Hemant P. Zirpe, Mumbai vs Assessee

/Assessee by : Dr. P.Daniel /Revenue by : Shri Jeetendra Kumar

Date of Hearing : 4th February, 2015 Date of Pronouncement 25th February,2015

ORDER

PER R.C.SHARMA (A.M):

The assessee has filed this appeal against the order of CIT(A),

dated 1-2-2013 for the assessment year 2008-09, in the matter of order

passed u/s.143(3) of the Act, wherein following grounds have been taken:

"1. NATURAL JUSTICE

The Learned Commissioner of Income-tax (Appeals)-26, Mumbai, (ld. CIT (A) erred in verifying all the fact of the case while framing the appellate order.

It is submitted that, in the facts and the circumstances of the case, and in law, the appellate order so framed be held as bad and illegal, as

(i) The same is framed in breach of the principles of natural justice;

and 2 ITA No.3835/13

(ii) The same is passed without application of mind to the facts and the submissions brought on record by the Appellant.

WITHOUT PREJUDICE TO THE ABOVE

2.1 The ld. CIT (A) erred in confirming the action of the A.O. in making addition of Rs. 13,28,700/- to the income of the Appellant u/s. 68 of the Income - tax Act, 1961["Act"], on the ground of alleged unexplained cash deposits in the bank account of the Appellant.

2.2 While doing so, the ld. CIT (A) erred in:

(i) Basing his action only on surmises, suspicion and conjecture;

(ii) Taking into account irrelevant and extraneous considerations; and

(iii) Ignoring relevant material and considerations as submitted by the Appellant.

2.3 It is submitted that in the facts and the circumstances of the case, and in law, no such Addition was called for.

2.4 Without prejudice to the above, assuming -but not admitting that any disallowance was called for, it is submitted that the computation of the addition made by the AO is arbitrary, excessive and not in accordance with the law."

2. The assessee has also filed addition ground during the course of

hearing, which reads as under :-

"It is submitted that in this case there is an important evidence in the form of Bank Statement which is very critical for hearing of this appeal. Because, the additions made by the A.O. are of Cash Deposits in the in the Bank account. On going through the Bank Statement it is seen that this Bank account is in the Joint names of S/Shri. Shetty Anil and Zirpe Hemant and the first name of the Bank account is Shri Anil Shetty. As the Assessing Officer did not verify this aspect it requires to be looked into. In view of this fact, it is prayed that this additional evidence may kindly be admitted and looked into and obliged."

3. We have considered rival contentions and found that the assessee

has not shown his savings bank account with Parshwanath Coop. Bank

Ltd. Kolhapur, Vashi Branch in his balance sheet filed along with return of 3 ITA No.3835/13 income. Accordingly, he was required to explain the source of the cash

deposit of Rs.13,28,700/- in the said account. However, before the A.O.

neither the assessee attended nor any explanation was filed with respect

of the said deposits. The A.O., therefore, treated the said cash deposits of

Rs.13,28,700/- as unexplained income u/s.68 of the I.T.Act and added to

the total income.

4. By the impugned order, the CIT(A) confirmed the action of the AO

after having the following observations :-

"3.2 I have carefully considered the findings of the A.O in the assessment order as well as the submission of the appellant. After considering the rival submission, it is noted that the assessee, neither at the time of assessment nor at the time of appeal proceedings could file any convincing documentary evidence or explanation as to why he has not disclosed the said bank account in the books of accounts and the balance sheet. Further, the appellant's submission that the cash withdrawals were again redeposited, is also not convincing. The appellant has not explained the circumstances as to why he has made repetitive withdrawals just re redeposit the same cash in his bank account. Under these circumstances, the appellant cannot be given benefit of such withdrawals which may be for personal purposes. Accordingly, the finding of the AO that entire cash deposits are unexplained appears correct, hence the addition made by the AO is confirmed."

Against the above order of CIT(A), the assessee is in further appeal

before us.

5. It was contended by ld. AR that additional evidence in the form of

bank statement be accepted which is very critical for deciding the issue

under appeal. Ld. AR further drew our attention to the fact that this bank

account was in the joint name of Shri Shetty Anil and Zirpe Hemant. As

per ld. AR half of the deposit in the said bank account was by other joint

holder of the bank account. He further submitted that after excluding the 4 ITA No.3835/13 50% deposit by the joint holder of bank account, the peak credit

appearing in the bank account should only be considered for making the

addition.

6. On the other hand, ld. DR contended that only during the course of

scrutiny assessment it was found that assessee has deposited huge cash

in the Parshwanath Cop. Bank Limited, in spite of repeated opportunity

assessee has not explained the source of such deposit in the bank

account, therefore, the AO was justified in making the addition in respect

of entire cash deposit in the said bank account.

7. We have considered rival contentions, carefully gone through the

orders of the authorities below and found from the record that during the

course of scrutiny assessment assessee was asked regarding deposit of

cash in the bank account but the assessee failed to explain the source of

deposit before the AO. Before the CIT(A) assessee contended that

besides the cash deposit, there were withdrawals of cash of Rs.7,68,000/-

in the said bank account, which were utilized for re-depositing in the very

same bank account, therefore, only peak credit should be added in the

income of the assessee. However, the CIT(A) did not accept assessee's

contention and confirmed the action of the AO.

8. We found that cash has been deposited in the various bank

account, however, prior to deposit of the cash, there were withdrawals

from the very same bank account. Therefore, any addition if required to

be made should be restricted to the peak credit in the said bank account,

unless the AO had any materials in his possession to the effect that cash 5 ITA No.3835/13 withdrawn had been used by assessee for any other purposes.

Accordingly, we restore the matter back to the file of AO for working out

the peak credit balance in the bank account for making the addition.

Additional evidence was submitted by the ld. AR to the effect that the

bank account was jointly owned by two persons, therefore, the amount

deposited by other persons should not be added in assessee's income.

The fact that account was jointly owned by assessee and one more

person related to him was not explained before the AO. We, therefore,

direct the assessee to explain any deposit by other person and if the AO

satisfies that some of the deposit in the said bank account was done by

other person, the same is to be excluded before working out the peak

credit. We direct accordingly.

9. In the result, appeal of the assessee is allowed in part for statistical purposes.

Order pronounced in the open court on this 25/02/2015.

Sd/- Sd/- ( ) ( ) (I. P. BANSAL) (R.C.SHARMA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER Mumbai; Dated 25/02/2015 /pkm, PS Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent. / BY ORDER, 3. / The CIT(A), Mumbai. 4. / CIT 5. / DR, ITAT, Mumbai (Asstt. Registrar) 6. Guard file. / ITAT, Mumbai //True Copy//