MRS. SARAH NUSRATH KHALEEL,MANGALURU vs. THE DEPUTY 'COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, MANGALURU

The assessee is an individual. There was a search and seizeure operation conducted under section 132 of the Income Tax Act, 1961 (hereinafter called ‘the Act’), in the case of Shri.Ibrahim Kaleel, husband of the assessee. Proceedings under section 153C of the Act was initiated on the assessee based on the material found in the course of search in the case assessee’s husband. In the course of assessment proceedings under section 153C of the Act, the AO called upon the assessee to explain the source with regard to cash deposits made in SB A/c. No.10981069697 maintained by the assessee with SBI, Fort Road, Mangalore. In Assessment Year 2016- 17, the cash deposits were made during the months January to March, 2016, totaling Rs.18,70,000/-. The assessee explained the source of cash deposited in the bank account was earlier withdrawal of cash from the very same bank account to the tune of Rs.12,75,000/- and this explanation was accepted by the AO. With regard to the remaining sum of Rs.5,95,000/- assessee relied on the circumstances that she had income of Rs.5,58,511/- as per the return of income filed and that the source of income declared was from tuition and tailoring classes. The AO added a sum of Rs.4 lakhs accepting in part the explanation of the assessee, observing as follows:

“4.2 It was further submitted that the income returned by the assessee may also be considered. As per the return of income, the assessee had shown the gross receipt of Rs. 8,98,650/- from tuition and tailoring and had estimated the net income @ 62.15% at Rs. 5,58,511/- and paid tax on the same. The assessee had obviously not maintained any books of accounts. Therefore, the monthly net income amounts roughly to Rs. 47,250/-. Even after assuming very liberally that about four month's net income was available with the assessee, there exists shortage of source to the tune of about Rs. 4,00,000/-. 4.3 The assessee was again opportunity to explain the source for the unexplained amount of Rs. 4,00,000/-. It was submitted that past years savings may also be available for the same. However, this explanation is not acceptable. No evidence is produced to prove that past years savings are kept as cash. In fact, while calculating the unexplained portion, four month's average income has already been given credit to without considering the personal expenditures or other outflows. Therefore, after considering the facts of the case, the assessment is completed as here under by making the additions of Rs. 4 lakhs, as the unexplained investment u/s. 69, to the total income returned u/s. 153C: - Total assessed income (5,58,510 + 4,00,000) = Rs. 9,58,510/-”