KANJIBHAI VIRABHAI AHIR,AHMEDABAD vs. ITO WARD 3(2)(2) AHMEDABAD, AHMEDABAD

The grounds of appeal raised by the assessee read as under:

The solitary issue in the present appeal relates to addition made to the income of the assessee on account of cash found deposited in his bank account the source of which remained unexplained.

The facts relating to the case are that the assessee was noted to have deposited cash totaling to Rs.2,19,61,500/- in his account with State Bank of India, Moraiya Branch, during the year under consideration and cash of Rs.28,05,500/- in his bank account with Mehsana Urban Co. Op. Bank Limited, Bhuyangdev Branch. Both before the AO and the Ld. CIT(A), the explanation of the assessee with regards to the source of the same was that he was engaged in the business of manufacturing “Chhagda’s” i.e. locally manufactured goods/passenger carrier vehicle used in rural areas of Gujarat. The end users and customers of the same being farmers and villagers located in rural areas of Gujarat, the collection of sales proceeds majorly happened in cash, which in turn, was deposited in the bank account of the assessee. In support of his explanation, the assessee filed copy of cash book, bank book, sale register, however, in the absence of sales bills

The Ld.CIT(A) has noted the fact that the assessee returned to tax income from selling chhagdas and the same was certified by the tax auditor also. The only anomaly noted by him was the difference in the figure of sales reported by the tax auditor and that claimed by the assessee as per its sales register. The Ld.CIT(A) noted a difference of Rs.43,16,069/-, the audit report certifying sales lesser by this extent as compared to the assesses claim. Finding the said difference to be not reconciled by the assessee by any documentary evidences, he accordingly rejected assesses contention.

Before us, Ld. Counsel for the assessee submitted that he had all evidences available to substantiate his claim and pleaded for opportunity to be given to explain his case.

Considering the facts and circumstances of the case wherein admittedly the assessee is in the business of sales of chhagadias in cash, there is therefore merit in the explanation of the cash deposited in his bank account being attributable to his business activity. Rejecting this explanation entirely by the Revenue authorities on account of mismatch in the figure of sales claimed by the assessee and that certified by the tax auditor, we find, is highly unjustified. Since the assessee has contended that he is in a position to justify his claim with documentary evidences, we consider it fit to restore the matter back to the file of the AO to

In the result, the appeal filed by the asessee is allowed for statistical purposes.