Income from transport receipts u/s 44AE of the Income Tax Act

This case concerns a taxpayer whose significant cash deposits in bank accounts were questioned by the Assessing Officer (AO). The taxpayer claimed these deposits originated from their transport business, where payments were often received in cash. However, the AO made an addition of Rs. 1,69,57,000/- under Section 69A of the Income Tax Act, citing a lack of supporting documents and corresponding bank withdrawals to explain the cash deposits. The Income Tax Appellate Tribunal reviewed the decision.

IN THE INCOME TAX APPELLATE TRIBUNAL
“B’’ BENCH: BANGALORE
BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER
AND
SHRI B.R. BASKARAN, ACCOUNTANT MEMBER
 ITA No.123/Bang/2019
 Assessment Year : 2015-16
C. Mithalal
Prop: Priyanka Agencies
5th Cross Dam Road
 N.C. Colony
Hospet 583 201
PAN NO : AEYPM3530M
Vs.
The ITO Ward-1
Hospet
APPELLANT RESPONDENT

Appellant by : Shri V. Srinivasan A.R.
Respondent by : Shri Priyadarshi Mishra, D.R.

Date of Hearing : 15.06.2021
Date of Pronouncement : 18.06.2021

O R D E R

PER GEORGE GEORGE K., JUDICIAL MEMBER:

This appeal at the instance of assessee is directed against the order of CIT(A) dated 14.12.2018. The relevant assessment year 2015-16.

2. The solitary issue raised is whether the CIT(A) was justified in confirming the addition made by the A.O. u/s 69A of the Income-tax Act,1961 ['the Act' for short], amounting to Rs.1,69,57,000/-. 3. Brief facts of the case are as follows. The assessee is an individual having income from house property, business & profession and other sources. For the assessment year 2015-16, return of income was filed on 16.12.2016, declaring total income of Rs.9,76,060/-. The assessment was selected for limited scrutiny to explain the source of cash deposit amounting to Rs.1,69,57,000/-. The assessee submitted that cash deposits are out of transport business. The submission/reply of the assessee reads as follows:

“Priyanka Agencies is a proprietorship concern Mithalal C is the proprietor having a C&F Agencies of Appollo Tyres supply the tyres and Priyanka Agency make the distribution in and around Hospet. The Appollo Company provides commission on the sales and also pay the freight charges for delivering to retail outlets. All the transactions are paid through banks and TDS is deducted on the same. During the FY 2014-15, we have also purchased lorries to transport contractors and industries on trip basis. The lorries used to go to the mine head and unload at the point specified by our contractee and obtain acknowledgement slip and LR copies the same was surrendered along with acknowledgement of unloading at the time of taking the payments. Normally the payments were made in cash on trip basis. The cash payments are received in transport business and I also like to bring to your kind notice that lorry drivers and helpers are uneducated. The same cash was deposits in the bank accounts. So our bank accounts are reflected with cash deposits.”

4. The A.O. noted that assessee did not file supporting documents to explain the source of cash deposit. Further, A.O. noted that if cash deposits are out of transport business, they ought to be corresponding withdrawals from bank accounts, which according to the A.O. was absent in this case. The hearing of the case was posted to 16.12.2017 directing the assessee to furnish the necessary details. Since assessee did not file the necessary details explaining the source of cash deposit, the case was adjourned to 29.12.2017. For hearing on 29.12.2017, the assessee sought additional time to file the necessary details. Since the assessment was getting time barred, the A.O. completed the assessment u/s 143(3) of the Act vide order dated 29.12.2017. The A.O. made the entire addition of cash deposit u/s 69A of the Act amounting to Rs.1,69,57,000/-. 

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