Kanwal Aggarwal, New Delhi vs Department Of Income Tax

This is an appeal filed by Revenue against the order of Ld. CIT(A) dated 20.09.2013. The Revenue has taken 4 grounds of appeal. However, the crux of grievance of the revenue is the action of Ld. CIT(A) by which he had deleted the addition of Rs.18 lacs which was made by A.O. on account of deposits by assessee in her bank account.

2. The brief facts of the case are that the assessee is a partner in the firm namely S P Aggarwal Dental and Ortho. and is engaged in the profession of providing dental services. During the year under consideration, the assessee declared her remuneration from the firm as her income besides interest and rental income. During assessment proceedings, the A.O. observed that on 2 ITA No.6210/Del/2013

various dates, the assessee had deposited cash in her bank account amounting to Rs.18.08 lacs. The assessee was show caused to explain the source of deposits of cash. She explained that as on 31.03.2009 she had cash balance of Rs.17,46,113/- in hand and had also earned rental income of Rs.1,08,000/- during the year. However A.O. did not accept the contention of assessee as the assessee failed to produce books of accounts maintained by assessee. She submitted that she was not in a position to submit books of accounts as her accounting records were maintained by C.A. and due to some dispute, he was not handing over the required books of accounts. Therefore, the A.O. made the addition of Rs.18 lacs as her explanation was unsubstantiated.

3. Aggrieved, the assessee filed appeal before Ld. CIT(A) and reiterated her contention that in the earlier year, she was practicing as individual and her books of accounts were audited u/s 44AD and the balance sheet contained Rs.17,46,113/- as closing balance of cash in hand as on 31.03.2009. Assessee further submitted that Rs.1.08 lacs was deposited in her bank account out of rental income. Ld. CIT(A) deleted the addition by holding as under:

"5.1 I have carefully considered the assessment order and submissions thereof. The facts of the case as per assessment order are that the assessee had deposited cash amounting to RS.18,08,000/- in the bank. The A.R. of the assessee was unable to explain the source of cash deposited in the bank account. It was simply claimed that the cash was deposited out of opening cash in hand available with the assessee, but the assessee failed to produce relevant records i.e. supporting ledger/register or form 3C. The Assessing Officer treated the amount as unexplained deposit and added it under section 68 of the Act. the preceding previous year, has not been questioned by the department. As per the audit report there is closing cash in hand of Rs.17 ,46,113/-. There is nothing on 3 ITA No.6210/Del/2013

record to show that this cash has been utilized in any other activity. Further the appellant has also shown Rs.1,08,000/- as rental income in her return. Keeping in view these two sources, the vailability of cash of RS.18,00,000/- in her hands cannot be doubted. In case the Assessing Officer is not convinced about the availability of closing cash in hand, as on 31.03.2009, appropriate action may be taken in the relevant year. The addition is deleted.

4. Aggrieved, the Revenue is in appeal before us. At the outset, Ld. D.R. submitted that Ld. CIT(A) has accepted the contention of assessee without verifying the books of accounts of assessee and simply on the basis of audited accounts accepted the plea of assessee regarding cash in hand.

5. Ld. A.R. on the other hand submitted that assessee was practicing in her individual name for the year ended 31.03.2009 and her books of accounts were also audited and copy of audit report along with copy of balance sheet was filed with the A.O. as well as Ld. CIT(A). He submitted that in the balance sheet as on 31.03.2009, there was closing balance of cash in hand at Rs.17,46,113/-. In support of his contentions he filed copy of balance sheet along with P & L account and audit report and on the basis of these documents he submitted that there was cash balance in hand and argued that source of deposits in the bank account was totally explained

6. We have heard rival parties and have gone through the material placed on record. We find that the assessee in the earlier year was practicing as dental surgeon in her individual capacity. A copy of balance sheet filed by Ld. A.R. clearly shows cash in hand of Rs.17,46,113/-. During earlier year the assessee had also shown a profit of Rs.13,94,113/- which is apparent form income and expenditure account as on 31.03.2009. The A.O. without referring to earlier year income tax return, made addition, which Ld. CIT(A) has rightly deleted as the deposits of cash in the year under consideration is 4 ITA No.6210/Del/2013

duly explained by opening balance of cash in hand as on 01.04.2009. Further, the assessee had declared rental income of Rs.1,08,000/-. The income declared by assessee in earlier year amounting to Rs.13,94,113/- is enough to justify cash in hand as on 31.03.2009. Therefore, we do not find any infirmity in the order of Ld. CIT(A). Therefore, appeal filed by revenue is dismissed.

7. In view of above, appeal filed by revenue is dismissed.

8. Order pronounced in the open court on 13th May, 2015.

Sd./- Sd./- ( G. C. GUPTA) (T.S. KAPOOR) VICE PRESIDENT ACCOUNTANT MEMBER Date: 13.05.2015 Sp Copy forwarded to:- 1. The appellant 2. The respondent 3. The CIT 4. The CIT (A)-, New Delhi.

5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi. True copy.

By Order (ITAT, New Delhi).

S.No. Details Date Initials Designation 1 Draft dictated on 11/5 Sr. PS/PS 2 Draft placed before author 11/5 Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS 13/5/15 Sr. PS/PS 6 Kept for pronouncement 13/5 Sr. PS/PS 7 File sent to Bench Clerk 13/5 Sr. PS/PS Date on which the file goes to Head 8 Clerk 9 Date on which file goes to A.R. 10 Date of Dispatch of order