PINAKI RANJAN MONDAL,KOLKATA vs. ITO, WD-55(3), KOLKATA, KOLKATA

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ITA 515/KOL/2015Status: DisposedITAT Kolkata11 December 2015AY 2003-20043 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had demonstrated a positive cash availability in their cash flow statement, even excluding the opening balance, which was sufficient to explain the cash deposits. Therefore, the additions made by the AO were not justified.

What were the facts?

The assessee had cash deposits in their bank accounts for AY 2002-03 and 2003-04, which the Assessing Officer (AO) added to income as unexplained. The CIT(A) confirmed the AO's action, citing an unexplained opening cash balance and lack of personal drawings in the cash flow statement.

What were the issues?

Whether the cash deposits in the bank account were sufficiently explained by the assessee's cash flow statement, considering the opening balance and other sources of cash.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” “B” BENCH: KOLKATA

Before: Shri Mahavir Singh, JM]

Hearing: 07.12.2015Pronounced: 11.12.2015

For the Appellant: Shri Girish Sharma, FCA For the Respondent: Shri Rajendra Prasad, JCIT, Sr. DR ORDER

Both these appeals by assessee are arising out of separate orders of CIT(A)-19, Kolkata vide Appeal Nos. 32 & 31/CIT(A)-19/Kol/Wd-62(2)/2014-15 dated 25.02.2015. Assessments were framed by ITO, Wd-19(4), Kolkata u/s. 143(3)/147 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Years 2002-03 and 2003-04 vide his separate orders dated 16.12.2009.

2.

The only common issue in these two appeals of assessee is against the order of CIT(A) confirming the addition of cash deposit into bank of Rs.3,55,000/- in AY 2002- 03 and Rs.2,95,000/- in AY 2003-04.

3.

I have heard rival submissions and gone through facts and circumstances of the case. I find that the AO in both the assessment years noticed from the bank account that there is a deposit of cash amounting to Rs.3,55,000/- in AY 2002-03 and Rs.2,95,000/- in AY 2003-04. According to him, as the assessee could not explain the source of deposit, he made additions. The CIT(A) also confirmed the action of AO despite the fact that complete cash flow statement including the deposits made during the year were explained by positive availability of cash in the cash flow statement despite the fact that opening balance, which is not needed to prove the cash flow. At the time of hearing, Ld. Counsel for the assessee drew my attention to para 5.1 wherein the AO’s remand report dated 04.08.2014 is reproduced as it is as under:

“5.1. As directed, the assessee was given opportunity of being heard. Sri Girish Sharma, CA/AR on behalf of the assessee appeared and stated the facts in support of his 2 & 515/K/2015 Pinaki Ranjan Mondal AY 2002-03 & 2003-04 submissions. The A/R clarified the cash flow statement from 01.04.1993 to 31.03.2002 with supporting copies of Post Office Pass Book and Bank statements which is found in order. But the opening balance as on 01.04.1993 is remained unexplained.”

4.

Similarly, Ld. Counsel for the assessee drew my attention to para 5.2 of CIT(A)’s order wherein except the opening cash balance of Rs.1,59,991/-, all deposits were accepted as explained and the relevant finding of para 5.2 reads as under:

5.2. I have considered the facts of the case, the appellant’s submissions and the remand report. On the basis of supporting documents like bank, statements/passbooks, post office MIS statements etc., the Assessing Officer found the cash flow statement submitted by the AR at the remand stage correct except for the opening cash balance of Rs.1,59,991 which remained unexplained. I find that the appellant deposited Rs.5000 on 16.01.2002, Rs.3,50,000/- on 04.03.2002 and Rs.2,95,000/- on 07.05.2002 and these deposits aggregating to Rs.6,50,000 are sought to be explained as accumulation of old cash balance of Rs.159991 available on 01.04.1993, periodic withdrawals out of bank accounts/maturity of fixed deposits/maturity of post office MIS schemes and interest received in cash on post office MIS but a relevant item of cash outflow conspicuous by its absence in the cash flow statement furnished by the AR is reasonable drawings for personal or household use.

5.

Ld. Counsel for the assessee before me stated that even though if I take out opening cash balance in both the years, there are positive cash available for making these deposits. When a query was put to Ld. Sr. DR, he could not controvert the argument of Ld. Counsel for the assessee. I have gone through the facts and circumstances of the case and find that there is a positive cash available with the assessee in the cash flow statement, which is enclosed in assessee’s paper book in addition to opening cash balance. In view of the above, I find that the assessee is able to explain the availability of cash which was deposited in the bank account. Similar are the facts in AY 2003-04 also. Hence taking a consistent view, I allow both the appeals of assessee.

6.

In the result, appeal of assessee is allowed.

7.

Order is pronounced in the open court on 11.12.2015.

Sd/- (Mahavir Singh) Judicial Member Dated : 11th December, 2015 Jd.(Sr.P.S.) Copy of the order forwarded to:

1.

APPELLANT – Shri Pinaki Ranjan Mondal, L/R of Lt. Ram Pada Mondal, Flat 1Dl, 625A, Diamond Harbour Road, Kolkata-700 034.. Respondent – ITO, Wd-55(3), Kolkata. 2 3. The CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata

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