Mahendra Narayan Raju, Mumbai vs Department Of Income Tax

This appeal by the Revenue is directed against the order passed by CIT(A)-35, Mumbai and it pertains to A.Y. 2009-10.

2. The only ground urged by Revenue reads as under: -

"On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in giving relief on the issue of addition u/s. 68 by restricting the addition to Rs.14,01,847/- out of Rs.30,19,883/- to the assessee without appreciating the fact that it is highly unbelievable that a prudent man will withdraw cash from one account to deposit in another account and when most of the withdrawals are very small to the extent of Rs.500 to few thousand."

3. Facts necessary for disposal of the appeal are stated in brief. Assessee is an individual earning income from three proprietary concerns. For the year under consideration he declared total income of `45,45,189/-. Though the return was originally processed under section 143(1) of the Act it was subsequently taken up for scrutiny. During the course of scrutiny proceedings the AO noticed that the assessee deposited `30,19,883/- in his saving bank account of ICICI bank at Kandivali. The AO called for the details with regard to availability of cash to make the deposit. In response it was 2 ITA No. 5073/Mum/2012 Shri Mahendra Narayan Raju

submitted that cash has been deposited from the cash withdrawn from different bank accounts and cash in hand. The AO disbelieved the version of the assessee on the ground that it was highly unbelievable that a prudent man will withdraw cash from one account to deposit in another account. Accordingly he made an addition of `30,19,883/- under section 68 of the Act.

4. Aggrieved, assessee contended before the CIT(A) that there were several cash withdrawals from other bank accounts which were deposited into ICICI Bank and therefore there is sufficient source to make the deposit. In the alternative it was contended that even on making day to day cash balance analysis there is negative cash balance to the extent of `14,01,847/- on 31.12.2008 and the AO could have, at best, taken the peak credit into consideration even if the main plea is not acceptable. Detailed statement of day to day balance is furnished before the learned CIT(A). Having regard to the circumstances of the case the learned CIT(A) restricted the addition to `14,01,847/- by observing as under: -

"Under the given factual matrix of the case, the appellant's submission can't be accepted fully since there is negative cash balance on many dates, the highest being on 31.12.2008 amounting to Rs.14,01,847/-. The addition made by the A.O. is restricted to the amount of Rs.14,01,847/- and the appellant gets relief of Rs.16,18,036/- since the entire cash deposit can't be added to his income. Therefore, going by the peak credit method, I direct the A.O. to delete the amount of `16,18,036/-."

5. Aggrieved, Revenue is in appeal before us. At the time of hearing the learned Sr. D.R. was mainly trying to read the ground of appeal, probably under the impression that the addition which is under dispute is `30,19,883/-. When it was pointed out to him that the entire addition is not in dispute he was unable to comprehend as to what is the addition which is under dispute. At the outset it may be noticed that in the ground of appeal addition of `14,01,84/- is challenged. The learned Sr. D.R. appears to have not even looked into the typographical mistake and he is blissfully ignorant of the fact that the addition, which was confirmed, was only the peak credit. No material, whatsoever, was placed before us and no argument was forthcoming to show that the view taken by the CIT(A) under the given factual matrix is wrong and contrary to law.

3 ITA No. 5073/Mum/2012 Shri Mahendra Narayan Raju

6. We have considered the rival submissions and carefully perused the record. Having regard to the circumstances of the case we are of the view that the order passed by the learned CIT(A) does not call for any interference.

7. In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 2nd March, 2015.

Sd/- Sd/- (Chandra Poojari) (D. Manmohan) Accountant Member Vice President

Mumbai, Dated: 2nd March, 2015

Copy to:

1. The Appellant 2. The Respondent 3. The CIT(A) - 35, Mumbai 4. The CIT- 25, Mumbai City 5. The DR, "B" Bench, ITAT, Mumbai

By Order

//True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p.