The Hyderabad Indore bench of Income Tax Appellate Tribunal (ITAT) has recently upheld the addition made by the Assessing Officer (AO) held that the number of cash receipts received as per cash book are not reflecting in the day book.
Assesee Sunil Kumar Ahuja filed original return of income and declared total income of Rs.66,55,790/- and agricultural income of Rs 12,09,000/-After he revised return of income and the case was selected for scrutiny.
During the course of assessment proceedings, the AO noted that the assessee has offered additional income of Rs.3,67,00,000/-
He verified from the cash book and daybook he noted that the number of cash receipts received as per cash book are not reflecting in the day book.
Asked the assessee to explain the discrepancies. The assessee explained that there are mistakes in the daybook and cash book originally submitted and filed another cash Book.
The Assessing Officer rejected the explanation of the assessee on the ground that the cash book and day book submitted in original shows that all the transactions are matching each other except the transaction pertaining to profit on sale of land.
Therefore, treated the cash receipts that appeared in the cash book as above as unaccounted income and added an amount of Rs. 2,44,14,000/- to the income of the assessee under Section 68 of the Income Tax Act.
Aggrieved by the order assessee filed an appeal before the CIT(A), who deleted the addition made by the AO. Then the revenue filed another appeal before the tribunal.
S.Rama Rao counsel for the assessee submitted that the Assessing Officer made an addition of Rs. 2,44,14,000/- on the ground of deficiency in the cash book on various dates and the assessee did not offer profit from sale of land also observation made by the Assessing Officer is based on the original cash book.
Moreover in the original cash book, there was deficit cash balance on various dates and some of the profit arising from sale of land were also not recorded in the cash book. After noticing the above discrepancy and observing that the cash found in the cash book is more than the profit on sale of land, the assessee offered the additional income of Rs. 3,67,00,000/-.
Rajendra Kumar, counsel for the revenue, supported the decision of the assessing officer.
It was observed by the tribunal that, AO in the instant case made addition of Rs. 2,44,14,000/- on the ground that there is deficiency in the cash book on various dates and the assessee did not offer the income from profit on sale of land
The CIT(A) without considering the nature of the entries found in the cash book which were not recorded in the day book, deleted the addition which is not justified.
Therefore the two member bench of R.K. Panda, (Accountant Member) and Laliet Kumar, (Judicial Member) observed that, there is a difference between the introduction of cash as “other income” whenever there is deficiency in the cash book and income from “profit on sale of land” not recorded in the books of accounts.
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