SHRI KISHORE KUMAR AGRAWAL vs. INCOME TAX OFFICER,

The assessee has raised following grounds of appeal:- “01. On the facts and in the circumstances of the case, the ld. CIT(Appeal) was not justified in upholding the addition of Rs. 1,01,000/- out of the total cash deposit of Rs. 1,70,000/- made in the bank account on 29.03.2005, which was made out of the funds reflected in the accounts with the returns on record available before the assessing officer. 02. On the facts and in the circumstances of the case, the ld. CIT(Appeal) was not justified in upholding the addition of Rs. 65,000/- towards the closing stock of the concern of the appellant M/s. Agarwal Traders. 03. On the facts and in the circumstances of the case, the ld. CIT(Appeal) was not justified in upholding the disallowance of Rs. 10,000/- against the justifiable expenses claimed by the appellant in his business concern M/s. Agrawal Traders.

Briefly stated facts of the case are that case of the assessee was re- opened and the assessment under Section 147 r.w.s 144 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) was framed vide order dated 20.09.2010, assessing total income of the assessee at Rs.8,04,680/-. While framing the assessment, the Assessing Officer made various additions in the income declared by the assessee, including addition of Rs.1,01,000/- on account of unexplained cash deposit in assessee’s bank account, addition of Rs.1,23,989/- on account of closing stock, disallowance of Rs.23,435/- out of various expenses, addition of Rs.2,60,500/- on account of unexplained capital introduced in the business along with other additions. Aggrieved by the order of the Assessing Officer, assessee preferred appeal before the learned CIT(A), who after considering the submissions of the assessee, partly allowed the appeal of the assessee. Further aggrieved, the assessee is now in appeal before the Tribunal.

At the outset, learned Counsel for the assessee submitted that he is not pressing ground No.3; hence, the same is dismissed as being not pressed.

Ground No.1 is against upholding the addition of Rs.1,01,000/- out of the total cash deposit of Rs.1,70,000/- made in the bank account on 29.03.2005.

Learned Counsel for the assessee reiterated the submissions as were made in the written submissions. He submitted that the authorities below failed to appreciate the fact that the amount was out of maturity of National

We have heard the rival contentions and perused the material placed before us. We find that ld. CIT(A) confirmed the addition of Rs.1,01,000/- out of Rs.1,70,000/- made by the Assessing Officer on account of unexplained cash deposit in the assessee’s bank account. However, it is the contention of the assessee that this amount is duly recorded in the cash book. The Revenue has not controverted this fact. Moreover, the Assessing Officer has not made any inquiry in the Post Office about the veracity of the claim of the assessee that the amount was received as maturity value of National Savings Certificate. Therefore, there was no justification for making this addition and the Assessing Officer is directed to delete the same. Ground No.1 of the assessee’s appeal is accordingly allowed.

Ground No.2 of assessee’s appeal is in respect of confirming addition of Rs.65,000/- made on account of difference in closing stock. Closing stock shown by the assessee was not accepted by the Assessing Officer on the ground that books of accounts have not been produced. Therefore, the Assessing Officer increased the value of closing stock by 20% and made an addition of Rs.1,23,989/-. However, learned CIT(A) restricted the addition to 10% of the closing stick to the extent of Rs.65,000/-. Aggrieved, the assessee is in appeal before us.

Learned Counsel for the assessee submitted that books of accounts were produced before the Sales Tax Authorities who accepted the opening stock, purchase and sales of the assessee. He also submitted that assessee deals in purchase and sale of medicines and looking to the nature of business, it is impossible to maintain the quantitative and qualitative closing stock. On the other hand, ld. Departmental Representative opposed the submissions so made by the learned Counsel for the assessee.

Having heard the rival contentions and perused the material available on record, we find that learned CIT(A) was not justified in confirming the addition of Rs.65,000/- made on account of difference in closing stock. It is pertinent to note from the profit and loss account of the assessee that the assessee had shown Rs.1,49,910/- before the liability of VAT, whereas the amount of Rs.13,790/- is the VAT liability as per the order passed by the Sales Tax Authority which is placed on record. Moreover, the Sales Tax Authority has accepted the opening stock, purchase and sales of the assessee. In view of all these facts and circumstances of the case, we find no justification for confirming the addition of Rs. 65,000/- on account of closing balance difference which is hereby deleted. Ground No. 2 raised by the assessee is also allowed.

Ground No.3 is against upholding the addition of Rs.2,60,500/-, which is introduced as capital by the assessee in his business concern M/s. Agarwal Traders out of funds available with the assessee.

We have heard the rival contentions and perused the material available on record. We find that assessee carries on the retail business of medicines and for the year under consideration assessee has also earned income from share trading which is also evident from the computation of

In the result, appeal filed by the assessee is partly allowed