ANIL CHANDRA SAHA,KOLKATA vs. I.T.O..,WARD-4(3), KOLKATA

The ld. AR of assessee has not pressed ground no. 1. Hence, the same is dismissed.

Ground no.2 of revised grounds of appeal is against the action of the ld. CIT(A) in confirming the action of the AO in making an estimated addition of Rs. 1,00,000/-, being 5% of the alleged turnover of Rs.20,00,000/-.

Brief facts of the case as noted by the AO are that he got information from ITO ( I & C1)-III, Kolkata that the assessee had made cash deposits in Vijaya Bank, Salt Lake Branch (a/c No. 722601011000074) in the FY (2010-11) relevant AY (2011-12) under consideration. Therefore, he issued summons u/s. 131 of the Income- tax Act, 1961 ( in short, hereinafter, the ‘Act’) and found that the assessee had deposited and withdrawn cash from time to time; and was having cash balance of Rs. 66,40,614/- as on 01-04-2007. When asked by the AO to explain these cash transactions, the assessee replied that he frequently deposited/withdrew the cash from his said saving bank account. According to assessee, in order to buy an immovable property he required loan from the bank and as per the advice of the bank (verbal) in order to avail the loan facility he was required to show sufficient bank balance and for that he ventured into the frequent deposit/withdrew of his money in order to inflate the bank balance to avail house building loan/purchase of an immovable property. The AO notes that this explanation of assessee is not supported by any evidence because the assessee has not availed any loan. Therefore, he was of the opinion that the difference in the opening balance and closing balance need to be treated as turnover of the business of the assessee, which assessee has not disclosed. Thereafter, he works out the difference at Rs. 22,62,226/- [ Rs. 34,97,597 – Rs.12,35,371/-]. Thereafter, he rounded off the difference to Rs. 20,00,000/- and made the addition of Rs. 1,00,000/- i.e 5% of Rs. 20,00,000/-. Aggrieved, the assessee preferred an appeal before the ld. CIT(A), who was pleased to confirm the same. Aggrieved, the assessee is before us.

After hearing both the parties and perusing the material available on record, I note that the assessee is a salaried person, who is indulging frequently in depositing and withdrawing cash from his bank account. According to the ld. AR, the assessee had opening balance as on 1-4-2007 Rs. 66,40,614/-, which he had been frequently withdrawing and thereafter depositing the same. For that activity he has been hauled up by the department and the AO has erred in taking note of even the correct difference in opening and closing balance while making the notional/estimated addition, which according to him is not sustainable in the eyes of law.

The ld. DR vehemently supported the actions of the AO and the ld. CIT(A). He does not want to interfere with the impugned order. I note that the assessee had an opening balance on 1/4/2007 to the tune of Rs.66,40,614/- and closing balance as on 31-03-2008 to the tune of Rs. 72,07,699/-. Therefore, the AO has erred in taking note of the correct opening/closing balance, which is discernible at pages 8 to 19 of the P/b. The difference between the opening/closing balance is of Rs. 5,67,083/-. Therefore, using the same methodology adopted by the AO, I am of the opinion that 5% of Rs.5,67,083/- i.e Rs.28,354/- only need be sustained. Therefore, I set aside the impugned order of the ld. CIT(A) and direct restricting the addition at Rs. 28,354/- in place of Rs 1 lakhs as made by the AO and confirmed by the ld.CIT(A).

Coming to AY 2011-12 ( I note that the AO has again made the addition based on the frequent deposits and withdrawal made by the assessee to the tune of Rs. 89,76,557/- and this according to him is the turnover of the assessee’s undisclosed business and therefore, made an estimated addition of 5% of Rs. 89,76,557/-, which comes to Rs.4,48,827/- (rounded to Rs.4,45,000/-). Aggrieved, the assessee preferred an appeal before the ld. CIT(A), who was pleased to confirm the same. Aggrieved, the assessee is before us.

I note that in this AY, the assessee had opening balance of Rs. 54,76,621/- and a closing balance in the cash book of Rs. 8,85,445/-. The AO has made the addition taking note of the cash deposits of Rs.89,76,557/- and has made an estimated addition to 5% on it i.e at (Rs.4,48,827/-, rounded to Rs.4,45,000/-). According to me, the AO could not have made any addition simply because the assessee has made frequent deposits and withdrawal of his own money. I note there is no prohibition/bar in law regarding frequent withdrawal/deposit of the amount from his disclosed bank account. It is noted that the bank account from which the assessee had deposited/withdrawn the amounts as alleged by the AO is his disclosed bank account. It is also noted that the AO has not been able to show that the money so withdrawn by the assessee has been utilised for making any expenditure/investment. It is also not the case of the AO that the assessee had any other sources of income. In such a scenario, I am of the considered opinion that no addition in this assessment year was warranted. 3 A.Y 2008-09 I.T.A No. 1703/Kol/2019 AY 2011-12 Therefore, I am inclined to delete the impugned addition of Rs. 4,45,000/- made on this issue and allow this ground of assessee’s appeal.

In the result, the appeal of assessee (ITA No. 1702/Kol/2019 for the AY 2008-09 is partly allowed and appeal of assessee ( A.Y 2011-12) is allowed as stated above.