ALOK KUNDU,HOWRAH vs. ITO, WARD - 47(3), KOLKATA, KOLKATA

The only grievance of the assessee as projected in the grounds of appeal is with regard to addition of Rs.3,00,000/- made to the assessee’s total income as undisclosed investment.

The Assessee is an individual. He carries on the business of trading in pipe fittings and non ferrous metals. There was a survey conducted in the business premises of the assessee u/s 133A of the Income Tax Act, 1961 (Act) by the revenue on 17.03.2010. In the course of survey it transpired that the assessee had made an investment of Rs.3,00,000/- in a company by name M/s. Alchemist Infra Reality Ltd. In a statement recorded at the time of survey the assessee admitted that he had invested Rs.3,00,000/- in M/s. Alchemist Infra Reality Ltd in cash and that this amount has not been accounted for in his regular books of account. He also admitted that he would offer Rs.3,00,000/- as undisclosed income for A.Y.2010-11. In a subsequent deposition recorded on 16.04.2010 u/s 131 of the Act, by the AO the assessee again took the same stand as was taken at the time of survey.

In the return of income filed, the assessee did not offer a sum of Rs.3,00,000/- to taxation. The assessee took a stand before the AO that the investments in M/s. Alchemist Infra Reality Ltd was made jointly by the assessee and his wife in equal shares. As far as the source of the assessee’s funds for making his contribution of his investment the assessee submitted that the same was out of drawings from assessee’s proprietorship business and partly from withdrawals from the bank. This plea of the assessee was however, rejected by the AO and he brought to tax a sum of Rs.3,00,000/- with the observation that there was no direct evidence to prove the claim of the assessee.

On appeal by the assessee the CIT(A) upheld the order of the AO. The CIT(A) found that the assessee had claimed that there was some withdrawals made in cash from the bank and other sources but these withdrawals were ten days before the deposit in M/s Alchemist Infra Reality Ltd. Moreover no such evidence of withdrawal was filed at the appellate stage also before CIT(A). In these circumstances the CIT(A) found that there was no material filed by the assessee to contradict the statement given at the time of survey which was subsequently confirmed in a statement recorded by the AO u/s 131 of the Income Tax Act, 1961 (Act).

Aggrieved by the order of CIT(A) the assessee has preferred the present appeal before the Tribunal.

I have heard the submissions of the ld. Counsel for the assessee, who reiterated the submissions as were made before the revenue authorities. The ld. DR relied on the order of the AO and the CIT(A). The certificate issued by M/s.. Alchemist Infra Reality Ltd evidencing investments is in the joint names of the assessee and his wife Smt. Sanchita .Kundu. She is assessed to tax and her PAN No.AGDPK 1726 A. The assessee has been pleading before the AO as well as CIT(A) that the assessee cannot be asked to explain 50% of the investments in M/s Alchemist Infra Reality Ltd. This plea of the assessee has not been accepted by the revenue. No valid reasons have been given to reject this plea of the assessee. It may be true that in respect of 50% of the investments viz. a sum of Rs.1,50,000/- the assessee is obliged to explain the sources. The assessee explained the source as withdrawal from proprietorship business M/s. A.K Enterprises and withdrawal from savings bank account of Axis bank on 16.01.2010. He also placed reliance on the cash book which reflects the above withdrawals. However, no evidence was filed to demonstrate the plea of the assessee. Therefore I sustain the addition made by CIT(A) to the extent of Rs.1,50,000/- and delete the addition made in respect of the remaining sum of Rs.1,50,000/-. The appeal of the assessee is partly allowed.

the result the appeal of the assessee is partly allowed.