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2016 (11) TMI 450 - AT - Income TaxAdoption of profit @10% of the undisclosed contract receipt - Held that - The impugned undisclosed receipt was on account of payments directly made by the parties of assessee to the truck owners and tax was deducted at source in the name of assessee. There was a reasonable cause on the part of assessee in not being able to enter such direct payments to truck owners in its books of account. Further the impugned gross receipt cannot be treated as income as it is in the nature of freight charges and the profits element in the impugned receipt can only be taxed and not the gross amount. Therefore, ld. CIT(A) has rightly sustained the addition to the extent of 10% of the gross receipt. - Decided against revenue Unexplained on account of unexplained cash deposit - Held that - As the impugned bank account in which cash has been deposited has been shown in the regular books of account and all the debits and credits in this bank account have been reflected in the related account in the books and the closing bank balance of SB account is also shown in the audited balance sheet as observed by ld. CIT(A). Certainly there is no element of unexplained cash credit so as to invoke provisions of section 68 of the Act as the impugned amount of ₹ 39,21,381/- is duly explained either as business receipt or out of regular cash withdrawal. We therefore, find no reason to interfere with the order of ld. CIT(A) and uphold the same. - Decided against revenue
Issues Involved:
1. Adoption of profit percentage on undisclosed contract receipts. 2. Deletion of addition made on account of unexplained cash deposits. Issue-wise Detailed Analysis: 1. Adoption of Profit Percentage on Undisclosed Contract Receipts: The Revenue challenged the decision of the CIT(A) regarding the adoption of a 10% profit rate on undisclosed contract receipts amounting to ?16,02,907/-. The Assessing Officer (AO) initially observed a discrepancy between the gross receipts shown in the books (?44,95,417/-) and the amount reflected in Form 26AS (?60,98,324/-), leading to an addition of ?16,02,907/- for suppressed receipts. The CIT(A) noted that the discrepancy was due to payments made directly by payer parties to truck owners, with TDS deducted in the name of the assessee. The CIT(A) reasoned that only the profit element from these receipts should be taxed, not the gross amount. Consequently, the CIT(A) sustained an addition of 10% of the undisclosed receipts, amounting to ?1,60,300/-, and deleted the remaining ?14,42,607/-. The Tribunal upheld the CIT(A)'s decision, agreeing that the gross receipts could not be treated as income and only the profit element should be taxed. The Tribunal found no reason to interfere with the CIT(A)'s findings and dismissed this ground of the Revenue's appeal. 2. Deletion of Addition on Account of Unexplained Cash Deposits: The AO made an addition of ?39,21,381/- under Section 68 for unexplained cash deposits in the assessee's bank account. The assessee contended that the bank account was duly disclosed in the regular books, audited, and all transactions were accounted for. The CIT(A) examined the bank account and found that the deposits and withdrawals were business transactions. The CIT(A) concluded that the cash deposits were either business receipts or withdrawals from the account and directed the deletion of the addition. The Tribunal reviewed the CIT(A)'s findings and the submissions made by the assessee. It observed that the bank account was reflected in the regular books and the closing balance was shown in the audited balance sheet. The Tribunal found no element of unexplained cash credit and upheld the CIT(A)'s decision to delete the addition. This ground of the Revenue's appeal was also dismissed. General Grounds: Ground Nos. 3 and 4 were of a general nature and did not require adjudication. Conclusion: The appeal filed by the Revenue was dismissed in its entirety. The Tribunal upheld the CIT(A)'s decisions regarding the adoption of a 10% profit rate on undisclosed receipts and the deletion of the addition for unexplained cash deposits. The order was pronounced in the open court on 30th September 2016.
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