OINDRI CHAKRABORTY ,KOLKATA vs. ITO, WARD-25(1), , KOLKATA

(a) For that on the facts and in the circumstances of the case and in law, the lower authorities grossly erred in treating the cash deposits of Rs.78,809/- in the bank account maintained with State Bank of India as unexplained money u/s 69A

For that on the facts and in the circumstances of the case, the orders of the lower authorities assessing the deposits aggregating to Rs.4,19,56,697/- as unexplained investment u/s 69A of the Act may kingly be set aside.

For that the appellant craves leave to submit additional grounds and /or amend or alter the grounds already taken either at the time of hearing of the appeal or before.”

Brief facts of the case are that, the assessee is a partner in partnership firm, Champahati C.S. Shop, which holds liquor license and is engaged in the business of trading in liquor. The assessee had filed return of income u/s 139(1) of the Act for AY 2017-18 on 13.02.2018 declaring total income of Rs.6,80,020/-. Case selected for scrutiny through CASS for verification of cash deposited during demonetization period followed by issuance of notice u/s 143(2) & 142(1) of the Act. In the course of the assessment, the AO noted that the assessee inter alia held Savings Bank Account with State Bank of India A/c No.322443377778, Current Account No.034905003599 with ICICI Bank, and a Current Account bearing No. 20654 and Overdraft Account bearing No. 724 with Boral Union Cooperative Bank Ltd in which substantial cash deposits were made. According to the AO, the cash deposits in these bank accounts did not form part of the books of 3 Assessment Year: 2017-18 Oinidri Chakraborty accounts of the assessee and therefore required the assessee to explain the same.

The assessee filed submission dated 05/03/2021, and brought to the notice of the AO that the bank accounts held with ICICI Bank & Boral Union Cooperative Bank were owned and operated by M/s. Champahati CS Shop, a partnership firm in which the assessee is a partner. To substantiate its claim, the assessee had filed the copy of the Trade License issued in the name of the partnership firm and a declaration from the Banks stating that the account was held in their branch as a partnership account of M/s Champahati CS Shop and not a proprietorship account of the assessee. The AO accepted the affirmation provided by the ICICI Bank but held the assessee to be the owner of the monies held with Boral Union Cooperative Bank. The AO held that the cash deposits of Rs.78,809/- appearing in SBI and cash deposits of Rs.66,93,728/- & Rs.3,51,84,160/- appearing in the two bank accounts held with Boral Union Cooperative Bank were found not recorded in the books of the assessee and therefore treated the aggregate sum of Rs.4,19,56,697/- as unexplained cash credit u/s 69A of the Act in the hands of the assessee.

Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who dismissed the same.

Aggrieved the assessee is now in appeal before this Tribunal.

At the time of hearing the Ld. Counsel for the assessee for the assessee brought to our notice the synopsis of the cash deposits in the bank accounts held with SBI Bank & Boral Union Cooperative Bank

The Ld. AR, therefore, pleaded that the impugned addition made in the hands of the assessee was unjustified as the Bank accounts held with Boral Union Cooperative Bank did not belong to her. Further as the cash deposited therein had already been credited and formed part of the regular books of her partnership firm, M/s Champahati CS Shop, it was claimed that the impugned addition tantamounts to assessment of the same amount twice.

On the other hand, the Ld. DR vehemently argued supporting the order of the ld. AO.

We have heard rival contentions and perused the material placed before us. Addition of Rs.4,19,56,697/- made by ld. AO u/s 69A of the Act for unexplained cash deposits confirmed by ld. CIT(A)

During the course of assessment proceedings, the ld. AO noted that the bank accounts held with SBI, ICICI Bank & Boral Union Cooperative Bank were appearing in the AIR details of the assessee and required her to explain the same. Before the AO, the assessee is 7 Assessment Year: 2017-18 Oinidri Chakraborty stated that accounts held with ICICI Bank & Boral Union Cooperative Bank did not belong to her in her personal capacity but were held by M/s Champahati CS Shop, a partnership firm in which she was a partner. The assessee furnished bank confirmations as well. Although the AO accepted the bank confirmation issued by ICICI Bank, but no cogent reasons were assigned by him for holding that the accounts held with Boral Union Cooperative Bank belonged to the assessee and thereby assessing the cash deposits therein in the hands of the assessee as unexplained u/s 69A of the Act.

Now, when the matter travelled before ld. CIT(A), before whom the above facts were stated in the appeal filed before him, but in the absence of compliance by the assessee to the notices of hearing, the ld. CIT(A) proceeded to adjudicate the appeal on merits ex-parte and dismissed the same. In our humble understanding ld. CIT(A) has co- terminus power to that of ld. AO and in the larger interest of justice, he ought to have given sufficient opportunity to the assessee to explain her case and should have given due weightage to the averments made by her so as to end the litigation.

However, now since the assessee filed the bank ledgers, bank confirmations and the audited financials of the partnership firm, M/s Champahati CS Shop along with the assessment order for subsequent AY 2018-19 which shows that the deposits in the bank account held with Boral Union Cooperative Bank belonged to the partnership firm and not the assessee, we do not find it reasonable to restore the issues to ld. CIT(A) or ld. AO for going through the relevant evidences and 8 Assessment Year: 2017-18 Oinidri Chakraborty thus, decide to adjudicate the issue in light of the facts available before us.

From the confirmation issued by Boral Union Cooperative Bank, it is noted that the bank account held with them was the partnership account and not the proprietorship account of the appellant. Also, the bank statement of Boral Union Cooperative Bank reveals that the account was held in the name of M/s Champahati CS Shop which is noted to be a partnership firm having separate identity and PAN AADFC1592L. The assessee has also furnished the bank ledgers which show that the entries found in the bank accounts held with Boral Union Cooperative Bank were accounted for in the books of M/s Champahati CS Shop and the cash deposits therein represents sale proceeds from liquor sale conducted by the partnership firm at the shop and the same was utilized to make payments to the suppliers for purchase of liquor. Also, the audited financials as well as the income- tax return of M/s Champahati CS Shop shows that these cash sales deposited in the bank account held with Boral Union Cooperative Bank formed part of the total turnover of Rs.12,85,49,570/- declared in the regular books of accounts. On these facts, we find sufficient merit in the submission of the assessee that the addition of Rs. 4,19,56,697/- made by the AO u/s 69A of the Act in relation to the cash deposited in Boral Union Cooperative Bank was unjustified as the same did not relate to her but belonged to her partnership firm M/s Champahati CS Shop in which both the bank accounts and the cash deposits from cash

Now coming to the cash deposit of Rs.78,809/- found in the State Bank of India, it is noted that the assessee had reported business income under the presumptive taxation scheme of Rs.6,97,237/- which is indeed sufficient to justify the cash deposits of Rs.78,809/- found in her personal bank account held with State Bank of India. Hence, the aforesaid addition is also held to be untenable and the ld. AO is directed to delete this addition made u/s 69A of the Act as well.

Accordingly, all the grounds of appeal raised on merit by the assessee are allowed as per the terms indicated above. Other grounds being infructuous and general in nature need no adjudication.

In the result, appeal of the assessee is allowed. Order pronounced in the Court on 22nd June, 2023 at Kolkata. (SONJOY SARMA) ACCOUNTANT MEMBER Kolkata, Dated 22/06/2023 *SC SrPs Assessment Year: 2017-18 Oinidri Chakraborty

""यथ" / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु" अपील ( ) / The CIT(A)- 5. िवभागीय "ितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाड" फाई/ Guard file.