MR. RAJESH BANSAL,,DELHI vs. ITO, NEW DELHI

The only issue raised in this appeal is against the confirmation of addition of Rs.6,35,000/-.

Briefly stated, the facts of the case are that the assessee is a Managing Director of M/s Mining Associates Pvt. Ltd. Certain cash deposits totalling to Rs.6,35,000/- were found to have been made in the assessee’s bank accounts, namely, ICICI Bank and HDFC Bank. On being called upon to substantiate the source of deposits, the assessee submitted that as a Managing Director, he was withdrawing money from the company account as imprest for the business of the company and then depositing the same in his bank accounts to be used for incurring expenses at remote and far off places where banking facility was not available. Not convinced with the assessee’s submissions, the Assessing Officer made an addition for a sum of Rs.6,35,000/-. The ld. CIT(A) confirmed the addition.

I have heard the rival submissions and perused the relevant material on record. Page 61 of the paper book is the assessee’s Imprest account in the books of account of the company. This shows giving of a sum of Rs.6,64,000/- to the assessee through various entries on different dates. The other side of the account represents the details of expenses made by the assessee for and on behalf of the company, leaving a net closing balance of Rs.695/-. Page 31 onwards of the paper book is a copy of the assessee’s bank accounts in which the amount received by the assessee from the company was deposited and then there are corresponding withdrawals on different dates. The essence of the matter is that the company was incurring expenses in far off places through the assessee; and for doing this, certain imprest amounts were given which the assessee was simultaneously depositing in his bank account to be used for incurring expenses through his ATM. When the company has certified that the amount deposited by the assessee in his bank account is from the imprest issued by it and further when there is ample evidence of adjustment by the company of such imprest with the expenses incurred, I fail to comprehend as to how an addition can be made in the hands of the assessee on account of cash deposits in his bank accounts by treating the same as unexplained. I, therefore, order for the deletion of addition. 3

In the result, the appeal of the assessee is allowed.