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Income Tax Appellate Tribunal, “SMC-A” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA
O R D E R
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee and the same is directed against the order of ld. CIT (A), Belagavi dated 29.10.2018 for Assessment Year 2015-16.
The grounds raised
by the assessee are as under. “1. The order of the authorities below is against the fact and circumstances of the case.
2. On the facts and circumstances of the case, the Assessing Officer erred in making the addition on account of unexplained cash deposits in the bank account amounting to Rs.31,79,134/-, as the appellant was having sufficient source of income to deposit the same in the bank account .
3. Without prejudice to the above Ground no.2, On the facts and circumstances of the case, the Assessing Officer erred in making the addition of Rs.31,79,134/- u/s 69A, instead of making the addition of G.P at the rate of 2.89% on unaccounted cash deposits amounting to Rs.18,70,883/- (Rs.4,09,92,430/- minus Rs.3,91,21,547/-), which is the actual unexplained cash deposits. The G.P on the same works out to Rs.54,068/-.
4. On the facts and circumstances of the case, the Hon'ble CIT(A) erred in sustaining the addition made by the Assessing Officer without appreciating the fact that unaccounted cash deposits emanates from the business should have been taxed at a G.P rate of 2.89%.
5. For these and other reasons which may be adduced at the time of hearing, this Hon'ble Bench is requested to delete the addition made by the Assessing Officer on account of cash deposit in the bank or pass such other order as this Hon'ble Bench may deem fit.
6. The appellant craves leaves, to add, to alter, to amend and to delete any other grounds at the time of hearing.” 3. It was submitted by ld. AR of assessee that as per the assessment order, the AO says that there were cash deposit in bank to the extent of Rs. 4,23,00,681/- including cash deposit in IDBI Bank, Vijayapur of Rs. 1,94,56,681/- and State Bank of India, Kannur of Rs. 2,28,44,000/-. Thereafter he submitted that the AO has allowed benefit to the assessee to the extent of sales disclosed by the assessee as per VAT returns to the extent of Rs. 3,91,21,547/- and made addition in respect of excess of cash deposit over sales. He submitted that there are two mistakes in the order of the AO. He submitted that the first mistake is this that the actual cash deposit by the assessee in the bank account with IDBI Bank noted by the AO at Rs. 1,94,56,681/- is incorrect. He submitted that assessee has deposited only Rs. 1,81,48,430/- with IDBI as against the amount noted by the AO of Rs. 1,94,56,681/-. In this regard, he submitted the copy of bank statement of IDBI Bank and date wise chart of cash deposit in IDBI Bank total of Rs. 1,81,48,430/-. 4. Regarding the second mistake he submitted that in addition to granting benefit of sales reported by the assessee in the present year, the AO should also have considered the opening cash balance. He submitted that the balance sheet of the assessee for the preceding year i.e. year ending as on 31.03.2014 is available on page no. 3 of the paper book and as per the same, there is closing cash balance as on 31.03.2014 of Rs. 38,58,600/-. At this juncture, the bench wanted to know regarding the closing cash balance as on 31.03.2015. He submitted a copy of balance sheet as on 31.03.2015 and pointed out that as per the same, the assessee has closing cash in hand of Rs. 13,00,087/- as on 31.03.2015. He submitted that the excess of opening cash in hand as on 01.04.2014 Rs. 38,58,600/- over closing cash in hand as on 31.03.2015 Rs. 13,00,087/- comes to Rs.
Page 3 of 5 25,58,513/- and it should also be considered as cash available for deposit in bank account. He submitted that if both these mistakes are taken into account then no addition is called for on this account.
As against this the ld. DR of revenue supported the orders of authorities below. He also submitted that as per para 9 of the assessment order, there is cash deposit of Rs. 1,94,56,681/- with IDBI Bank and therefore, assessee’s claim that deposit in IDBI bank is only Rs. 1,81,48,430/- as against amount of such cash deposit noted by the AO in para 9 of the assessment order of Rs. 1,94,56,681/- should not be accepted.
I have considered the rival submissions. I find that the date wise deposit chart in this bank is available on pages 5 to 11 of paper book. When the same is compared with the bank statement submitted by ld. AR of assessee, it is found that on following 18 dates there is deposit in bank account but these deposits are not cash deposit but transfer or clearing.
Amo Date unt 1 02.04.2014 14,983 2 06.04.2014 37,000 24.05.2014 8,000 3 4 16.06.2014 6,000 26.06.2014 7,000 5 6 19.07.2014 12,564 7 09.09.2014 12,686 8 15.09.2014 12,686 9 29.09.2014 10,00,000 26.11.2014 3,500 10 06.12.2014 2,500 11 12 19.12.2014 8,785 13 26.12.2014 1,51,000 14 27.12.2014 4,500 15 16.01.2015 6,700 10,057 16 28.01.2015 17 12.02.2015 4,500 5,790 18 05.03.2015 13,08,251 Assessee 1,81,48,430 AO 1,94,56,681 SBI 2,28,44,000 4,09,92,430 Total cash Deposit 3,91,21,547 Sales 18,70,883 Excess Cash Deposit 25,58,513 Excess of opening cash
The total amount of these cash deposit is Rs. 13,08,251/-. When this amount is added to the total cash deposit as per assessee of Rs. 1,81,48,430/- then the same tally with total cash deposit as per AO recorded by him in para 9 of the assessment order of Rs. 1,94,56,681/-. In view of this, I feel that the total cash deposit in IDBI bank should be considered at Rs. 1,81,48,430/- and not at Rs. 1,94,56,681/- as stated by the AO in para 9 of the assessment order. If we add the total amount of cash deposit in SBI of Rs. 2,28,44,000/-, then the total cash deposit comes to Rs. 4,09,92,430/- as worked out by the assessee on page no. 7 of the paper book being written statement. Out of this cash deposit, the AO has accepted that an amount of cash deposit of Rs. 3,91,21,547/- stands explained being the amount of sale shown by the assessee in VAT returns. If we reduce this amount of accepted cash deposit from total cash deposit, balance comes to Rs. 18,70,883/- being excess of cash deposit over cash sales. Now, we consider excess of Cash in hand as on 31.03.2014 of Rs. 38,58,600/- over closing cash in hand as on 31.03.2015 of Rs. 13,00,087/-, it is seen that the said amount comes to Rs. 25,58,513/- as against excess cash deposit of Rs. 18,70,883/- in excess of sales as per VAT returns. Therefore no amount of cash deposit can be added as unexplained cash deposit. I therefore, delete the entire addition made by the AO on this account.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on the date mentioned on the caption page.