2023 (2) TMI 80 - AT - Income Tax

Addition u/s. 69A - cash deposits made by an appellant treating it as unexplained money - declaration made by the assessee u/s. 44AD as offered 8% on the cash deposits - HELD THAT - We find that considerable force in the arguments made by the assessee counsel as the assessee filed her Return of Income declaring profit u/s. 44AD of the Act. The assessee has not maintained proper books of accounts and the assessment also being a reassessment for the assessment year 2010-11 completed in 2017, the assesse could not maintain proper records. On the various case laws relied by the assessee were consistently held that addition by estimating for profit @5% on sale of unregistered dealers/purchases which has been reduced to 1.25% by Ld. CIT(A), Jamnagar which were being upheld by Co-ordinate Bench of this Tribunal. It is demonstrated by the assessee before us in various six other assessee s cases, the additions made by the Assessing Officer were reduced to 5% by the Ld. CIT(A). In the present case, the assessee has offered 8% on the cash deposits made in her bank account, which we found a reasonable declaration made by the assessee u/s. 44AD of the Act. Thus the grounds raised by the assessee is hereby allowed and the additions made by the lower authorities are deleted. Appeal filed by the Assessee is hereby allowed.

Summary

Issues Involved:
1. Timeliness of the appeal filing.
2. Addition of unexplained money based on cash deposits.
3. Rejection of assessee's explanation and confirmation of addition by lower authorities.
4. Appeal against addition of unexplained money.
5. Arguments presented by both parties.
6. Consideration of case laws and previous judgments.
7. Decision and outcome of the appeal.

Issue 1: The appeal was noted as time-barred by 2 days, but the delay was condoned, and the appeal was accepted for hearing.

Issue 2: The case involved an individual engaged in trading who deposited a significant amount in a bank account. The Assessing Officer added the deposited amount as unexplained money due to the inability to provide evidence for cash sales, resulting in a tax demand.

Issue 3: The assessee argued that the cash deposits were from sales, and profit was declared under Section 44AD of the Act. However, the lower authorities dismissed the explanation, stating the lack of evidence and failure to maintain proper records, upholding the addition of unexplained money.

Issue 4: The assessee appealed against the addition of unexplained money, reiterating the profit declaration and comparing the case to others where profit estimations were reduced by the CIT(A) or ITAT.

Issue 5: The assessee's counsel reiterated arguments, emphasizing the nature of transactions and the reasonable profit declaration based on trading activities. The Revenue supported the lower authorities' decision, citing the lack of produced documents.

Issue 6: After careful consideration and reviewing the records, the Tribunal found merit in the assessee's arguments. Citing previous judgments, the Tribunal noted consistent reductions in profit estimations for similar cases and accepted the assessee's 8% profit declaration, leading to the deletion of the additions made by the lower authorities.

Issue 7: The appeal filed by the Assessee was allowed, and the additions made by the lower authorities were deleted based on the reasonable profit declaration and comparison with similar cases.

The judgment addressed the timeliness of the appeal filing, the addition of unexplained money based on cash deposits, the rejection of the assessee's explanation by lower authorities, the subsequent appeal against the addition, arguments presented by both parties, consideration of relevant case laws and judgments, and ultimately led to the allowance of the appeal and deletion of the additions.