ABDUL RAHMAN H SAYYED,THANE vs. ITO WD 1(3), MUMBAI

Rival contentions have been heard and record perused. Facts in brief are that the assessee has filed his return of income declaring total income of Rs.1,24,660/-. The assessee carried on the business of booking Air Tickets and commission agent and during the year under consideration, he had disclosed receipts from the business at Rs.2.59 lakhs and after claiming the expenses the net income was offered at Rs.1.14 lakhs. Balance amount of income has been disclosed from house property, capital gains and other sources. During the course of assessment proceedings, the AO examined various details and he

We have considered rival contentions and found that out of total addition of Rs.3,38,000/-, during remand proceedings, assessee could not explain Rs.75,000/- received from Shri Bhaguram Muwal, Rs.40,000/- and from Mohd. Rafiq Rs.35,000/-. Accordingly, CIT(A) confirmed to the extent of Rs.75,000/-. Nothing was brought on record by ld. AR to persuade us to deviate from the findings recorded in the assessment order as well as CIT(A)’s order. Accordingly, we do not find any infirmity in the order of CIT(A) for confirming the addition to the extent of Rs.75,000/-.

With regard to the addition of Rs.11,36,170/- in respect of amount deposited in the bank account, the CIT(A) has called for a remand report, which he has reproduced at page 6 & 7 of his appellate order. After considering the remand report the CIT(A) has upheld the addition of Rs.5,59,406/- after having the following observations :- “4.1 In respect of the cash deposits in the bank account, I find that the appellant before the A.O as well as during appellate proceedings has vehemently argued that deposits in the bank account are out of cash receipt from his clients for various services provided by him in respect of the Air Tickets and related to Visa. It has been also argued that heavy withdrawals have been made from the bank accounts for incurring the expenditure in respect of the services provided by the appellant and hence both deposits as well as withdrawals should be considered. In this regard, the summary of bank statements reveal that there were cash deposits of Rs.11,53,252/- in bank account with ICICI Bank besides deposits of Visa stamping fees at Rs.30,000/-. Thus, total receipts on the basis of deposits in this bank account worked out to Rs. 11,83,252/-. The withdrawals from this bank accounts in cash have been made at Rs.6,48,489/- leaving the balance of Rs. 5,34,763/- as net receipts from the appellant's business. Similarly, in the bank account with DCB Bank, cash deposits to the tune of Rs.1,46,187/- are on account of fees, interest, LIC refund, etc. On perusal of the details, it is noticed that LIC Refund was Rs. 7,500/- and interest was only Rs. 44/-. Thus, after excluding the LIC refund and interest totalling to Rs.7,544/- from Rs.1,46,187/-, the receipts from the business worked out to Rs.1,38,643/-. Thus, as per the appellant's own argument and submission, the net receipt from the business after excluding the withdrawals for expenses worked out to Rs. 6,73,406/- (Rs. 5,34,763 + Rs. 1,38,643). However, in the books of account and return of income, the appellant has disclosed gross receipts from Air Tickets and commission agency at Rs. 2.59 lacs only and after claiming various expenses at Rs. '1.14 lakhs. Thus, it is crystal clear that the appellant has suppressed his net receipts from the business and accordingly, the source of cash deposits in bank accounts remained

The appellant accordingly, gets partial relief in respect of ground no.2”.

It was contended by ld. AR that entire deposit in the bank account was explained by the assessee during remand proceedings. Our attention was invited to the remand report which reads as under :- "

As regards the additions of Rs.11,36,170/-, the assessee has submitted that the deposits made in the bank account are receipts in the normal course of business of the assessee, hence these do not amount to unexplained cash credit u/s.

The assessee while submitting the details of cash deposits in the bank account ties given list of clients from whom he has accepted the cash. Taking into account the nature of business of the assessee, details of clients and receipts from clients was called for. It has been verified that the receipts are from various clients of the assessee who have paid him in order to obtain VISA related services.

The assessee has filed submission dt. 24th July, 2012 furnishing details of cash deposits and payment. (copy is attached herewith Sch 1) cash withdrawn from bank is verified with the bank account of the assessee. However, since these records were not produced by the assessee during assessment proceedings. The same may please be looked from different perspective now.

As regards the additions of Rs.3,38,000/- the assessee has submitted that the said additions are deposits made in the Development Credit Bank during the F. Y. 2007-08. The assessee has furnished details of the deposits made in Development Credit Bank A/c (copy of the same is attached herewith Sch.2). On verification of the records and books of account produced by the assessee it can be reasonably stated that deposits amounting to Rs. 5,26,987/- (out of above Rs. 5,86,987/-) are in agreement with the explanations provided by the assessee.

However, as regards the deposits of Rs.40,000/- from Mr. Bhaguram Muwal and Rs.35,000/- from Mohd Rafiq received as unsecured loan, no satisfactory explanation have been produced before the undersigned.

Considering the above facts and observations noted above the claim of the assessee may be accepted on merits. "

We have gone through the remand report and it is clear that out of addition of Rs.3,38,000/-, the CIT(A) has upheld addition of Rs.75,000/- which we have already confirmed.

With regard to addition of Rs.11,36,170/-, we found that no finding has been given by the AO in his remand report, so as to justify deposit in the bank account out of business receipts, whereas CIT(A) has precisely calculated the amount deposited in the bank account out of the business receipts, wherein he found that business receipts disclosed by the assessee do not correspond to the amount deposited in the bank account. The CIT(A) found that in view of the net business receipts offered at Rs.1,14,000/-, there was a deposit of Rs.6,73,406/- in the bank account. Thus, there was a shortage of Rs.5,59,406/-, however, the remand report does not support this finding of CIT(A). In the interest of justice, we restore this issue back to the file of AO for deciding afresh after taking into account net business receipts disclosed by the assessee vis-à-vis amount deposited in the bank account. The AO is to decide the issue afresh after giving due opportunity to the assessee.

In the result, appeal of assessee is allowed in part, in terms indicated hereinabove. Order pronounced in the open court on this 24/02/2016 (PAWAN SINGH) (R.C.SHARMA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER भुंफई Mumbai; ददनांक Dated 24/02/2016 प्र.कु.मभ/pkm, नन.स/ PS आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीराथी / The Appellant 1. प्रत्मथी / The Respondent. 2. आमकय आमुक्त(अऩीर) / The CIT(A), Mumbai. 3. आमकय आमुक्त / CIT 4. 6 ववबागीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai 5. गार्ा पाईर / Guard file. 6. सत्मावऩत प्रनत ////