N.JAYABOOPATHY,CHENNAI vs. ITO, CHENNAI

आदेश / O R D E R

PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:

This is an appeal filed by the assessee against an Order dated 06.01.2016 of Commissioner of Income Tax (Appeals)-7, Chennai, in for the AY 2011-12.

ITA No.895/Mds/2016 :- 2 -:

2.0 Grounds of the Appeal:

1) For that the order of the Commissioner of Income-tax (Appeals)-7, Chennai, is contrary to law, facts and circumstances of the case and is opposed to the principles of natural justice. 2) For that the appellant was not the custodian of the bank account which was reported under the CASS for cash deposits, since it was forming part of the books of account of M/s. JAYA & Co. owned and operated by the spouse of the Appellant i.e. Mr. Ramachandran. 3) For that the facts of the inclusion of the Bank accounts with that of the Spouse’s business was established by the Appellant before the Ld. AO as well before the CIT (A), who had not considered at the time of arriving at the decision of additions to the Appellant. 4) For that the CIT (Appeals)-7, Chennai, having powers co-terminus that of Ld.AO had not considered and relied on the AC’s report for sustaining the additions is contrary to the facts of the Appellant’s case. 5) For that Remand Report of the Ld. AO in respect of the additional evidences submitted before the CIT (A) had not been considered in its originality had been ignored while sustaining the additions made by the AO. The Ld AO disregarded the fact that the appellant had never borrowed any monies since her regular sources of income is from house property as per the ITR filed. 6) For these grounds and such other ground that maybe adduced before or during the hearing of the appeal with the leave of this respectful authority, may be pleased to - (a) Delete the additions of Rs.44,02,333/- as unexplained deposits u/s. 68 of the Income- tax Act, 1961; OR (b) Pass such other orders as this respectful authority may deem fit.

3.0 All the grounds of the appeal are related to the addition made by the Assessing Officer (hereinafter referred to as ‘AO’) amounting to Rs.44,02,333/- relating to the deposits made by the assessee in SB A/c the No.0964010003622 with UCO Bank, Korattur Branch & ICICI, Anna Nagar, Third Avenue Branch, as per the details furnished as under:-

Name of Bank Amount in Rs.

ICICI Bank 4,64,860-00 UCO Bank 43,15,997-00 ------------------ Total Deposit 47,80,857-00 Less: Rental Income admitted 3,78,524-00 ------------------- Source for deposit in bank unexplained 44,02,333-00 --------------------

ITA No.895/Mds/2016 :- 3 -:

4.0 During the assessment proceedings, the AO called for the explanation for source and the assessee could not explain the source to the satisfaction of the AO. Therefore, the AO made the addition of Rs.44,02,333/- to the returned income. The assessee went on appeal before the Ld.CIT(A) and the Ld.CIT(A) was not convinced with the explanation offered by the assessee, since there was an inconsistency in the explanation regarding the source. Before the AO, the assessee explained the source as cash loans from private financiers and in some instances, explained as cash loans from neighbours. Since, the assessee has changed her stand frequently regarding the source of cash deposits, the Ld.CIT(A) held that the source of the cash deposits were unexplained and confirmed the addition made by the AO.

5.0 Aggrieved by the Order of the Ld.CIT(A), the assessee is on appeal before us.

Appearing for the assessee, the Ld.Counsel submitted a paper book and argued that Smt.Jaya Boopathy is having joint account with Shri T. Ramachandran in UCO Bank and the account being operated by Shri Ramachandran (Husband of the assessee), the husband of the assessee engaged in hardware business and deposits the sales in the joint account of the assessee for the sake of convenience. The Ld.AR of the assessee, further, submitted that the entire transactions/deposits made in SB A/c of the assessee represented the sale proceeds and business transactions of the assessee’s husband and duly accounted in the books of accounts of ITA No.895/Mds/2016 :- 4 -: the assessee’s husband’s and offered for tax as a turnover. The same was reflected in the balance sheet of the M/s.Jaya & Co., the business of the assessee’s husband. The Ld.AR, further, submitted that the representative who appeared before the lower authorities has not presented the case properly. Therefore, there was a confusion in explanation of the source which lead the Ld.CIT(A) to take adverse inference. The Ld.AR requested for one more chance to remit the matter back to the file of the AO to verify the correctness of the transactions with the books of accounts of M/s.Jaya & Co., vis-à-vis transactions, cash deposits made in the SB A/c. On the other hand, the Ld.DR relied on the orders of the lower authorities.

6.0 We have heard the rival submissions and perused the material placed on the record.

We have also gone through the SB A/c as well as the cash book of the M/s.Jaya & Co., and test checked the couple of transactions which appear to be recorded in the books of accounts of M/s.Jaya & Co.

Therefore, we found some force in the argument of the assessee’s AR that cash deposits made in the SB A/c of the assessee are related to the business transactions of M/s.Jaya & Co., which is a business concern of the assessee’s husband. However, the entire deposits need to be verified with the books of accounts to arrive at the correct conclusion. Therefore, we remit the mater back to the file of AO and direct the AO to verify the transactions of the SB A/c whether they were properly accounted in ITA No.895/Mds/2016 :- 5 -:

M/s.Jaya & Co. or not. If the transactions are properly accounted in the M/s.Jaya & Co., there is no need to make the separate addition in the hands of the assessee. The amount of transactions/deposits not accounted in the books of accounts of M/s.Jaya & Co., required to be examined in the angle of Sec.69 of the Income Tax Act and decide on merits. Therefore, we direct the AO to examine the credits and decide the issue afresh on merits.

7.0 In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the Open Court on 13th January, 2017, at Chennai.