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TMI Blog2015 (10) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 3,99,560. During the course of the assessment proceedings, the AO observed that an amount of Rs. 34,52,500 was deposited as cash on various dates in the bank account maintained with Vysya Bank, Labbipet Branch, Vijayawada and in absence of any details and explanation for sources for cash deposits, entire cash deposits were treated as unexplained income of the assessee while finalising the proceedings u/s. 144 of the Income-tax Act, 1961. During the course of appellate proceedings the assessee objected to the treatment of cash deposit as unexplained income of the assessee on the ground that the proceedings were finalized u/s. 144 of Income Tax Act. The assessee submitted that they received gross contract receipts of Rs. 1,24,08,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also furnished contract account, bank account, contract agreement etc. It was contended that the AO is not justified in holding that nexus between the cash deposits and sources could not be established just because the main contractor and Sri Sanjeeva Reddy were not produced before the AO. It was also contended that cash deposit of Rs. 33,58,000 received from main contractor i.e. payer was included in total gross contract receipts of Rs. 1,24,08,000 shown in the P&L Account which was prepared for computing the taxable business income of the assessee. It was also contended that just because TDS was not made, the contract receipts of Rs. 33,58,000 cannot become make believe transactions, as opined by the AO. The assessee relied on the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood at Rs. 1,24,08,000 and the books of the assessee were not rejected. Hence, the CIT(A) held that the contract payment received in cash to the extent of Rs. 33,58,000/- explain the cash deposits into the bank account and merely because the contractor did not appear before the AO the transaction cannot be held to be a make believe one. It was also pointed out by the CIT(A) that the bank account of the assessee explain the receipts both in cash and cheque from the contractor and hence the details of cheque payment as well as the cash payments cannot be held to be a make believe transaction. The AO cannot believe the cheque payment alone will disbelieving the payment received in cash. The CIT(A) pointed out that the assessee has complied w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case. 3. The learned Commissioner of Income-tax (Appeals) is not justified In law in confirming an addition of Rs. 94,500/- made by the assessing officer under the provisions of section 68 of the Act, being unexplained cash credit under the facts and circumstance of the case. 4. The learned authorities failed to appreciate the fact that the cash deposits in the bank accounts are from the cash available in the books of the Respondent / Cross Objector under the facts and circumstances of the case. 5. The Respondent / Cross Objector denies itself liable to be charged to interest under section 234 B & 234 C of the Income Tax Act under the facts and circumstances of the case. Further the levy of interest under section 234 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cash deposits into bank account, the assessee was able to establish the sources for Rs. 33,58,000 only. The assessee had explained that the cash receipts towards the contract amounts from the contractor for the year was only Rs. 33,58,000 and hence balance of Rs. 94,500 was left unexplained. The CIT(A) has rightly held that the amount of Rs. 33,58,000 which have been explained as cash receipts towards contract payment is to be deleted. We find no infirmity in the order of the CIT(A) on this count. Hence, we dismiss the Department's appeal. 10. With respect to the retention of addition of Rs. 94,500 made by the AO, the CIT(A) has rightly held that u/s. 68 addition can only be made when the assessee fails to explain the cash credit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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