KAVVERY PERUMAL SATHEESWARAN,CHENNAI vs. ITO,WARD 1, TIRUCHENGODE, TIRUCHENGODE

The ld. Counsel for the assessee has submitted that this is the assessee’s first year of operation in this business and forced to pay the weekly payments even if the assessee has not received the contractual receipts from the company. It is common practice in this line of business to make payment like other contractors deploying funds from various sources, but genuinely deposited the same into her bank account for the purpose of making routine business payments professionally. The ld. Counsel further submits that the bank transactions were already part of the contractual receipts and has been audited by the CA along with the certificate given for the same. He further submits that inadvertently, the assessee failed to disclose the balance of the account in the balance sheet, but, however, the transactions of the account were part of the receipts declared in the financials. Thus, the ld. counsel vehemently argued that the deposits made in UCO Bank cannot be treated as unexplained credit under section 69A of the Act and prayed to delete the addition.

On the other hand, the ld. DR supported the order passed by the ld. CIT(A) on this issue.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. On perusal of the assessment order, we note that the Assessing Officer disallowed cash deposits made with UCO Bank to the tune of ₹.48,75,000/- for the reason that it does not commensurate with the returned income filed by the assessee. We note that on verification of the details of balance sheet, profit & loss account filed along with return of income, the Assessing Officer noted that the assessee has not shown her bank account maintained with the UCO bank in the balance sheet, which implies that the deposits maintained in the said account have not been recorded in the regular books of accounts. Since the assessee could not explain the deposits, the Assessing Officer treated the same as unexplained income under section 69A of the Act and brought to tax. Before the ld. CIT(A), by filing audit report, the assessee has contended that the deposits are made from sales. However, the assessee could not establish the nexus between the cash deposits and turnover. Since the assessee has failed to establish the nature and source of deposits held in the account maintained with UCO bank, the ld. CIT(A) confirmed the addition made under section 69A of the Act. Before us, the ld. counsel for the assessee has submitted that the assessment year under consideration is assessee’s first year of operation in this business and forced to pay the weekly payments even if the assessee has not received the contractual receipts from the company and forced to deploy funds from various sources and deposits the same into the bank account for making routine business payments. But, the assessee failed to explain the source for the deposits with documentary evidence before the authorities below. Considering the above facts and circumstances of the case and to meet the ends of natural justice, we deem it proper to remand the matter to the file of the ld. CIT(A) to decide the issue afresh in accordance with law after affording reasonable opportunity of being heard to the assessee. The assessee is also directed to furnish proper explanation with documentary evidences to substantiate her claim before the ld. CIT(A) without fail, otherwise, the order of the ld. CIT(A) on this issue stands sustained. Thus, the ground raised by the assessee is allowed for statistical purposes.

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