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TMI Blog2020 (1) TMI 1354X X X X Extracts X X X X X X X X Extracts X X X X ..... ing days of the financial year and maintenance of huge balance in a particular period cannot be the basis to doubt the genuineness of the cash book. Cash was withdrawn from bank despite cash balances being available in the cash book, cannot be the basis to doubt the genuineness of the cash book. The presence of sundry creditors and the fact that the Assessee could have discharged sundry creditors instead of having cash in hand cannot also be the basis to doubt the genuineness of the cash availability as per cash book. Therefore the addition deserves to be deleted as the source of funds for cash deposit in the bank account stands duly explained and therefore the addition sustained by the CIT(A) deserves to be deleted and is hereby directe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of a sum of ₹ 27,616/- being contribution to Contractors Benevolent Fund (CBF) on the ground that the said sum is not allowable u/s.36(1) of the Act. The AO found that the Assessee had deposited cash totalling ₹ 51,34,000/ in his bank account. Since the source of funds remained unexplained the AO added 50% of the cash deposited in the bank account viz., a sum of ₹ 25,67,000/-. The AO according determined the total income of the Assessee as follows:- COMPUTATION OF ASSESSED INCOME Income returned 1655650 Add: Addition on account of difference in Turnover 492318 Addition on account of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sec.145(3) of the Act and estimated the income of the Assessee @ 8% of the contract receipts as per Form AS 26 viz., a sum of ₹ 3,28,21,904/- which resulted in the income from business being estimated at 26,25,752. Income from business was accordingly determined by the AO at ₹ 26,25,752 and the other additions to income under the head income from business was deleted by the CIT(A). 4. As far as the addition of ₹ 25,45,279, which was added by the AO as unexplained cash deposited in bank account, the Assessee claimed before CIT(A) that the source of funds was out of cash received in the course of business which is duly reflected in the cash book of the Assessee. The CIT(A) called for a remand report from the AO on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sits made by the assessee stands explained. However, I would like to bring it on record that the Books of Accounts claimed to be maintained by the assessee and produced for verification found o defective, not reliable and suffers from following major defects: i) Considering the meagre Opening and Closing Cash Balance of ₹ 41,468/- and ₹ 8,222/- respectively, the assessee purported to have maintained disproportionately huge Cash Balance during the period from 04/04/2014 (₹ 21,97,468) to 24/02/2015. ii) With huge cash balance in Books, the assessee keep on drawing the cash from Bank which creates doubt about correctness Cash Balance as per Books. Few of such instances are produced as under: Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount. In view of this, I am unable to vouch the veracity of books of accounts produced before me for verification. Accordingly. I request the CIT(A) to dispose off the case on its merits. 5. The CIT(A) accepted the remand report and held that the source of funds to the extent of ₹ 25,67,000/- being cash deposits in the bank account remained unexplained. The CIT(A) however gave benefit of the telescoping the addition sustained by him whereby 8% profit rate was applied on the turnover of ₹ 3.28,21,904/-, which resulted in an addition of ₹ 11,20,584/-. To the extent of ₹ 11,20,584 which was the increase in business income of the Assessee consequent to rejection of books and estimation of profits of business of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bank account stands duly explained and therefore the addition sustained by the CIT(A) should be deleted. The learned DR relied on the order of the CIT(A). 7. I have considered the rival submission and am of the view that the addition of ₹ 26,57,000/- sustained by the CIT(A) deserves to be deleted and therefore the question of allowing telescoping benefit does not arise for consideration at all. As rightly submitted by the learned counsel for Assessee, the AO having accepted the correctness of the cash book in paragraph-6 of his remand report was not justified in expressing some doubts on the genuineness of the cash book maintained by the Assessee. As argued by him, the fact that there was low cash balance during the opening a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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