SMT SOMA SAHA,KOLKATA vs. ITO, WD-51(3), KOLKATA, KOLKATA

Except ground Nos. 1 and 2 all the other grounds were not pressed. The learned counsel for the Assessee made an endorsement to that effect in the original grounds of appeal

The Assessee is an individual. She derives income from the business of trading in readymade garments. The assessment proceedings before AO were completed exparte ITA No.603/Kol/2014-Smt. Soma Saha. A.Y.2009-10 1 u/s 144 of the Income Tax Act, 1961 (Act). In the course of assessment proceedings the AO called upon the assessee to explain the source of cash deposit in the bank account maintained by the assessee with Bank of Baroda, Sodepur Branch, Kolkata- 10. This bank account was also not disclosed by the assesse to the department and the AO discovered the existence of this bank account by his own enquiry. The AO called upon the assessee to show cause as to why the cash deposit in the said bank account of Rs.32,63,500/- should not be added to the undisclosed sources. According to the AO the assessee had not offered any explanation and therefore a sum of Rs.32,63,500/- was added to the total income of the assessee as income from other sources.

Before CIT(A) the assessee submitted that the assessee maintained an Undisclosed Bank Account [A/C No. 00400100022522] with Bank of Baroda, Sodepur Branch. During the Financial Year: 2008-2009, deposits in the said account in cash were made totaling Rs.32,63,500/- within a period of 11 days (from 02.04.2008 to 12.04.2008). The amounts were also withdrawn during the relevant previous year. The assessee admitted that he could not explain either deposits amounting to Rs.32,63,500/- or withdrawal amounting to Rs.48,08,391/- from the very same bank account, which were transferred into or from the said account. The Assessee claimed that in the given circumstances, the cash deposits which were nothing but undisclosed sale from the business of trading in ready-made garments, only a percentage of gross profit on undisclosed sale of Rs.32,63,500 ought to have been made to the total income. Though such specific submission was made but the plea of the Assessee in effect was that cash deposit was unaccount sale of ready made garments. direct The Assessee submitted that the entire sum of Rs.32,63,500 could not have been added as income of the Assessee. The Assessee relied on the decision of the Hon’ble Gujarat High Court in support of his contention that average G. P. Rate should be applied on undisclosed sale and only the resultant sum should added as income of the Assessee and not the entire Deposits amounting to Rs.32,63,500/- (decision of Gujarat High Court in the case of CIT vs. President Industries Limited [258 ITR 654 (Guj.)]. The assessee submitted that there were deposits of cash for the period from 02.04.2008 to 12.04.2008 (11 days) of sum of cash totalling ITA No.603/Kol/2014-Smt. Soma Saha. A.Y.2009-10 2 Rs.32,63,500/- in the bank account referred to by the AO in the order of assessment. The assessee pointed that it also withdrew a sum of Rs.48,08,391/- from the said bank account. The assessee also filed a revised profit and loss account and balance sheet in which the assessee declared additional sales of Rs.32,63,500/- and purchases at Rs.33,59,941/-. The turn over originally declared by the assessee was Rs.6,05,918/- and the corresponding purchases declared was Rs.7,02,359/-. As already stated, the assessee relied on the decision of the Hon;ble Gujarat High Court in the case of CIT vs President Industries Ltd. 258 ITR 654(Guj) and CIT vs Balchand Ajit Kumar (2003) 263 ITR 610(MP) wherein it has been held that the total sale cannot be represented as profit and only the net profit rate has to be applied on the total sales. The assessee gave an average percentage of gross profit in the past three assessment years as follows :-

The CIT(A) considered the above submissions of the assessee and did not agree with those submissions. The following were the reasons assigned by CIT(A) in his order :- “These grounds essentially dispute the addition of Rs.32,63,500/- & Rs.43,416/- made by the AO on account of unaccounted money found deposited in the undisclosed bank account of the assessee and the interest earned thereon respectively. As the declared turnover of the assessee is only Rs.6,05,918/-, the deposits made in the bank account are held urn-elated to the business of the assessee. An analysis of the Bank Statement is revealing as under: (i) All the deposits are made in cash. (ii) The entire set of deposits totaling Rs.32,63,500/- was made only between 02.04.2008 to 12.04.2008 i.e. in a span of 11 days. -Smt. Soma Saha. A.Y.2009-10 3

The ld. DR relied on the findings of CIT(A). He brought to my notice that cash was deposited in a span of 11 days and it was not possible to believe that the asessee would have done such huge turn over in just 11 days. He relied on the order of CIT(A).

I have given a very careful consideration to the rival submissions. The proceedings before AO were completed u/s 144 of the Act exparte assessee. Therefore there was no occasion to explain the source of deposit of cash in the bank account. Before CIT(A) the assessee claimed that the sum in question was nothing but sale proceeds of readymade garments and further claimed that in respect of sale of Rs.32,63,500/- there were corresponding purchases to the tune of Rs.33,59,941/-. A copy of the bank statement of the assessee is placed at pages 3 to 5 of the assessee’s paper book. The same is given as Annexure to this order. A perusal of the same shows that there were cash deposits as well as withdrawals from the bank account. The credit balance as on 3.10.2007 was just Rs.1500/-. Between 22.11.2007 to 5.12.2007 there are deposit of cash totalling Rs.7,67,075/- into this bank account. There was withdrawal of cash from this bank account totalling Rs.7,69,900/- between 21.1.2008 till 8.2.2008. Between 13.3.2008 till 12.4.2008 there was deposit of cash into this account of Rs.50,09,000/-. A sum of Rs.3,00,000 was withdrawn from this account on 16.4.2008. After deposit of Rs.15,332/- on 5.5.2008, cash of Rs.49,23,007 was withdrawn between 7.5.2008 till 11.11.2008. As rightly observed by the CIT(A) there is uniform pattern of deposit and withdrawal, which renders the plea of the Assessee that these represents sale proceeds of unaccounted business in readymade garments. In fact the Assessee has not made such submission at any stage of the proceedings but by implication, the Assessee’s plea has to be construed only that way. -Smt. Soma Saha. A.Y.2009-10 5 There is no whisper of how the unaccounted transactions were carried out what is the quantity of purchase and sale, what is the closing stock as on the last of previous year etc. As rightly observed by the CIT(A), the periodicity of the deposit and withdrawal renders the plea of the Assessee that the cash deposited was sale proceeds of unaccounted transaction of sale of readymade garments, improbable. The decisions referred by the learned counsel for the Assessee will not be of any assistance to the plea of the Assessee, as the plea of the Assessee that the cash deposited was out of sale proceeds of readymade garments is held to be not substantiated. It is only when it is held that there was unaccounted sale that the question whether to assessee gross profit or the entire sale proceeds will arise for consideration. On the facts and circumstances of the present case, I am of the view that the conclusions drawn by the CIT(A) is just and proper and calls for no interference. Accordingly, the relevant grounds of appeal are dismissed.

In the result the appeal of the assessee is dismissed.