ITO WARD-46(1), KOLKATA, KOLKATA vs. ALOKE KUMAR BANERJEE, HOWRAH

In Ground No.1, the revenue has challenged the deletion of addition of Rs.2,87,12,120/- by the ld. CIT(A), which was made by the AO on account of unexplained cash deposited in the bank account.

Facts in brief are that the assessee is engaged in the business of running of petrol pump under the proprietorship concern namely M/s Auto Care Centre at Indo American More, Dr. Zakir Hossain Avenue, Durgapur. The AO on the basis of AIR information has taken the total cash deposited cash into his bank account at Rs.21,47,02,666/-, whereas the assessee has deposited only Rs.18,59,90,456/- in Axis Bank saving account, thus, there is a difference amount of Rs.2,87,12,210/- which has been treated by the AO as unexplained cash and added the same to the total income of the assessee.

The ld. CIT(A) in appellate proceedings allowed this isuse in favour of the assessee taking into consideration the submissions of the assessee by observing and holding as under :- 4.2. I have considered the facts of the case, assessment order and appellant's submissions. The Assessing Officer on the basis of AIR & CIB information, held that total cash deposit into bank a/c's should be Rs.21,47,02,666/- whereas the assessee deposited only Rs. 18,59,90,456/- in Axis Bank saving account, thus the difference amount of Rs.2,87,12,210/- is unexplained and added to the total income. The appellant has explained that both AIR & CIB information have been drawn from assessee's Saving Bank A/c No. 910010029302353 with Axis Bank, Durgapur Branch. The appellant has also uploaded the copies/ summary of all current, saving and overdraft bank accounts and cash flow statement to substantiate his claim. I have carefully verified the various documents filed by the appellant and I find that the appellant's claim is correct. Both AIR & CIB data has been taken from a single saving bank a/c no. 910010029302353 Axis Bank, Durgapur Branch and the AO has committed a mistake in treating these data separately and adding these two amounts to hold that actual cash deposited was less than what was indicated in these two statements. If this mistake is corrected, then there remains no excess cash deposit of Rs.2,87, 12, 120/- as held by the AO. The addition has been made on wrong facts, the same is deleted. The ground no. 1 raised by the appellant regarding this issue is allowed.

Ground No.2 is against the deletion of addition of Rs.1,71,925/- by the ld. CIT(A), which was made by the AO on account of difference in capital account treating the same as unexplained cash credit into books of the assessee u/s.68 of the Act and added the same to the total income of the assessee.

The AO during the course of assessment proceedings observed that the assessee has introduced capital of Rs.11,87,000/- in the bank Rs.13,58,925/- and hence, a difference of Rs.1,71,925/- which was not explained by the assessee, and was added to the total income of the assessee u/s.68 of the Act treating the same as unexplained cash credit.

In the appellate proceedings, the ld. CIT(A) after taking into account the contention and submissions of the assessee deleted the addition by observing and holding as under :- 5.2. I have considered the facts of the case, assessment order and appellant's submissions. The AO held that capital introduced in balance sheet was Rs. 13,58,925/- whereas as per bank statement the inflow was Rs. 11,87,000/-, thus, difference of Rs. 1,71,925/- is added as income. The appellant has explained that capital introduced was Rs. 16,01,020/-(Rs. 10,00,000/- in Bank, Rs. 37,000/- Cash & Rs.5,64,020/- I.T. Refund) and withdrawal from capital a/c was Rs.2,42,095/-, thus, increase in capital account was Rs. 13,58,925/-, Considering the reconciliation given by the appellant which is reproduced in para 5.1 supra, I am inclined to agree with the appellant's claim. The AO has taken only the amount of Rs. 11,50,000/- (Rs. 10,50,000/- into Axis bank - 3791 Current a/c and Rs. 1,00,000/- into Axis bank 2353 Saving a/c) and Rs. 37000/- in cash to arrive at a figure of Rs. 11,87,000/- as capital introduced during the year. The addition of Rs. 1,71,925/- is based on wrong appreciation of facts, the same is directed to be deleted. The ground no. 2 raised by the appellant regarding this issue is allowed.

After hearing the rival contentions of the parties and perusing the material available on record, we find that the amount shown in the capital account was net of withdrawals and the ld. CIT(A) has given a detailed finding to that effect after considering the reconciliation produced by the assessee, which is reproduced in para 5.1 to the appellate order. Accordingly, we do not see any reason to interfere with the order of the ld. CIT(A) and therefore uphold the same. Thus, ground No.2 is dismissed.

Facts in brief are that during the year the assessee received commission of Rs.39,62,615/- from HPCL, which was appearing in Form 26AS. The assessee claimed the expenses against the said commissions and disclosed the net income of Rs.7,06,655/-. The AO by misconstruing the facts issued show cause notice to the assessee as to why that commission to Rs.39,62,615/- received from HPCL should not be treated as income in the hands of the assessee and finally the same was added after making allowance for income already declared by the assessee of Rs.7,06,655/- thereby making an addition of Rs.29,55,960/-. In the appellate proceedings the assessee filed detailed submissions and made argument before the ld. CIT(A) which has been reproduced by the ld. CIT(A) in its order at para 6.1 and after taking into consideration the said reply and submissions of the assessee allowed the said ground of assessee on this issue.

After hearing the rival contentions of the parties and perusing the material available on record, we observe that the assessee has fully explained as to how the net commission income of Rs.7,06,655/- has been arrived at. The assessee has submitted before the ld. CIT(A) details of the expenses along with proofs incurred under the head lifting of petroleum product after making payments, selling of goods to retail customers, managing staff including payment of salary, PF& ESI etc., pump and property maintenance and all other pump related issues i.e. safety & security expenses etc. The ld. CIT(A) after taking into account all these details deleted the addition. We, therefore, do not see any reason to interference with the order of the ld. CIT(A). Accordingly we uphold the same. Ground No.3 of the revenue is dismissed.

Ground No.4 is against the deletion of addition of Rs.9,94,405/- by the ld. CIT(A), which was made by the AO on account of income received by the assessee from FD & miscellaneous income under the head of income from other sources.

The AO during the course of assessment proceedings observed that the assessee has earned f Rs.7,96,725/- and Rs.1,97,680/- which had been credited as interest on FD and miscellaneous income respectively and was duly shown by the assessee in its profit and loss account. However, the AO on wrong understanding of facts treated the same as income from other sources. During the appellate proceedings, the assessee filed detailed submission explaining the nature of income and the ld. CIT(A) considering the same deleted the said addition after observing and holding as under :- 7.2. I have considered the facts of the case, assessment order and appellant's submissions. The AO stated that Rs.7,96,725/- & Rs.1,97,680/-credited to Profit & Loss a/c as interest on FD and miscellaneous income are treated as income from other sources and added to total income. The appellant has submitted that FD was pledged for obtaining bank guarantee and miscellaneous income consists of sale of empty drum, unused spares, loose tools etc., the same being business receipts are credited to P&L: a/c and even if the AO is taxing the same as "income from other sources" then corresponding deduction should be given from business income. I find force in the appellant's contention. The AO's action has resulted into taxing these two amounts twice amounting to double addition of the same income thus inherently wrong. The Rs.7,96,725/- and Rs. 1,97,680/- are deleted. Ground nos. 4&5 raised by the appellant regarding these additions are allowed.

Having considered the rival contentions and the appellate order passed by the ld.CIT(A), we note that the ld. CIT(A) has recorded a clear finding that if the addition made by the AO is sustained ,it would amount to double taxation in the hands of the assessee in respect of the same income. Therefore, we do not see any reason to interfere with the findings recorded by the ld. CIT(A) in this regard which is correct and therefore we uphold the same. This ground of revenue is dismissed.

In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 21/04/2025.