SRI SARAJIT KR BACHAR,SOUTH 24 PARGANAS vs. I.T.O WD - 53(4),KOLKATA., KOLKATA
What did the Tribunal hold?
The Tribunal dismissed the ground related to the negative cash balance as the assessee did not dispute it before the lower authorities. However, for the land investment, the Tribunal found that the AO should have examined the deponents of affidavits filed by relatives, and thus remanded the issue back to the AO.
What were the facts?
The assessee's cash book showed a negative balance, leading to an addition by the AO. The assessee also made an investment in land, and the source of the difference between the total cost and the advance shown was questioned.
What were the issues?
Whether a negative cash balance in the cash book can be added as unexplained cash credit. Whether an addition for undisclosed investment is justified without examining the deponents of affidavits supporting the source of funds.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, BENCH “SMC”, KOLKATA
Before: Hon’ble Shri N.V.Vasudevan, JM ]
This is an appeal by the assessee directed against the order dated 26.12.2012 of CIT(A)-XXXIII, Kolkata relating to A.Y.2005-06.
The assessee has filed revised grounds of appeal and has requested that the said grounds of appeal be adjudicated.
Ground No.1 in the revised grounds of appeal reads as follows :- “1.That Ld. CIT(Appeal) has erred in facts in sustaining the addition of negative cash balance of Rs.5,26,770/- when in fact the cash balance was always positive throughout the year.”
4. The assessee is an individual. He is engaged in the business of trading in sugar. In the course of assessment proceedings on examination of the cash book of the assessee the AO found that there was negative cash balance to the extent of Rs.5,26,770/-. Negative cash balance occurs when as per the cash book the cash Shri Sarajit Kr.Bachar A/.Y.2005-06 1 available is say Rs.100/- but the Assessee has shown withdrawal of say Rs.200/- in the cash book. The sum of Rs.100/- is said to be negative cash balance. AO made addition of the aforesaid sum as unexplained cash credit u/s 68 of the Act.
5. Before the CIT(A) the assessee pleaded that somer dealers used to keep money as advance in order to supply goods which were subsequently adjusted with the goods supplied by the assessee. The assessee explained that such temporary advances were recorded in the cash book. The assessee took another stand that he had taken cash loans from two of his younger brothers and these loans were recorded in the cash book. The CIT(A) called for the remand report from the AO on the new plea raised by the assessee before him. AO vide remand report dated 02.03.2012 pointed out that no evidence regarding temporary loan given either by his two brothers was filed by the assessee in the remand proceedings. In these circumstances, CIT(A) was of the view that the assessee failed to explain cash credit satisfactorily and confirmed the action made by the AO.
Before us the ld. Counsel for the assessee filed a copy of the cash book as was produced before the AO and made a submission that there was no negative balance as mentioned by the AO in the order of the assessment. His limited request was to set aside the issue to the AO for fresh consideration.
The learned DR opposed the prayer of the assessee. According to him the negative cash balance were accepted by the assessee before the AO as well as the CIT(A). He pointed out that the cash book had not been impounded by the AO at the time of assessment proceedings and therefore veracity of cash book now filed before the Tribunal is doubtful.
I have considered the rival submissions and am of the view that the prayer as made by the ld. Counsel for the assessee cannot be accepted. As rightly pointed out by the learned DR., neither before the AO nor before the CIT(A), the assessee took a stand that there was no negative balance in the cash book. It is therefore not proper to Shri Sarajit Kr.Bachar A/.Y.2005-06 2 take cognizance of the cash book now sought to be filed before us. I, therefore, reject the request made on behalf of the assessee and dismiss ground No.1 raised by the assessee as otherwise the conclusions of the CIT(A) are just and proper.
Ground No.2 raised by the assessee reads as follows : “2. That the addition of Rs.3,67,625/- towards undisclosed investment is perverse in the absence of cross examination of affidavits.”
The assessee has purchased a plot of land at Sonarpur at a cost of Rs.6,47,625/- including cost of registration. In the balance sheet of the assessee a sum of Rs.2,80,000/- had been shown as advance for purchase of the plot. The deed was registered on 06.05.2004. AO in the absence of satisfactory explanation with regard to the source of fund for making investments to the extent of Rs.3,67,625/- (Rs.6,47,625 – 2,80,000) treated the said sum as unexplained investment.
Before the CIT(A) the assessee submitted that contributions were made by other members of the family and that was the source for purchase of the property. The affidavits of the family were filed before CIT(A). CIT(A) called for a remand report from the AO and the AO in the remand report submitted that the affidavit was being filed after a lapse of time and it cannot be accepted. CIT(A) accepted the remand report of the AO and confirmed the addition made by the AO.
I have considered the rival submissions and am of the view that in the light of the affidavits filed by the relatives of the assesse, the AO ought to have examined them before coming to a conclusion about the truth or otherwise of the stand taken by them. Without examination of these persons it is not possible to come to a conclusion that they do not have source of funds for making such contribution. I, therefore set aside the order on this issue and remand the issue to the AO for fresh consideration. The AO will carry out examination of the deponent of the affidavits and thereafter decide the issue in accordance with law after affording opportunity of being heard to the Assessee. Consequently ground no.2 of the assessee is treated as allowed for statistical purposes. Shri Sarajit Kr.Bachar A/.Y.2005-06 3
In the result the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the court on 09.12.2015.
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