Praveen Teotia (Indl.), Dehradun vs Department Of Income Tax

This is an appeal filed by Revenue against the order of Ld. CIT(A) dated 30.10.2012. None was present on behalf of the assessee. It was noted from the record that initially, the appeal was fixed on 21.02.2013 on which date nobody was present on behalf of the assessee and the appeal got adjourned to 23.01.2014 on which date also nobody was present and finally, the appeal was fixed for today i.e. 13.01.2015 on which date again nobody was present on behalf of the assessee. With the assistance of Ld. D.R., we have gone through the material placed on record and we find that the mater can be disposed off even without legal representative of assessee. The Revenue is aggrieved with the action of Ld. CIT(A) by which he had restricted the addition made by A.O. for an amount of Rs.23.25 lacs to Rs.12.50 lacs.

2 ITA No.6313/Del/2012 2. The brief facts of the case are that the A.O. during assessment proceedings observed that an amount of Rs.23.25 lacs was shown to have been received by assessee in cash from M/s. Nanak Builders and Developers on various dates as noted on page 2 of the assessment order. The assessee could not explain the purpose of receipt of such amount from M/s. Nanak Builders and Developers and neither any confirmation was filed. The A.O. further observed that he assessee had not submitted even PAN of such developer and therefore, it was held that genuineness of receipt of cash in the cash book was not verifiable and, therefore, he made addition u/s 68 of the Act.

3. Aggrieved, the assessee filed appeal before Ld. CIT(A) and Ld. CIT(A) observed that from the books of accounts, it seems that some of cash deposited was made from outside Dehradun i.e. Delhi, Meerut, Lucknow, Muzaffarnagar etc and moreover he observed that besides cash deposits, there were receipts of cheque deposits also and assessee had agreed before Ld. CIT(A) that he was working as a Civil Contractor. Ld. CIT(A) further observed that there were transactions to the tune of Rs.2.53 crores in the bank account of PNB and IDBI and therefore, he held that the contention of assessee that the money was received from M/s. Nanak Builders and Developers was unsubstantiated and he held that the assessee was engaged in the business and estimated business as Civil Contractor profits @ 5% of total receipts. The operative portion of Ld. CIT(A)'s order is reproduced below:

"1.6 As noted above, money was coming mostly from outside Dehradun and it was be withdrawn and applied at Dehradun. The assessee has not furnished any explanation about this. In view of this, it cannot be said that the assessee was withdrawing cash amount form his bank accounts and depositing it back in the same and, for that 3 ITA No.6313/Del/2012

reason, the benefit of peak balance of cash deposit cannot be given to him. Considering the nature of the fund- flow, it is held that that the entire amount deposited in his bank account represented his business receipt. The amount withdrawn by him from the bank account may be accepted to partly represent his business expenditure. Since the closing balance of the bank accounts was nominal and there is nothing on record to suggest that he had acquired assets out of the amount withdrawn from his bank account, a rational method of estimating his income would be to estimate his net profit from these transactions. In view of the matching fund-flow in his bank accounts, the gross turnover of his business is estimated to be 2.5 crore and the net profit may be estimated @5% i.e. RS.12,50,OOOI. The AO was not correct in considering only the cash deposits and ignoring the cash withdrawals altogether. In fact, he was also not correct in ignoring the cheque transactions because their nature and source as well as the income component embedded therein was equally important. The net profit estimated above would take care of the assessee's payments side of the bank account 'as well as the income component of the cheque transactions. The AO is accordingly directed to reduce the addition to Rs.12,50,000/-."

4. Ld. D.R. argued that without any basis, Ld. CIT(A) arrived at the conclusion that receipt represent business receipt and he estimated the profits @ 5%. It was submitted that the assessee was not even maintaining books of accounts which Ld. CIT(A) had ignored and therefore, he submitted that case be remitted back to Ld. CIT(A) for readjudication.

5. We have heard Ld. D.R. and have gone through the material placed on record. We find that Ld. CIT(A) on one hand observed that there was heavy transactions in the two bank accounts of the assessee and the value of transactions was to the tune of Rs.2.53 crores and without looking into the entire facts and circumstances of the case, estimated the profits @ 5% on above receipts therefore, the order passed by Ld. CIT(A) is not a reasoned one and is not an speaking order. Therefore, in the interest of justice, we 4 ITA No.6313/Del/2012

remit this case to the file of Ld. CIT(A) who should pass a well reasoned and speaking order. Needless to say that necessary opportunity will be provided to the assessee of being heard.

6. In view of above, appeal filed by Revenue is allowed for statistical purposes.

7. Order pronounced in the open court on 16th Jan., 2015.

Sd./- Sd./- (H. S. SIDHU ) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER th Date: 16 Jan., 2014 Sp Copy forwarded to:- 1. The appellant 2. The respondent 3. The CIT 4. The CIT (A)-, New Delhi.

5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi. True copy.

By Order (ITAT, New Delhi).

S.No. Details Date Initials Designation 1 Draft dictated on 13/1 Sr. PS/PS 2 Draft placed before author 13,14, Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS 16/1 Sr. PS/PS 6 Kept for pronouncement 16/1 Sr. PS/PS 7 File sent to Bench Clerk 16/1/15 Sr. PS/PS Date on which the file goes to Head 8 Clerk 9 Date on which file goes to A.R. 10 Date of Dispatch of order