Case Law Details
Smt. Dyapa Rajini Vs ITO (ITAT Hyderabad)
The Assessing Officer made an addition u/s 69 of the Act referable to peak credit closing balance found in the Savings Bank Account. The case of the assessee on the other hand was that temporary advances were taken from the customers and the same was utilised for depositing in the bank account but it was immediately withdrawn. It is not in dispute that on account of non-compliance to the notices issued by the Assessing Officer, A.O. made best judgment assessment and at that stage of the proceedings the assessee has not come forward with regard to source of funds. For the first time, the assessee claimed before the Ld. CIT(A) that the deposits were pooled amounts from advances received from customers and sales effected in her business. Ld. CIT(A) called for the remand report and on two occasions the Assessing Officer categorically stated that there are gaps in the explanation given by the assessee and the assessee would not have maintained cash book and ledger since the return of income was filed as a ‘no-accounts case’. It was also stated that even the claims made with regard to the sales are not supported by any evidence. Despite detailed objections by the Assessing Officer, the Ld. CIT(A) proceeded to consider the explanation of the assessee and accepted that the advances were received by the assessee from the customers.
Consequent thereto the Ld. CIT(A) directed the A.O. to treat the entire deposits as her business turnover and directed the A.O. to estimate the profit @ 8% on the deposits. If the conclusion of the Ld. CIT(A) with regard to the acceptance of the source of funds is wrong, it is the duty of the Assessing Officer to either file an appeal or to file cross-objection or appeal by way of a petition under Rule 27 of the ITAT Rules. But in the instant case, no such action was taken at any stage of the proceedings which implies that the Revenue has accepted the conclusion of the Ld. CIT(A) i.e., the source of funds was referable to the monies pooled from the customers in the form of advances received and sales effected in the business. In such event, the addition cannot be made u/s 69 of the Act.
FULL TEXT OF THE HIGH COURT JUDGMENT / ORDER IS AS FOLLOWS:
This appeal by the assessee is directed against the order passed by Ld. CIT(A)-11, Hyderabad and it pertains to assessment year 2008-09.
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