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Manjit Singh Malhi, Delhi Vs A.C.I.T.,Circle-2, Asansol

Court :
ITAT Kolkata

Brief :
This is an appeal preferred by the assessee against the order of Ld. CIT(A), Asansol dated 10-05-2019 for the assessment year 2015-16.

Citation :
ITA No. 2070/Kol/2019

[Before Shri A. T. Varkey, JM]
ITA No. 2070/Kol/2019
Assessment Year: 2015-16

Manjit Singh Malhi PAN: AHUPM 2456P

ACIT, Cir-2, Asansol

Date of Hearing 30.06.2020
Date of Pronouncement 03.07.2020
For the Appellant Shri J.M. Thard, Advocate, ld.AR
For the Respondent Shri Dhruba Jyoti Roy, JCIT, ld. Sr.DR


This is an appeal preferred by the assessee against the order of Ld. CIT(A), Asansol dated 10-05-2019 for the assessment year 2015-16.

2. The effective ground no. 1, which reads as under:-

“1. For that on the facts and in the circumstances of the case the ld.CIT(A) was wrong and unjustified in treating the interest from Fixed deposits made in connection with Contract business as income from ‘Other sources’ in place of income from ‘Business’.

3. Facts pertaining to this ground are that the assessee is engaged in the business of civil contractor and returned income at Rs. 11,27,050/-. His case was selected for limited scrutiny assessment through CASS because there was mismatch (i) in respect of sales turnover (ii) mismatch on Tax credit and (iii) mismatch on contract receipts/fees. After issuing notice u/s. 142(1) of the Income-tax Act, 1961 ( hereinafter referred to the ‘Act’ in short), the AO after perusal of 26AS data noted that the assessee has received total amount of Rs. 93,46,927 ( Rs. 88,00,954/- as contract receipt u/s. 194C and Rs. 5,45,973/- as interest u/s. 194A). However, the AO observed that the assessee has shown his contract receipt at Rs. 91,65,482/- . Shortfall of (Rs.93,46,927 – Rs. 91,65,482)= Rs. 2,31,445/-. The AO observed that the assessee has disclosed his interest income of Rs. 860/- only and also claimed a deduction u/s. 80TTA of the Act. The AO taking note of the aforesaid facts was of the view that the assessee has not shown the interest income of Rs. 5,45,973/- as his income and therefore, the assessee was asked to explain as to why the same should not be treated as undisclosed income/added to the total income of the assessee. The assessee replied that he has received interest amount of Rs. 5,45,973/- on FDRs and an amount of Rs. 54,630/- was deducted as TDS u/s. 194A of the Act. Before the AO, the assessee explained that his interest was paid by his bankers on different FDRs, which were solely used for business purpose (contract business). According to the assessee, these FDRs are his business asset and have been always reflected in his business balance sheet and these FDRs are made for the purpose of his contract business [ Malhi Construction]. Moreover, the assessee submitted before the AO that interest earned on these FDRs are always treated as part of his business income generated from business asset and always credited in the P & L account of his proprietorship business (Malhi Construction) and in order to show that the assessee consistently was adopting this practice, he filed audited balance sheet, P & L account for the AY 2013-14, wherein also he has shown this interest receipt on this business-FDRs as his business income (by crediting in the P/L account of his business). It was also emphasized and pointed out that these FDRs were made solely for the purpose of above contract business by offering it as collateral securities to the above bank and/or as tender money i.e E/money, Security deposit and so on to different contractees, who insist on it, without which, the assessee would not got the contract. Thus, it was contended by the assessee that interest earned on these FDRs are correctly shown by him by including and treating it as his business income. However, this contention of the assessee was not accepted by the AO. According to AO, the assessee has failed to reconcile how the interest income of Rs. 5,45,973/- received from FDR for which tax was deducted by the bank u/s. 194A of the Act is reflected in contract gross receipt of Rs. 91,65,482/- which includes Rs.88,00,954/- as contract receipt for which tax was deducted u/s. 194C of the Act. The AO noted that the assessee has not maintained books of account during the year and has shown his business income on estimated basis at Rs.8,87,050/- u/s. 44AD and Rs. 90,000/- u/s. 44AE and also shown salary of Rs. 3,00,000/- from a Firm. The AO also noted that the assessee has separately shown S/B interest of Rs.860/-, which was shown as interest income “from other sources”. According to the AO, the assessee had shown his income in the ITR of Rs.12,77,910/- (Rs. 8,87,050 + Rs. 90,000 + Rs. 3,00,000/-). And, the assessee has not reflected the gross receipt of Rs. 93,46,927/- instead has shown only Rs 91,65,482/-(shortfall of Rs.2,31,445/-). And since the assessee has not shown Rs. 5,45,973/-, therefore, the AO treated/added the same as undisclosed income to the total income of assessee u/s. 69A of the Act. Aggrieved, the assessee preferred appeal before the ld. CIT(A), who was pleased to confirm the order of the AO. Aggrieved, the assessee is before this Tribunal.

To know more in details find the attachment file


on 28 November 2020
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