LATE RAMESH KUMAR AGARWAL,KOLKATA vs. ITO, WARD 51(4), KOLKATA, KOLKATA

The assessee in the present case is an individual who derives income from house property and other sources. The return of income for the year under consideration was filed by him on 07.07.2008 declaring a total income of 1,49,661/-. As per the AIR information received by the A.O., the assessee had deposited cash to the tune of Late Ramesh Kumar Agarwal Rs. 14,20,000/- in his bank account with Oriental Bank of Commerce. During the course of assessment proceedings, the assessee was called upon by the A.O. to explain the source of the said cash deposits. In reply, it was explained by the assessee that he had purchased 5080 bags of potato in the F.Y. 2006-07 and the same were kept in store of M/s. Ma Bhairabi Himghar Pvt. Ltd. It was submitted that the amount paid for the said purchases was shown as advance in the balance sheet for the year ended 31.03.2007. It was further submitted that the said potatoes were sold during the year under consideration on different dates to different parties and the amounts received against such sale in cash was deposited in the bank account with Oriental Bank of Commerce. The A.O. did not accept this explanation of the assessee. He found that there was no closing stock of potatoes shown by the assessee in his balance sheet as on 31.03.2007. He also found that M/s. Ma Bhairabi Himgarh Pvt. Ltd. have not charged any storage charges to the assessee for storing the potatoes. The assessee also failed to produce the supporting bills for the purchase of potatoes claimed to be made in the F.Y. 2006-07. Keeping in view all these facts of the case, the A.O. did not accept the explanation of the assessee as regards the source of cash deposits found to be made in his bank account with Oriental Bank of Commerce and treating the same as unexplained, addition of Rs. 14,20,000/- was made by him to the total income of the assessee in the assessment completed under section 143(3) vide an order dated 19.11.2010.

Against the order passed by the A.O. under section 143(3), an appeal was preferred by the assessee before the Ld. CIT(A). During Late Ramesh Kumar Agarwal the course of appellate proceedings before the Ld. CIT(A), the assessee filed a letter dated 31.03.2007 issued by M/s. Ma Bhairabi Himgarh Pvt. Ltd., self made money receipts for sale of potatoes, katcha receipt from Ma Bhairabi Himgarh Pvt. Ltd. towards receipt of potato bags, bank statement and extract of cash book, P & L A/c and balance sheet for the year under consideration as well as for the immediately preceding year. This additional evidence filed by the assessee was forwarded by the Ld. CIT(A) for verification and when the A.O. submitted his remand report to him after verification, the same was confronted by the Ld. CIT(A) to the assessee who in turn filed his rejoinder to the remand report. After taking into consideration the entire material available on record, the Ld. CIT(A) decided the issue vide his impugned order as under: “Till date names & addresses of sellers and purchasers of potato and receipts for rent paid to cold storage have not been furnished. Perusal of bank statement shows that several transactions are not reflected in balance sheet. For e.g. on 11.04.2007, assessee received Rs. 10,00,000/- through clearing. On 16.04.2007 an amount of Rs. 10,00,000/- was given to Ma Bhairabi Himghar through cheque but this amount was not received bank till the end of the year. However, in the balance sheet no amount is shown outstanding in the name of this party. Neither is these any entry of receipt of any money from this part in A.Y. 2007-08. Similarly, Rs. 10,00,000/- has been given to Ashika Stock Broker on 23.10.2007 but transactions with this party is not part of either P & L A/c or balance sheet. Similary, there are several transactions in the bank statement which are not duly amounted for. Hence, balance sheet and other documents are not reliable as these are self serving documents. On money receipts, in respect of sale of potato, there are no signatures of the other parties. Hence, these are also not reliable. ITAT order in the cases of Ramesh Kumar Agarwal (HUF) and Vivek Agarwal is on the basis of facts of their cases. No legal issue is involved. As the assessee has not been able to establish the facts, ratio of the decision of ITAT order is not applicable.”

Late Ramesh Kumar Agarwal 4. The Ld. CIT(A) thus confirmed the addition of Rs. 14,20,000/- made by the A.O. on account of unexplained cash deposits found to be made in the bank account of the assessee in Oriental Bank of Commerce and aggrieved by the same, the assessee has preferred this appeal before the Tribunal.

I have heard the arguments of both the sides and also perused the relevant material available on record. As submitted by the learned counsel for the assessee, a similar issue was involved in other related cases of Ramesh Kumar Agarwal (HUF) and Shri Vivek Agarwal for the same A.Y. i.e. 2008-09 and vide its common order dated 05.11.2015 passed by the Division Bench of this Tribunal in & 1494/K/2012, the same has been decided in favour of the assessee vide paragraph no 4 which reads as under: “We have heard rival submissions and gone through facts and circumstances of the case. Before us, Ld. Counsel for the assessee drew our attention to page 1 of assessee’s paper book wherein copy of P & L Account for the year ended 31.03.2007 is enclosed wherein profit received from potato account is disclosed at Rs. 2,37,400/- and on the very same page of Balance Sheet as on 31.03.2007 is enclosed whereby advance under the head potatoes for 4189 bags is disclosed at Rs. 10,47,250/- which was sold in the next year and book profit from sale of potatoes in the P & L Account for the year ended 31.03.2008 i.e. relevant to A.Y. 2008- 09. The assessee has filed complete trading account of potato sale and disclosed the sale proceeds on various dates i.e. on 03.04.2007 at Rs. 1000/-, on 09.07.2007 at Rs. 1.50 lacs, on 04.07.2007 at Rs. 3.50 lacs, on 20.07.2007 at Rs. 2.50 lacs, on 26.07.2007 at Rs. 1.50 lacs and on 31.07.2007 at Rs. 3.03 lacs thereby to total aggregate for this is Rs. 12.04 lacs. The sale was disclosed before the A.O. and before CIT(A) also. According to Ld. Counsel, this sale proceed is only deposited in the bank account of the assessee and which is co-related from the bank account as is clearly evident from the entries. We have seen the copy of bank pass book of Oriental Bank of Commerce and noticed from the pass book that the cash deposits are exactly matching with the dates of sale of potatoes