ITO, NEW DELHI vs. SH. DEEPAK CHAWLA, NEW DELHI

2. Restricting the addition of Rs.27,000/- against Rs.20,27,289/- made by the AO on account of unexplained income u/s 68 of the income tax Act.

Facts in brief as culled out from the order of the lower authorities are that the assessee was an individual and was running a general store in the name and style of M/s. ‘Chawla General Store’ during the relevant period of time. The assessee filed return of income on 20.01.2009 declaring total income of Rs.1,27,240/-. The case was selected for scrutiny through computer assisted selection of scrutiny (CASS). In the course of the scrutiny proceedings, the learned Assessing Officer (in short ’AO’) observed cash deposit of Rs.19,27,289/- in saving bank account with ICICI Bank and cash deposit of Rs.1 lakh in saving bank account with Kotak Mahindra Bank. In the assessment order passed under section 143(3) of the Income-tax Act, 1961 ( in short ‘Act’) on 23.12.2010, the ld. AO held that even after providing so many opportunities, no reply was filed by the assessee regarding source of cash deposits, and therefore, cash deposits of Rs. 20,27,289/- appearing in both the accounts were held as unexplained cash credits under section 68 of the Act.

Aggrieved, the assessee filed an appeal before the learned Commissioner of Income-tax( appeals) [ in short ‘CIT(A)’]. The ld. CIT(A) in his order has mentioned that, after filing the appeal, the assessee demised at the young age of around 40 years and his wife smt. Minu Chawala, being legal hair of the assessee, authorised Mr Arjun Gupta,

Aggrieved the Revenue is before us.

The learned Senior Departmental Representative ( in short ‘SR DR’) relied on the order of the ld. AO and submitted that assessee failed to explain the source of deposits in banks, whereas, on the other hand an application for adjournment was filed by the wife of the assessee , which was rejected.

We have heard the submission of the Revenue and perused the material available on record. We are of the opinion that the ld CIT(A) has thoroughly examined the availability of cash balance and in view of the withdrawals from banks, cash generated from business turnover and opening cash balance, the deposits of Rs.20,27,289/- in banks stands fully explained and sustained an addition of Rs.27,000/- in view of the negative cash balance for the period from 1st July to 15th July, 2007. In view of above clear findings of the ld. CIT(A) , we are of considered view that no interference is required in the order of the ld CIT(A) on this issue. Accordingly, the first ground of Revenue is dismissed.

As regards to the next ground of the Revenue that additional evidence in the form of cash flow statement was admitted by the ld. CIT(A) in contravention of Rule 46A is concerned, the ld SR DR submitted that ld. CIT(A) has not provided opportunity to the learned AO to go through the ITA No.1626-66/Del/2013 5