MANISH KISHOR PARIKH,MUMBAI vs. ITO WD 25(2)(2), MUMBAI

Per P.K. Bansal, Vice President

3. So far as issue No. 1 relating to sustaining of addition of `10,34,250/-, after hearing the learned D.R. and going through the orders of the tax authorities below we noted that the AO received information that Shri Manish Kumar Parikh the assessee has deposited a sum of `10,34,250/- in his saving bank account with The Saraswat Co-operative Bank Ltd. during the impugned assessment year but since the did not file any details Saraswat Co- operative Bank Ltd. was not part of the regular books of account the AO made addition of `10,34,250/- under section 68 of the Income Tax Act. The assessee went before the CIT(A). Before the CIT(A) assessee submitted that there were deposits as well as withdrawals from the said account and if at all addition has to be made that would be made in respect of the peak credit which he has worked out at `1,60,000/-. The CIT(A) did not agree with the assessee and even did not give any finding on the peak credit as has been worked by the assessee at `1,60,000/- and upheld the addition as made by the AO at `10,34,250/-.

Shri Manish Kumar Parikh father and the details has been shown in his father’s return of income and income statement. There was further submission by the assessee that a deed of assignment was drawn between the father and the assessee which witnessed the handing over the entire business of M/s. Shreeji Traders, a proprietary concern, of the assessee’s father. The said deed of assignment is dated 01.04.2008. The assessee paid a consideration of `25,000/- and agreed to purchase the entire business of the father and whatever amount was standing credited in father’s name the same stand shown as loan in the books of the business of the assessee. Once the running business has been taken over and all the assets and liabilities of the running business will become the assets and liabilities of the assessee. The only inference, in our opinion, is that the capital standing in the name of the father in the books of account of the proprietary concern of the father names M/s. Shreeji Traders will become the liability of the assessee and will go in the books of the assessee as a sum payable to his father. It is not denied that this is a case of taking over of a running proprietary business by the assessee from his father. In view of these facts and the agreement which has been referred to under para 4 of the order of the CIT(A), we are of the view that the assessee has discharged all the onus as relied on him under section 68 of the Income Tax Act, i.e. identity, creditworthiness as well as genuineness of the transaction. Therefore, we delete the addition. Thus, the second issue stands allowed.