ITO, NEW DELHI vs. SH. ANIL VERMA, GURGAON

The facts in brief are that on the basis of AIR information that assessee has deposited a sum of Rs. 36.67 lac during the relevant financial year in his savings bank account with Industrial Development Bank of India Ltd, the assessee’s case was reopened u/s.147 vide notice dated 22.03.2012 issued u/s 148. Before the Assessing Officer, the assessee has furnished the copy of bank statement showing the total deposit made in cash and corresponding withdrawals, which were at Rs.36,37,000/- and Rs. 32,67,000/-, respectively. However, the Assessing Officer noted that assessee has failed to explain the cash deposit and accordingly, the entire deposits were treated as income from other sources while framing the assessment u/s 144.

Before the ld. CIT (A), it was submitted that assessment was completed u/s.144 and no proper opportunity of being heard was given by the Assessing Officer to the assessee. Accordingly, the assessee furnished additional evidence to substantiate the source of deposit in his bank account. It was further submitted that assessee is a Chartered Accountant employed with a company named as M/s. FITJEE Ltd. which was in the process of establishing its office in Hyderabad. The assessee had acquired the office properties for the said company for its other group company named as ‘M/s. Kartikeya Infrastructure and Finsec Pvt. Ltd.’, during the relevant assessment year. Since the said company did not have any bank account in Hyderabad, M/s. Kartikeya Infrastructure deputed the assessee to make instant payment in cash as and when required. Since assessee had multicity account with IDBI Bank, the said company gave cheque of Rs.23 lacs for the purpose of negotiating the deal for purchase of office on behalf of the said company which was deposited by the assessee in his bank account on 02.04.2004 and cash was withdrawn on the same day for making payment. However, the deal could not be materialized, and therefore, the cash was re-deposited and the entire amount was returned to the M/s. Kartikeya Infrastructure and Finsec Pvt. Ltd. by cheque. The summary of cash deposits and withdrawals in his bank accounts was explained in the following manner:- 1. In IDBI Bank A. Total Deposits Rs.36,67,000/- Less: deposit out of cash withdrawal of Rs.23,00,000/- received from M/s. Kartikeya Infrastructure and Finsec Pvt. Ltd. Rs.23,00,000/- Net Deposit in Bank (other than 23,00,000/- Rs.13,67,000/- B. Total Withdrawal Rs.32,63,500/- Less: Withdrawal of Rs.23,00,000/- received Rs.23,00,000/- From M/s. Kartikeya Infrastructure and Finsec Pvt. Ltd. Net other withdrawal Rs.9,63,500/-

Ld. CIT (A) noted that, since assessee was not given proper opportunity of being heard by the Assessing Officer and assessment has been completed u/s.144, therefore, he admited the additional evidence and forwarded the same to the Assessing Officer to offer its comment and submit remand report. In response, the Assessing Officer had submitted his remand report on the additional evidence which has been duly taken note and considered by the ld. CIT (A). He first of all noted the details of the deposits in the bank account which was as under:-

Thereafter he noted that assessee received sum of Rs.23 lacs from M/s. Kartikeya Infrastructure on 02.04.2004 through cheque which has been duly credited in the account of the assessee and the same amount has been withdrawn by him in cash on the same day which again has been re- deposited on various dates. After depositing of these cash, the same amount has been returned back to M/s. Kartikeya Infrastructure and Finsec Pvt. Ltd. through cheque. Thus, these entries have been squared up during the relevant Assessment Year and it has not resulted in any gain/ income to the assessee. He further noted that in the remand report, Assessing Officer has not made any comment to controvert the claim of the assessee either for the cash withdrawn or the subsequent deposits. Accordingly, he deleted the addition of Rs.23 lacs. Ld. CIT(A) further noted that the assessee has deposited sum of Rs.13,67,000/- which was made out of cash available with him of Rs.15,22,100/- and thus, the source of deposit of Rs.13,67,000/- was treated to be unexplained and the same was deleted.

Before us, learned Department Representative submitted that ld. CIT (A) did not call for the books of account of the assessee nor has he verified the contention raised by the assessee. He has simply accepted the explanation of the assessee and deleted the addition; therefore, he submitted that matter should be restored back to the file of the Assessing Officer. On the other hand, learned counsel after referring to the various documents placed in the paper book submitted that each and every cash deposits and withdrawal have been explained with supporting documents which has been placed in the paper book, therefore, the finding given by the ld. CIT(A), while deleting the said addition should be confirmed.

We have heard the rival submissions and perused the relevant findings given in the impugned order as well as the material placed on record. The Assessing Officer in his ex- parte assessment order u/s.144 has simply added the entire deposits without taking note of the cash withdrawals made by the assessee. The assessee before the ld. CIT (A) has filed all the relevant documents which was duly remanded to the Assessing Officer who again has failed to examine the same or gave any rebuttal to the explanation offered by the assessee or documents furnished. Out of total deposit of Rs.33,67,000/-, the source of deposit of Rs.23 lacs was explained to be from M/s. Kartikeya Infrastructure and Finsec Pvt. Ltd. which was received by way of cheque and same was withdrawal on the same day; and since money which was withdrawan for the purpose of purchasing the property could not be fructified, therefore, same was re-deposited and the cheque of the same amount was issued back to M/s. Kartikeya Infrastructure and Finsec Pvt. Ltd. Thus, there is direct link of the source of deposit and again the amount which has been withdrawn to pay back to the said party. In such a situation, the amount of Rs.23 lacs cannot be held to be income from undisclosed sources.

In so far as other deposits are concerned, the assessee has submitted that total withdrawal from salary account and other withdrawals aggregated to Rs.13,93,600/-. Apart from that, there were opening cash in hand of Rs.4.05 lacs which totaled to Rs.15,22,100/-. Out of the said total fund available with the assessee the net deposit was Rs. 13.67 lacs as per the chart incorporated above. In the wake of such availability of cash with the assessee, the deposits in the bank account ostensibly stands proved and in absence of any material on record, the finding given by the ld. CIT (A) in deleting the addition is confirmed.