The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that cash deposits are not corroborated with business receipts or cash withdrawals and upholds addition under section 68 of IT Act.
The assessee, assessee M/s. Sneh Developers Pvt. Ltd., has not filed an income tax return, hence the Assessing Officer issued a notice under section 148. During the assessment proceedings, the Assessing Officer added cash deposits of Rs.10,00,000/- under section 68 of the Act alleging that the assessee has failed to explain the source of cash deposits.
On appeal, the CIT(A) confirmed the addition and for failure to maintain books of accounts, non-cooperation during the assessment proceedings as well as the remand proceedings, adverse remarks given in the audit report, and keeping in view the arguments of presumptive taxation held that it was fair and reasonable to estimate the profits at 15%. The aggrieved appellant approached ITAT.
The Tribunal observed that the assessee is facing criminal cases under section 138 of N.I. Act on 8 accounts and civil suit on 2 accounts. The Tribunal further observed that the cash deposits are not corroborated with any receipts of the business and any cash withdrawals proving the same.
The Coram of Mr. Aakash Deep Jain, Vice President, and Dr. B. R. R. Kumar, Accountant Member while upholding the addition held that “keeping in view, the entirety of the facts and circumstances, we hold that justice would be well served by directing the revenue to estimate the profits at 8%”. The Tribunal further held that “we unequivocally hold that the cash deposits cannot be treated as the integral part of the receipts reflected in Form 26AS”.
Adv. S. Krishnan appeared on behalf of the appellant and Mr. K. A. Manu appeared on behalf of the revenue.
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