INCOME TAX OFFICER, WARD-1(3) (4),, SURAT vs. SHRI VIKESH JAYANTILAL MANDVIWALA, SURAT

It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of assessing officer may be restored to the above extent.”

Ground No.1 raised by the Revenue relates to addition of Rs.31.60 lakh in respect of unexplained cash credits.

In response to notice under section 148 of the Act, the assessee submitted before the assessing officer that return of income filed on 03.08.2009, may be treated as return of income filed in pursuance of notice u/s 148 of the Act. The copy of reason recorded was provided to the assessee on 18.08.2015.

Thereafter, during the assessment proceedings, the assessee submitted the details of the cash deposited in bank account as follows: Page | 2

However, the assessing officer rejected the contention of the assessee and held that no evidence of cash sales of colour chemicals, cash sales-Rushabh Textiles and other cash turnover was submitted by the assessee. Therefore, assessing officer considered the cash deposits of Rs.31,60,000/- as unexplained and added to the same to the income of assessee for the year under consideration.

We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Learned DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. On the other hand, ld Counsel for the assessee defended the order passed by the learned CIT(A). We note that assessee had deposited cash of Rs.31,60,000/- in his account in Centurion Bank of Punjab Ltd during the year, therefore the case of the assessee was reopened u/s 147 of the Act. The assessing officer held that assessee could

We note that during the assessment proceedings, it was submitted by the assessee that cash sales of color chemicals of Rs.10,65,845/-; cash sales of Rishabh Textiles of Rs.16,02,560/- and other cash turnover of Rs.7,55,400/- was duly reflected in the return of income. One of the observations of the assessing officer in his reasons recorded was that assessee has not disclosed his bank account in his return of income. However, we note that bank account with the Centurion Bank of Punjab Ltd. is a disclosed bank account which is reflected in the books of account of the assessee and the return of income since its inception. Therefore, the presumption of the assessing officer that bank account was never disclosed, was wrong. In fact, the assessee had deposited cash of Rs.31,60,000/- in his bank account out of his sales receipts of Rs.34,24,805/- during the year and the income was offered for tax under section 44AF of the Act. The turnover of Rs.34,24,805/-is reflected in the return of income filed by the assessee and against the said cash turnover, the assessee deposited cash of Rs.31,60,000/- in his bank account. Therefore, we note that bank account was disclosed in the return of income and the cash deposits was out of the cash sales duly reflected in the return of income and books of account. The assessing officer had not brought out any facts on record to counter the contention of the assessee that the cash sales shown in the return of income is not genuine. It is not a case of undisclosed bank account. Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made by the assessing officer, has been rightly deleted by ld CIT(A).

Ground No.2 raised by the Revenue relates to addition of Rs.1,97,49,999/-.

Brief facts qua the issue are that during the course of assessment proceedings, the Assessing Officer observed that assessee has shown the following outstanding unsecured loans:

In response, the assessee furnished details on 19.10.2015, before the Assessing Officer. Apart from this, it was also submitted before the assessing officer that no unsecured loans were received by the assessee during the year. Besides, assessee also submitted before assessing officer, the Ledger Account of all unsecured loans.

On appeal, ld CIT(A) deleted the addition. Aggrieved by the order of Ld. CIT(A) the Revenue is in appeal before us.

Ms. Anupama Singla, Learned DR for the Revenue pleads that Assessing Officer issued a show cause notice to the assessee on 08.03.2016. The assessee was asked to submit confirmation in respect of all unsecured loan parties, current address of all unsecured loan parties and copies of ROI for AYs 2007-08 and 2008-09 since the loans were old as observed from balance sheet given by the assessee for the A.Y 2007-08. This enquiry was made to ascertain whether the unsecured loan parties reflected in the balance sheet are actually in existence or not. In reply filed by the assessee on 23.03.2016, he simply submitted ledgers in respect of unsecured loan parties therefore, assessee has not proved the creditworthiness and genuineness of these loan parties.

On the other hand, ld Counsel for the assessee submitted that no new loans have been taken by the assessee during the year, therefore, ld CIT(A) has rightly deleted the addition.

We have heard both the parties. We note that these disputed Loan parties are coming in the Balance Sheet, as an opening balance from the previous year. We note that total unsecured loans as per the balance sheet from the four persons was of Rs.2,01,38,294/- and this amount was old loan which was duly reflected in the balance sheet for AY 2007-08 also, and no new loans have been taken by the assessee during the year. The assessing officer Page | 6

In the result, appeal of the Revenue is dismissed and that of assessee’s Cross Objection is dismissed as infructuous.