BADRI NARAYAN DARAK,HYDERABAD vs. INCOME TAX OFFICER, WARD-8(1), HYDERABAD, HYDERABAD

Brief facts of the case are that, during the year under consideration, the assessee filed his return of income on 02/06/2016 declaring an income of Rs.3,25,017/-. Finding cash deposits in the accounts of the assessee, the

Assessee preferred appeal and submitted before the learned CIT(A) that since 2007-08 he has been an income tax assessee and regularly filing the returns of income in the concerned ward and doing business of participating dealing in Government auction/tender for scrap material like paper waste, steel etc, for which the general practice of the business was to deposit amount to Government for bidding in the auction and if bid is final in his favour he had to pay the balance amount by way of demand draft otherwise the same amount will be returned to his account, which fact is evident from the bank statement. He further submitted that since

On a perusal of the papers and considering the contentions raised by the assessee, learned CIT(A), as a matter of fact found that the assessee uploaded a copy of cash book bearing opening balance of Rs. 6,52,369/- which is more than the additional cash deposited by him during the year, but since the assessee could not furnish any supporting documentary evidence with respect to the transactions reflecting in the cash book along with opening balance, cash in hand shown by the assessee, the same cannot be accepted. On this premise, he upheld the addition.

In respect of disallowance of deduction of Rs.90,970/- claimed by the assessee under section 80C of the Act, the learned CIT(A) observed that during the assessment proceedings, the assessee could not furnish any documentary evidence to substantiate his claim under section 80C of the Act, and though the assessee uploaded only written submission and claimed that such deduction was claimed by him on account of payment

Assessee is, therefore, in this appeal submitting that the authorities below did not appreciate the documents filed by the assessee including the cash flow statement etc., in their proper perspective. Learned AR submitted that there was an opening cash balance of Rs. 6,52,369/- and the total withdrawals during the year were Rs. 30,86,500/- and put together it amounts to Rs. 37,38,869/-. He, therefore, submitted that out of this available Rs. 37,38,869/-, assessee deposited a sum of Rs. 34,04,050/- which leaves a further cash of Rs. 3,34,819/- in the hands of the assessee. Basing on this he submitted that the explained amount of cash exceeds the total deposits by Rs. 3,34,819/- which does not warrant any addition on this score. He further submitted that the bank statements filed by the assessee clearly reflected the payments made to LIC and, therefore, that itself constitute proper evidence to support the claim under section 80C of the Act.

Learned DR submitted that as is evident from the written submissions dated 25/04/2018 made before the learned Assessing Officer, the assessee submitted only copy of computation of income, bank account statements and the cash flow statement and he never produced the cash book nor the LIC receipts and, therefore, the authorities are justified in making and sustaining the additions.

I have gone through the record in the light of the submissions made on either side. Though the Revenue contended that neither the cash book

Learned AR submitted that there was no requirement by the learned CIT(A) to produce any sort of evidence, and, therefore, the assessee could not produce the same. Be that as it may, copy of such statement is produced before me also and on a perusal of the same, I too find that the cash book for the financial year 2015-16, there was an opening balance of Rs. 6,52,369/- which was the closing balance for the financial year 2014-15. The return of income for the corresponding assessment year 2015-16 was accepted without any dispute and, therefore, it is not open for the Revenue to dispute the same now.

It is, therefore, clear that the total cash available during the year is Rs. 37,38,869/- which is certainly more than the deposited amount of Rs. 34,04,050/- and this factual position militates against the findings of the learned Assessing Officer. I, therefore, accept the contention of the learned AR that there was sufficient cash available to the assessee, explaining the deposits and no addition on that score is sustainable.

Coming to the disallowance of claim under section 80C of the Act, I find that the bank statement relating to Tamil Nadu Mercantile Bank clearly reflects the payments to the LIC. Apart from this, the assessee also produced the copies of LIC receipts. Considering this material, I am of the opinion that the disallowance of claim under section 80C of the Act cannot be sustained and the same is directed to be deleted.

In the result, appeal of the assessee is allowed. Order pronounced in the open court on this the 9th day of November, 2023.