MAKSOOD K KHAN,MUMBAI vs. ITO 24(2)(4), MUMBAI

The only grievance of the assessee relates to addition of `62,48,595/- in respect of cash deposited in the bank account.

During the course of scrutiny the AO found that as per the AIR data available with the Department, it was noticed that the assessee was maintaining bank accounts with ICICI Bank. A notice under Section 133(6) of the Act was therefore issued to the ICICI Bank, Marine Lines and Fort Branches to furnish the copies of the bank statement reported by them in the AIR data. On receipt of the same, it was noticed that the assessee was maintaining Account No. 623501529785 with ICICI Bank, Mumbai. On further perusal of both the accounts it was noticed that the assessee has made substantial deposits in both the accounts maintained by him but Shri Maksood K Khan neither of these accounts were disclosed in the return of income filed with the Department. It is noticed from the bank accounts collected by issuing notice under Section 133(6) of the Act that the assessee’s bank account shows a total credit entries of `34,57,801/- in one saving bank account (Account No. 623501529785 with ICICI Bank, DN Road, Fort Branch) and credits of `21,61,421/- in another saving account (Account No. 032401504268 with ICICI Bank, Marine Lines Bank. After considering the statement of accounts with these banks, the AO added the entire amount of cash deposited as unaccounted income of the assessee. By the impugned order the CIT(A) confirmed the action of the AO.

It was argued by the learned A.R. that the assessee has filed details of bank account with the lower authorities, which indicated withdrawal of cash immediately prior to the deposit of cash, therefore, only the peak credit is to be added in the income of the assessee in place of entire amount of deposit. Our attention was also invited to the date-wise entry in the bank statement indicating withdrawal of cash and corresponding deposit of cash in the bank account.

On the other hand, the learned D.R. relied on the orders of the Authorities below and contended that the assessee could not explain the deposit in the bank account, therefore the entire amount so deposited has been correctly added by the AO in assessee’s income.

Rival contentions have heard and record perused and carefully gone through the orders of the Authorities below as well as bank accounts in respect of ICICI saving bank account. We find that both these bank accounts were not disclosed to the Department but when addition has been made by the AO in respect of deposits in the bank account, credit for withdrawal of cash from same bank is to required to be given. Accordingly, we direct the AO to decide issue afresh after giving due credit for withdrawals made from very bank account. The opening balance in the bank account is to be treated as unaccounted income and unexplained. At the very same time we find that the amount has been utilised by the Shri Maksood K Khan assessee for purchase of goods which were sold in the open market. We, therefore, direct the AO to make addition of 10% of such deposit as profit earned on the transaction entered into by the assessee in the course of its business. We direct accordingly.

In the result, the appeal of the assessee is allowed in part in terms indicated hereinabove.