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TMI Blog2022 (7) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... nt assessee as he failed to place on record any cogent evidence as stated by the ld. DR. Not only that it has been observed that the income which is arising and offered in the return of income by the assessee is far less then this amount introduced in the firm. Therefore, the argument of the ld. AR is incorrect on fact and in the absence of any evidence and income being offered as arise from these unaccounted transactions as alleged and decided by us should be considered to substantiate the introduction of cash in the firm to the extent of that income and therefore, this ground of appeal is partly allowed and therefore, the AO is directed to reduce the addition to that extent of income decided as per Ground No. 1 above. In the result, Ground No. 2 is partly allowed. - ITA No. 03/JP/2022 - - - Dated:- 8-7-2022 - SHRI SANDEEP GOSAIN , JM And SHRI RATHOD KAMLESH JAYANTBHAI , AM Assessee by : Sh. S. L. Poddar ( Adv. ) Revenue by : Sh. A. S. Nehara ( Addl. CIT ) ORDER PER : RATHOD KAMLESH JAYANTBHAI , A. M. This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 13/12/2021 [here in after (NFAC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip firm M/s Dhansil Eicher Tractors and income from other sources of Rs.1,07,837/-. Thus, the assessee has declared total income of Rs.3,00,580/-. 4.2 In the course of assessment proceedings made u/s 143(3) in the assessee's own case for A.Y. 2014-15, it was come to notice that the assessee was maintaining a bank account with OBC Bank, Branch Govindgarh, Chomu, Jaipur (A/c No. 15482191003022) and the same was not disclosed to the department and was not considered the transactions recorded therein for computing total income. Considering the facts, the case was completed on 28.12.2016 u/s 143(3) and addition of Rs.44,22,108/- was made u/s 68 of the I.T. Act 1961 on account of cash deposited in the bank account. As, the assessee was also operating this account in previous year (F.Y. 2012-13) also and there was total cash deposit of Rs.53,83,000/-, therefore considering the facts, necessary reasons were recorded and after getting necessary approval, notice u/s 148 was issued and case of assessee for current period was re-opened. 4.3 During the course of re-assessment proceedings, the AR of the assessee filed written submission dated 30.10.2017 on the issue of source of cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiny, then the existence of this bank account would not have been known to the Income tax Department. Secondly, the account is in the he partnership firm M/s. Dhansil name of the appellant while the business of trading of tractors and parts is done by Eicher Tractors. The appellant is only a partner in the firm which is dealing with trading of tractors and parts. It is important to note here that the appellant has disclosed income from business and profession only as remuneration and interest received from partnership firm. Therefore, it does not stand to reason that the bank account maintained in the name of the appellant would be used for the business of the firm. The appellant has stated that the AO has only considered the deposits and not the withdrawals. However it is seen from the assessment order that the appellant to whom the payment of Rs.11 lacs were made on had not provided the details to whom the 26.02.2013 through cheque from the bank account. Further, the AO has mentioned in the assessment order that in the bank account, there were only cash deposits between the period 03.12.2012 to 04.12.2013 and the balance of the bank account as on 04.02.2013 was Rs.35,35,400/-.It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,580/- inter-alia making the following additions: - (i) Addition of Rs. 53,83,000/- u/s 68 of the Income Tax Act, 1961 on account of cash deposited by the assessee in his bank account which is fully explained. (ii) Addition of Rs. 5,50,000/- on account of capital introduced in firm without considering the submission of the assessee. Aggrieved with the order of the Learned Assessing Officer the assessee has preferred appeal before the Learned CIT(A) NFAC, Delhi. The Learned CIT(A) vide order dated 13.12.2021 dismiss the appeal of the assessee without considering the submission and other evidences filed before the Learned AO. Thereafter the assessee preferred the appeal before Hon ble ITAT With this background the individual grounds of appeal are as under: - Ground No. 1 - Under the facts and circumstances of the case the Learned CIT(A) has erred in confirming the addition of Rs. 5383000/- u/s 68 of the Income Tax Act, 1961 on account of cash deposited by the assessee in his bank account which is fully explained. Ground No. 2 - Under the facts and circumstances of the case the Learned CIT(A) has erred in confirming the addition of Rs. 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 846000 03.12.2012 Cash withdrawal 200000 1046000 13.12.2012 Cash deposit 300000 746000 14.12.2012 Cash deposit 100000 646000 21.12.2012 Cash received from customer for DD 350000 996000 22.12.2012 Cash deposit 650000 346000 23.12.2012 Cash received from customer for DD 750000 1096000 24.12.2012 Cash deposit 1000000 96000 25.12.2012 Cash received from customer for DD 250000 346000 27.12.2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 250000 01.02.2013 150000 Total 2300000 Out of above payment received the assessee has made payment of following amounts to the respective persons: - Date Amount 26.02.2013 1100000 20.03.2013 600000 Total 1700000 Remaining Rs. 600000/- was paid in subsequent years. Therefore, the amount deposited in cash in the above bank account is fully explained. The learned AO did not accept the above submissions and cash flow chart submitted by the assessee because of the following reasons: - (i) That the assessee has introduced Rs. 13,00,000/- as capital in the partnership firm out of above withdrawals made on 03.09.2012, 12.09.2012 and 18.10.2012 which is part of total capital introduction in M/s Dhansil Eicher Tractors so out of total capital introduction of Rs. 13,00,000/- Rs. 7,50,000/- was withdrawal from disclosed bank account and remaining amount of Rs. 550000/- was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellate has not provided the details to whom the payment of Rs. 11 Lakhs were made on 26.02.2013 through cheque from the bank account. It was made to the person from whom the assessee purchased goods for supply to the customers. Therefore, the total deposits in the bank accounts are fully explained and only the profit earn can be taxed. The assessee has already paid tax on additional income of Ra. 204000/- offered u/s 44AD of the Income Tax Act, 1961 on turnover of Rs. 2550000/-. Therefore, the whole addition deserves to be deleted. We also rely on the following case laws in this regard. 1. Subhash Chand Sharma, Agra vs Ito-2(2), Agra on 31 May, 2019 ITA No. 327/Agra/2017 for Asst. year : 2011- 12 2. ITO Vs Shri Vishan Lal, ITA No.634/LKW/2014 In the above cases it has been held that the deposits and withdrawal were made regularly in saving bank account of assessee during the year hence it can only be treated as his business turnover and only profit on the same should be treated assessee's business income. the assessee is carrying on a small business of dairy products through cash transactions and in absence of any other source of income, the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the evidence the story of trading activity cannot be believed as true. Even the assessee has not considered the whole amount deposited in the account as turnover and only the part of the amount considered as trading turnover. As regards the second addition he said that since in the books this account is totally not disclosed the addition is purely based from the undisclosed source and the addition of Rs. 5,50,000/- made by the AO is required to be sustained as the assessee failed to prove the clear link of withdrawal from this account and deposit in the accounted books. Not only that the account in question has not income except what is disclosed by the assessee is available with the assessee and cannot be considered as explained from the account. 10. In the rejoinder to the ld. DR s argument the ld. AR of the assessee placed a reliance on the decision of the co-ordinate bench decision which is extracted for the convenience: 14. Considering the facts as discussed above that the cash deposit and withdrawal in the bank account was made regularly by the assessee during the year, it is very reasonable to say that the same was business turnover and therefore only gross profit ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h deposits and withdrawals were made regularly during the assessment year under consideration. Therefore the AO was not justified in making the addition of Rs.15,68,500/-, the entire cash deposits during the assessment year under consideration. On the other hand it cannot be accepted that the appellant has not earned any profit on these receipts of Rs.15,68,500/-. Thus these receipt of Rs.15,68,500/- is treated as the turnover of the appellant from trading of cloth and the realization of sale proceeds were deposited by him in the said bank account on different dates during the assessment year under consideration. As withdrawals have also been made by him throughout the year for payment to suppliers and meeting out other direct and indirect expenses. It has also been noticed that the appellant is partner in firm M/s. Namaskar Textiles from where he is deriving salary and share income. M/s. Namaskar Textile is also dealing in purchase and sale of cloth and has disclosed a GP rate of 13.80% on its turnover. Therefore it can be assumed that the appellant has also earned gross profit @13.8% on sale of Rs.15,68,500/- which works out to Rs.2,16.453/-. Thus the addition is sustained to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of withdrawal made from these accounts. The assessee however placed a general plea that the introduction of the capital is sourced from this account. There is no force in the argument of the ld. AR of the assessee as he failed to place on record any cogent evidence as stated by the ld. DR. Not only that it has been observed that the income which is arising and offered in the return of income by the assessee is far less then this amount introduced in the firm. Therefore, the argument of the ld. AR is incorrect on fact and in the absence of any evidence and income being offered as arise from these unaccounted transactions as alleged and decided by us should be considered to substantiate the introduction of cash in the firm to the extent of that income and therefore, this ground of appeal is partly allowed and therefore, the AO is directed to reduce the addition to that extent of income decided as per Ground No. 1 above. In the result, Ground No. 2 is partly allowed. 13. Ground no 3 raised by the assessee is academic but, in the submission, they have taken the alternative plea that when the ld. AO has made addition for whole credit side of the bank deposits then the ld. AO was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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