AJIT A. CHEYADEN,KALYAN vs. ITO, WARD -23(2)(1) [NOW WD. 29(1)(1)], MUMBAI

In this appeal, the first Ground raised by the assessee is with regard to the validity of notice issued u/s 143(2) of the Act, which has not been pressed at the time of hearing and accordingly, the same is dismissed as not pressed.

The other Ground is with regard to the action of the CIT(A) in confirming the addition of Rs.5,18,000/- on account of unexplained cash deposit in the bank.

In brief, the relevant facts are that in the course of assessment, additions were made by the Assessing Officer by treating various deposits in the bank account as unexplained amounting to Rs.2,29,69,517/-. The CIT(A) has allowed the relief, except to the extent of Rs.5,18,000/-, which represented deposits made in Federal Bank account on 19.03.2011 and 31.03.2011 of Rs.18,000/- and Rs.5,00,000/- respectively, which have been held to be unexplained. The assessee is in appeal against such a decision of CIT(A).

Before us, the learned representative for the assessee referred to para 4 of the order of CIT(A), wherein the explanation with regard to the source of deposits of Rs.18,000/- and Rs.5,00,000/- on 19.03.2011 and 31.03.2011 respectively have been enumerated. It is pointed out that before the CIT(A), assessee had explained that the deposits are out of earlier withdrawals made from the same bank account. The learned representative pointed out that the said explanation has been rejected by the CIT(A) on mere conjectures and surmises.

On the other hand, the ld. DR pointed out that the CIT(A) refused to accept the explanation on the ground that the assessee was not maintaining books of account and, therefore, there was no supporting evidence to explain the re-deposit of the withdrawals.

We have carefully considered the rival submissions. A perusal of assessee’s explanation, which has been tabulated by CIT(A), shows that assessee listed the withdrawals made prior to the aforesaid deposits and justified the deposit of Rs.18,000/- and Rs.5,00,000/- on 19.03.2011 and 31.03.2011 respectively. The explanation has been rejected by the CIT(A) in the absence of account books, as also his observation that no one keeps withdrawing successively from the bank and keeps cash idle without purpose. In this context, we find that the CIT(A) considered and accepted similar explanation with regard to deposit of Rs.3,00,000/- made on 31.03.2011. Thus, when the CIT(A) accepts a particular modus operandi, then, he cannot reject the same with regard to other similarly placed transactions. Even with regard to the deposits made on 19.03.2011 and 31.03.2011 of Rs.18,000/- and Rs.5,00,000/- respectively, the earlier dates of withdrawal are quite proximate to the date of deposits and, therefore, the explanation ought to have been accepted by the CIT(A), especially considering the fact that no other material is available on record to suggest utilisation of such funds by the assessee for any other purpose. Thus, we find enough justification on the part of the assessee in asserting that the impugned deposits have been made out of earlier withdrawals. Thus, the order of CIT(A) is set-aside and the Assessing Officer is directed to delete the addition of Rs.5,18,000/-.

Before parting, we may place on record the statement made by the assessee at Bar. When the ld. DR sought some time to verify as to whether any cross-appeal has been filed by the Department since substantial relief was allowed by the CIT(A), the learned representative made a statement at Bar that the Department had not preferred any appeal and that on earlier two occasions also, the Department was allowed time by the Bench to verify this aspect, but no such information has been brought out. The rival parties were heard on the merits of the appeal in the above background.

Resultantly, the appeal of the assessee is allowed, as above.