SMT. KUSUM GOSWAMI,RISHIKESH vs. ITO, RISHIKESH

The facts in brief are, the assessee is an individual and has income from beauty parlour at Jain market, Rishikesh. The assessee initially stated that she was not maintaining books of accounts. The assessing officer (A.O.) during the course of assessment proceedings noticed that the assessee has purchased a plot from Sh Kamal Narain Mishra and Sh. Shekhar Gupta. The payments to the plot included cash amount of Rs. 2,24,000/– paid in June,2007. When questioned, it was explained that the cash on hand was available with the assessee. The Ld. counsel for the assessee had filed a cash flow statement for financial year 2007– 08 and the opening cash on hand was shown as Rs. 4,21, 309/–. As assessee was not maintaining any books of account and as she had not filed the balance sheet along with the return of income for A.Y. 2007 -2008. The assessing officer was of the view that the claim of the assessee is not believable specifically when the assessee was maintaining a bank account with Axis Bank Ltd.. He added the same as undisclosed income. Aggrieved the assessee carried the matter in appeal. The First appellate authority confirmed the addition on the ground that, the assessee has not brought any evidence on record to show that she actually had the cash on hand in the regular books and that such cash on hand was accumulated out of sources of income disclosed to the Department. Further aggrieved the assessee is before me.

The Ld. counsel for the assessee Mr Sanjeev Saxena filed the paper book running into 18 pages and submitted that, the cash flow statement submitted by the assessee has not been considered at all by the lower authorities. He submitted that the addition was made on the ground that the assessee could not have certain cash balance with her which is not correct in law. He took this bench through the balance sheet of the assessee, the month wise cash flow statements as well as copies of the returns of income filed by the assessee for the previous assessment years to prove his point that such a balance of cash on hand is truly maintained by the assessee. He submitted that month wise reconciliation of cash was provided to the assessing officer as well as the Ld. CIT(A) and prayed for relief.

The Ld. departmental representative Mr Rajesh Kumar relied on the order of the Ld. CIT(A), as well as the last paragraph the order of the assessing officer. He submitted that the assessee has not given any evidence in support of her claim and looking at the facts of the case, it is not believable that the assessee maintains such huge cash balances.

After hearing rival contentions I find that the addition has been made by the assessing officer without invoking any specific section. Be it as it may, the assessee has been filing returns of income from the assessment year 2002-03. She has submitted the balance sheet for the assessment year 2008–09. Month wise cash flow statement, reconciling the receipts and payments, has been filed before the assessing officer as well CIT(A). These have been rejected without any verification. The gross receipts of assessee as disclosed have not been disturbed. The expenditure claimed by the assessee has been allowed by the assessing officer. Under these circumstances I am of the considered opinion that the addition made by the assessing officer cannot be sustained. Specific reasons should have been given as to why the month wise cash flow statements filed by the assessee cannot be relied upon. Rejection of such documents without even verification cannot be countenanced. Hence I delete the addition of Rs.2,24,000/- and allow the appeal of the assessee.

In the result the appeal of the assessee is allowed