2017 (6) TMI 559 - AT - Income Tax

Addition on account of cash deposited in bank - mismatch between the amounts of gross receipt shown by assessee vis-a-vis total deposits made by assessee during the year - Held that - Admittedly, the assessee has filed his return of income declaring total gross receipt of ₹20,45,960/- u/s. 44AF of the Act. This fact has not been disputed by Authorities Below. Once the turnover has been accepted then no further addition can be made on account of money deposited in the bank account of assessee. Once the turnover has been accepted then no further addition can be made on account of money deposited in the bank account of assessee. On perusal of bank account we find that there are regular deposits and withdrawn of money. Even assuming that all the deposits are income of assessee then the benefit of withdrawal should be given by the Authorities Below. AO cannot on one hand take all the deposits as income of the assessee without giving the benefit of withdrawal. The turnover shown by assessee is exceeding the total amount of deposit made in his bank account. - Decided in favour of assessee.

Summary

Issues:
Addition on account of cash deposited in bank.

Analysis:
The appeal involved the issue of confirming the addition of ?19,85,008 on account of cash deposited in the bank. The Assessing Officer observed a mismatch between the gross receipts shown by the assessee and the total deposits made. The AO treated the entire deposit as concealed income under section 68 of the Income Tax Act, 1961. The assessee contended that the deposits represented the total turnover of the business and were duly incorporated in the gross receipts shown in the income tax return. The CIT(A) partially granted relief, confirming the addition only to the extent of ?19,85,008. The assessee appealed, arguing that since the deposits were already considered in the turnover, adding the same amount as undisclosed income was unjustified. The AR reiterated that all deposits were part of the turnover declared in the return. The Tribunal noted that the turnover declared was not disputed, and all deposits were part of it. The Tribunal found that the turnover exceeded the total deposits, and the AO had not considered the benefit of withdrawals. Thus, the Tribunal allowed the appeal, directing the AO accordingly.

In conclusion, the Tribunal allowed the assessee's appeal, overturning the CIT(A)'s decision and directing the AO to delete the addition to the extent of ?10,67,992, confirming the balance addition of ?19,85,008. The Tribunal found that since the turnover declared already included all deposits, no further addition on account of the deposited amount was justified. The Tribunal emphasized that the AO should consider the benefit of withdrawals when treating deposits as income.