NIRMALA M PATEL,MUMBAI vs. ITO WD 21(1)(3), MUMBAI

This appeal is filed by the assessee against the order of CIT(A)-... dated 26.02.2013 raising the following grounds of appeal: A) Principles of natural justice violated

Brief facts of the case are that the assessee filed return of income for the relevant AY on 15.07.2008 declaring total income of Rs. 1,72,380/-. The return of income was selected for scrutiny. During assessment the AO observed that in AIR information it was disclosed that assessee has deposited cash deposit of Rs. 19,52,000/- in Axis Bank. The assessee was asked to produce the detail of the cash deposit in the Bank. Assessee not complied with the direction of AO. AO summoned the bank authorities to produce the details of assessee’s bank account. After submission of details by Bank AO further noticed that there were credit entries of Rs. 19,07,201/-, cash deposit of Rs. 19,52,000/- and bank interest of Rs. 1995/-. The assessee was again asked to explain the details of various entries. Since assessee did not file any satisfactory reply the AO made an addition of Rs. 19,52,000/- as cash deposit in Axis Bank, Rs. 19,07,201/- as credits in Axis Bank, Rs. 1995/- on account of interest and Rs. 52,785/- from Share Khan in Union Bank as an unexplained credit in the assessment order.

Aggrieved by the order of AO, assessee filed an appeal before the CIT(A). CIT(A) after considering the contention of the assessee restricted the addition of Rs. 19,07,201/- to Rs. 5,81,968/- and treated it as a Short Term Capital Gain (STCG) and Rs. 25,688/- as unexplained credit u/s. 68/69A of the Act and the addition of Rs. 19,52,000/- was sustained. However, credit entry of Rs. 52,785/- through cheques from Share Khan deposited in Bank of India was deleted in the impugned order dated 26.02.2013. Aggrieved by the order of CIT(A) the assessee has filed present appeal before us.

We have heard ld. AR for assessee and DR for revenue and perused the material available on record.

First we will consider the ground no.1, raised in the present appeal. In Ground No. 1, the assessee urged that the principle of natural justice was violated by CIT(A) in holding that assessee filed revised computation of income and other details after completion of assessment proceeding. We have noticed that AR of assessee has not argued in respect of this ground, so we hold that this ground is not pressed and the same is dismissed. 6. Next ground for our consideration is addition of Rs. 19,52,000/- on account of unexplained cash credit. Ld. AR of assessee argued that CIT(A) erred in law in upholding the order of AO instead of restricting the same to Rs. 3,67,000/- being the peak balance offered to tax by the assessee. Ld. DR supported the order of authorities below. We have perused the date-wise details of deposits and withdrawal of the cash in the saving bank account of the assessee (as mentioned in para 3.4.3 of CIT(A) order) and noticed that peak balance in the bank account of assessee is Rs. 3,67,000/- during the assessment year. 7. We have considered the rival contention of the parties and perused the statement of bank account of the assessee. In our opinion it may not be proper on the part of revenue to consider the amounts of deposit only and not to give the consideration for the amount withdrawn from time to time. The co-ordinate bench of ITAT, Ahmadabad in case titled as Sudhirbhai Preevinkant Thakkar vs. ITO reported vide (2015) 44 ITR(Trib.) 135 Ahmadabad while dealing with the identical ground held as under: “In our considered view, when the assessee has demonstrated that he had withdrawn cash from the bank and there is no finding by the authorities below that this cash available with the assessee was invested or utilized for any other purpose, in that event, it is not open to the authorities to make the addition on the basis that assessee failed to explain the source of deposit. Moreover, the authorities below have not disputed the fact that the assessee had withdrawn and amount of Rs. 9,10,000/- before the deposits made on various dates during the financial year2007-08. Therefore, the order of authorities below are set-aside and the AO is directed to delete the addition. ” 8. Now coming to the facts of the case, we have seen that the amounts deposited and withdrawn are very small. And whereas AR for assessee argued for restricting the addition of cash deposit equivalent to the peak balance. Accordingly, in view of the above legal discussion, we set-aside the order of CIT(A) and direct the AO to restrict this addition to Rs. 3,67,000/- being peak balance offered by the assessee after carrying out necessary verification.

Next ground for our consideration is business loss of Rs. 6,51,927/-. AR of the assessee argued that during the course of assessment proceeding it was brought to the notice of AO that assessee is engaged in the business of NSE Futures and Options and had sold the certain shares from which she had income from STCG and Long Term Capital Loss (LTCL). Beside income was not declared at the time of filing of return. During the course of assessment proceeding assessee filed revised statement of income with copy of ledger account of saving bank account of assessee in Axis Bank along with narration of deposits and withdrawals, statement showing date wise cash deposits and withdrawals and statement of Futures and Options (NSE) wherein assessee has incurred loss of Rs. 6,51,927/- and quarterly summary of STCG and LTCL on sales of shares. DR for the revenue relied upon the order of AO.

We have noticed that during First appellate stage assessee argued that no proper and fair opportunity was given by AO. CIT (A) seek remand report on the contention of assessee with respect to the LTCL. The AO submitted his report, wherein AO has not disputed the correctness of computation of business loss (LTCL) on sales of share and on STCG. Despite this fact the CIT(A) has not given the set off loss against the STCG. DR for revenue supported the finding of authorities below. We have considered the rival contentions of the AR of the assessee and perused the material available before us including revised computation of total income. Though the assessee was raising new claim before the AO, which was not claimed originally, but, if the claim is raised for bonafide consideration as per law the appellate authority is entitled to admit such claim. The assessee while making the revised computation has shown loss from Future and Options (NSE) and STCG of Rs. 5,81,967/- and income from other sources of Rs. 3,92,000/-. Thus the assessee was entitled for set off loss against the STCG, though it was not claimed originally. We have also notice that in the remand report the AO has not disputed the correctness of computation of business loss and STCG. CIT (A) has not doubted the F&O loss and LTCL after receipt of remand report. In these circumstances, we direct the AO to admit the claim and examine the same in accordance with law.