VIKAS MALIK,NEW DELHI vs. ITO WARD - 39(4), NEW DELHI

7. On the facts and the circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 66,36,000/- on account of cash deposits in the bank.

8. On the facts and the circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition despite the assessee bringing on record all evidences and material to prove the source of the deposits, duly supported by an affidavit filed which was not contradicted.

9. On the facts and the circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition rejecting the contention of the assessee to assess the income at the most under section 44AD of the Act, the assessee having disclosed the nature of business and in the absence of books of account.

10. On the facts and the circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition despite the same having been made by the A.O. following own surmises and conjectures by adding the total cash deposited during the year into the bank account.”

Vikas Malik 3. The Assessing Officer made addition of Rs.66,36,000/- based on the cash deposits in the bank account of State Bank of India and Oriental Bank of Commerce. For the sake of ready reference, the Assessment order is reproduced as under:

“As per the information, the assessee has made cash deposits of Rs. 36,40,000/- in State Bank of India, Sector-11 Rohini branch and Rs. 29,96,000/- in Oriental Bank of Commerce, Connaught Place branch, Delhi during the year under consideration. As the assessee did not come forward to explain the sources of cash deposits aggregating to Rs. 66,36,000/-, in the two bank accounts mentioned above therefore, the total deposits of Rs. 66,36,000/- is treated as unexplained income of the assessee for the year under consideration. Penalty proceedings u/s 271(1)(c) are being initiated for concealing the true particulars of her income. Also, penalty proceedings u/s 271(1)(b) are being initiated for non compliance of statutory notices issued from time to time.

With the above remarks, assessed at Rs. 66,36,000/-. Issued demand notice and challan. Charge interest u/s 234A and 234B as per rules. Penalty proceedings u/s 271(1)(b) and u/s 271(1)(c) have been initiated separately.

With the above remarks, assessed at Rs.66,36,000/-. Issued demand notice and challan. Charge interest u/s 234A and 234B as per rules. Penalty proceedings u/s 271(1)(b) and u/s 271(1)(c) have been initiated separately.”

Vikas Malik 4. Aggrieved, the assessee filed appeal before the ld. CIT(A) who affirmed the action of the AO. The operative part of the order of the ld. CIT(A) is as under:

“The explanation offered is that the appellant was doing business of coal trading and that he used to keep cash in hand instead of keeping it in the bank. It is claimed that cheques were issued to supplier of coal. Subsequently, it was also informed that the "entire deposit in bank during 01.04.2010 to 31.03.2011 (AY 2011-12) is for purchase of coal or cash deposit for purchase of coal but did not supply & thereafter withdrawn cash in order to deposit later on as & when required for supply of coal." The above explanation, which is without any supporting and reliable evidence is neither logical nor reasonable. It is also unexplained what was the commercial expediency or compulsion of keeping cash in hand rather than in the bank. It is further claimed that the initial source of purchase of coal was some payments received from DRO on account of land acquisition by state government in the earlier year. This firstly, is a bald claim without evidence & more importantly, the nexus between the two is not established i.e. the source deposits in the relevant year are unambiguously out of the compensation received against land acquisition and not utilized elsewhere is questionable. Hence, there is no merit in the plea of the appellant & the ground of appeal is accordingly dismissed.”

5. Aggrieved, the assessee filed appeal before the Tribunal.

6. Before us, the ld. AR submitted that the assessee had opening cash balance of Rs.2,00,000/- in hand and even if the assertion of the ld. CIT(A) is accepted the cash withdrawals and Vikas Malik the cash sales made by the assessee cannot be disputed as emanating from the bank statement. The ld. AR submitted the cash account, P&L account and the bank statement. On the other hand, the ld. DR relied on the order of the Revenue.