SMT. ANITA KAILASH KHARPUDE,,AHMEDNAGAR vs. INCOME-TAX OFFICER, WARD - 1,, AHMEDNAGAR

Despite service of notice, none appeared on behalf of assessee nor any application was moved for adjournment. The matter was fixed for hearing on

The assessee has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the learned CIT(A)-2, Pune erred in confirming/enhancing the addition to Rs.27,10,802/- (Rupees Twenty Seven Lacs Ten Thousand Eight Hundred and Two only) under the provisions of the Income Tax Act – 1961. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A)-2, Pune erred in confirming and enhancing the addition without considering the provisions of the Income Tax Act, 1961 as well as facts of the case and nature of the transaction and hence not good in law. 3. The Appellant prays for the relief by deleting the addition / enhancement of Rs.27,10,802/- (Rupees Twenty Seven Lacs Ten Thousand Eight Hundred and Two only).

Briefly, in the facts of the case, the assessee was an individual and for the year under consideration had furnished return of income declaring total income of ₹ 1,40,950/-. The case of assessee was picked up for scrutiny. As per AIR information, the assessee had deposited cash of ₹ 21,82,100/- in Axis Bank, Tilak Road, Ahmednagar. The assessee was asked to furnish the sources of cash deposit in saving account. The assessee submitted that she had taken loan from bank, however, failed to furnish any information. The Assessing Officer obtained the account extract from Axis Bank, Ahmednagar Branch. On going though the saving account, it was seen that the assessee had deposited cash of ₹ 18,75,651/- from time to time. The Assessing Officer noted that there was maximum cash deposit of ₹ 5 lakhs and maximum cash

The Assessing Officer also noted vide para 9 that the assessee had made regular payments to certain parties. The said parties were manufacturers and wholesalers of crackers and since the assessee had only shown rental income from utensils, the Assessing Officer estimated income from crackers in the hands of assessee @ 20% of ₹ 10 lakhs and made addition of ₹ 4 lakhs. Another addition was made on account of cash credits of ₹ 5 lakhs in the hands of assessee.

Before the CIT(A), the assessee furnished written submissions which are reproduced in the order of CIT(A). The said written submissions were confronted to the Assessing Officer, who in turn, filed remand report. The CIT(A) after remand report, issued notice for enhancement, in response to which the assessee again explained the sources of cash deposits. The CIT(A) deleted the addition made by the Assessing Officer of ₹ 5 lakhs as the said amount represents loan taken from Mahatma Phule Nagari Sahakari Bank Ltd. In respect of second issue raised by assessee that the balance deposits were out of his business receipts and since the total receipts were less than the prescribed limit, she had shown income under section 44AF of the Act @ 5% of total turnover. This was not accepted and the CIT(A) estimated income @ 20% and confirmed the addition of ₹ 5 lakhs.

Coming to cash credit of ₹ 5,06,033/- i.e. cash deposit in the bank account. The CIT(A) noted that total cash deposits were to the tune of ₹ 27,10,802/- and since the assessee had not corroborated the source of cash deposits and had only shown income of ₹ 1,40,950/-, then addition of ₹ 23,10,802/- was made in the hands of assessee as against ₹ 4 lakhs made by Assessing Officer.

The assessee is in appeal against the order of CIT(A) in respect of addition of ₹ 23,10,802/-.

Though the assessee has failed to appear before the Tribunal, the perusal of order of CIT(A) reflects the submissions made by assessee explaining the source of cash deposits in the following bank accounts:- “i. Axis Bank Savings account Rs.18,75,658/- ii. The Ambika Mahila Sahakari Bank Ltd. Rs. 3,06,694/- iii. Mahatma Phule Nagari Sahakari Bank Ltd. Rs. 5,28,450/- Total Rs.27,10,802/-”

In respect of last entry of Mahatma Phule Nagari Sahakari Bank Ltd., the CIT(A) has deleted the addition as the assessee had explained that she had obtained loan from the said bank and hence, the same was treated as explained.

Second aspect of bank accounts i.e. as against cash deposits, there are cheque payments for purchasing fire crackers. The assessee had submitted date-wise details totaling ₹ 22,26,909/-, which are available at pages 15 to 17 of the appellate order. The assessee explained that it had shown net profit in retail trade under section 44AF of the Act @ 5%, hence the cash receipts from

Another point which was raised by assessee was that she had savings of ₹ 1,60,000/- which was deposited in her bank account. Both the authorities below have brushed aside submissions of assessee and made additions in the hands of assessee, which were enhanced by the CIT(A). If we look at the total of cash deposits, then the same are as under:- “i. Axis Bank Savings account Rs.18,75,658/- ii. The Ambika Mahila Sahakari Bank Ltd. Rs. 3,06,694/- iii. Mahatma Phule Nagari Sahakari Bank Ltd. Rs. 5,28,450/- Total Rs.27,10,802/-” 13. First, let us exclude cash deposit in Mahatma Phule Nagari Sahakari Bank Ltd. i.e. ₹ 5,28,450/-. Then, let us coming to other deposits totaling about ₹ 22 lakhs, out of which the assessee explained that she is carrying on fire crackers business. The factum of said business stands established by the fact that both the Assessing Officer and CIT(A) refers to the withdrawals from the same bank account, in which cash has been deposited i.e. the payments made to various fire cracker sellers. So, once the amount has been paid by way of cheques to the parties, then source of cash deposits stands established from the business receipts of fire crackers business carried on by the assessee. The assessee claims to have declared profits as per section 44AF of the Act @ 5%, which works out to ₹ 23,38,254/-. Further, the assessee explained that she had savings of about ₹ 1,60,000/- which has been deposited in her bank account. In the totality of the above said facts and circumstances, we find no merit in the aforesaid additions made in the hands of assessee. So, we delete the addition

In the result, the appeal of assessee is allowed.