40% deduction for cash deposit in undisclosed bank account was very liberal says ITAT

40 percent deduction for cash deposit in undisclosed bank account was very liberal as no details/evidences of expenses submitted by assessee says ITAT

ABCAUS Case Law Citation
ABCAUS 3635 (2023) (01) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in partly confirming the additions made by the Assessing Officer (AO) inter alia u/s 69A of the Income Tax Act, 1961 (the Act) as undisclosed and unexplained receipts.

The assessee was an advocate and had declared income from profession as well income from other sources, in the return of income filed with the department.

From the AIR information and on the 26AS statement, the Assessing Officer (AO) observed that the assessee has deposited large amount of cash in his Bank Account which was not disclosed/declared by the assessee in his ITR.

The assessee replying to show cause, explained that the omission was due to clerical error which occurred inadvertently.

Also, there were cash deposits introduced in the capital account by way of cash receipts allegedly as gift from wife and agricultural income.

However, the assessee could not prove the creditworthiness, genuineness of the aforesaid transactions. He failed to furnish the income tax returns and confirmatory letters for gifts in cash.

The assessee claimed that there are so many expenses which were incurred by the assessee such as stamp duty, court fee, notarial charges etc. for which receipts were not available, but the same were to be allowed as deduction. The assessee further submitted that around 60% of the cash deposit should be allowed as deduction towards professional expenditure, while 40% of the said cash deposit can be treated as income.

However, the AO invoked deeming provisions of Section 69A of the Act that no deduction shall be allowed in respect of deemed income being added back to assessee’s income and completed the assessment and made additions u/s 69A with respect to cash deposits in bank account not disclosed in the ITR as well as cash deposits introduced in the capital account by way of cash receipts allegedly as gift from wife and agricultural income.

Before CIT(A) also the assessee could not prove and substantiate the cash receipts.

The CIT(A) treated all the receipts as professional income not declared by the assessee  and allowed  deduction towards expenses @40% of the aforesaid credits/receipts and brought to tax the remaining 60% of credit/receipts  as net income of the assessee  from profession chargeable to tax.

Aggrieved by appellate order passed by CIT(A), the assessee went in second appeal before the tribunal.

The only grievance of the assessee was that he should be allowed 60% of the aforesaid undisclosed professional receipts as deduction towards expenses instead of 40% allowed by the CIT(A).

The Tribunal observed that there were consistently large number of deposits in the said bank account and withdrawal from this bank account was much less.

The Tribunal observed that there was no  availability  of funds/cash to meet any further unrecorded expenses to  be  set  off  against undisclosed professional receipts and also no details/evidences for such expenses had been submitted by the assessee on which the onus lay.

The Tribunal opined that already an extremely liberal view had been taken by the CIT(A) in granting part relief to the assessee and no further relief could be granted to the assessee keeping in view the  facts and circumstances of the case.

Accordingly, the appeal filed by the assessee was dismissed.

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