ANTHONY CARNEIRO,MUMBAI vs. ITO WD 19(3)(1), MUMBAI

The only issue in this appeal of assessee is against the order of the CIT(A) confirming the addition made by the AO of unexplained cash credit amounting to Rs.10,15,988/- us/ 68 of the Act.

Briefly stated the facts are that the assessee is a Karate Teacher and teaching karate in various schools as well as at personal level. As per AIR information received by the AO, the assessee has deposited cash of Rs.11,15,500/- in his saving bank maintained with Bank of Maharashtra, Bandra (West), Mumbai saving bank account No. 7126. The AO required the assessee to explain cash deposits made in the said bank account. The assessee filed some explanation, which was not accepted by the AO and made addition of Rs.10,15,988/- u/s. 68 of the Act. Aggrieved, the assessee preferred appeal before the CIT(A), who also confirmed this action of the AO by dismissing the assessee’s appeal. Aggrieved, now the assessee is in second appeal before the Tribunal.

We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the assessee explained the details of cash deposit of Rs.10,83,500/- and given bifurcation of the same as under:- Bifurcation of Rs.10,83,500/- deposited in Bank of Maharashtra in Asst. Year 2005-06 ( i.e. from 1.04.2004 to 31.03.2005) (As per the list given by AO in his order Pg no.2) Total Amount Deposited 10,83,500 - Income from Karate fees received in cash (2,31,500) Amount received by way of inheritance 8,52,000 Which includes as under:- 1. Amount received on closure of Father’s Bank account 99,512 (Relief granted by the AO for the same) 2. Amount received from maturity proceeds of FD with SBI 2,15,000 3. Agricultural income earned by Father of assessee 5,37,488 ( who is agriculturist owning agriculture land at Goa)

In respect of first amount of Karate fees the assessee received Rs. 2,31,500/-, the ld. counsel for the assessee explained that the assessee has deposited these receipts in his own bank account and made withdrawals also. In regard to Karate receipts, we are of the view that the amount to the extent of Rs.2,31,500/- is own karate receipts out of which the assessee disclosed income of Rs.1,32,360/- and there are withdrawals also. The assessee has produced bank statement of said saving bank account maintained with Bank of Maharashtra for the year ending on 31-03-05 from which it is noticed that there are withdrawals in cash. It means that these deposits are out of receipts from Karate classes by the assessee. This stands explained by the assessee. Thus, we direct the AO to delete the cash deposit to the tune of Rs.2,31,500/-.

In regard to amount received on closure of assessee’s father’s bank account of Rs.99,512/-, the ld. counsel for the assessee explained that this amount has been accepted by the AO. She read out para 4.9 of the assessment order before us, which reads under: “4.9 However, the assessee’s explanation in respect of cash received of Rs.99,512/- on closure of his father’s bank account is acceptable, as the same has some supporting evidence in the form of copy of bank account. “ It means that the amount to the extent of Rs.99,512/- stands explained and accepted by the AO.

Next amount explained by the assessee is Rs.2,15,000/- claimed to be received from the maturity proceeds of Fixed Deposits made by the assessee’s father with SBI. In support of this claim, the ld. counsel for the assessee filed the copy of Fixed Deposit receipts dated 3/7/1998, which became due on 3-7-2003 of Rs. 1 lakh and maturity value of the same is of Rs.1,76,277/-. She explained that this amount was re-invested in fixed deposit for further 1 year and ultimately this FDR(Fixed deposits receipts) got matured during the year and its cash was deposited in the said saving bank account amounting to Rs.2,15,000/-. The ld. counsel for the assessee explained that this FDR belongs to assessee’s father. The assessee being only son, this amount after his father’s death, it devolves on him. She explained, that, at present, she has no proof of re-invested of fixed deposit matured value in the year 2004. She undertook to file the proof of the same. We find that the argument of the ld. AR of the assessee is convincing, but in absence of proof of re-investment of fixed deposit receipt, we feel that this matter needs verification at the level of the AO. Accordingly, this issue limited to the extent of FDR maturity value of Rs.2,15,000/- is remanded back to the file of the AO. It is mentioned that the FDR may be of little less value or little more value, then the AO is directed to verify the same. The AO will decide this issue after taking into consideration the evidence from the assessee. This issue of assessee’s appeal is allowed for statistical purpose.

Next issue amounting to Rs. 5, 37,488/- the ld. counsel for the assessee explained that the assessee’s father was having agricultural income. He filed land holding papers in Form I & XIV issued by Talati of Nuvem, Goa. According to this land holding papers the assessee’s father was owner of 0.3025 acres of total land out of this 0.2875 acres is agricultural land is irrigated, on which cashew nuts was grown. The assessee also stated that the assessee’s father used to earn agricultural income to the tune of Rs 1 lakh p.a approx. When this was put to the ld.Sr.DR, he agreed for fair estimation of said agricultural income. The ld. counsel for the assessee also explained that this cash of Rs.5,37,488/- is saving of agricultural income from last 4-5 years.

After hearing both the sides and going through the facts of the issue of agricultural income, we are of the view that the fair and reasonable estimate can be made to which both the parties before us are agreed. Accordingly, we estimate that Rs. 3 lakh out of total of Rs.5,37,488/- can be estimated as savings from agricultural income and balance of Rs.2,37,488/- can be treated as unexplained cash deposits u/s. 68 in the bank account. Accordingly, we direct the AO. This issue of assessee’s appeal is partly allowed.

In the result, the appeal of the assessee is partly allowed as stated above. Order pronounced in the open court on 08 .07.2016