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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
ORDER PER C.M.Garg, J.M. This appeal has been filed by the assessee agaisnt the order of the Commissioner of Income-tax (Appeals)-XII, New Delhi dated 16/03/2010 passed in first appeal no. 226/2008-09 for AY 2006-07.
Briefly stated the facts giving rise to this Act, case was selected for scrutiny and notice u/s 143(2) of the Income-tax Act, 1961(for short the Act) was served upon the assessee. The Assessing Officer passed assessment order on 31.12.2008 u/s 143(2) of the Act, assessee net taxable income at Rs. 86,46,923/- as agaisnt return income of Rs. 4,73,971/- by making total 10 additions /
2 Sandeep Mangla disallowances. The Assessing Officer also rejected books of accounts of the assessee and estimated the income from property business at the rate of 10% of the total sale and turnover. Aggrieved assessee preferred first appeal before CIT(A) which was partly allowed on certain minor issues but the assessee remained empty handed as the main major grievance of the assessee could not be redressed. Now the assessee is before this tribunal in this second appeal with the grounds as reproduced below : “ 1) That the order of the Learned Commissioner of Income Tax (Appeals) - XXII is arbitrary, biased and bad in law and facts of the case. That the Learned CIT(A) has grossly erred in confirming the 2) addition of Rs. 1,09,800/- being the amount of 20% of Rs. 5,49,000/- paid in cash for purchase ofproperty at the insistence of the seller. That the Learned CIT(A) has grossly erred in confirming the 3) disallowance of Rs. 43,200/- on account of payment of interest on loan availed from self occupied house property. That the Learned CIT(A) has grossly erred in confirming the 4) addition of Rs. 47,50,000/- u/s 68 made by the assessing officer on incorrect appreciation of teh facts and law on the issue. The amount had been received as advance from the customers during the year as under :- Rs. 20.00 lakhs from Smt. Maju Gupta, Prop. M/s. Mudit Enterprises. Rs. 27.50 lakhs from Mr. Rakesh Mangla. 4.1) The Learned CIT(A) has grossly erred while confirming the addition u/s 68 of Rs. 47,50,000/- in ignoring the fact that the amount of Rs. 47,50,000/- received from aforesaid two customers had been refunded back to them during the assessment year itself. 5) The Learned CIT(A) has grossly erred in confirming the rejection of books of accounts without pointing out any difference or 3 Sandeep Mangla discrepancy in the audited books of accounts and without apprising the appellant as to how the actual profit could not be deduced from the audited books of accounts. The Learned CIT(A) has grossly erred in confirming the 5.1) rejection of books of accounts and the estimate of income of Rs. 27,30,437/- at 10% of total sales made by the assessing officer. That the Learned CIT(A) has grossly erred in confirming the 5.2) addition of 22,56,466/- in estimate of income after reducing profit declared by the assessee ofRs. 4,73,971/-.
6. That the Learned CIT(A) has grossly errea in not allowing relief on merit of various expenditure claimed by the assesses which were disallowed by the assessing officer on estimation basis, namely. Rs. 19,052/- being l/5lh of travelling, conveyance sns a) depreckxjon /or alleged personal use on estimated basis. b) 20% as business development expenses amounting to Rs. 4427/- c) A sum of Rs. 35,236/- being the 50% of electricity & water charges & 25% cf telephone expenses for alleged personal use. d) A sum of Rs. 79,800/- being the amount of commission paid by the appellant. 7) That the Learned CIT(A) has grossly, erred in confirming the rejection cf claim of expenditure incurred on rent amounting to Rs. 72,000/-. 8) That the Learned CIT(A) has grossly erred in confirming the addition of Rs 3,29,000/- as unexplained cash deposit in bank u/s 69 in spite of valid explanation having been furnished by the appellant. 9) Without prejudice to the ground no. 2 and ground no. 5, 5.1 and 5.2 that rejection of books of accounts and estimation of income is incorrect, the Learned CIT(A) has grossly erred in confirming separate addition u/s 40A(3) made by the assessing officer of Rs. 1,09,800/-. 10) Without prejudice to ground no. 4,4.1, 5, 5.1 and 5.2 that addition
under section 68 and rejection of books of accounts and estimate of addition in trading results of Rs. 27,30,437/- (reduced to Rs. 22,56,466/- by the CIT(A) in income of the asses see made by the AO was not proper, the CIT(A) has grossly erred in not granting the benefit of telescoping to the assessee with respect to the addition made by rejecting the books of accounts with addition made on account of cash credit u/s 68 of the Act. 10.1)That the Learned CIT(A) has grossly erred in not adjudicating on the alternative ground of telescoping. 11) That the appellant craves leave to add, alter, or delete the above grounds at the time of hearing. ”
Ground no. 5, 5.1 & 5.2 of the assessee : 3. Ground nos. 1 and 11 of the assessee are general in nature which require no adjudication. First of all, we find it appropriate to deal with the issue of rejection of books of accounts and consequently estimation of income which profit from the property business at 10% of total turnover during the relevant financial period.
We have heard argument of both the sides and carefully perused the relevant material available on record. The ld. Assessee’s Representative (AR) submitted that the Assessing Officer rejected the books of accounts without any justified and legal reasoning and the CIT(A) has also grossly erred in confirming the rejection of books of accounts without pointing out any defect or discrepancy in audited books of accounts and without considering the submission of the appellate as to how the actual profit could not be deduced 5 Sandeep Mangla from the audited books of accounts submitted before him the AO. The Ld. AR also pointed out that the net profit ratio declared by the assessee was of 1.97% of sales and the CIT(A) confirmed the estimation of 10% with the wrong understanding the declared net profit ratio is 5% of turnover whereas declared net profit ratio was 1.97% only. The Ld. AR vehemently contended that the CIT(A) observed on the basis of pure guesswork only that there was a boom in the real estate market during the period which is not factually correct as in fact there had been a down word swing in the trade of sale of agricultural land in the NCR region. The Ld. AR also contended that no comparable case has been cited neither by the AO nor by the CIT(A) to justify estimation of net profit @ 10% of turnover and thus the same is arbitrary and based on surmises and conjectures which cannot be held as sustainable. The Ld. AR also contended that the estimation of net profit @ 10% of turnover is too much on the higher and the authorities below are not validly empowered to estimate net profit ratio as their own will without any relevant basis or justification in absence of any rational and acceptable evidence.
Ld. AR also drawn our attention towards page no. 67 of the assessee’s paper book wherein details and sale effected by the assessee during the period has been given. The ld. AR drawn our attention towards page no. 106 and 107 and submitted that the details of deals settled during the EMI Bayana without formal sale and contended that these transactions deals settled in favour of third party only on Bayana without formal sale deeds and these transactions fetch a very meagre amount of profit which is much 6 Sandeep Mangla less than 10%. The Ld. AR further took us through page no. 72 to 85 of the assessee’s paper book and submitted that the assessee submitted detail of commission expenses totalling to Rs. 2,01,230/- and confirmation of the commission agents before the AO towards payment of commission by the assessee and receipt of commission by respective the commission agents which shows sincerity and honesty of the assessee. The ld. AR also pointed out that from audited books of accounts and balance sheet of the assessee, placed at pages 44 to 53 of assessee’s paper book 1, it is amply clear that the auditors certified truthfulness and correctness of the books of accounts of the assessee which shows 1.97% profit on the sale of on the turn over of 2.73 crores. The ld. AR vehemently contended that the action of rejection of books of accounts may kindly be set aside and profit declared by the assessee may kindly be accepted.
Replying to the above, the ld. Departmental Representative (DR) vehemently strongly the supported the action fo the AO as well as first appellate impugned order and submitted that as per paragraph “J” of the assessment order it was noted that the assessee failed to produce documents relating to purchase and sale and properties, secondly, the Bayana receipts furnished do not show total sale and purchase consideration, therefore, the AO correctly held that arriving at correct profit arising from sale and purchase transactions undertaken by the assessee was not possible. The ld. DR vehemently submitted that the AO rejected books of accounts of the assessee after allowing sufficient opportunity for producing the co-relating documents or the persons and the assessee failed to substantiate the actual amount of transactions and profit earned by him from the business of sale and purchase of property. Therefore, the AO was quite justified in rejecting the books of accounts of the assessee and estimating profit 10% of turnover during the relevant period. The Ld. DR also supported the CIT(A) order in this regard.
The Ld. AR also placed rejoinder to the above contentions of the Ld. DR and submitted that even if there was a necessity to estimate net profit then the Assessing Officer is duty bound to consider financial results of the assessee for earlier and subsequent years also required to consider the estimation of profit on the basis of comparable case of similar nature of business and in absence of such exercise estimation of profit cannot be done correctly. The Ld. AR also pointed out that the CIT(A) in para 6.1. wrongly noted that the assessee himself computed the net profit at 5% of turn over as from the audited balance sheet, it is amply clear that the assessee in its tradings profit and loss account for the relevant period placed that page 53 of the assessee’s paper book has shown sales of Rs. 2,73,04,367/- and net profit earned therefrom has been declared at Rs. 5,39,786/- which comes to 1.97% of the total turn over, therefore, factually incorrect and baseless findings of the authorities below should be dismissed.
On careful consideration of above rival submissions, at the very outset, from paragraph “J” at page 12 of the assessment order we note that the AO undertaken exercised by invoking provisions of section 133(6) of the Act but there was no compliance of such notices by the addresses and thus there was no result. The Assessing Officer in the second part of this para noted that the assessee failed to produce documents relating to purchase and sale of properties and the Banaya receipts do not show total sale and purchase consideration, thereafter, he proceeded to reject books of accounts of assessee by holding that even after allowing sufficient opportunity for producing and relating documents and persons, the assessee failed substantiate the actual amount of transaction and profit from the business of real estate. Then the AO proceeded to estimate income from the property business.
From the impugned appellate order para 6.1, we note that the CIT(A) placing reliance on the judgment of Hon’ble Supreme Court in the case of CIT vs. British Paints India Limited 188 ITR 44(SC) held that it is the duty of the AO consider whether or not the books disclosed the true state of accounts and the correct income. The CIT (A) further noted that the assessee appellant faiUto give proper and correct details of sales, purchase, expenses and supporting evidence thereof resulting into invoking of provisions of section 145(3) of the Act. In this situation, we are of the considered opinion that the authorities below, after allowing the due opportunity of hearing of assessee, found that financial statements and books of accounts of the assessee do not show the correct profit and the Assessing Officer was not satisfied about the correctness or completeness of the books of accounts of the assessee then the rejection of books of accounts of the assessee u/s 145(3) of the Act is to be held as valid and sustainable. In our considered opinion the Books of accounts do not become sacrosanct merely because they are audited. Consequently, we hold that the rejection of books of accounts by the AO was quite justified & correct and CIT(A) was also correct in upholding the conclusion of the AO in this regard.
Further, since by the earlier part of this order, we have upheld conclusion of the authorities below that the rejection of the books of accounts of the assessee was correct and justified then next question for adjudication before us is that whether the authorities below were reasonable and correct in 9 Sandeep Mangla estimating profit at the rate of 10% of turn over of the assessee effected during the relevant financial year. Admittedly and undisputedly, this is the first year of commencement of business by the assessee. Therefore, there could be not history of earlier years the assessing officer completed assessment proceedings on 31.12.2008 and CIT(A) passed an impugned order on 16.3.2010 but neither of them bother to consider and ,to have benefit of the net profit rate, declared by the assessee and accepted by the department, in the subsequent assessment years i.e. AY 2007-08 and 2008-09. From the relevant part of assessment order on the issue of estimation of net profit we observe that the AO neither considered subsequent years GP rate nor considered any other comparable similar to the functional profile of the assessee. From the relevant operative para 6.1 of the CIT(A), we note that the CIT(A) was factually incorrect in observing that the assessee computed and declared net profit at the rate of 5% as from the audited books of accounts of assessee and copy of the P & L Account available at page 53 of the assessee paper book 1 it is amply clear that the assessee earned net profit at the rate of 1.97% which is less than 2% of the turn over.
It is well accepted principle of estimation of net profit that after rejection of books of accounts and financial results of the assessee the revenue authorities should firstly consider the earlier and subsequent period not profit of the assessee declared by him and accepted by the department and secondly, net profit earned by the other entities / persons comparable to similar line of business of the assessee may also be taken into consideration for estimation of profit. At the same time, we also observe that the assessee did not putforth his net profit of subsequent years before the authorities below and nor submitted any comparable case to show that the estimation of net profit made by the AO and upheld by the CIT(A) is excessive high. In the present case when the assessee is earning profits from sale and purchase of properties and number of deals have been transferred to third party earning profits only on bayana amount yielding profits to the assessee and his clients then the estimated net profit rate @ 10% of turnover cannot be said to be very high and not sustainable and thus we up to the same. Consequently, ground nos. 5, 5.1 & 5.2 of the assessee are dismissed being devoid of merits.
Ground no. 2 and 9 of the assessee : The Ld. AR placing reliance on the decision of Hon’ble MP High Court in the case of CIT vs. Purshottamlal Tamrakar 270 ITR 314 (MP) and decision of Hon’ble Punjab and Haryana High Court in the case of CIT vs. Smt. Santosh Jain 296 ITR 324 (P & H High Court) submitted that where the income of the assessee has been computed by applying gross or net profit rate, then there is no need to look into the provisions of section 40A(3) of the Act, as applying the gross profit rate takes care of expenditure otherwise then by way of crossed cheque also.
Replying to the above the Ld. DR strongly supported the action of the AO as well as first appellate order and submitted that since the land was meant for selling, the treatment of land would be stock in trade and not as capital asset, therefore, provisions of section 40A(3) of the Act would apply and the issue is also covered with CBDT Circular no. 34 dated 5.3.1970.
On careful consideration on above submission and undisputedly the authorities below rejected the books of accounts of the assessee and proceeded to estimated net profit of the assessee at the rate of 10% of turn over. At the cost of repetition, we may point out that by the earlier part of this order we have upheld rejection of books of accounts and estimation of net profit has also been upheld @ 10% of turnover as per facts and circumstances of the case. In this situation, when we respectfully consider the ratio laid down by Hon’ble Madhya Pradesh High Court in the case of CIT vs. Purshottamlal Tamrakar (Supra) and decision of Hon’ble Punjab and Haryana High Court in the case of CIT Vs. Santosh Jain (supra) then we find that their lordships in the similar facts and circumstances held that where the income of the assessee has been computed by applying a gross profit rate, there is no need to look into the provision of section 40A(3) of the Act because applying of gross profit rate takes care of expenditure otherwise than by way of cross cheque also. Thus, we are of the considered opinion that the impugned issues are squarely covered in favour of the assessee by the above quoted judgements of Hon’ble High Court. Consequently, ground no. 2 and 9 of the assessee are allowed. 15. Ground no. 4 and 4.1 of the assessee : The Ld. Assessee’s Representative submitted that as per the AO addition u/s 68 of the Act of Rs. 47.5 lakhs for the amounts received from Manju Gupta and Rakesh Mangla Gupta has to be made. The Ld. AR further explained that the reasons given by the AO are that (i) loan creditors not produced ; (ii) notices u/s 133(6) received back and not complied; (iii) the penal receipts were filed in support of receipt of amount but no cancellation of date of the deals filed to support repayment of these advance ; (iv) Cancel bayana receipts were not filed for which the assessee explained that these do not remained with the appellant assessee and however, the AO acknowledge the confirmations filed by the assessee. The ld. AR further pointed out that the amounts received by the assessee were in regular course of real estate brokerage business as some times transactions could not completed and bayana amount is return to the intended purchasers by the owners of the property on cancellation of agreement to sell. The ld. AR further explained that as per observations of the CIT(A) noted on page 11 it was observed that M/s. Manju Gupta had no matching withdrawals to justify the amount of Rs. 20 lakhs. He further submitted that as per observations of the CIT(A) the and explanation about the source of Shri Rakesh Mangla that the assessee received said amount of Rs. 27.50 lac from Jamindar towares sale of agriculture land is not true. The ld. AR vehemently contended that the CIT(A) observed that since the appellant failed to produce the persons who advanced the loan therefore the onus has not been discharged by the assessee to show source of these unexplained amounts. It was also contended by Ld. AR that basis of addition as alleged by the CIT(A) that notices u/s 133(6) of the Act were not got served upon these persons but merely because the notices u/s 133(6) of the Act were not send upon the creditors addition cannot be made without any further enquiry.
Ld. AR further contended that M/s Manju Gupta had sufficient cash in her funds as per cash account as per income tax return filed before the authorities below by her. He further drawn our attention towards Income-tax return of Smt. Manju Gupta for AY 2006-07 and submitted that Smt. Manju Gupta declared having given Rs. 20,00,000/- to the assessee as bayana amount towards purchase of agricultural land as Gannor village. The Ld. AR contended that the filing of confirmation from M/s. Manju Gupta so as to that she has confirmed the advancement of Rs. 20,00,000/- in cash viz. Rs. 5,00,000/- on and Rs. 15,00,000/- on 20.01.2006 and received back Rs. 20,00,000/- from the assessee on 16.3.2006 which establishes the genuineness of the transaction. The Ld. AR further contended that the final of confirmation from M/s. Manju Gupta and copy of bank account of M/s. Mudit Enterprises proprietorship concern of Mrs. Manju Gupta establishing the identity, genuineness and creditworthiness of the payee Mrs. Manju Gupta, Proprietor of M/s. Mudit enterprises. He further submitted that from the copy of the bank statement of M/s. Mudit enterprises for the period of 1.9.2005 to 31.2.2006 was gathered by the AO, u/s 133(6) of the Act which fully discharge the onus of the assessee to prove the source of receipt of Rs. 20,00,000/- from Mrs. Manju Gupta.
Replying to the above, the ld. DR strongly supported the action of the AO and submitted that the assessee could not file bayana receipts and other relevant documents to show that the assessee amount received by the assessee from these two parties was a trading receipts which was received towards banaya amount in regard to sell of agricultural land transaction and in this situation, when the assessee could not submit banaya receipts before the AO then the explanation of the assessee was rightly not found convincing since all the notices sent to these two parties u/s 133(6) of the Act were received back as unserved. The Ld. DR also contended that the assessee did not establish that he returned the amounts to the respective payees clients / persons and thus addition was rightly made and confirmed.
The ld. AR further submitted that the appellant had received a sum of Rs. 27,50,000/- from Shri Rakesh Mangla on 31.01.2006 which was returned by the assessee to Shri Rakesh Mangla on 20.03.2006 and 22.03.2006 as per confirmation filed by the assessee at page 35 and 36 of the assessee’s paper book. The ld. AR vehemently contended that the assessee filed confirmation from both the parties along with their addresses and particulars of PAN no. which establishes the identity and creditworthiness of the customers beyond doubt. The Ld. AR also submitted that copy of computation of Assessing Officer income and copy of the bank statement further establishes and supports the genuineness of the transaction and creditworthiness and capability of the customers / clients. The ld. AR also submitted that the appellant has discharged the onus cast upon him u/s 68 of the Act, therefore, no addition u/s 68 of the Act can be made.
In view of above noted ratio of the judgment of Hon’ble Punjab & Haryana High Court in the case of Agarwal Engineering (Supra) is amply clear that once the net profit rate was applied no further addition was called for in respect of unexplained cash and purchases. The Hon’ble High Court in the judgment has also referred and considered the ratio of the judgement of Hon’ble Allahabad High Court in the case of CIT vs. Banwari Lai Banshidhar (Supra). Therefore, we observe that while the books of accounts of assessee has been rejected and net profit of the assessee was estimated by the authorities below then no further addition u/s 68 of the Act would validly be made on account of unexplained cash.
However, in the present case when we consider the merit of the addition made by the AO u/s 68 of the Act then firstly we note that the assessee filed copies of the ITR return confirmation and bank statement of the respective creditors and amount have been received and returning by the assessee during the same financial year. The AO proceeded to make addition without any verification from the respective creditors whose PAN no. were submitted by the assessee during assessment proceedings. We are also of the considered opinion that in view of the documentary evidence submitted by the assessee in the form of confirmation, bank statement the addition u/s 68 of the Act cannot be held as sustainable merely because in compliance to the notice u/s 133(6) of the Act the respective payees did not appear before the authorities below. Authorities below are not permitted to make addition without any verification or examination of 15 Sandeep Mangla assessment record of the respective payers/ creditors which was possible of the assessee submitted their PAN No. and addresses before the AO. It is also relevant to mention that when the assessee received cash amount from his clients towards purchase of agriculture land and on cancellation of Bayana agreement the same was returned to the respective payees during the relevant financial period than this amount of trading receipts cannot be taxed in the hands of the mediator assessee as income. Consequently, we inclined to hold that the additions made by the AO and upheld by the CIT(A) of Rs. 47,50,000/- is not sustainable as per the ratio of the decision of Hon’ble P & H High Court in the case of CIT vs. Agarwal Engineering Company (Supra). Accordingly, ground no. 4, 4.1 of the assessee are also allowed and the AO directed to delete addition.
Ground nos. 6 and 7 : Apropos ground no. 6 the ld. AR submitted that the AO was not justified in making separate additions after disallowing the individual expenses on one hand and on the other hand the net profit has been estimated for making addition. The ld. DR strongly supported the action of the AO, however, he could not explain that on what premise impugned separate Addition by making disallowances in regard to the individual expenses can be made, specially in the situation, when the net profit has been estimated by the authorities below after rejection of books of accounts.
We have carefully considered the rival submissions and perused the relevant material available on record before us, inter alia, orders of the authorities below that is AO and the CIT(A) on this issue. Since by the earlier part of this order, we have upheld the action of the AO rejecting books of 16 Sandeep Mangla accounts of the assessee and we have also upheld the action of the authorities below regarding estimation of net profit on the basis of turnover. Therefore, in this situation when net profit has been estimated by the authorities below and after rejection of books of accounts then no further addition in respect of this amounts of individual expenses can be made hence, addition made by the AO on account of travelling, convenience , depreciation, business development expenses, electricity water charges, telephone expenses, for alleging person used and amount of commission paid by the assessee cannot be sustain and consequently, additions made by the AO by disallowing separate individual expenses on the allegation of account personal use and other allegations cannot be held as justified and AOs directed to delete the disallowance and additions on said expenses. Accordingly, ground nos. 6 and 7 of the assessee are allowed.
Ground no. 8 of the assessee : Apropos ground no. 8 of the assessee brief facts observed from the assessment order are that during the examination of books, the AO noticed that the bank statement of assessee shows a cash of Rs. 14,500/- was deposited in the bank of India on 8.09.2005 and Rs. 3,14,500/- on 9.11.2005 which was not reflected from the cash book filed by the assessee. The AO also noted that on 9.11.2005 there was a cash deposit of Rs. 3,14,500/- in bank of India it was also not reflected from the cash book maintained and produced by the assessee. The assessee explained that the cash Rs. 14,500/- deposited in the bank was shown in the cash book on 14.9.2005. It was also explained that in the cash book there was a balance move than Rs. 14,500/- during 08.09.2005 to 14.09.2005 thus deposit is property explained and the confusion arose in the mind of the AO due to accounting mistakes. On being asked by the AO, the assessee vide letter dated 30.12.2008 explained that cash deposit of Rs. 3,14,500/- was made on from the advance received from Smt. Anju against the sale of land on 04.02.2006 which is already shown in the sale account. The Assessee also submitted account of Anju in the books of books of accounts of assessee but the AO was not convinced from the explanation submitted by the assessee and made addition of Rs. 3,29,000/- u/s 69 of the Act. The CIT(A) also rejected contention of the assessee and upheld the addition.
We have heard the argument of both the sides and carefully & perused the material produced on record, the ld. AR submitted that from the bank statement of available at assessee’s paper book II, pages 86 to 105 it is clear that there were two deposits of Rs. 3,14,500/- on 9.11.2005 and Rs.14,500/- on 8.9.2005 (page 88 and 90 of assessee paper book II) . The main allegation of AO that these deposits did not appear in the cash book. Regarding first amount of Rs. 3,14,500/-, the assessee explained that the amount was received as an advance from the Smt. Anju on 28.10.2005 and the advance was received for the transaction of the sale of property which was effected subsequently on 4.2.2006. From the operative part of the assessment order, we note that without controverting the explanation of the assessee. The AO wrongly held that the assessee could not prove the source of fund. At the same time, we observe that the assessee had explained the source of fund by way of documentary evidence and his affidavit available at pages 108 and 109 of the assesses paper book II. In this situation, addition u/s 69 of the Act is not sustainable before the part with the order it is relevant to mention that in this case the books of accounts of the assessee has been rejected the action of the AO estimating of the net profit on the basis of percentage of turnover has been upheld by us by the earlier part of this order. Therefore, in view of ratio laid down by Hon’ble P & H High Court in the case of CIT vs. Agarwal Engineering Company (Supra) further addition on account of unexplained cash cannot be made.
It is relevant to mentioned that from the copy of assessee’s paper book page 88 and cash book of the assessee page 97 cumulatively shows that the assessee deposited 14500/- that 8.9.2005 by cash in his bank account and the assessee in his cash book has shown deposit of Rs. 14,500/- on 14.9.2005 but in the passbook, There is no cash deposit of Rs. 14,500/- on 14.09.2005. -In this situation, it on the basis of foregoing discussion it is clear that the assessee deposited cash on 08.09.2005 which was recorded in the cash book on 14.9.2005. In the cash book there is no entry showing deposit on 8.9.2005 and similarly in the passbook, There is no deposit of Rs. 14,500/- on 14.9.2005. Doubt raised in the mind of the AO due to difference between the dates of actual deposit in the bank and its recording in the cash book which forced the AO for making such addition. On the basis of foregoing discussion, we have no hesitation to hold that the addition made by the AO u/s 69 of the Act and both the counts cannot be held as sustainable and we demolish the same. Consequently ground no. 8 of the assessee is allowed.
Ground no. 10 : Since we have allowed ground no. 2 and 9 of the assessee by the earlier part of this order. Therefore, ground no. 10 and 10.1 of the assessee requesting for telescoping becomes academic and infructuous and we dismiss the same as having become infructuous.
In the result, appeal of the assessee is partly dismissed on ground no. 5 , 5.1 & 5.2; appeal of the assessee is partly allowed for statistical purposes on ground no. 3 and allowed on other grounds of appeal. Order Pronounced in the Court on 01/07/2016.