ASHARAF KHAN,DELHI vs. ITO, WARD-47(4), NEW DELHI

Although a number of grounds have been raised by the assessee, these all relate to the order of the CIT(A) in confirming the addition of Rs.23,64,413/- made by the AO on account of cash deposit in the bank account on different dates.

Facts of the case, in brief, are that the assessee is an individual. On the basis of the information received by the AO that the assessee has made cash deposit of Rs.22,79,400/- in his savings bank account with Punjab National Bank and that the assessee has not filed his return of income despite giving opportunity for filing the return, the case of the assessee was reopened u/s 147 of the Act and notice u/s 148 was issued to the assessee. Despite several opportunities granted by the AO, there was no compliance from the side of the assessee for which the AO proceeded to complete the assessment u/s 144. During the assessment proceedings, he obtained information u/s 133(6) from Punjab National Bank and the statement of account was obtained from where it was noticed that there were credits to the tune of Rs.23,64,413/-. The AO accordingly made addition to the total income of the assessee. In appeal, the CIT(A) confirmed the addition made by the AO by relying on various decisions including the decisions of the Hon’ble Supreme Court in the case of Sumati Dayal vs. CIT reported in 214 ITR 801.

Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal.

The ld. Counsel for the assessee submitted that the assessee is a small businessman and has made the cash deposits out of his sale proceeds and has withdrawn the money for purchase of goods as and when required. He submitted that the entire addition made by the AO and sustained by the CIT(A) is not justified under the facts and circumstances of the case. The subsequent withdrawals made by the assessee from the said bank account were never considered. Since the assessee is a small trader, the profit at best could have been estimated and the entire addition could not have been made. He accordingly submitted that the addition made by the AO and 2 sustained by the CIT(A) is not justified. In his alternate contention, he submitted that he has no objection if the matter is restored back to the file of the AO with a direction to give one more opportunity to the assessee to substantiate his case.

The ld. DR, on the other hand, heavily relied on the order of the CIT(A).

I have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions relied on by the ld. Counsel for the assessee. I find the AO, in the order passed u/s 144 of the Act, made addition of Rs.22,64,413/- being the unexplained cash deposit by the assessee in the bank account maintained with Punjab National Bank. I find the ld.CIT(A) sustained the addition. It is the submission of the ld. Counsel for the assessee that the assessee is a small businessman who deposits his routine sale proceeds in the bank account and withdraws the money for purchase of the goods and, therefore, the entire cash deposits could not have been added to the total income without giving the benefit of the subsequent withdrawals made from the same bank account. It is also his submission that given an opportunity, the assessee is in a position to substantiate with evidence to the satisfaction of the AO regarding such cash deposit and withdrawals. Considering the totality of the facts of the case and in the interest of justice, I deem it proper to restore the issue to the file of the AO with a direction to grant one more opportunity to the assessees to substantiate his case and decide the issue as per fact and law. The assessee is also hereby directed to appear before the AO and substantiate his case 3 failing which the AO is at liberty to pass appropriate order as per law. I hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.