JHAMTANI JAIRAM RAMCHAND,,PUNE vs. INCOME-TAX OFFICER,, AKURDI

The assessee has filed modified grounds of the appeal, which have been taken into consideration for disposal.

The first issue raised through modified ground nos. 1 & 2 is against the confirmation of addition of Rs.5,23,348/-, being, deposits made by the assessee in Seva Vikas Cooperative Bank (Savings Account No.007260) not disclosed by the assessee in its return of income.

The factual scenario of the case is that the assessee filed his return of income on 27-09-2008 for which the assessment was completed on 24-10-2010. Later, the AO came to observe that the assessee had maintained two bank accounts maintained with Seva Vikas Cooperative Bank, Pimpri, Pune having numbers S.B.A/c.Nos.7260 and 8638, which were not disclosed in the books of accounts. Taking recourse to sec.147 of the Act, he issued notice u/s.148. On being called upon to explain the source of deposits in these accounts, the assessee submitted qua S.B.A/c. No.7260 that transactions in respect of its undisclosed transportation business were recorded herein, which were covered u/s.44AE of the Act. A prayer was made that only the income chargeable u/s.44AE, at the rate of Rs.3,150/- per month as multiplied with 12 totaling to Rs.37,800/-, should be charged to tax. The AO did not accept the assessee’s contention and included the amount of deposits of Rs.5,23,348/- in the total income on this score. The assessee remained unsuccessful before the ld. CIT(A), who followed the view taken in the appeal of the assessee for the assessment year 2009-10. Aggrieved thereby, the assessee has come up in appeal before the Tribunal.

We have heard both the sides through Virtual Court and gone through the relevant material on record. It is seen that the assessee though filed the return of income, but did not disclose the savings bank account no. 7260 maintained with Seva Vikas Cooperative Bank. The transactions recorded in this bank account were consequently not depicted in the regular books of account maintained by him. When the AO enquired about the maintenance of such a bank account and sources of the deposits, the assessee came out with a plea that he was running a transportation business outside the books of account and the receipts from such business were deposited in the bank account. This plea was taken so as to circumvent the taxation of the full amounts deposited in the bank account in this respect and accordingly get covered u/s.44AE of the Act with a lower incidence of income. This claim could have been merited acceptance if the assessee had shown the list of persons and their confirmations etc. for whom he did the transportation business and the resultant transportation receipts. No such evidence has been placed on record. In such a scenario, it is difficult to accept the assessee’s plea of running a transportation business outside books of account and depositing the proceeds of such a business in this bank account. It is pertinent to mention that similar plea taken by the assessee for the assessment years 2009-10 and 2010-11 was also discarded by the Tribunal, copies of which orders have been placed on record. Respectfully following the precedent, we dismiss the grounds taken by the assessee qua S.B.A/c. No.7260 and hold that the addition of Rs.5,23,348/- was rightly made. Further, there is no substance in the assessee’s alternate ground for taxing peak credit as such a contention has also been rejected by the Tribunal in the afore noted orders in identical circumstances. These two grounds, therefore, stand dismissed.

The next three grounds are with reference to deposits made in Savings Bank A/c. No.008638 maintained with Seva Vikas Cooperative Bank which was also not disclosed. The AO added Rs.30,01,000/- representing deposits in this bank account on the ground that the assessee could not substantiate the source of deposits in the bank account. The assessee had, in fact, stated before the AO, which has been reproduced on page 3 of the assessment order, that this bank account was jointly operated with his brother and the receipt of Rs.30.00 lakh was on account of sale of plot which was owned by his father-HUF and should be taxed in the father’s HUF and both the brothers, being, members of the HUF.

In support of the contention, the assessee also furnished a copy of agreement for the plot sale and also the assessment order for the assessment year 2009-10. Not convinced, the AO made addition for the entire amount of deposits which came to be affirmed in the first appeal.

After considering the rival submissions and perusing the record, we find that the assessee categorically stated before the AO that the deposit of Rs.30.00 lakh in this bank account was his share in the sale of plot of land by his father. The assessee also placed on record a copy of return filed on behalf of his father for the assessment year 2008-09, indicating the disclosure of the factum of the sale of the plot, a copy of which has been placed at page 169 of the paper book. Such return was filed on 20-04-2009 and a copy of assessment order passed on 27-12-2010 has also been placed on page 145 of the paper book. These facts evidence that the father did sell certain property and the amount of proportionate capital gain was offered in the return of income. When such material was placed before the AO and the assessee contended that the bank account was maintained jointly with his brother, then it became the duty of the AO to examine the assessee’s contention for unearthing the truth instead of simply making an addition towards the amounts credited in the bank account. Any temptation on the part of the AO to adopt short cuts and make addition without examining the assessee’s contention, needs to be eschewed. We, therefore, set aside the impugned order and remit the matter to the file of the AO for examining the assessee’s contention afresh in this regard and thereafter find out the amount of addition, if any, called for under the circumstances.

The last issue raised in this appeal is against the confirmation of addition of Rs.48,314/- towards interest received. The AO made addition for this sum on the basis of cash flow statement filed by the assessee, which indicated the interest earned but not disclosed in the return. The ld. CIT(A) affirmed the addition.

The ld. AR invited our attention towards page 11 of the paper book which is a copy of bank account recording such interest income. Correct amount of the entry in the statement is Rs.18,314/- as against Rs.48,314/- which was inadvertently shown as interest income and got included in the assessee’s total income. Since the correct amount as per the bank account is Rs.18,314/-, we direct to restrict the addition to this extent. Consequential relief of Rs.30,000/- is allowed.

In the result, the appeal is partly allowed.