Yash Deep Kumar, New Delhi vs Assessee
- CitationITA No.470/Del/2012
Ratio decidendi
The rule this decision rests on
Where a bank account shows credit entries exceeding no more than the gross receipts declared by an assessee who has opted for presumptive taxation under section 44AD, and those credits are substantially offset by contemporaneous debit withdrawals leaving a negligible closing balance, the Assessing Officer cannot treat the aggregate of the credit entries as unexplained cash deposits under the Act; the credit entries are to be assessed against the declared gross receipts and the account as a whole, and no addition is sustainable on that basis. An assessee who has availed the option under section 44AD and is therefore not required to maintain books of account cannot be expected to record in such books every bank deposit and withdrawal arising from business transactions, and the absence of such book entries does not by itself justify an addition in respect of bank credits.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Assessee By : Shri Deepak Ostwal, CA Department By : Shri J.P. Chandrakar, Sr. DR ITA No.470/Del/2012 CO No.141/Del/2013
Date of Hearing : 03.03.2015 Date of Pronouncement : 03.03.2015
ORDER PER R.S. SYAL, AM:
This appeal by the Revenue and Cross Objection by the assessee
arise out of the order passed by the CIT(A) on 2.11.2011 in relation to
the AY 2006-07.
2. The only issue raised by the Revenue in its appeal is against the
deletion of addition of Rs.11,65,000/- made by the AO in respect of
unexplained cash deposits.
3. Briefly stated, the facts of the case are that the AO received
information from CIT (CIB), New Delhi, that the assessee had made
cash deposits in his saving bank account with Delhi State Cooperative
Bank Ltd., amounting to Rs.11,65,000/- during the financial year
relevant to the assessment year under consideration. The assessee was
called upon to explain the source of this deposit in the bank account. In
the absence of any satisfactory explanation forthcoming from the side of 2 ITA No.470/Del/2012 CO No.141/Del/2013
the assessee, an addition of Rs.11.65 lac was made. The ld. CIT(A)
deleted the addition.
4. We have heard the rival submissions and perused the relevant
material on record. The facts which have been recorded in the impugned
order and have not been controverted by the ld. DR are that the assessee
is a small business contactor supplying labour on various project sites.
No books of account were maintained, but, the return was filed u/s
44AD of the Income-tax Act, 1961 (hereinafter called 'the Act'),
showing income at Rs.89,820 against the gross receipts from the above
activities amounting to Rs.14,05,000/-. We have perused the copy of
bank account in which the sum of Rs.11.65 lac was allegedly deposited.
A copy of this bank statement is available on pages 9 onwards of the
paper book. It can be seen that there are several credit and debit
transactions in this bank account. To cite an example, the first
transaction for the year is dated May 3, 2005 for the cash deposit of
Rs.40,000/-. Then, there is debit of equal amount on the same date.
Again, there is a cash deposit of Rs.50,000/- in the bank account on
3 ITA No.470/Del/2012 CO No.141/Del/2013
29.6.2005 and there are debit entries amounting to Rs.25,000/- on
30.6.2005 and Rs.10,000/- on 1.7.2005. In this way, there are several
credit and debit transactions in this bank account. At the end of the year
the closing balance is only Rs.11,472/-. What the AO has done is that he
totaled all the credit entries in the passbook and made addition for such
amount coming to Rs.11.65 lac, by completely ignoring that there were
debit transaction of almost equal amount, leaving the closing balance at
Rs.11,472/-. Given the fact that the assessee is a contractor and filed his
return by declaring income u/s 44AD with the total receipts from such
activities at Rs.14.05 lac, there can be no question of making addition in
respect of the only credit entries in the passbook. Since the total credit
entries in the passbook, for which the addition has been made, are less
than the gross receipts shown by the assessee and the further fact that
there are almost equal amount of withdrawals on day-to-day basis, we
hold that the ld. CIT(A) was justified in deleting the addition. When the
Act has given an option to the assessee not to maintain accounts in the
circumstances as have been enumerated u/s 44AD and the assessee has
4 ITA No.470/Del/2012 CO No.141/Del/2013
availed such option, now it can't be expected of the assessee to maintain
books of account by showing all the bank deposits and withdrawals from
its business transactions in the books of account. We, therefore, uphold
the impugned order on this issue.
5. The ld. AR did not press the Cross Objection filed on behalf of the
assessee.
6. In the result, both the appeals are dismissed.
The order pronounced in the open court on 03.03.2015.
Sd/- Sd/- [I.C. SUDHIR] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated, 03rd March, 2015. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.
5
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