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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI PRASHANT MAHARSHI & KAVITHA RAJAGOPALShri Girish Ghanshamdas Chhabria vs
ORDER Per Kavitha Rajagopal (JM): This appeal has been filed by the assessee as against the order of the Ld.Commissioner of Income-tax (Appeals)-3, Thane dated 29/01/2018 passed under section 250 of the Income-tax Act, 1961 pertaining to assessment year 2014-15. 2. The following are the grounds of appeal raised by the assessee:- “1. The Ld CIT (A) has seriously erred in confirming the action of AO in completing the assessment exparte u/s. 144 of the IT Act, without appreciating that appellant had a reasonable cause in not being able to comply with notices issued.
2. Without prejudice to the above the appellant submits that the Ld CIT (A) has erred in confirming the action of assessing officer in holding that entire amount deposited in all bank accounts taken together represented undisclosed income of the appellant without considering the facts and circumstances of the case in totality and without appreciating that major part of cash deposited in different bank accounts is out of the cash withdrawn. 3. The appellant alternatively prays that in any case since appellant is not required to maintain regular books of accounts, the learned CIT(A) has erred in not estimating the reasonable rate of net profit on the turnover of the appellant.”
3. The brief facts are that the assessee filed its return of income on 16/06/2015 declaring total income of Rs.2,39,710/-. The assessee’s case was selected for scrutiny under CASS to verify the large cash deposits in savings bank account of the assessee. During the assessment proceedings it was observed that the assessee has made huge cash deposits of Rs.19,95,865/-, Rs.22,12,150/- and Rs.19,41,720/- in the saving bank account of the assessee maintained with Oriental Bank of Commerce, Bank of India and State Bank of India, respectively totalling Rs.61,49,735/-. As the assessee failed to provide sufficient documentary evidence to substantiate the nature and source of the cash deposits, the same was added back to the total income of the assessee as unexplained cash credits under section 68 of the I.T. Act in an assessment made under section 144 of the Act. Aggrieved by this, the assessee was in appeal before the Ld.CIT(A), who confirmed the addition made by the Ld.Assessing Officer on the ground that the assessee has failed to produce any documentary evidence to substantiate his claim except for the bank statement. The Ld.CIT(A) further held that the assessee’s P&L account, balance-sheet and capital account filed before the Ld.CIT(A) was without any supporting documentary evidence to substantiate that the said deposits are for business purposes. The Ld.CIT(A) has further observed that the assessee has not produced the purchase and sales bills, ledger accounts of creditors and debtors with regard to the assessee’s retail business in plastic goods, viz. household utensils and bathroom utensils. The Ld.CIT(A) has held that the transaction was more in the nature of accommodation entries and not as purchase and sale of business activities. The Ld.CIT(A) has stated that the credit entry is treated as unexplained cash credit under section 68 for the reason that the assessee has failed to explain the source of such credit and thereby an estimation of gross profit and net profit was not to be determined as the source of deposits and corresponding debit remains unexplained. The Ld.CIT(A) relied on the decision of D.K. Garg reported in [TS-334-HC-2017 (Del)] dated 04/08/2017 wherein it was held that “as assessee was unable to explain the source of all deposits in his accounts or the ultimate destination of all outgoes there from, High Court refuses to extend benefit of ‘peak credit’ while relying on Allahabad HC ruling in Bhaiyalal Shyam Bihari; Restoring the assessment order, High Court remarks that “ITAT went merely on the basis of accountancy, overlooking the settled legal position that peak credit is not applicable where deposits remain unexplained u/s 68.”
4. On the above observation, the Ld.CIT(A) upheld the addition made by the Assessing Officer. The assessee is in appeal before us as against the order of Ld.CIT(A).
The Ld.AR for the assessee contended that the copies of bank accounts enclosed in the paper book substantiates that the fees levied by the bank for all interest transfer was for business transaction. The Ld.AR prayed for another opportunity before the Assessing Officer to furnish details to show that the said deposits were only for business transactions.
The Ld.DR relied on the decisions of lower authorities.
Having heard both the learned representatives and perused the materials on record, we are of the considered opinion that the assessee may be given one last opportunity to substantiate his claim that the huge cash deposits evidenced in his bank account statements pertain to the business transaction of the assessee as dealer of plastic items. We direct that the present case be remitted back to the Assessing Officer for verification of the documents that are to be produced by the assessee to substantiate that the said cash deposits was only for the purpose of business transaction.
In the result, the appeal is allowed for statistical purpose.
Order pronounced in the open Court on 29th August, 2022.