SRI.SUBHASH KIZHAKKEPARAMBIL CHANDRASEKHARAN NAIR,KOTTAYAM vs. THE ACIT, COCHIN

Per ABRAHAM P.GEORGE, ACCOUNTANT MEMBER:

This appeal filed by assessee is directed against an order of the CIT(A)-IV,

Kochi dated 16/06/2016. Assessee is aggrieved on an addition of Rs. 54,05,000/-

made u/s. 68 of the Income Tax Act, 1961 (‘the Act’ hereinafter), confirmed by

the CIT(A).

return of income for the impugned assessment year declaring an income of

Rs.5,72,260/-. Assessing Officer was having information through Annual

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Information Return that assessee had deposited a sum of Rs.54,05,000/- in his

Saving Bank account with Indusind Bank Ltd. Though the assessee initially

denied having made such deposits in any Bank, when the statement of account

was put to him, assessee admitted the deposits. Thereafter, assessee filed a

letter before the Assessing Officer claiming that he had earlier advanced loans to

three different parties through cheques and the deposits in the Bank Account

were cash repayments from such debtors. Of these three debtors named Shri

Bijumon V., Shri Justin Francis and Shri K.C. Jayakumar, one was his brother.

The Assessing Officer pointed out to the assessee that the cash deposits were

made prior to the issue of cheques to these three parties. As per the Assessing

Officer, if the deposits were cash returned by the debtors, then the cheques

given by the assessee as loans should have preceded the date of such deposits.

Assessing Officer was of the opinion that cash deposits made by the assessee,

were undisclosed income of the assessee. He made an addition of Rs.54,05,000/-

u/s. 68 of the Act.

were cash deposits as well as cash withdrawals from the Bank account and the

Assessing Officer had considered only the deposits, while making the addition.

Further, as per the assessee, the cash deposits were made by the debtors after

discounting the cheques issued to them, through their respective Bank accounts.

Contention of the assessee was that when cheques came to his Bank for clearing

3 I.T.A. No.352/Coch/2016

cash received by the debtors on discounting these cheques earlier, were

deposited, so that the cheques were not dishonoured. As per the assessee, there

was a chain of cheque discounting between the three debtors, namely, Shri

Bijumon V., Shri Justin Francis and Shri K.C. Jayakumar. However, the CIT(A)

was not impressed. According to him, the claim of the assessee that refunds of

loans aggregating to Rs.6,90,000/- to Shri Bijumon V., loans aggregating to

Rs.15,95,000/- to Shri Justin Francis and loans aggregating to Rs.30,94,000/- to

Shri K.C. Jayakumar were used for making the deposits could not be believed. As

per the CIT(A),the cash deposits in assessee’s Bank account had preceded the

date of the cheques. Thus, as per the CIT(A), the cheques and the cash

deposits could not be co-related and assessee had failed to discharge the onus

on him to prove the source of cash deposits. He upheld the addition made by the

Assessing Officer.

three debtors, Shri K.C. Jayakumar and Shri Justin Francis were Income Tax

assessee and Shri Bijumon V., though he was not an income tax assessee, was a

vegetable vendor who had income below taxable limit. Contention of the Ld. AR

was that even if the deposits were to be considered as unexplained, the

Assessing Officer ought to have computed the peak credit before making the

addition. As per the Ld. AR, peak deficit came to Rs.3,09,500/- only. According

to him, confirmations given by the three parties were not verified by the

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Assessing Officer. Ld. AR submitted that if given another chance, assessee would

be able to clearly demonstrate the source for the cash deposits.

Copy of the Bank account of the assessee, cash deposits of which were

considered for addition, has been placed at paper book pgs. 6 -13. What we find

from the said copy is that the cash deposits were of sums varying between Rs. 2

lakhs to Rs.4000/-. The number of the cash deposits came to 55. As against

each of these deposits, there were withdrawals by cheque in the preceding few

days. The cheques issued in the name of the three parties were also almost of

the same amount as the cash deposits. Peak credit in the Bank account as per

the Bank statement comes to Rs.3,02,091.83 only on 26-11-2010. Contention of

the assessee that the cheques given to the three debtors were discounted by

them and cash received on such discounting used for making the deposits has

not been carefully examined by the lower authorities. In the facts and

circumstances of the case, we are of the opinion that the question regarding

quantum of addition that can be done u/s. 68 of the Act requires fresh look by

the Assessing Officer. We set aside the orders of the lower authorities and remit

it back to the file of the Assessing Officer for considering the issue afresh in

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accordance with law. Needless to say, assessee has to be given an opportunity

to substantiate its case and furnish evidence in support.

Pronounced in the open court on 16-05-2017.

sd/- sd/- (GEORGE GEORGE K.) ( ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER

Place: Kochi Dated: 16th May, 2017 GJ Copy to: 1. Shri Subash Kizhakkeparambil Chandrasekharan Nair, Kizhekkeparambil House, Park Lane, Kottayam. 2. The Assistant Commissioner of Income-tax, Central Circle-2, Kochi. 3. The Commissioner of Income-tax(Appeals)-IV, Kochi, 4. The Commissioner of Income-tax, Central, Kochi. 5. D.R., I.T.A.T., Cochin Bench, Cochin. 6. Guard File. By Order

(ASSISTANT REGISTRAR) I.T.A.T., Cochin