2024 (8) TMI 45 - AT - Income Tax

Addition of specified bank notes u/s. 69A - AO treated the entire cash deposits during the demonetisation period as unexplained investment u/s. 69A and section 115BBE - HELD THAT - We note that the cash deposits during demonetisation is only Rs. 3,25,000 and the CIT(A) has allowed Rs. 75,000 and only issue is for balance of Rs. 2,50,000 is before us. We are of the view no purpose will be served if the issue is remitted to AO since the assessee has not maintained any books of accounts, therefore we proceed to adjudicate the issue on merits. We note from the monthly sales submitted before the CIT(A) that business has been carried out by the assessee only for 10 months. From the purchase and sales for the month of September, October and November 2016 is not extraordinary in trends. Therefore keeping cash of Rs. 3,25,000 is meagre and assessee has also submitted that cash deposited is related with the turnover from 9.11.2016 to 16.11.2016 for 8 days and remaining cash was before 8.11.2016. If we consider the average sales per day for 26 days in a month, turnover comes to Rs. 32,780. Accordingly turnover for 8 days is Rs. 2,62,240 which is more than the disallowed amount of Rs. 2,50,000. Since the assessee has not maintained books of account therefore on the basis of calculating arithmetical figure and considering the nature of business and turnover of the assessee and very less amount of cash deposits, we allow this ground. Invoking of section 44AD - estimation of income at 8% of turnover - HELD THAT - We do not find any infirmity in the order of CIT(Appeals) and the assessee is unable to prove that it is exempt towards eligible business and eligible assessee is defined u/s 44AD and assessee has also not maintained any books of account. He has not complied other provisions for showing lower profit. We hold that the order of the CIT(Appeals) on this point for estimating profit @ 8% is justified. Appeal by the assessee is partly allowed.

Summary

The Appellate Tribunal ITAT BANGALORE, consisting of Smt. Beena Pillai as Judicial Member and Shri Laxmi Prasad Sahu as Accountant Member, heard an appeal filed by the assessee against an order from the CIT(Appeals) at the National Faceless Appeal Centre, Delhi, for the AY 2017-18. The appeal contested two grounds: the addition of Rs. 2,50,000 as unexplained investment under section 69A of the Act, and the estimation of income at 8% of a turnover of Rs. 85,22,740. The case involved an assessee who deposited cash during the demonetization period and did not file a return of income. The AO treated the cash deposits as unexplained investments under section 69A, leading to an assessment order. The CIT(A) partially allowed the appeal, considering the turnover and profit margin of the assessee, who argued that the profit estimate was unjustified due to low margins. The ITAT, after considering the submissions, upheld the CIT(A)'s decision on both issues, partly allowing the appeal. The decision was pronounced on July 30th, 2024.