MANISH BADALIA,KOLKATA vs. I.T.O., WARD - 2(2), HOOGHLY, HOOGHLY

This is an appeal preferred by the assessee against the order of Learned Commissioner of Income-tax (Appeals)- XXXVI, Kolkata [hereinafter referred to Ld. ‘CIT(A)’] dated 28.08.2014 for the Assessment Year (in short ‘AY’) 2008-09.

The issue raised in ground nos. 1 & 2 are against the confirmation of Rs. 13,63,510/- by Ld. CIT(A) as added by The Assessing Officer (in short Ld. 'AO') on the basis of cash peak credit.

The facts in brief are that the Ld. AO during the course of assessment proceedings noticed that the assessee has deposited cash in his bank account and accordingly, a show cause notice was issued which was never replied by the assessee. Ld. AO concluded that the assessee has not disclosed the bank account in the return of income as well as in the balance sheet prepared by the assessee and consequently added the peak balance of cash deposit of Rs. 13,63,510/- to the income of the assessee.

In the appellate proceedings also Ld. CIT(A) simply affirmed the order of Ld. Assessing Officer (in short ld. 'AO').

After hearing rival contentions and perusing the material on record, we find that the assessee has made purchases of coal from Eastern Coal Fields for which the assessee has received cash advances from various customers. We observe that the money received by the assessee from the customers has been utilized for purchase of coal from the Coal Junction. The assessee has furnished the details of payments made to Metal Junction Services Ltd. and Eastern Coal Fields Ltd. at page no. 14 & 15 of the paper book which is extracted below for the sake of ready reference:

We observe from the above that the assessee has received advances for coal purchases from seven parties and has also given their PANs along with addresses in the statement extracted above. We further note that during the year the assessee has received Rs. 15,24,980/- from customers towards coal purchase. Considering these documents and also other various evidences filed by the assessee before us, we are of the view that the observations of the authorities below are not correct and cannot be sustained. Accordingly, we set aside the order of Ld. CIT(A) and delete the addition made by Ld. AO. The ground no. 1& 2 are allowed.

The issue raised in ground no. 3 is against the confirmation of addition of Rs. 95,832/- by Ld. CIT(A) as made by Ld. AO in respect of unexplained other credits.

Ld. AO noted during the course of assessment proceedings that some credits were appearing in the bank account aggregating to Rs. 95,832/- which were not explained by the assessee and accordingly added the same to the income of the assessee. In the appellate proceedings, Ld. CIT(A) affirmed the order of Ld. AO on this issue.

After hearing rival contentions and perusing the material on records, we find that the assessee has sufficient source to make the purchases with the amount in the bank account of the assessee as the assessee is in the business of trading in coal. We note that during the year the assessee has received Rs. 15,24,980/- from seven parties aggregating against which the purchases were made to the tune of Rs. 13,52,980/- and sufficient cash is available to explain the other credits. We, accordingly, set aside the order of Ld. CIT(A) and direct Ld. AO to delete the addition.