MANIK CHAND AGARWAL,KOLKATA vs. I.T.O. WD - 32(3),KOLKATA, KOLKATA

Ground No.1 raised by the assessee reads as follows :- “1) That on the facts and circumstances of the case, Ld. CITCA) erred in not accepting the cash flow statement and confirming the addition u/s 68 of the I. Tax Act amounting to Rs.17,40,500/- being cash deposits in bank accounts. The addition, being based on mis- appreciation of facts, needs be deleted.”

The Assessee is an individual. The assessee filed return of income for A.Y.2009-10 declaring total income of Rs.3,08,010/-. The assessee had deposited cash totaling a sum of Rs.17,40,500/- in the bank account in his name with South Indian bank and ABN Amro bank. The assessee explained the source of funds out of which cash was deposited into the aforesaid bank accounts by filing a cash flow statement, a copy of which is at

Before CIT(A), the assessee submitted the gist of the source of cash as reflected in the cash book that was filed before the AO. The statement of cash balance so given by the assessee reads as follows :- Composition of cash balance Opening Cash blance Rs.8,10,964.77 Add: 1)Cash received from employer a) For salary earned during A.Y.2009-10 Rs.1,75,680.00 b) For salary earned last year remained Unpaid same paid during A.Y.09-10 Rs.1,68,380.00 c) Advance taken from the company Rs.1,85,000.00 d) Short term loan from the company Rs.2,00,000.00 Rs.7,29,060.00 2)Withdrawal from Bank Rs.6,00,000.00 Rs.21,40,024.77 2

The CIT(A) however rejected the above reconciliation for the reason that the same is not supported by any evidence. Aggrieved by the order of CIT(A) the assessee has raised ground no.1 before the Tribunal.

We have heard the rival submissions and perused the material on record. At page 56 of the assessee’s paper book we find that M/s. Storewell Shipping Pvt. Ltd. in which the assessee was employed have confirmed the following payments of the assessee :- “1. a) Mr. Manick Chand Agarwal is our Executive Staff. We have paid a sum of Rs.l,80,000/- as gross salary to Sri M C Agarwal and after deducting Rs.l,320/-as P.Tax and TDS of Rs.3,000/- net amount paid works out Rs. 1,75,680/- for the said financial year. The mode and date of payment is enclosed as per ledger. b) We have also paid an arrear salary of Rs.l,68,380/- during the F.Y.2008- 09. 2. We have not paid any loan to the Sri Agarwal but paid an advance of Rs.l,85,000/- against salary during the F.Y.2008-09 as per statement enclosed. 3. We have short term advance to the assessee amounting to Rs 2,00,000/- during the F.Y.2008-09 and the amount recovered during the same year. Statement enclosed.”

The revenue authorities have given no reason for disregarding this confirmation from the Assessee’s employer. As far as cash book filed by the assessee for proving the flow of cash that was deposited in the bank account, we find that there is a negative cash balance of Rs.5,83,555.23 as on 01.03.2009 which is the peak of negative cash balance. The ld. Counsel for the assessee submitted that the AO should be directed to give credit for the amounts received from the employer as set out in page 56 of the paper book and thereafter consider the negative cash balance and decide the issue of making the addition u/s 69 of the act in respect of the source of funds for cash deposited in the bank account. We are of the view that the plea put forth by the ld. Counsel is

Ground No.2 raised by the assessee reads as follows :- “2) That the Ld. CITCA) erred in confirming the addition u/s 69C of the Act on account of payments made against credit cards of Rs.4,16,715/- without appreciating the facts of the case. The addition needs be deleted.”

As far as ground no.2 is concerned the facts are that the AO made an addition of Rs.4,16,715/- for the following reasons :- “The credit card payments except those which are reflected in the bank statement are also being added back in this order u/s 69C of the I.T.Act as per following calculation:- Total credit card payment Rs.8,14,315/- Less:Routed through South Indian Bank Rs.3,97,600/- Amount of undisclosed expenditure u/s 69C of the Act Rs.4,16,715/- [Addition : Rs.4,16,715/-]”

The CIT(A) confirmed the order of AO.

After considering the rival submissions on this issue we find that at page 64 of the assessee’s paper book the details of the credit card payments made by the assesee have given and the same reads as follows : “Total amount routed through South Indian Bank: CITI Bank as per list attached 364755 ABN AMRO Bank 95000 24.07.08 cheque 668561 AXIS Bank 69600 09.01.09 ---668572 529355 LESS: ALLOWED 397600 131755”

Ground No.3 raised by the assessee reads as follows :- “3) That the Ld. CITCA) erred in confirming the addition of Rs.1,68,000/- being the unpaid salary for the Asst. Year 2008-09 received in the year under consideration. The salary so received was disclosed in the Asst. Year 2008-09 itself. The addition on this account implies double addition and hence the same need be deleted.”

As far as ground no.3 is concerned the limited prayer of the ld. Counsel for the assessee is that the amount of salary relating to A.,Y.2008-09 which was received by the Assessee in A.Y.2009-210 was already offered to tax in A.Y.2008-09. In support of the claim of the assessee he has drawn our attention to page 11 of the paper book which is the computation of total income for A.Y.2008-09. The balance sheet filed along with the return of income shows a sum of Rs.1,68,380/- as received from M/s. Storewell Shipping Pvt. Ltd which has been taken into account by the assessee in the computation of the total income filed for A.Y.2008-09. We are of the view that it would be just and appropriate to set aside the order of CIT(A) on this issue and direct the AO to verify the claim of the assessee if found correct, then allow appropriate relief.

Ground No.4 raised by the assessee reads as follows :- “4) That the Ld.CIT(A) erred in upholding the addition of Rs.1,85,000/- u/s 17(1)(v) ignoring the fact that the said amount was only a short term advance and was duly returned by the appellant to his employer. The addition needs to be deleted.”