SANJEEV KUMAR KHEMKA,KOLKATA vs. ACIT, CIRCLE - 43, KOLKATA , KOLKATA

The issue involved in Grounds No. 1 & 2 relates to the addition of Rs.4,00,000/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of cash deposits found to be made in the Bank Account of the assessee with HDFC Bank by treating the same as unexplained.

The assessee in the present case is an individual, who filed his return of income for the year under consideration on 31.03.2012 declaring total income of Rs.13,14,962/-. During the course of assessment proceedings, the assessee was called upon by the Assessing Officer to Assessment year:2011-2012 Page 2 of 4 explain the cash deposits of Rs.4,00,000/- found to be made in his Bank Account with HDFC Bank, Goa. As the assessee failed to offer any satisfactory explanation in this regard, the Assessing Officer treated the cash deposits found to be made in the Bank account of the assessee in the HDFC Bank, Goa as unexplained and made addition to the total income of the assessee. On appeal, the ld. CIT(Appeals) confirmed the said addition.

I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. As submitted by the ld. Counsel for the assessee, a cash flow statement was prepared and furnished by the assessee before the Assessing Officer to explain the source of cash deposits found to be made in his Bank account with HDFC, Goa, but the same was not considered by the Assessing Officer. He has contended that this aspect specifically brought to the notice of the ld. CIT(Appeals) was not appreciated and considered by the ld. CIT(Appeals). He has urged that this matter may, therefore, be sent back to the Assessing Officer for deciding the same afresh after verifying the cash flow statement of the assessee. Since the ld. D.R. has not raised any objection in this regard, I set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer for deciding the same afresh after verifying the cash flow statement stated to be furnished by the assessee. Grounds No. 1 & 2 of the assessee’s appeal are accordingly treated as allowed for statistical purposes.

The issue involved in Ground No. 3 relates to the addition of Rs.2,98,225/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of Credit Card expenses incurred by the assessee by treating the same as unexplained.

I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. As submitted by the ld. Counsel for the assessee, the addition of Rs.2.36 lakhs was made by the Assessment year:2011-2012 Page 3 of 4 Assessing Officer to the total income of the assessee for A.Y. 2010-11 on account of profit estimated at 8% on the unaccounted sales of the assessee. He has submitted that a similar addition to the extent of Rs.1.54 lakhs has been finally made to the total income of the assessee even for the year under consideration. As this addition made to the total income of the assessee has resulted in cash accrual to the assessee, the ld. Counsel for the assessee has contended that the same may be treated as available with the assessee for explaining the Credit Card expenses in question and the impugned addition is liable to be deleted by giving the benefit of telescoping. Since this contention of the ld. Counsel for the assessee is duly supported by the decision of the Hon’ble Calcutta High Court in the case of Balaram Saha –vs.- CIT (I.T.A. No. 319 of 2003-order dated April 19, 2011), I delete the addition made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of unexplained Credit Card expenses keeping in view the intangible addition made on account of estimated profit from the unaccounted sales, which resulted in accrual of cash to that extent thereby giving the benefit of telescoping, especially when there is nothing on record to show that the accrual of such cash was utilized by the assessee somewhere else. Ground No. 3 is accordingly allowed.

In the result, the appeal of the assessee is treated as allowed as indicated above. Order pronounced in the open Court on October 31, 2018.