ITO, WD-31(2), KOLKATA, KOLKATA vs. SMT. RUBI CHATTERJEE, KOLKATA

This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals)-XIX, Kolkata dated 01.07.2014. Assessment was framed by ITO Ward No.31(2), Kolkata u/s 144 of the Income tax Act, 1961 (hereinafter referred to as ‘the Act ‘) vide his order dated 21.12.2011 for assessment year 2009-10. Shri Sital Chandra Das, Ld. Departmental Representative represented on behalf of Revenue and Shri Soumitra Choudhury, Ld. Advocate appeared on behalf of assessee. A.Y. 2009-10 ITO Wd-31(2) Kol. Vs. Smt. Rubi Chatterjee Page 2 2. The inter-connected issue raised by the Revenue in this appeal is that the ld. CIT(A) erred in admitting the additional evidence in contravention to the provisions of Rule 46A of the Income Tax Rules, 1962.

The facts in brief are that the assessee is an individual and has filed return of income declaring a total income of Rs.2,21,200/-. The Assessing Officer during the course of assessment proceedings observed that the assessee has deposited a sum of Rs.36,55,675/- in cash in its bank account maintained with Axis Bank. On questioned by AO about this source of cash deposit the assessee failed to provide any reliable information. Therefore, the same was treated as income of the assessee.

Aggrieved assessee preferred an appeal before ld. CIT(A). The assessee before ld. CIT(A) submitted that she was married in December, 1998 and received gifts of jewellery, ornaments made of gold and diamond from her in-laws and parental sides. The said jewellery was valued as on 13.12.1998 from a Registered Valuer who has valued the same at Rs.9,63,356/-. In the year 2008 she again revalued the same from the Registered Valuer who valued at Rs.14,35,570/-. Subsequently she sold the entire jewellery to M/s. Bhavin Jewellers located in Ahmedabad having GST No.24070701303 dated 01.07.2002 & GST TIN No.24570701303 dated 23.03.1992 for Rs.17,10,535/-. Besides the above, the assessee submitted that the AO has taken the total deposits of Rs. 36,55,675/- as income without considering the withdrawals made in cash from such bank account. The cash withdrawals from the bank are of Rs.23,75,000/-. There was an opening balance of cash in the hands of the assessee as on 1st April, 2008 for Rs.7,46,000/- which was withdrawn from her SB A/c No.40256 maintained with Axis Bank dated 12th March, 2008. The assessee has also received loan from different parties which was repaid during the year. All the parties from whom the loan was taken were having valid PAN card. The assessee for the year for consideration has also declared income of Rs.3,21,197/- its income tax return. A.Y. 2009-10 ITO Wd-31(2) Kol. Vs. Smt. Rubi Chatterjee Page 3 The assessee has also taken loan from her husband for Rs.4 lakh and the PAN No. of her husband AGMPC 3484E. The money was borrowed for the purpose of a flat in Kolkata. In view of the above, the ld. CIT(A) called for the remand report from the AO who in turn submitted that the party M/s. Bhavin Jewellers is not traceable. Similarly, parties from whom the assessee has taken loan were issued notice u/s 131 of the Act but none of them physically appeared before the AO. They had just submitted their reply to the income tax department. The ld. CIT(A) after considering the submissions of the assessee has deleted the addition made by the AO by observing as under : “3.5. I have considered the assessment order and the submission of the AR of the appellant along with cash flow statement and supporting documents & evidences and the remand report of the AO and comments of the AR in deciding the issue. The rival contentions on the issue have been analyzed with all the material facts on record for necessary adjudication. The AR of the appellant has explained before me the source of cash deposit in Bank A/cs which is clearly available from the date wise cash flow statement with supporting evidences. He has submitted that there was cash withdrawal from Bank Accounts during the year under consideration, opening cash balance which was withdrawn on 12.3.2008 from SB A/c No. 40256 of Axis Bank, sale of jewellery and loan/advance taken from near relatives and friends. He has submitted that cash deposits in bank A/cs are fully and clearly explained as most of such deposits are out of withdrawals from Banks and sale of Jewellery. I have thoroughly checked and verified that the cash deposits in the Bank A/cs as added by the AO were out of the withdrawals from Banks, Advances/Loans from relatives/friends and sale of jewellery the source of which has been fully explained and verified by me with all the relevant evidences and as such the question of addition on the ground of unexplained cash deposits does not arise under any circumstances. I have carefully considered the contention and the cash. flow statement with other documentary evidences and I am of the opinion and hold that cash deposits in Bank A/cs are fully covered as explained by the. AR of the appellant and verified by me. Moreover, the advances received from relatives and friends were from the persons who are having their identity and I.T. PANs and who have duly confirmed the transactions stating the source in compliance to notices sent by speed post which were all served on them. It is evident that Rs.7,46,000/- was withdrawn from Axis Bank, CIT Road branch, S.B. Account No. 40256 on 12.3.2008 which remained cash available with the appellant on 01.04.2008. As regards source of sale of jewellery of Rs.17,10,535/- which was possessed by the appellant as stridhan, it is evident from the valuation reports dated 13.12.1998 and 07.04.2008 given by Kirit H. Kothari having registration number WB CAT VIII/14(T) of 1988 that the said jewellery was sold as the appellant thought of investing the same in mutual funds etc. in which profits could be earned and the evidence of sale was duly produced confirming the sale at ~17, 10,535/-. There is no adverse remark from AO that the firm M/s. Bhavin Jewellers to whom the jewellery was sold was not A.Y. 2009-10 ITO Wd-31(2) Kol. Vs. Smt. Rubi Chatterjee Page 4 in existence in the year 2008-09 and as such the sale of jewellery cannot be denied. Considering the entire facts and circumstances of the case, I hold that Rs.36,55,675/- added as unexplained cash deposits in Bank A/cs is not justified as can be seen from the findings in the foregoing paras. The same is directed to be deleted.”

The ld. AR before us reiterated the submissions as made before the ld. CIT(A) and he relied on the order of Ld. CIT(A). On the other hand, the ld. DR relied on the order of AO.

We have considered the rival submissions of both the parties and perused the materials available on record. The issue in the instant case relates to the disallowance made by the AO on account of the cash deposit in the bank. It was observed that the assessee failed to furnish the necessary details to the AO at the time of assessment with regard to the source of cash, therefore the addition was made. However at the time of appellate stage we find that sufficient information with regard to the source of cash deposited with the bank was explained by the assessee as detailed under :