Deposit and withdrawal of cash in regular interval is enough to prove that assessee is engage in business

Last updated: 24 July 2013

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
I have considered the submission of the appellant and gone through the balance sheet, trading and profit loss account and cash flow statement. The Assessing Officer has considered the business income to the extent of Rs.5,990/- on the basis of trading and profit & loss account and as such it is not fair to disregard the same trading and profit & loss account in the context of corresponding deposit in the bank account. It was noticed that all the transactions in the bank account are in cash and as such there is merit in the submission of the assessee that cash deposit are supported and covered by cash sales. Further, there are corresponding withdrawals which is claimed to be on account of purchases and this fact also support the claim of business activities. In the light of above position, the Assessing Officer is not correct in disregarding in the cash entries in the bank account with reference to business activities particularly when the Assessing Officer has considered profit as per same profit and loss account for the purpose of assessment. Even otherwise, the entries in the bank account have to be considered in totality and it is not open to disregard withdrawals and making addition in respect of all the credit entries on cumulative basis. As per peak credit details given in the written submission duly supported by cash flow statement, peak credit works out to Rs.56,000/- only.

Citation :
Ito, Ward 47 (2), New Delhi. (APPELLANT) Vs. Ms. Surinder Kaur, B – 56, Kripal Apartments, Plot No.44, I.P. Extension, New Delhi – 110 092. (PAN: AMFPK0860K) (RESPONDENT)