MARUTI NANDAN SAH,NAINITAL vs. ACIT, CIRCLE- 3, NAINITAL

This appeal by the assessee is directed against the order of the Commissioner of Income Tax [Appeals], Haldwani dated 28.03.2018 pertaining to assessment year 2014-15.

The substantive grievances raised by the assessee read as under:

Briefly stated, the facts of the case are that the assessee derives income from share profit from firms and from other sources etc. Return for the year was filed on 31.03.2015 declaring income at Rs. 15,39,110/-. The case was selected for limited scrutiny through CASS and, subsequently, on 27.09.2016 the case was converted from limited to complete scrutiny.

The assessee was found to have deposited cash in the Savings Bank Account No. 4669 maintained with Kurmanchal Nagar Sahkari Bank Ltd, Tallital, Nainital [KNSB] amounting to Rs. 60 lakhs. The assessee was also found to have purchased an immovable property at Ranidhara, Almora for Rs. 70.25 lakhs. Rs. 50 lakhs was invested out of housing loan taken from KNSB and Rs. 20.25 lakhs was invested in cash. The assessee was further found to have spent Rs. 5 lakhs in house hold expenses.

During the course of scrutiny assessment proceedings, the assessee was asked to explain the sources of cash deposit in KNSB amounting to Rs. 60 lakhs. The assessee was further asked to explain the source of Rs. 20.25 lakhs utilised in purchase of immovable property and the source of Rs. 5 lakhs which was spent towards house hold expenses.

The assessee explained that cash sales of the firm M/s Shri Jogeshwar Traders was collected by him and subsequently deposited in the bank account of the firm. It was explained that on two occasions cash was deposited in the personal bank account of the assessee which amounts to Rs. 60 lakhs. In support of his contention, the assessee furnished copy of current account in the books of M/s Shri Jogeshwar Traders. The assessee tried to explain the cash deposited in his Savings Bank Account with KNSB from the entries in the current account with M/s Shri Jogeshwar Traders. The AO did not find any substance in the claim of the assessee and made addition of Rs. 60 lakhs which was subsequently confirmed by the first appellate authority.

In respect of investment of Rs. 20.25 lakhs in cash towards purchase of immovable property, the assessee once again took shelter behind the current account with M/s Shri Jogeshwar Traders and once again failed to convince the AO. Addition was made and confirmed by the CIT(A).

Source of house hold expenses of Rs. 5 lakhs was also from the current account with M/s Shri Jogeshwar Traders and once again did not find any favour with the AO /CIT(A).

Before us, the ld. AR drew our attention to the current account with M/s Shri Jogeshwar Traders, which is exhibited at pages 11 to 17 of the paper book.

We have given thoughtful consideration to the copy of ledger account. A perusal of the said copy of ledger account reveals that there are debit and credit entries. However, such debit and credit entries cannot establish the availability of cash with the assessee which he could have deposited in his savings bank account and utilised in the purchase of immovable property. Moreover, we find that the firm M/s Shri Jogeshwar Traders was having bank account with Nainital Bank Ltd whereas the assessee was having savings bank account with KNSB. We fail to understand as to why would a firm permit its partner to deposit the sale proceeds in his personal saving banks account. No documentary evidence has been brought on record to substantiate the availability of cash vis a vis entries in the firm’s books of account.

Considering the peculiar facts in totality, we do not find any error or infirmity in the findings of the first appellate authority. We, accordingly, dismiss the current ledger account in the books of the firm M/s Shri Jogeshwar Traders. As the source of funds is in the hands of the assessee, all the three additions made by the AO and confirmed by the CIT(A) are upheld.

In the result, the appeal filed by the assessee is dismissed.