MAYUR JAIN ,NAGPUR vs. INCOME TAX OFFICER WARD 4(2), NAGPUR

This appeal by the assessee against the order dated 19-06-2020 passed by the Commissioner of Income Tax (Appeals)-1, Nagpur [‘CIT(A)’] for assessment year 2010-11.

The assessee raised ground Nos. 1 and 2 amongst which the only issue emanates for my consideration is as to whether the CIT(A) is justified in confirming the addition to an extent of Rs.5,50,000/- in the facts and circumstances of the case.

Heard both the parties and perused the material available on record. I note that the assessee is an individual derives income on commission on transactions of exchange of soil and mutilated notes by depositing into Reserve Bank of India and ICICI Bank. The AO noted in his order that the assessee has three bank accounts in State Bank of India, Punjab National Bank and ICICI Bank. The AO found that the assessee had cash deposits in ICICI Bank to an extent of Rs.18,55,000/-. It was explained that no records are required to be maintained for soil mutilated transactions and requested the AO enquire from ICICI bank for such transactions. In pursuance of the same, the AO issued notice u/s. 136 of the Act to the ICICI bank and in response to the said bank informed the AO, that there was no deposit of soil notes during the year under consideration and the cash deposit to an extent of Rs.18,55,000/- is general cash deposit. Having no evidences contrary to the information given by the ICICI bank, the AO added entire amount of Rs.18,55,000/- to the total income of the assessee. I note that the CIT(A) held the action of AO in adding entire cash deposits of the total income of the assessee is not justified, but however, taking into consideration the summary of credit entries in respect of cash transactions of bank statement, the details of which reproduced by the CIT(A) at pages 13 and 14 in the impugned order and confirmed to the extent of peak cash deposit of RS.5,50,000/-. The only contention raised by the ld. AR that the peak cash deposit as confirmed by the CIT(A) is incorrect as the closing balance on 20-08-2009 was only Rs.1,50,000/-. He argued that the order of CIT(A) is not justified in taking Rs.5,50,000/- as peak credit as on 20-08-2009 and it should be Rs.1,50,000/- and drew my attention to the page 33 of the paper book. I find that the bank statement of assessee from 02-04-2009 to 18-02-2011 is placed at pages 33 and 34 of the paper book and the closing balance on 20-08-2009 is Rs.1,70,257/-. The ld. DR did not dispute the closing balance as on 20- 08-2009 was Rs.1,70,257/- but however relied on the order of CIT(A). Therefore, taking into consideration the submissions of ld. AR and ld. DR and facts covering the issue emanating from the record including the bank statement at pages 33 and 34, I hold that the order of CIT(A) is not justified in confirming the addition to an extent of Rs.5,50,000/- on account of peak credit balance but it is modified to an extent of Rs.1,70,257/-. Accordingly, the addition of Rs.1,70,257/- is confirmed. Thus, ground Nos. 1 and 2 raised by the assessee are allowed.

In the result, the appeal of assessee is allowed.