BAIJ NATH SHAW,KOLKATA vs. I.T.O WD - 28(3),KOLKATA, KOLKATA

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-XIV, Kolkata dated 25.02.2013. Assessment was framed by ITO Ward-28(3), Kolkata u/s 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 23.12.2010 for assessment year 2008-09. Mrs. Shipra Sen, Ld. Authorized Representative appeared on behalf of assessee and Shri Rajat Kr. Kureel, Ld. Departmental Representative represented on behalf of Revenue.

Briefly stated facts are that assessee is an individual and engaged in the business of readymade garments. During the course of assessment proceedings, Assessing Officer observed that on the basis of ITS data that assessee has deposited a sum of ₹ 30.53 lacs whereas the assessee has shown his gross receipt from the business for ₹20,35,960/- only. Thus, AO observed the mismatch between the amounts of gross receipt shown by assessee vis-a-vis total deposits made by assessee during the year under consideration. Accordingly, AO called upon the assessee to explain the aforesaid difference but assessee failed to provide necessary details. Therefore, AO treated the entire deposit of money as concealed income u/s. 68 of the Act and added to the total income of assessee.

Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that he is a small entrepreneur and has no fixed place of business. He sells the goods by participating in various local fair in the district/villages of West Bengal and Odisha. The assessee further submitted that total sum of ₹19,85,008/- was deposited in the year under consideration and such deposits represents the total turnover of assessee’s business which has been duly incorporated in gross receipt shown in his income tax return for ₹20,25,960/-. The assessee also submitted that return was filed by declaring income under the provision of Sec. 44AF of the Act. However, Ld. CIT(A) after considering the submission of assessee has granted relief in part by observing as under:- “6. I have carefully considered the assessment order and submission of the appellant. I have also considered the remand report submitted by the Assessing Officer and the contra submission of the Ld. A/R of the appellant in the rejoinder. The first ground of appeal is directed against the addition of deposit of Rs.30,53,000/- in the bank account of the appellant in Bank of India, Bhowanipur Branch, Kolkata during the F.Yr 2007-08. The aforesaid addition was made u/s. 68 of the IT Act, 1961. The Ld. A/R of the appellant submitted that the total deposits in the said bank account was only Rs.19,85,008/-. It was also contended that the Baij Nath Shaw Vs. ITO Wd-28(3) Kol. Page 3 appellant had shown gross receipt/gross turnover of Rs.20,45,960/- which covers cash deposits of Rs.19,85,008/-. The argument of the Ld. A/R of the appellant that the gross receipt shown by the assessee included cash deposits of Rs.19,85,008/- made in the bank is not acceptable for want of evidence. I am of the considered view that the appellant has squarely failed to produce any evidence to substantiate his explanation. Neither books of accounts nor any such bills have been produced to substantiate the appellant’s contention. The Assessing Officer has clearly stated in the remand report that the assessee has neither maintained any books of account nor any bills and vouchers to substantiate his explanation. Hence this explanation of the appellant is not acceptable. In light of the submission made by the appellant, a remand report was called from the Assessing Officer. In the remand report dated 19.10.2011 sent by Assessing Officer through Jt. Commissioner of Income Tax, Range-28 Kolkata, the Assessing Officer has admitted the fact that the bank has clarified that the total deposits in the bank account with the Bank of India, Bhawanipur Branch, Kolkata was Rs.19,85,008/-. However, the AO submitted that it could not be verified whether the gross receipt/gross turnover Rs.20,45,960/- includes the cash deposit of Rs.19,85,008/- deposited in the bank as the assessee did not maintain any books of account and did not produce any evidence of sales etc. having considered all the facts of the case I am of the considered view that the appellant’s submission that the total amount deposited in the impugned bank account of the assessee was only Rs.19,85,008/- is correct. This factual position has been confirmed by the Branch manager of Bank of India, Bhawanipur Branch, Kolkata and the Assessing Officer. Therefore, it is held that the addition can be confirmed only to the extent of Rs.19,85,008/-. Hence, it is held that the AO was not right in law and on facts in making addition to the extent of (Rs.30,53,000 – 19,85,008) = Rs.10,67,992/-. Accordingly, the AO is directed to delete the addition to the extent of Rs.10,67,992/-. However the balance addition of Rs.19,85,008/- is confirmed. Accordingly, the first ground of appeal is partly allowed.”

We have heard rival contentions of both the parties and perused the materials available on record and the order of Authorities Below. The instant issue relates to the amount of cash deposited by assessee in his bank account. The assessee claimed to have filed his return of income under the provision of Sec. 44AF of the Act by declaring total turnover of ₹ 20,45,954/- only. As per Ld. AR the entire deposit made in the bank account is part and parcel of the turnover declared in the return income of assessee. However, we find that the Authorities Below rejected the claim of assessee by observing that necessary documents such as books of account and other details were not furnished. Admittedly, the assessee has filed his return of income declaring total gross receipt of ₹20,45,960/- u/s. 44AF of the Act. This fact has not been disputed by Authorities Below. Once the turnover has been accepted then no further addition can be made on account of money deposited in the bank account of assessee. On perusal of bank account which is placed on pages 39 to 45 of the paper book, we find that there are regular deposits and withdrawn of money. Even assuming that all the deposits are income of assessee then the benefit of withdrawal should be given by the Authorities Below. The AO cannot on one hand take all the deposits as income of the