I.M.FARVIS AHMED,CHENNAI vs. ITO, CHENNAI

This appeal is filed by the assessee, aggrieved by the order of the Learned Commissioner of Income Tax(A)-7, Chennai dated 28.04.2016 pertaining to assessment year 2009-10.

The assessee raised the grounds with regard to sustaining addition of `6,01,489/-, which is for cash deposited into savings bank account and a sum of `9,40,000/-, which is being the amount deposited into current account of the assessee.

The facts of the case are that the assessee is an individual, earning income from Snack Bar Business and trading in edible essences. Subsequently, the case was selected for scrutiny and notice u/s.143(2) was issued on 14.06.2011. In response, the ld.A.R submitted P&L account and Balance sheet of the Assessee. During the assessment proceedings, the AO found that as per the AIR information, the assessee has made cash deposits of `41,80,050/- during the year 2008-09 in SB account with M/s.Axis Bank and has made some cash deposits in his current account with ICICI bank and paid an amount of `2,38,373/- for credit card expenses. As per the balance sheet submitted by the assessee, it is seen that only the SB account balance is appearing in it and not the current account balance. The turnover disclosed by the assessee is `36,95,366/-.

Before us, the ld.A.R submitted that these deposits were made out of disclosed sales turnover, being so, only GP on it to be estimated. Further, he submitted that in terms of Sec.285A of the Act, annual Information Return should report only the cash deposits in a Savings Bank account for assessment purposes and any cash deposits into the current account cannot be considered for making assessment as unexplained investment.

On the other hand, ld.D.R relied on the order of lower authorities and submitted that these deposits is undisclosed sales turnover of the assessee and the assessee has already accounted for purchase and expenses relating to these turnovers and hence, the entire amount of unexplained deposits into savings bank account as well as current account is to be considered as unexplained income of assessee u/s.69 of the Act.

We have heard both the parties and perused the material on record. In the present case, the amount of `6,01,489/- represents the unexplained deposit into Saving Bank account of the assessee and another amount of `9,40,000/- represents the unexplained cash deposit into Current account of assessee. Section-69 makes it clear that onus is on the assessee as regards furnishing of explanation relating to deposits, which is not recorded in the books of accounts, if any, maintained by the assessee. Where the assessee offers no explanation or where the explanation offered by the assessee is not satisfactory in the AO’s opinion, the value of the unexplained investments, the value of the unexplained investments would be treated as income of the financial year in question. Whenever explanation offered by the assessee were not fully relied upon by the Department, it cannot be said that the Department had any further burden to prove that this was an income of assessee. Where the assessee had failed to prove the source of investments to the satisfaction of the AO, the AO should be justified in treating the same as unexplained investment u/s.69 of the Act.