack of bills from agriculturists. The appellant regularly filed returns from business income and LIC commission, indicating engagement in the business. The Tribunal found merit in the appellant's contentions and remitted the issues back to the Assessing Officer for detailed examination, directing cooperation and submission of relevant details, bills, and vouchers.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the need for a thorough examination of the appellant's business income and LIC commission to determine the undisclosed income accurately.