Addition for cash deposit set aside as AO accepted turnover under presumptive taxation

Addition for cash deposit in bank set aside where AO accepted the turnover under presumptive taxation

ABCAUS Case Law Citation
ABCAUS 3584 (2022) (02) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the addition on account of unexplained cash deposited in bank account of the assessee.

The assessee was an individual and had not filed the return of income.  Assessing Officer (AO) received the information that the assessee had deposited large amount of cash in his bank account.

The AO therefore, after recording the reasons, reopened the case u/s 147 of the Income Tax Act, 1961 (the Act) and issued notice u/s 148 of the Act. 

During the course of assessment, the AO asked the assessee to explain the source of deposit of cash and after considering the submissions made by the assessee, the AO accepted part amount as explained and made an addition of the part amount to the total income of the assessee.

Before the CIT(A), the assessee challenged the validity of the reassessment proceedings as well as the addition on merit.  However, the CIT(A) was not satisfied with the arguments advanced by the assessee and dismissed the appeal.

Before the ITAT, the assessee submitted that undisputed fact was that assessee was in trading business and was not required to maintain books of account and had filed return of income under presumptive taxation declaring receipt u/s 44AF of the Act and the cash deposit was well explained as the turnover of the assessee in the preceding two assessment years.

It was further submitted that the AO reopened the case after going through the assessment orders for the succeeding two Assessment Years due to the cash deposit in the bank account.  It was stated that for the two succeeding AYs, the AO had himself assessed the income u/s 147/143(3) of the Act.

It was further stated that in the further three succeeding AYs the AO had accepted the return filed u/s 44AD of the Act. 

It was submitted that the addition made by the AO and sustained by the CIT(A) was not justified.  He, however, submitted that he had no objection if the matter is restored to the file of the AO for adjudication of the issue afresh in the light of the orders passed for the preceding and subsequent years.

The Tribunal considering the totality of the facts of the case restored the issue to the file of the AO with direction to adjudicate the issue afresh in the light of the orders passed by him in succeeding years wherein the AO has completed the assessment u/s 147/143(3) of the Act. He was directed to keep in mind the return filed by the assessee in the subsequent years which had been accepted by the AO. 

Accordingly, the Tribunal allowed the appeal in favour of the assessee.  

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