9911796707
TMI Blog2022 (6) TMI 1528X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income Tax (Appeals)-3, Nagpur ought to have accepted returned income and cash in hand shown by the assessee in the regular return of income and rejecting the contention of the assessee and treated the same as unexplained money u/s. 69A & u/s. 68 is unjustified, unwarranted and excessive. 4. On the fact and circumstances learned Commissioner of Income Tax (Appeals)-3, Nagpur ought to have accepted returned income of Rs. 17,05,000/- were regular income of the assessee and without going into merits of the case treating the same U/s. 69A as unexplained money and confirming the same taxed as per section 115BBE of the Income Tax Act, therefore addition made is unjustified, unwarranted and excessive. 5. On the fact and circumstances learned Commissioner of Income Tax (Appeals)-3, Nagpur without going into merits of the case and not following statutory provision provided U/s. 44AD of the Act rejected the claim of income the assessee by making addition U/s. 69A of the Act, therefore addition confirmed is illegal, invalid and bad in law. 7. The learned Commissioner of Income Tax (Appeals)-3, Nagpur erred in not accepting the contention of the assessee and without going ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- was offered for taxation which is more than 50% of the total turnover. The Assessing Officer noticed that the turnover shown was not supported by any bills and vouchers and has treated as not genuine either in respect of turnover or in respect of quantum of net income shown under section 44AD of the Act. Accordingly, the Assessing Officer rejected the entire amount of Rs. 17,05,640/- on account of business income shown by the assessee which was treated as unexplained money under section 69A of the Act in the hands of the assessee. The assessee also submitted the remaining amount and the assessee has estimated income for the assessment year 2018-19 at Rs. 13,45,000/- and paid advance tax on the aforesaid income before the action taken by the department. Being not satisfied with order so passed by the Assessing Officer, the assessee carried the matter before the first appellate authority. 6. The learned CIT (A) confirmed the order so passed by the Assessing Officer by observing as under:- "4.2 A.Y. 2019-20: For the A.Y. 2019-20, the appellant's AR has filed 6 grounds of appeal. Grounds of appeal no.1 and 6 are general in nature and therefore, not adjudicated. Groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn under provisions of section 44AD of the Act, therefore, the question does not arise of making addition under section 69A of the Act. The learned Counsel further submitted the assessee was not covered under section 132 of the Act and the claim of the assessee is that the cash of Rs. 21,50,000/- were found from locker of Shri Ankit Tanwani, belonged to the assessee and the same were out of his income earned for which return of income has already filed and cash in hand available as per Balance Sheet filed alongwith return of income is placed at Page-4 of the Paper Book. The learned Counsel further brought to the notice of this Bench that that during the assessment proceedings notice under section 153A of the Act was issued and in response to the notice the assessee immediately filed his return of income manually on 12th December 2019, and also electronically filed the same return of income on 11th June 2019, declaring net taxable income of Rs. 17,05,640/-, a copy of which is placed at Page-23 to 28 of the Paper Book. The learned Counsel further submitted that the Assessing Officer has not accepted the contention of the assessee and without any basis with respect to the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mt. Kiran Vallabhai Ahir v/s ITO, ITA no. 65/Srt./2017, order dated 10.02.2020; ix) ACIT v/s Aggarwal Construction Co., [2007] 106 ITD 129 (Chd. Trib.); x) Om Prakash Karnani v/s ACIT, [2021] TaxPub (DT) 841 (Jp. Trib.). 9. During the course of the appellate proceeding the learned Counsel, in support of his arguments relied upon the following case laws i) Girish V. Yalakkishettar Sujatha Buildings v/s ITO [2020] 58 CCH 0073 (Bang.Trib) ii) Honey Rahulan v/s ITO, ITA No. 150/Coch/2020 dated 09/06/2020 iii) Syed Khalid Saifullah v/s. ITO, [2020] TaxPub(DT) 2006 (Del-Trib); iv) SaurabhMalhotra v/s. ITO, ITA No. 72/Agra/2016 dated 28/02/2018; v) Syed Maqsoodulla v/s. ITO, ITA No. 397/Bang/2019 dated 11/09/2020 vi) Om Prakash Karnani v/s. ACIT [2021] TaxPub(DT) 0841 (JP-Trib); vii) DineshkumarVerma v/s. ITO, ITA No. 1183/Mum/2019, dated 28/12/2020 10. In view of the above, the learned Counsel for the assessee further submitted that the assessee has already paid advance tax before any action taken by the Department for the A.Y. 2019-20 and estimated income for previous year i.e., A.Y. 2019-20 and paid advance tax. The learned Counsel humb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further relied on statement recorded U/s. 131 of the Act. The contention of the departmental representative was that the assessee has kept cash at Rs. 21,50,000/- in his locker and stated that the source of income is retail business. The departmental representative further stated that the assessee does not have any documents to prove cash found in the locker and stated that it is not possible to generate such huge amount of abnormal profit from such business and relied on the order of lower authorities. 13. The departmental representative further relied on further judgment a. Ashok H. JariwalaV s ACIT [20017] 84 taxmann.com 196 SC)/[2017 250 Taxman 14 (SC), 2017-TIOL-236-SC-IT; b. Krish Kumar Vs ITO, [2019] 107 taxmann.com 464 (SC)/[2019] 265 Taxman 227 (SC); c. Arvind Jarandhan Pandey Vs ITO, [2019] 104 taxmann.com 127 (Bombay)/[2019] 262 Taxman 401 (Bombay); d. Fakir Mohmed Haji Hasan Vs CIT [2002] 120 Taxman 11 (Gujrat)/[2001 247 ITR 290 (Gujrat)/2001] 165 CTR 111 (Gujrat); e. CIT VsArunMalhotra [2014] 47 taxmann.com 385 (Delhi/ [2014) 363 ITR 195 (Delhi); f. CIT Vs P. Mohanakala, [2007] 161 Taxman 169 (SC)/[2007] 291 ITR 278 (SC)/[2007] 210 CTR 20 (SC); g. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs, in absence of any evidence furnished by assessee, the same deserves rejection. The said case law is clearly distinguishable from the Appellant's since, the Appellant has filed return of income under section 44AD whereas in the caselaw relied upon by departmental representative the assessee has filed normal return of Income wherein it was mandatory for the assessee to maintain books of account and documents whereas as per section 44AD, Appellant is not under obligation to maintain books of accounts or documents. It was a fact that the appellant had not maintained books of account and that is why he had opted for 8% income as per section 44AD. The section also did not put obligation on the assessee to maintain books of account, in view of the fact that his income has been assessed as per section 44AD, he cannot be punished for not maintaining the same. c) In the case of Hon'ble Bombay High Court in Arvind Janardhan Pandey vs. ITO (2019) 262 TAXMAN 0401 (Bom-HC) the Assessee was engaged in the activity of securing admissions for students in various academic institutions upon payment of capitation fees in cash. During search operation, some incriminating documents were impou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as can be inferred from the facts. e) In the case of Hon'ble Delhi High Court in case of CIT v/s Arun Malhotra (2014) 47 taxmann 385, AO made addition under section 69A, keeping in view that purchase transactions from ST and RC were not genuine and export transactions relating to ball pens were bogus. The said transactions were related to assessment year 1994-95, in which assessee had filed no return. AO observed that deduction under section 80HHC(4) was not available to assessee on failure to submit Form No. 10CCAC. CIT (A) held that purchase transactions were bogus, but export transactions were genuine and directed AO to recompute deduction under section 80HHC on basis of return filed by IGI successor company for assessment year 1995-96 and to determine disallowance under section 40A(3) required to be made. Thereafter, AO did not allow deduction under section 80HHC. On appeal, CIT (A) deleted said addition. Tribunal deleted the addition made by AO solely on the basis of statement of 'CP', the ostensible proprietor of 'ST' and 'RC' keeping in view that no evidence was found in course of search proceedings to held purchase and sale transactions wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the income of the assessee's. It was held by Hon'ble Supreme Court that the opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion. The factual matrix of the case is distinguishable since, the Appellant has submitted its return of income by showing opening cash balance at Rs. 3,65,000/- as per capital position. That the addition was made merely on the basis of suspicion. Also, the case laws speaks about gift received from undisclosed sources as not real and genuine and the same cannot be applied to Appellant's case on the basis of distinguishable facts. g) In the case of Hon'ble High Court of Allahabad (Lucknow Bench) of Commissioner of Income Tax v/s G.S. Tiwari& Co. (ITA No. 5 of 2008) the brief facts are that the assessee carried on the business as contractor for civil work of Public Works Department, Nagar Palika, and other Government Departments. The Assessing Officer (AO) had provided several opportunities to the assessee, but the assessee did not attend the proceedings, so the Assessing Office, after issuing the notice, has passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as already mentioned above, the assessee's case falls under section 44AD and hence, no obligation is there to maintain the books of accounts or documents. Therefore, the case law relied upon cannot be used against assessee. 16. We have considered the rival contentions perused the order of the authorities below and the material available on record. Following case laws have been relied upon by the learned Counsel for the assessee in support of his arguments:- i) CIT v/s Surinder Pal Anand, Surinder Pal Anand, [2011] 242 CTR 0061 (P&H HC) Assessment being made under s. 44AD, the assessee was not under obligation to explain individual entry of cash deposit in the bank unless such entry had no nexus with the gross receipts and therefore no addition under s. 68 was called for. ii) Dinesh Kumar Verma v/s ITO,, [2021] TaxPub(DT) 63 (Mum.Trib.) Held-Maintaining books of account is since quo non for making addition under section 68. Since section 44AD does not obligate assessee to maintain books, provision of section 68 could not be invoked where assessee had filed return of income under provisions of section 44AD without maintaining books of account. iii) Virender Kumar v/s I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has been found in order to avoid long drawn crosses of assessment in cases of small traders or in cases of those businesses where incomes are almost are static quantum of all businesses assessing officer could have made addition under section 69A once he had carved out case out of glitches of provisions of section 44AD-In view of above decision once assessment of assessee was completed under section 44AD, there can not be any application of section 68/69A. Being so court direct the AO to delete the addition made by the AO and confirmed by the CIT(A)- Assessee's ground allowed. vii) Mr. Pradeep Jain v/s ITO, ITA no. 8001/Del./2018, order dated 04.06.2019; Since assessee is involved in small business activity and filed return of income under presumptive provisions under section 44AD of the I.T. Act, there was no justification to consider the sales of assessee to be bogus or to make addition of cash in hand as per details submitted by the assessee because A.O. did not bring any sufficient evidence on record to justify the ITA. No. 8001/Del./2018 Mr. Pradeep Jain, Gurgaon. addition. I, therefore, do not find any justification to sustain the addition. I, accordingly, set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a v/s. ITO, ITA No. 72/Agra/2016 dated 28/02/2018; v) Syed Maqsoodulla v/s. ITO, ITA No. 397/Bang/2019 dated 11/09/2020 vi) Om Prakash Karnani v/s. ACIT [2021] TaxPub(DT) 0841 (JP-Trib); vii) DineshkumarVerma v/s. ITO, ITA No. 1183/Mum/2019, dated 28/12/2020 17. It is admitted fact on record that the assessee has not been maintaining any books of account and opted to file return of income u/s 44AD of the Act. The assessee had already submitted copy of sale account before the Dy. Director of Income Tax (Hqs.) and also before the Assessing Officer as well as before the learned CIT(A). Provisions of section 44AD of the Act do not put obligation on the assessee to maintain the books of account, as the income has been assessed as per section 44AD of the Act. The addition made by the Assessing Officer under section 69A of the Act and there is no bar under section 44AD of the Act. The only fetter provided under section 44AD of the Act is the applicability of the provisions of sections 32 to 38 of the Act. The provisions of section 69A of the Act read as under:- "Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
