HATKIMMUDIN MANSOORALI PLASTICWALA,MUMBAI vs. ITO 13(1)(3), MUMBAI
What did the Tribunal hold?
The Tribunal directed the Assessing Officer to prepare a consolidated cash flow statement to justify the availability of cash at the time of deposit. The addition should be restricted to the peak amount of credit in the bank account.
What were the facts?
The assessee deposited cash into his bank account, which the Assessing Officer treated as unexplained cash credits. The assessee explained the source of funds as cash sales and collections from debtors, with funds being transferred between bank accounts.
What were the issues?
Whether the entire cash deposited in the bank account can be treated as unexplained cash credits without considering the cash flow and transfers between accounts.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “H”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN, JM Shri Hakimuddin Mansoorali
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the assessee against the order of CIT(A) for the assessment years 2010-11, in the matter of order passed u/s.143(3) of the IT Act.
The only grievance of assessee relates to addition of Rs.26,31,197/- in respect of amount deposited in the saving bank account.
We have heard the rival contentions and carefully gone through the orders of the authorities below.
It is observed from the records that Assessing Officer had received information from the Air System of the department that assessee had 2 Shri Hakimuddin Mansoorali Plasticwala deposited cash of Rs. 32,35,539/- in his bank account with ICICI Bank during the financial year relevant to AY 2010-11 and asked the assessee to explain the source of credits totalling Rs. 32,35,539/- in the bank account. Assessee submitted the cash book which showed cash receipts of Rs. 55,79,993/- from various parties, viz., sundry debtors and its subsequent deposits of Rs. 43,01,600/- in the bank account with Bombay Mercantile Cooperative Bank Limited (BMC) and explained that he had effected cash sales of Rs. 80,06,138/- during the year out of which Rs. 61,77,057/- represented cash sales and balance amount represented credit sales. He also submitted that out of the cash sales, he had deposited Rs. 24,78,556/- in ICICI Bank which was withdrawn over a period of time and re-deposited in cash book of Super Plastic Corporation. In another submission assessee stated that the collections from debtors first come to ICICI Bank account and then the same is withdrawn and re- deposited in BMC Bank and therefore the entire deposits cannot be treated as cash credits and only peak cash credits should be taxed. Assessing Officer did not accept assessee's contention and added the sum of Rs. 26,31/1971- as unexplained cash credits u/s. 68 of IT. Act, 1961.
By the impugned order CIT(A) confirmed the action of the AO against which assessee is in further appeal before us.
We have considered rival contentions and found from record that during the year under consideration, the assessee was engaged into the proprietary business in the name of M/s. Super Plastic Corporation and 3 Shri Hakimuddin Mansoorali Plasticwala was engaged in the business of manufacturing of PVC Rain Coats, Rain Suits, Reversible Suits, PVC Ale Jurking. He declared business profits of . 6,38,009/- and also other income of 606/- in his return of income. "During the year under consideration among various bank accounts the assessee was maintaining a savings bank account with lCICI Bank Ltd. having account no. 623501141048. In this particular bank account, the assessee had withdrawn cash from time to time and also deposited cash into it from time to time. The total cash withdrawn from this bank account by the assessee was 25,70,300/- and total cash deposited into this bank account by the assessee was 23,01,870/-.
We also found that the assessee’s total sales during the year under consideration was 80,06,138/- out of which cash sales were 61,77,057/- and the balance sales of 18,29,081/- were on credits. Out of such total cash sales of 61,77,057/-, the cash were deposited first into the said bank account maintained with ICICI Bank Ltd. either directly by the customers or by the assessee. Thereafter, the cash were withdrawn by the assessee from the said bank account maintained with lCICI Bank Ltd. from time to time and such cash were re-deposited into the current account of the assessee maintained with Bombay Mercantile Co-operative Bank Ltd.
From the record we found that assessee has made both deposit and withdrawal from the bank account and had also cash received in respect of cash sales as well as debtors. Cash was deposited in bank account as well as withdrawn from the bank account. In some instances, the cash
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