MURAD IBRAHIM KHAN,MUMBAI vs. ITO WD 19(3)(3), MUMBAI

The captioned appeal by assessee for Assessment Year [AY] 2010-11 contest the order of the Ld. Commissioner of Income-Tax (Appeals)-33 [CIT(A)], Mumbai, Appeal No.CIT(A)-33/Rg.23/36/2013-14 dated 01/01/2016 qua confirmation of certain additions. The assessment for Murad Ibrahim Khan Assessment Year 2010-11 impugned AY was framed by Ld. Income Tax Officer Ward-19(3)(3),Mumbai [AO] u/s 144 of the Income Tax Act,1961 on 28/03/2013 wherein the income of the assessee has been assessed at Rs.139.55 Lacs after certain additions as against returned income of Rs.9.78 Lacs filed by the assessee on 29/09/2010. None has appeared for assessee despite notice and no valid adjournment application is on record. Left with no option we proceed to decide the appeal on the basis of material available on record and after hearing Ld. Departmental Representative [DR].

Facts leading to the same are that pursuant to certain Annual Information return [AIR], it was noted that the assessee made cash deposit aggregating to Rs.1,23,88,450/- in one of the savings account held with Syndicate Bank. Since the assessee could not explain the source thereof, the same was added to the income of the assessee as unexplained cash credit u/s 68. It was further noted that the assessee received interest of Rs.5,75,500/-,which was not reflected in the return of income and therefore, the same was also added to the income of the assessee. The assessee was saddled with another addition of Rs.12,640/- on account of certain alleged bogus purchases. Finally, the assessment was completed after making aggregate additions of Rs.129.76 Lacs on best judgment basis u/s 144 since the assessee failed to attend the hearing from time to time before Ld. AO and supply requisite information / documents. 3. Aggrieved, the assessee contested the same without any success before Ld.CIT(A) vide impugned order dated 01/01/2016. During the course Murad Ibrahim Khan Assessment Year 2010-11 of appellate proceedings, the assessee filed certain additional evidences against which a remand report was called from Ld. AO. During remand proceedings, the assessee submitted statement of cash deposits and withdrawals as extracted on page no.5 of the appellate order and contended that the cash deposit was sourced from cash withdrawals made by the assessee during impugned AY. However, not finding the explanation and documentary evidences plausible one, Ld.CIT(A) confirmed additions u/s 68. The other two additions were also similarly confirmed. Aggrieved, the assessee is in further appeal before us. The Ld. DR has placed reliance on the stand of lower authorities.

We have carefully considered the contentions and material on record. Upon perusal, we find that the assessee has deposited cash of Rs.1,23,88,540/- and made cash withdrawals of Rs.99,06,400/- during the impugned AY as evident from the appellate order and therefore, there may be some feeble strength in the stand of assessee that cash deposits were sourced from cash withdrawals. The complete onus to prove the nexus between cash deposits and cash withdrawals completely rest on the assessee and we find that the assessee has miserably failed to prove the same before lower authorities despite being provided with sufficient opportunity of being heard. The same is also evident from the fact that no submissions could be made by assessee before Ld. AO and even during remand proceedings, the assessee failed to prove the nexus thereof. Nevertheless, on factual matrix and keeping in view the principle of natural Murad Ibrahim Khan Assessment Year 2010-11 justice, we deem it fit to provide another opportunity of being heard to the assessee and therefore, remit the matter back to the file of Ld.CIT(A) with a direction to the assessee to prove nexus between cash deposits and cash withdrawals with documentary evidences. This ground stands allowed for statistical purposes.

The addition on account of interest income of Rs.5,75,500/- has rightly been taxed by revenue as income from other sources. However, we find that the assessee, during appellate proceedings, had pleaded that the said interest was credited to profit & loss account and offered as business income. The same income could not be taxed twice and therefore, the matter is remitted back to file of Ld. CIT(A) for limited purpose of verification of this fact. If the income has already been offered as business income, the same shall be reduced accordingly. The assessee is directed to file sufficient documentary evidences to demonstrate the same. This ground stands allowed for statistical purpose. The third addition of Rs.12,640/- on account of alleged bogus purchases stands confirmed for want of evidences.

The assessee, in one of the ground has contested assessment made u/s 144. However, we find no strength in the same since the assessee failed to comply with the hearing notices and make requisite submissions before Ld. AO and therefore, Ld. AO was left with no option but to make assessment on best judgment basis u/s 144. This ground stands dismissed.