SHRI SANJAYKUMAR ZAMATMAL KALWANI,SIDHPUR vs. THE INCOME TAX OFFICER,WARD-4,, PATAN

The Ld. CIT(A) held that apparently the assessee failed to produce sale bills and purchase bills and there was no closing or opening stock. The Ld. CIT(A) held that the items of other expenses claimed were also unlike those found in normal accounts and also there was no claim of direct expenses such as transport, labour etc. The Ld. CIT(A) held that the bank account does not reflect any payments for purchases made through banking channels and hence the assessee's claim of running fruit trading business was not substantiated. It was held that the assessee was depositing cash and immediately withdrawing it. These kinds of transactions merely increase the quantum of inflow and outflow from the account without any actual transactions of substance. The Ld. CIT(A) held that there were instances of immediate transfer of the cash deposited to different accounts out of cash deposits, hence, the banking transactions do not inspire confidence in the explanation given that the withdrawals from bank account are the source of deposits made in demonetization period. The Ld. CIT(A) held that the sales and purchases being in cash were not supported by proper documentation i.e. sale & purchase bills. Therefore, the books of accounts maintained as claimed and the statements of accounts produced were not reliable for computing the income assessable and hence the Ld. CIT(A) held that the books of accounts are rejected in terms of Sec 145(3) of the Income Tax Act. The Ld. CIT(A) held that the withdrawals from the bank account have not been organized and presented in a fashion for co- relating the withdrawals with the deposits. Since, the cash book claimed to be maintained had been rejected u/s 145(3) of the Act, the withdrawals credited to the cash book could not be relied upon as source for subsequent redeposit. In conclusion, the Ld. CIT(A) held that the assessee failed to discharge the onus of satisfactorily explaining the source of cash deposit.

Aggrieved, the assessee is now in appeal before the Tribunal.

With regard to the addition of Rs.11,83,000/- made by the Assessing Officer u/s 69B of the Act, the Ld. AR contended before the Revenue Authorities that :-

Heard the contentions of both the parties and perused the material available on record on this issued.

We find that, as per the financial statements available before the Revenue Authorities, the total sales were Rs1,58,30,380/- and purchases were to the tune of Rs.1,32,35,740/-. The assessee is a fruit seller who has been depositing and withdrawing cash at regular intervals, the fact of which has not been disputed by the Ld. CIT(A), but disputed that the assessee has not proved to be a fruit seller on the grounds that no printed bills have been made available. The Ld. CIT(A) has totally ignored the cash withdrawals made during the year, while the total transactions were to the tune of Rs.1.58 crores. The Ld. CIT(A) choose to treat the amount of Rs.11,83,000/- deposited during the demonetization period. In the business of trading of vegetables & fruits, the assessee cannot be expected to maintain impeccable records as that of a corporate. As per the records before the Revenue, the assessee has submitted financial statements in the submission which show that assessee has made sales of Rs 1,58,30,380/- and purchases of Rs 1,32,35,739/-. The Ld. CIT(A) has not doubted the deposits of Rs.1.58 crores but only doubted the deposits made during the demonetization period of Rs.11.83 lakhs which, based on the evidences before us, could be treated as part of the regular business. Hence, the decision of the Ld. CIT(A) holding that the withdrawals are not arising from cash deposits made and hence, the cash withdrawals do not represent the actual cash available or otherwise cannot be affirmed.

In the result, the appeal of the assessee is allowed.