ASSISTANT COMMISSIONER OF INCOME TAX, KALYAN vs. ISHWARLAL HOLARAM MULCHANDANI, ULHASNAGAR

The assessee filed his return of income for the year under consideration declaring total income of Rs.33,90,790/-. The same was taken up for scrutiny. It was noticed that the assessee has made cash deposit of Rs.4,60,09,541/- into his bank account during demonetization period. With regard to the sources for making the above said deposits, the assessee explained that he was proprietor of a concern named M/s Swamini fashions upto 31.3.2016. It was having sundry debtors and sundry creditors balance as on that date. It was submitted that the above said concern was converted into a Partnership Concern w.e.f. 1.4.2016. It was submitted that the assessee had collected money from sundry debtors outstanding as on 31.3.2016 and the same was deposited into the bank account during demonetization period. Even though the assessee furnished above said explanation with regard to the nature and source of deposits, yet he did not furnish any evidence to support the above cited explanation. Hence, the AO treated the above said deposit as unexplained money u/s 69A of the Act and added the same to the total income of the assessee.

In the appellate proceedings, the ld CIT(A) noticed that the assessee had deposited cash to the tune of Rs.15.15 crores in the financial year 2015-16, i.e., immediately preceding financial year. The above cash deposit was more than three times of deposit of Rs.4.60 crores made during the year. He also noticed that the proprietary concern was showing sundry debtors balance of Rs.10.46 crores and sundry creditors balance of Rs.13.47 crores. Based on these information, the Ld CIT(A) concluded that the sources of deposits cannot be doubted with. Accordingly, he deleted the addition and hence the revenue is aggrieved.

We heard rival contentions and perused the record. We notice that the Ld CIT(A) has deleted the addition on the basis of probabilities. However, the fact would remain that the assessee did not furnish copy of books of accounts of the proprietary concern for the financial year 1.4.2016 to 31.3.2017 in order to substantiate its claim that the collections made from sundry debtors were deposited into the bank account. There should not be any doubt that the initial onus to prove the deposits made into the bank account would lie upon the assessee only, which the assessee has failed to discharge. Hence, we are of the view that the Ld CIT(A) was not justified in deleting the impugned addition on the basis of probabilities.