AOs Action of taxing unexplained cash credit u/s 68 by a practicing CA who failed to justify his business activities valid
The assessee is a practicing Chartered Accountant being partner in the firm M/s R. A. Bansal & Company. As per the AIR Information, the A.O came to know that the assessee had made cash transactions amounting to Rs. 60,02,880/- in his bank account.
The assessee was asked to explain the source of cash deposited in the aforementioned bank accounts. In his reply, the assessee accepted that the gross receipts of Rs. 60,02,800/- belong to him and simultaneously submitted a revised return on 18/1/2015. The gross receipts were shown as income from trading business of Grey Fabrics. The reasons for revising the return were mentioned as to buy peace and avoid litigation with the Income Tax Department in pursuance of AIR Information.
His revised return was dismissed and Assessing Officer did not accept the claim of business for want of evidence. The cash Deposited was treated as unexplained cash credit u/s 68 of the Act and the addition was made accordingly.
What Honorable ITAT said?
The assessee is a practicing Chartered Accountant and is, therefore, barred from doing any business. Only under certain circumstances, the governing body ICAI permits a practicing Chartered Accountant to do business. However, no such evidence was brought on record. The assessee has been harping upon the revised return which is in fact an invalid return. Further, even before us, the assessee has not brought on record any demonstrative evidence to justify his business activities. There is no evidence of any VAT, GST, or permission from the Municipality. Nor there are any evidence in respect of purchases/ sales of Gray Fabrics.
It appears that the revised return was filed only to cover up the queries raised during the assessment proceedings in respect of cash found to be deposited in various bank accounts.
Since there was no demonstrative evidence, the ITAT refused to interfere with the findings of the CIT(A).