SHRI DNYANESHWAR PANDHRINATH KATKE,PUNE vs. ITO WD-12(3), PUNE

Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. CIT(A) / NFAC in confirming the addition of Rs.73 lakhs made by the Assessing Officer u/s 68 being the cash deposit in bank account.

This is the second round of litigation before the Tribunal. Facts of the case, in brief, are that the assessee is an individual who filed his return of income for the

The assessee filed an appeal before the Tribunal and the Tribunal dismissed the appeal filed by the assessee challenging the 263 proceedings. In order to give effect to the decision of the Tribunal the Assessing Officer issued a letter calling for the relevant information / details from the assessee. However, the assessee did not respond to the notice issued by the Assessing Officer. The Assessing Officer observed during the scrutiny proceeding completed on 30.12.2010 that the assessee has deposited an amount of Rs.76,05,000/- in the bank account with Axis Bank,

The Assessing Officer observed that the assessee could not satisfactorily explain the source of cash deposit of Rs.3,05,000/- and accordingly disallowed the same. Thereafter the Tribunal has directed the Assessing Officer to verify proper source of cash deposits as regards to the balance amount of Rs.73 lakhs. Since the assessee did not make any submission to substantiate the source of cash deposit of Rs.73 lakhs, the Assessing Officer, invoking the provisions of section 68 of the Act, made addition of the same.

In appeal the Ld. CIT(A) / NFAC dismissed the appeal filed by the assessee by observing as under:

Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal.

The Ld. Counsel for the assessee drew the attention of the Bench to para 6, page 2 of the assessment order and drew the attention of the Bench where the Assessing Officer had made addition of Rs.73 lakhs. He submitted that an amount of Rs.37 lakhs was the gross business receipts which were received in cash on which the assessee has declared business income and the books of account of the assessee were not rejected and the business income has been accepted. He submitted that an amount of Rs.34 lakhs was received from various parties towards cancellation of deed for purchase of land. He submitted that the amount of Rs.34

So far as the receipt of Rs.2 lakhs from the father of the assessee as cash gift is concerned, he submitted that his father is having sufficient landholding to give cash of Rs.2 lakhs. Therefore, addition on this account is also uncalled for. He accordingly submitted that the order of the Ld. CIT(A) / NFAC be set aside and the addition of Rs.73 lakhs be deleted.

The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC. He submitted that the Ld. CIT(A) / NFAC, after obtaining remand report from the Assessing Officer, has sustained the addition made by the Assessing Officer and therefore, the order of the Ld. CIT(A) / NFAC be upheld and the grounds raised by the assessee be dismissed.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs.73 lakhs u/s 68, the details of which are given at para 6, page 2 of the assessment order. A perusal of the same would show that out of cash deposit of

So far as the amount of Rs.74 lakhs is concerned, it is the submission of the Ld. Counsel for the assessee that the same was given in the shape of cheques to various persons in the preceding year towards purchase of land but since the deal did not materialize, the persons returned the money in shape of cash which has been deposited by the assessee in his bank account. Further, an amount of Rs.2 lakhs has been received from his father as cash gift. Thus, it is his submission that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) / NFAC is not justified.

A perusal of the Profit and Loss Account filed by the assessee, copy of which is placed at page 238 of the paper book shows that the assessee has shown contract receipt of Rs.37,03,970/- and interest income of Rs.1,292/- on which net profit of Rs.2,61,770/- has been declared. The return of income has been filed

A perusal of the computation of income shows that the assessee has declared the business profit of Rs.2,61,770/- in the computation of income. Once the gross receipt of Rs.37,03,970/- on which the profit of Rs.2,61,770/- has been earned and the same has shown in the computation submitted and the Assessing Officer has not disputed the same, we find merit in the argument of the Ld. Counsel for the assessee that the amount of Rs.37 lakhs being cash deposit on account of business receipts cannot be added. We, therefore, accept the contention of the Ld. Counsel for the assessee and direct the Assessing Officer to delete Rs.37 lakhs from the amount of Rs.73 lakhs.

Now coming to the next addition i.e. addition of Rs.34 lakhs is concerned, we find the assessee during the course of assessment proceedings had given the following details:

According to the above the assessee has issued cheques to the above 13 persons towards purchase of their agricultural land. However, due to certain reasons, the deal could not be through for which those persons have returned the cash. We find their confirmations along with the landholdings and various other details have already been filed before the lower authorities, copies of which are placed at pages 243 to 321 of the paper book. Since the assessee has filed various documents to substantiate with evidence that the amounts given earlier to the prospective agriculturists for purchase of their agricultural land were returned subsequently on account of non-materialization of the deal and their confirmations are on record, therefore, we accept the contention of the Ld. Counsel for the assessee that the addition of Rs.34 lakhs is also not warranted. Accordingly, we set aside the order of the Ld. CIT(A) / NFAC on this issue and direct the Assessing Officer to delete addition of Rs.34 lakhs.

So far as the cash gift of Rs.2 lakhs is concerned, the Ld. Counsel for the assessee could not satisfactorily explain the creditworthiness of the father of the assessee for giving cash gift of Rs.2 lakhs. We, therefore, sustain the addition made by the Assessing Officer and upheld by the Ld. CIT(A) / NFAC.

To sum up, out of addition of Rs.73 lakhs, the assessee gets relief of Rs.71 lakhs (i.e. 37 lakhs + Rs.34 lakhs). The grounds raised by the assessee are accordingly partly allowed.

In the result, the appeal filed by the assessee is partly allowed.