MANOJ KUMAR GUPTA,NEW DELHI vs. ITO,WARD-26(1), DELHI

Aggrieved by the said order, the assessee is in appeal before us. The assessee has taken following grounds of appeal: “1. On the facts and circumstances of the case, order passed by the National Faceless Appeal Centre (NFAC) is bad both in the eye of law and on facts.

On the facts and circumstances of the case, the order passed by the NFAC is without application of mind.

(i) On the facts and circumstances of the case, NFAC has erred, both on facts and in law, in confirming the action of the Ld. Assessing Officer in rejecting the books of account of the assessee.

(i) On the facts and circumstances of the case, the NFAC has erred, both on facts and in law, in confirming the action of the Ld. AO in making addition of Rs.56,95,626/-being the total credits in the bank account of the assessee.

The applicant craves leave to add, amend or alter any of the grounds of appeal.”

The only effective grounds of appeal No.3 & 4 of the assessee wherein the assessee has challenged the action of the AO in invoking the provisions of section 145(3) of the Act and further challenged the addition of Rs.56,95,626/- made on account of credits in the bank Manoj Kumar Gupta vs. ITO account by holding the same as unexplained credits u/s 68 of the Act.

Before us, the Ld. AR of the assessee submitted that Ld. CIT(A) while deciding the appeal of the assessee in Para 6.2 of the order has observed that assessee has made cash deposits of Rs.56,95,626/- in three bank accounts maintained by the assessee. The Ld. AR submitted that observations of the Ld. CIT(A) that the deposits were made in the bank accounts in cash is patently wrong as assessee has made any cash deposits in the bank account and the deposits were made as a result of transfer from the partnership firm M/s Vansh Electrical assessee and from the company wherein he is getting Director remuneration. In support of the claim, the assessee has filed the copies of the bank accounts maintained with Oriental Bank of Commerce, Account No.028222011007001, Oriental Bank of Commerce, Account No. 02822011007001 and Axis Bank Account No.913010052327096 along with respective copies of the bank book as recorded in books of account of the assessee which are placed in the Paper Book pages 38 to 57. The Ld. AR of the assessee submitted that from the perusal of the bank statements as well as bank book, it could be seen that none of the entry of the deposit made by the assessee was in cash and rather they were transfer entry from the firm M/s Vansh Electromechanical Devices (P) Ltd. and from M/s Vansh Electricals. The Ld. AR also submitted the copy of the ledger account of the assessee in the books of M/s Vansh Electricals and also the copy of the Directors remunerations account in the books of Vansh Electromechanical Devices (P) Ltd. to support the claim that Manoj Kumar Gupta vs. ITO the credit entries are from these two firms. Ld. AR submitted that the AO as well as Ld. CIT(A) has wrongly observed that these deposits were in cash. Ld. AR further submit that the Ld. AO has doubted the cash in hand as 31st March, 2016 declared by the assessee at Rs.26.33 lacs. The assessee was having cash in hand on the opening date of previous year i.e., on 1st April, 2015 at Rs.25,53,172/- carried over from previous year and, therefore, the cash to the extent of opening balance brought forward cannot be doubted. It is further submitted that all the deposits made in the bank account during the year under appeal were through bank channels and as has been demonstrated by the assessee as discussed above and therefore, the action of Ld. AO in rejecting books of accounts is not in accordance with law. Therefore, the Ld. AR of the assessee prayed that books of accounts of the assessee by accepted and additions made be deleted.

On the other hand, Ld. Sr. DR supported the orders of the lower authorities and submit that the details were filed by the assessee with respect to the entries in the books of accounts were not examined by the AO and, therefore, the matter may be sent back to the file of the AO for necessary verification.

We have heard the rival submissions and perused the materials available on record. In the instant case, the main allegation of the Revenue is that the assessee has made cash deposits in the bank accounts and source of the same were not explained.

Before us, the Ld. AR of the assessee has been able to demonstrate that all entries in the bank account were through Manoj Kumar Gupta vs. ITO banking channel and were transfer entrie made from the partnership firm M/s Vansh Electricals and M./s Vansh Electromechanical Devices Pvt. Ltd. where the assessee is one of the Directors and received remunerations from time to time and credited in the bank account. The AO has not doubted the source in the shape of the salary income which was accepted. Further the receipts from the partnership M/s Vansh Electronics were also duly verifiable from the copy of the assessee account of the assessee as appearing in the books of M/s Vansh Electricals. This being so, we find that deposits cash in the bank accounts of the assessee were duly explained therefore, there is no need to remand back the matter which could only delay the proceedings. In view of these facts, we find no justification in holding the deposits made at Rs.56,95,626/- as unexplained in the hands of the assessee, therefore, the same are hereby deleted. The grounds of appeal of the assessee is allowed.

As a result, the appeal of the Assessee is allowed.