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TMI Blog2015 (11) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... e credits in the said bank account to the extent of ₹ 22,25,000/- and held that the same has to be construed as turnover of the assessee and net profit to be determined at the rate of 6% thereon as he found that profits from undisclosed business would normally be higher than the regular business profits as the assessee need not incur certain expenditure thereon. We also find that the finding given by the Learned CITA that the only source of income of the assessee is his income from contract / sub contract business has not been refuted by the revenue. Hence we are in agreement with the findings given by the Learned CITA in this regard. - Decided against revenue Addition on undisclosed sundry debtor - CIT(A) deleted the addition - Held that:- CITA had given a categorical finding of the manner in which the security deposit was created in the earlier years and these findings have not been refuted by the revenue . Moreover, we hold that since the security deposits were made in the earlier years, the same cannot be the subject matter of addition as undisclosed income u/s 69 of the Act in the assessment year under appeal. Hence we are not inclined to interfere with the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee disclosed ₹ 2,64,20,951/- as its gross receipts. The gross contract receipts as per NSDL TDS records was ₹ 2,67,77,057/-. This was one of the defect noticed by the Learned AO in the details submitted by the assessee vis a vis the books of accounts maintained by the assessee. The Learned AO also found that the assessee had maintained a savings bank account with Allahabad Bank, Gariahat Branch, Kolkata which was also not disclosed in the books of accounts maintained by the assessee and accordingly found it as a defect in the books of accounts and proceeded to reject the books of accounts and determine the profit on an estimated basis u/s 145(3) of the Act. The net profit was estimated at 8% of gross receipts by the Learned AO and determined at ₹ 21,42,165/- (8% of ₹ 2,67,77,057/-). On first appeal, the same was brought down to 4% by the Learned CITA based on the average profit ratio of the assessee in the earlier years. Aggrieved, the revenue is in appeal before us on the following ground:- 1. That the ld. CIT(A) has erred in applying lower estimated rate of profit from business of the assessee being a civil contractor, after accepting the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed bank account, a sum of ₹ 22,25,000/- was also found credited. This was initially informed by the assessee as unsecured loans. However, no details for the same were produced before the Learned AO. Later the Learned CITA treated the sum of ₹ 22,25,000/- as turnover from undisclosed business of the assessee of being a contractor / subcontractor and determined the net profit thereon at 6% of turnover of ₹ 22,25,000/- . The Learned CITA also held that the only source of income for the assessee is from his contract business and the Learned AO having rejected the books of accounts and resorting to determine the net profit from business on an estimated basis, cannot make any separate addition towards peak credit from the undisclosed bank account and agreed to the proposition of the assessee that the credits in the said bank account are only towards business receipts. Accordingly, the Learned CITA directed the Learned AO to delete the addition towards peak credit in the sum of ₹ 91,96,120/- and directed to add 6% of sum of ₹ 22,25,000/- as business profits of the assessee in addition to the regular business profits added as per ground no.1 hereinabove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness profits as the assessee need not incur certain expenditure thereon. We also find that the finding given by the Learned CITA that the only source of income of the assessee is his income from contract / sub contract business has not been refuted by the revenue. Hence we are in agreement with the findings given by the Learned CITA in this regard. Accordingly, the ground no.2 raised by the revenue is dismissed. 5. The third issue to be decided in this appeal is as to whether the Learned CITA is justified in deleting the addition made in the sum of ₹ 9,01,870/- towards undisclosed sundry debtor. 5.1. The brief facts of this issue is that the assessee made a security deposit of ₹ 9,01,870/- with M/s Westinghouse Saxby Farmer Ltd for whom the assessee worked as a sub-contractor. As the payment of said security deposit was not reflected in the balance sheet filed by the assessee, the Learned AO proceeded to add the same as unexlianed investment u/s 69 of the Act. On first appeal, the Learned CITA found that M/s Westinghouse Saxby Farmer Ltd is controlled by Government of West Bengal and the said security deposit was made in the earlier years by the assessee and not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. In any case, we find that the Learned CITA had given a categorical finding of the manner in which the security deposit was created in the earlier years and these findings have not been refuted by the revenue . Moreover, we hold that since the security deposits were made in the earlier years, the same cannot be the subject matter of addition as undisclosed income u/s 69 of the Act in the assessment year under appeal. Hence we are not inclined to interfere with the findings of the Learned CITA in this regard. Accordingly, the ground no. 3 raised by the revenue is dismissed. 6. The last issue to be decided in this appeal is as to whether the Learned CIT(A) is justified in deleting the addition of ₹ 74,826/- towards interest on fixed deposits by reckoning the same as business income as against the claim of the Learned AO as income from other sources. 6.1. The brief facts of this issue is that the assessee had derived interest income on fixed deposits of ₹ 74,826/- and credited the same in his profit and loss account and claimed the same as business income as the assessee had invested in fixed deposits and utilized the same as a security for availing overdraft facil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find that the Learned CITA had only accepted to the contentions stated by the assessee during first appellate proceedings and proceeded to accept the claim of the assessee. No evidences were produced to support the contentions of the assessee in this regard either before the Learned CIT(A) or before us. In the absence of clear evidences to prove the business nexus of investing the fixed deposits, the resultant interest income had to be taxed only as income from other sources. We also draw support from the decision of the Hon ble Supreme Court to support our view in the case of Pandian chemicals Ltd vs CIT reported in 262 ITR 278 (SC). This decision was rendered in the context of granting deduction of interest income on electricity deposits for the purpose of section 80HH of the Act. In this case, the Hon ble Apex court held that though electricity is required for the purpose of running the industrial undertaking it cannot be construed that interest derived from such electricity deposits could be treated as profits derived from such industrial undertaking for the purpose of section 80HH of the Act. Applying the same analogy to the facts of the instant case, we hold that the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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