2021 (4) TMI 154 - AT - Income Tax

Addition of unexplained deposits in the bank account maintained by the assessee - HELD THAT - The return so filed u/s 44AD has been accepted by the Assessing officer which in effect means the declarations and disclosure so made by the assessee in terms of carrying on diary business, non-maintenance of books of accounts and gross receipts from such business has since been accepted by the Assessing officer. In such a scenario, where there are cash and other credits in the bank account maintained by the assessee which are less than the gross receipts from diary business so declared by the assessee, we find the explanation offered by the assessee that such deposits are from his diary business as a plausible explanation in absence of anything contrary on record in terms of any other source of income - We find force in the contention so advanced by the ld AR that the source of cash and other deposits in the bank account is out of assessee s dairy business and gross receipts thereof have already been offered in the return of income.The addition so made by the Assessing officer is hereby directed to be deleted. - Decided in favour of assessee.

Summary

Issues:
Appeal against addition of unexplained deposits in bank account.

Analysis:
The appeal was filed against the addition made by the Assessing Officer for unexplained deposits in the bank account of the assessee. The Assessing Officer added amounts towards cash deposits and credits in the bank account, which were confirmed by the ld CIT(A). The assessee contended that the deposits were from the dairy business and should not be separately added as they were less than the gross receipts declared in the return of income. The assessee relied on legal precedents to support this argument.

During the hearing, the assessee's representative argued that the source of cash and other deposits in the bank account was from the dairy business. The Assessing Officer did not provide any other source of income and accepted the gross receipts declared by the assessee. The representative cited decisions from the Punjab and Haryana High Court and other cases to support the contention that no separate addition should be made based on bank deposits when they are less than the declared gross receipts.

On the other hand, the Departmental Representative argued that the assessee failed to provide documentary evidence to substantiate the claim regarding the dairy business. The Department contended that without evidence, it was not possible to verify if the declared receipts were indeed from the dairy business. The Department also highlighted that the source of cash and credits in the bank account remained unverified due to the lack of response from the assessee.

The Tribunal noted that the assessee's return of income under section 44AD, declaring gross receipts from the dairy business, had been accepted by the Assessing Officer. In the absence of any contrary evidence, the explanation offered by the assessee that the deposits were from the dairy business was considered plausible. The Tribunal referred to a decision of the Punjab and Haryana High Court to support this view.

Based on the discussion and legal precedents, the Tribunal concluded that the addition made by the Assessing Officer should be deleted. The Tribunal found merit in the argument that the deposits were sourced from the dairy business, as already declared in the return of income. Consequently, the appeal filed by the assessee was allowed. Other legal grounds raised by the assessee were deemed infructuous in light of the decision on the addition made by the Assessing Officer.