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Income Tax Appellate Tribunal, DELHI BENCHES : SMC-I : NEW DELHI
Before: SHRI R.S. SYAL
ORDER This appeal by the assessee arises out of the order passed by the CIT(A) on 27.02.2015 in relation to the assessment year 2010-11.
The assessee has filed revised grounds, in which the impugned order has been assailed only on the solitary issue of sustenance of disallowance of Rs. 32,33,000/-.
Briefly stated the facts of the case are that the A.O. got A.I.R. information about the cash deposit of Rs. 3233000/- by the assessee in his saving bank account. The assessee was called upon to explain the source of such cash deposit. The assessee contended that he received gift from his father. A copy of gift deed, affidavit and bank account of his father was submitted. The A.O. required the assessee to produce his father, which the assessee failed to do. In the subsequent proceedings, the assessee submitted that the source of cash amounting to Rs. 32,33,000/- was opening cash balance of Rs.7,52,000/- and withdrawals from the same bank account.
The assessee filed also cash flow statement in support of this contention. The A.O. observed that it was a complete u-turn by the assessee from earlier explanation of the source of cash deposited into his bank account, where the above cash was stated to have been received from his father as gifts. He therefore, made disallowance of Rs.32,33,000/- on account of failure of the assessee to offer source of cash amounting to Rs. 32.33 lac. The Ld. CIT(A) upheld the addition.
After considering the rival submission and perusing the relevant material on record, it is observed that the A.O. made addition of Rs. 32.33 lac on the ground that : `the explanation offered by the assessee for the nature and source of cash amounting to Rs. 32,33,000/- into his saving bank account during the relevant previous year is not satisfactory and therefore a sum of Rs. 32,33,000/- credited into the bank account of the assessee is added to the income of the assessee u/s 68 of I. Tax Act’. It is therefore, clear that the A.O. made addition of Rs. 32.33 lac on account of unsatisfactory explanation given by the assessee towards deposit of equal sum in the saving bank account. Impliedly, the A.O. dropped the making of addition in respect of gift received by the assessee from his father. It is so for the reason that the A.O. himself recorded in the assessment order that a substantial part of the gift was received through cheques, whereas he made addition in respect of cash deposited in the bank account. This manifests that the A.O. accepted the explanation of the assessee qua the receipt of gift from father through banking channel. Since, the addition has been made on account of failure of the assessee to explain the source of cash of Rs.32.33 lac deposited by the assessee in his bank account, what remains to be examined is the explanation given by the assessee about the source of such cash deposited in bank. The A.O. has drawn a chart on page 3 of the assessment order indicating cash deposited in bank to the tune of Rs. 32.33 lac and cash withdrawn for a sum of Rs. 26.59 lac. The addition has been made by simply considering all the entries of cash deposits in the bank for a sum of Rs. 32.33 lac without considering the corresponding withdrawals made from the bank. Here, it is relevant to mention that the assessee, inter alia, disclosed income of Rs. 430455/- by giving a note at the end of his Computation of income reading : `this is profit on trading. Sale 36,00,000/- profit Approx. 11.96% applying section 44AF’. When the assessee had made a sales of Rs. 36/- lac, which fact has not been controverted by the AO, I fail to understand the logic in treating a lower amount of cash deposit in the bank account as unexplained. In the given circumstances, I am satisfied that the addition sustained by the Ld. CIT(A) deserves to be and is hereby deleted.
In the result, the appeal is allowed.