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Before: SH. KUL BHARAT
This appeal by the assessee is preferred against the order of the CIT(A)-12, New Delhi dated 31.07.2019 pertaining to A.Y. 2016-17.
The assessee has raised the solitary ground that reads as under :- “1. On the facts and the in the circumstances of the case and in law the Ld. CIT(Appeals) erred in confirming the addition made by the Assessing Officer in a sum of Rs.43,23,000/- by invoking the section 68 of the Income Tax Act, 1961 (‘the Act’). The action being erroneous unlawful and untenable must be quashed with further directions for appropriate relief.”
The facts of the present are that in this case the assessee had filed her return of income of Rs.5,55,920/- on 01.10.2016. The case was selected for limited scrutiny on the ground of large cash deposits in savings bank account. In response to the notice u/s. 143(2) of the Income Tax Act, 1961 (‘Act’) the assessee filed her response, however, the reply of the assessee was not found acceptable to the AO and he proceeded to make addition of Rs.43,23,000/- on account of unexplained cash deposit u/s.68 of the Act.
Aggrieved by this the assessee preferred appeal before the CIT(A) who after considering the submissions of the assessee and perusing the material available on record sustained the addition. Thus, the appeal filed by the assessee was dismissed.
Aggrieved by this the assessee is in appeal before us.
6. Ld. Counsel for the assessee vehemently argued that the Ld. CIT(A) misdirected himself and did not appreciate the facts in right perspective. He submitted that assessee is a migrant from Jammu and Kashmir and she is engaged in the business of trading of ladies suits and fabrics in individual capacity and declared net profit u/s. 44 AD of the Act. He submitted that the assessee was also engaged in other business of LIC agency where from she received commission. He submitted that the Ld. CIT(A) fail to appreciate the fact that the bank statement reflected opening balance and there were deposits and withdrawal out of the bank account of the assessee. He further submitted that the addition cannot be sustained as the AO has made addition u/s. 68 of the Act. He submitted that section 68 does not apply on facts and circumstances of the present case.
Per contra the Senior Departmental Representative supported the findings of the lower authorities and the orders of the lower authorities. He submitted that assessee did not file any evidence in support of carrying out any business activity. He submitted that in the absence of supporting evidence the authorities have rightly made addition and confirmed this.
I have heard the rival arguments, perused the relevant material available on record and gone through the material available on record. There is no dispute with regard to the fact that the case was selected for limited scrutiny assessment to verify the source of bank deposits. The assessee has admitted the fact of cash deposits in her bank account before the authorities below. However, it was submitted that the deposit was out of withdrawal from the same bank account and some of the amount related to the business of the assessee. The Ld. Counsel for the assessee pointed out that there were withdrawals as well as deposits but the AO has not given any set off qua the withdrawals made by the assessee. I find merit into this contention of the assessee even Ld. CIT(A) in the impugned order in para – 7.4 observed as under :- “7.4 I have considered the facts of the case and submission of the Appellant. The Appellant has given no evidence that she was carrying on any business during the relevant financial year. The cash book or the cash summary prepared by her is not supported by any documents. Therefore, her submission with regard to the business is liable to be dismissed. She has stated that the cash deposited by her was Rs.69,72,000/- instead of Rs.58,83,000/- as pointed out by the Assessing Officer. The Assessing Officer has given the credit for turnover shown by her and added Rs.43,23,000/- to the total income. To my understanding, the Appellant has failed to substantiate any business carried out by her. Therefore, the cash deposits made by her in the bank account remain unexplained. However, the Appellant has shown withdrawals on different dates from the bank account which according to her were the tune of Rs.85,16,150/-. It would be quite reasonable to estimate that the cash deposited by her must had some part from the cash withdrawals. Since the Assessing Officer has added Rs.43,23,000/- to the total income, it is held that the remaining cash deposits had its link with the cash
withdrawals on different occasions. In view of the above discussion, the addition of Rs.43,23,000/- is confirmed.”
From the above findings of the CIT(A) it is evident that the same has been arrived at on the basis of estimation only.
8.1 Therefore, considering the totality of the case in hand and the material placed before me I hereby set aside the impugned order and restore the issue to the file of the AO to decide it afresh. The AO is hereby directed to verify the deposits and withdrawals in the bank account of the assessee in case the withdrawals were sufficient to make deposits the AO would give set off of the same to the assessee and recompute the addition. The ground of the assessee is appeal allowed for statistical purpose.