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TMI Blog2024 (12) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... e subject, the learned CIT(A) has erred in confirming the action of assessing officer in allowing addition of Rs. 9,60,845/- u/s 69C of the I.T. Act on account of alleged unexplained expenditure being outstanding creditors as on 31.03.2017. 3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in allowing the disallowance of R.2,09,147/- on account of being 10% of expenses of Rs. 20,91,470/- claimed by the assessee. 4. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in allowing the taxation of the addition by taking the rate @ 77.25 percent by attracting S.115BBE instead of normal tax rate. The addition if any that may be confirmed should be taxed as business income. 5. Even otherwise, the learned CIT(A) has erred in confirming the action of assessing officer in allowing the taxation of the income u/s 115BBE @ 77.25 percent by applying the duly substituted S.115BBE inserted retrospectively instead of taxing it at 35.54 percent as per the old provision of S.115BBE. 6. Appellant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d other expenses, the AO took his view that assessee has not furnished sufficient details and evidence in respect of such various expenses. In absence of justifiable evidence, AO disallowed @ 10% of such expense in the assessment order passed on 27.12.2019. 5. Aggrieved by the additions made in the assessment order, assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A), assessee filed detailed statement of fact, as well as detailed submission in all three additions made by AO Office. The submissions of the assessee are recorded on page 2 to 11 of the impugned order. Against addition of Rs. 26.00 lacs on account of cash deposit, assessee stated that he is engaged in manufacturing of textile and grey cloth in the name of Shree Harsiddhi Textiles. The assessee used to sales textile and grey s in cash as well as on credit. The assessee also earned grey checking income and rental income in cash. During demonetization period, he has deposited Rs. 26.00 lacs approximately in Prime Co-Op Bank. Cash was deposited, out of cash received during the year, if deposit cash in bank. In response to query raised by Government, the assessee filed on-line response on 20.01.2018 and stated that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully. Ground No.1 of the appeal relates to the unexplained cash credit in the bank account of the assessee. The ld AR of the assessee submits that during the relevant financial year, the assessee was engaged in the business of manufacturing of textile and grey. The assessee was running his business in the name of "Shree Maheshwari Textiles". The assessee used to sell textile goods in cash and on credit basis. The assessee also earned income from rent and income from grey checking. During demonetization period, the assessee made cash deposits of about Rs. 26.00 lacs in his bank account, which was out of cash received against sell during the year. During assessment, the assessee furnished cash book for A.Y. 2016- 17 and A.Y. 2017-18. Comparative details of cash deposit during the current years and preceding year were also furnished. There was no abnormal cash deposit. The Assessing Officer has not rejected the cash book. The assessee has shown cash in hand in the return of income for A.Y. 2016-17 of Rs. 11,20,893/-. The cash book is matching with the cash balance shown in the cash book. The return of income for A.Y. 2016-17 was filed on 06/03/2017. The assessee also furnished compara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, deposited in the form of old currency notes. One of the explanation of assessee about the source of cash deposit was that assessee was having cash balance of Rs. 11,20,893/- as on 01/04/2016 in his cash book. I find that return of income for A.Y. 2016-17 was filed on 06/03/2017 which is after declaration of demonetization of Specified Bank Notes (SBN). The assessee also took the plea that he has made withdrawal from his bank account. However, such bank withdrawals are not sufficient to substantiate the entire cash deposit. Though, I find that the assessee is engaged in the business of textile and grey and is filing return of income for many years. The cash sales in the business of assessee, is a usual practice. Thus, considering the overall facts and circumstances of the case, entire cash deposit during demonetization period cannot be treated as unexplained credit, for a businessman having turnover of more than Rs. 1.00 crore. Further considering the fact that the assessee is not able to substantiate the source of entire cash deposit, similarly entire cash deposit cannot be treated as income. Therefore, a reasonable addition out of total cash deposit will be sufficient to avoid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yarn. Complete details of creditors are available on sales invoices/purchase bills. Thus, I do not find any justification of making such addition. The AO is directed to delete the addition. In the result, ground No. 2 of appeal is allowed. 14. Ground No. 3 relates to ad hoc disallowances of 10% of expenses. The ld. AR of the assessee submits that the assessee has offered income under Section 44AD, thus, there is no scope of further addition. 15. On the other hand, the ld. Sr. DR for the revenue submits that all the expenses are shown in cash without supporting any evidence. The evidence furnished by assessee are self-serving document. 16. I have considered the rival submissions of both the parties and perused the record carefully. I find that the AO made disallowance of 10% of various expenses by taking view that the assessee has not furnished sufficient supporting evidence in respect of various claim and that all expenses are incurred in cash. The AO disallowed 10% of the expenses and added to the income of assessee. The ld. CIT(A) confirmed the action of AO with similar view. Before me, the ld. AR of the assessee vehemently argued that the assessee has offered income under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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