ASHOK KUMAR GUPTA,SORO vs. ACIT, CIRCLE BALASORE, BALASORE

Shri Mohit Sheth, Mohit Sheth, ld AR appeared for the assessee and Shri the assessee and Shri S.C.Mohanty, ld Sr S.C.Mohanty, ld Sr DR appeared for the revenue.

It was submitted by ld AR that the assessee is an individual, who is doing the business of consumable goods. It was the submission that the assessee had earned income of Rs.40 lakhs under the head “income from other sources” and had offered the same in his profit and loss account. It was the submission that this amount of Rs.40 lakhs has been deposited by the assessee in his bank account with UCO Bank, Soro. It was the submission that this amount was in SBN currency. It was the further submission that when computing the trading and profit and loss account, the assessee included the amount of Rs.40 lakhs in its income and had determined the total income at Rs.46,11,748/- and had filed his return of income disclosing the total income at Rs.44,51,750/-. It was the submission that in the course of assessment, the Assessing officer treated SBN currency of Rs.40 lakhs deposited in UCO Bank as unexplained income of the assessee and made an addition of Rs.40 lakhs. Further, from the profit and loss account, the Assessing officer treated Rs.40 lakhs shown under the head “income from other sources” as being without any sources and made further addition of Rs.40 lakhs. It was thus the submission of ld AR that when preparing the profit and loss account, the assessee has himself disclosed Rs.40 lakhs and has determined the income at Rs.46,11,748/-. The said Rs.40 lakhs deposited in the bank account of Uco Bank, was treated as unexplained income of the assessee. Further, on the ground that the profit and loss account of the assessee showed income of Rs.40 lakhs

In reply, ld Sr DR submitted that the assessee had cash availability as per cash book at Rs.52,32,600/- and the same amount was deposited in two deposits of Rs.25 lakhs each. It was the submission that this amount of Rs.40 lakhs which has been deposited by the assessee on 28.11.2016 in the form of SBN currency in Uco Bank could not be treated as part of the business income of the assessee as in cash book no entry was found in this respect. It was the submission that the assessee has not explained the source of SBN currency of Rs.40 lakhs deposited in the bank account in P a g e 3 | 6 Uco Bank, Soro and the addition made by the AO and confirmed by the ld CIT(A) is liable to be upheld.

We have considered the rival submissions. For better understanding the fact, it would be worthwhile to extract the profit and loss account of the assessee, which is as follows:

On perusal of the profit and loss account clearly shows that the assessee has shown Rs.40 lakhs under the head “income from other sources”. This amount of Rs.40 lakhs has been considered by the assessee when arriving at the net profit of Rs.46,11,748/-. Should the AO want to P a g e 4 | 6 treat the amount of Rs.40 lakhs as unexplained income of the assessee, first he should have recast the profit and loss account of the assessee and excluded Rs.40 lakhs shown under the head “income from other sources”. This has not been done by the AO. In fact, when determining the total income of the assessee, the Assessing officer has shown Rs.44,51,750/-, in the computation as declared in the return of income, which derived from the profit & loss account. This being so, clearly, the assessee has taken this amount of Rs.40 lakhs in profit and loss account and this amount of Rs.40 lakhs has been deposited by the assessee in his bank account with Uco bank, Soro. The assessee had clearly shown the source as being income from other sources in his profit and loss account. Ld CIT(A) deleted the addition made towards this amount which itself establish the source for SNB deposit in the bank account. In view of these facts, the addition made by the AO and as confirmed by ld CIT(A) in respect of deposit of SBN currency of Rs.40 lakhs in the bank account of the assessee with Uco Bank on 20.11.2016 stands deleted.

In the result, appeal of the assessee stands allowed.