COL AMARJIT D. NAGI,MUMBAI vs. ASST CIT CIR 20, MUMBAI

Since the facts and circumstances in both the appeals stand on similar footing, the appeal of the assessee for assessment year 2008-09 is taken as the lead case. This appeals is directed against an order passed by CIT(A)-39, Mumbai dated 24/01/2014, which in turn arises out of an order passed by the Assessing Officer under section 143(3) r.w.s. 153A of the Income Tax Act, 1961 (in short ‘the Act’) dated 30/12/2010. Although the assessee has raised multiple Grounds of appeal, but at the time of hearing, arguments have been made by the representative of the assessee only with respect to Grounds of appeal No.4 in the Memo of appeal, which reads as under:-

Notably, assessee is an individual who is a member of one Nagi Group, which was covered under the search action under section.132(1) of the Act and as a consequence, the impugned assessment has been made under section. 143(3) r.w.s. 153A of the Act. Notably, assessee is an individual, who is a retired Defence Personnel and receives pension. During the year the total income declared by the assessee comprised of income under the head ‘salaries, business income from proprietary concern, M/s. Sai Soham and income from other sources including interest on FDRs with Bank. In the context of dispute before us, the relevant discussion is contained in para-6 of the assessment order. As per the discussion therein, the Assessing Officer noted credits of Rs.46,79,798/- appearing in the bank accounts and in the absence of any explanation, the said amount was treated as unexplained credit within the meaning of section 68 of the Act.

Before CIT(A) assessee made detailed submissions and pointed out that the impugned sum comprised of two amounts namely Rs.39,42,415/- reflecting credit entries in Current account No.1022880880 in the name of M/s. Sai Soham and Rs.7,37,383/- reflecting credit entries in an Overdraft Account No.3037766. With regard to the credits appearing in the Current account of the proprietary concern M/s. Sai Soham, assessee asserted that the same has already been declared in return of income and the respective Profit and Loss Account and Balance sheet of the proprietary concern was filed. With regard to the credits in the Overdraft account, assessee explained that the same consisted of refund of deposit earlier given to the land lord of Rs.3,00,000/- and a transfer of Rs.3,50,000/- from the proprietary concern. The balance of Rs.87,383/- was painting hire received from DHL, which was duly accounted in the return of income filed by assessee’s spouse Mrs. Chandra Nagi and in support copy of her return of income was furnished. For all the said reasons, assessee pointed out that the Assessing Officer wrongly treated the credit of Rs.46,79,798/- in the bank account as unexplained credit under section. 68 of the Act.

Before us the Ld. Representative for the assessee has referred to the written submissions placed in the Paper Book to point out that the impugned addition sustained by the CIT(A) was wrong and in fact none of the amounts could be treated as unexplained.

We have carefully considered the rival submissions. We find that so far as the amount of Rs.39,42,415/- credited in the Current account of the proprietary concern is concerned, the assessee had explained that the same featured in the Balance sheet and the Profit & loss account of the proprietary concern and that it pertains to the business receipts. The CIT(A) did not accept the explanation on the ground that the sales credited in the proprietary concern during the year was only Rs.19,28,164/- and the debtors in its balance sheet stood at Rs.3,45,696/- and, therefore, according to him the receipts of Rs.39,43,415/- were not appropriately explained. In our view, the CIT(A) has not appreciated the explanation furnished by the assessee in its proper perspective. In this context, we are tempted to reproduce hereafter the relevant explanation of the assessee, forming part of the written submissions, which is as under:-

In so far as the appeal for assessment year 2009-10 is concerned, the first issue raised therein is also similar to that considered by us in assessment year 2008-09 on account of credit Rs.4,98,516/- found in the bank account of the assessee. On this aspect also for the reasons noted in the earlier year, the same is remanded back to the file of the Assessing Officer for passing an order afresh after hearing the assessee, as per law.

The only other issue remaining in the appeal for assessment year 2009-10 is an adhoc disallowance of rs.1,00,000/- sustained by the CIT(A) out of expenses claimed. Notably, the Assessing Officer had disallowed 25% of the total expenses of Rs.15,40,124/- debited to the P&L account on an adhoc basis citing absence of complete documentary evidence.

In the result, captioned appeals of the assessee are partly allowed as above.