SRI PRAKASH BHANDARY,BHUBANESWAR vs. ITO, WARD-3(4), BHUBANESWAR

This is an appeal filed by the assessee against the order of CIT(A)-2,

Bhubaneswar , dated 17.11.2016 for the assessment year 2012-13.

confirming the addition of Rs.23,77,750/- u/s.69 of the Act.

authorities and materials available on record. In the instant case, the

Assessing Officer found that the assessee has deposited cash of

Rs.21,57,595/- in his S.B Account with State Bank of India, Bhubaneswar.

ITA No. 65/ CTK/2017 Asse ssment Year :20 12- 201 3 On examination of the bank account, he found that total deposits in this

account are of Rs.1,18,84,287/- and out of the same Rs.85,91,692/-

pertains to contra entry transactions from a firm namely M/s. Sugi

Marketing, where the assessee is a partner. The Assessing Officer excluded

the contra entry and held that balance amount of Rs.35,92,595/- was

assessee’s undisclosed income, which included cash deposit of

Rs.21,57,595/- and balance amount of Rs.14,35,000/- by way of cheque

deposits/transfer. The Assessing Officer on examination of assessee’s

account with Axis Bank, found that there are total deposits of Rs.3,20,971/-

, which was also held to be the undisclosed income of the assessee.

Considering the two bank accounts, the Assessing Officer made addition of

Rs.39,13,566/-.

sale of mixed solvent and industrial solvent and total sales and purchases

during the year are shown at Rs.26,47,668/- and Rs.22,40,513/-,

respectively. All evidences and purchase invoices and sales memos were

submitted before the Assessing Officer. The Assessing Officer did not

accept the existence of the business on the ground that payments were

made mostly to Kolkata parties through NEFT/RTGS/Cheques, Electronic

transfer as evident from the saving bank account maintained in State Bank

of India and Axis Bank account. Further, the Assessing Officer did not

believe the existence of business, which involved purchases and sales of

ITA No. 65/ CTK/2017 Asse ssment Year :20 12- 201 3 goods. The wholesale dealers from whom purchases were made have

given confirmation letters by Speed Post, which was filed before the

Assessing Officer. All the cash deposits were nothing but sale proceeds

received from outside parties and business counter totalling to

Rs.21,57,595/- as against the total sales shown in the profit and loss

account of Rs.26,47,668/-.

verification of calculation, the total deposits in State Bank of India and Axis

Bank are of Rs.1,35,38,945/-. He observed that the contra entries as per

the bank statement are of Rs.1,06,40,000/- from M/s. Sugi Marketing of

Rs.1,76,000/- , fixed deposit withdrawal of Rs.2,75,195/- and receipt from

Puspanjali Mohapatra of Rs.1,00,000/- aggregating to Rs.1,11,91,195/-.

Therefore, the unexplained deposits in banks are of Rs.23,77,750/-

(Rs.1,35,68,945 – Rs.1,11,91,195). Thereafter, the CIT(A) observed that

it is the contention of the assessee that the aforesaid balance deposits in

bank of Rs.23,77,750/- are disclosed by him in the sale of Rs.26,47,668/-

credited in the profit and loss account. The Assessing Officer rejected this

explanation of the assessee in the assessment order. According to the

Assessing Officer, if the assessee was doing the business of trading in

solvents and maintained books of account then he should have filed his

return of income in ITR-4 instead of ITR 4S. ITR -4S is meant for disclosure

of business profit on presumptive basis, whereas ITR-4 is to be filed when

ITA No. 65/ CTK/2017 Asse ssment Year :20 12- 201 3 the assessee maintains books of account. In ITR 4, the particulars of

balances sheet as well as profit and loss account are to be furnished. He

observed that I agree with the Assessing Officer that had the assessee filed

return of income in ITR -4, he would have been in a position to establish

that he was doing business in solvent. Further, the CIT(A) observed that

he found merit in the decision of the Assessing Officer that the plea of

trading in solvents was taken when the case was reopened to examine the

source of cash deposit in State Bank of India and Axis Bank. During the

course of assessment proceedings, the Assessing Officer asked the

assessee to furnish name, address and bills of the persons from whom

purchases and to whom the sale were made. The assessee furnished these

details. The Assessing Officer issued notices u/s.133(6) of the Act to the

said suppliers and sellers. All these notices were returned back by the

postal authorities with the remarks “insufficient address” or “not known”.

This fact was brought to the notice of the assessee by the Assessing Officer.

The assessee took the plea that the addresses of the suppliers and the

sellers might have been changed and submitted new addresses. The

Assessing Officer sent notices at new addressees but no reply was received

from these parties. Therefore, it was held that the assessee has not

established the trading activity. The CIT (A), therefore, held that deposits

of Rs.23,77,750/- are not on account of business receipts. These deposits

are from undisclosed sources and hence, he confirmed the addition to the

ITA No. 65/ CTK/2017 Asse ssment Year :20 12- 201 3 extent of Rs.23,77,750/- and allowed relief of Rs.15,35,816/- to the

assessee.

authorities.

by ld A.R. of the assessee to demonstrate that the assessee was carrying

on business of solvents and that the deposits in the bank accounts of

Rs.23,77,750/- was out of sale proceeds from the said business. The

assessee has failed to do so before the Assessing Officer and CIT(A) also.

Therefore, I find no good and justifiable reason to interfere with the order

of the CIT(A), which is hereby confirmed and the grounds of appeal of the

assessee are dismissed.

Order pronounced in the open court on 16 /06/2017 in the presence of parties.

Sd/- (N.S Saini) ACCOUNTANT MEMBER

Cuttack; Dated 16 /06/2017 B.K.Parida, SPS

ITA No. 65/ CTK/2017 Asse ssment Year :20 12- 201 3 Copy of the Order forwarded to : 1. The appellant : Shri Prakash Bandary, S-3/9, BDA Commercial Complex, Baramunda, Bhubaneswar 2. The Respondent. ITO, Ward 3(4), Bhubaneswar 3. The CIT(A) -2, Bhubaneswar 4. Pr.CIT-2, Bhubaneswar 5. DR, ITAT, Cuttack BY ORDER, 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack