Rajeev Khurana , New Delhi vs Assessee

Rajeev Khurana, Vs. Income Tax Officer, B-1/499, Janak Puri, Ward -33(3), New Delhi New Delhi (PAN:AAIPK0033B) (Appellant) (Respondent)

Appellant by : Sh. Dinesh Chandra Agarwal, CA Respondent by : Sh. Vikram Sahay, Sr. DR

Date of hearing: 26.03.2015 Date of pronouncement: 27 .03.02015

ORDER

PER R.S. SYAL, A.M.:

This appeal by the assessee arises out of the order passed by the CIT(A)

on 28.02.2013 in relation to the assessment year 2009-10.

2. The only issue raised in this appeal is against the confirmation of addition

of Rs. 45,50,775/- towards unexplained cash deposits in bank, as income from

undisclosed sources.

3. Briefly stated the facts of the case are that the Assessing Officer found

during the course of assessment proceedings that the assessee had deposited a

sum of Rs. 34,65,775/- in ICICI Bank Ltd. and Rs. 10,85,000/- in HDFC Bank

Ltd. Since the assessee did not participate in the assessment proceedings, the

assessment was finalized under Section 144 of the Income-tax Act, 1961 (for 2 ITA No. 2906/Del /2013 AY: 2009-10

short "the Act") making addition, inter alia, for a sum of Rs. 45,50,775/-. The

learned CIT(A) required the Assessing Officer to submit remand report on the

additional evidence filed by the assessee during the course of the first appellate

proceedings. After considering the relevant facts, remand report and assessee's

rejoinder, he sustained the addition of Rs. 45,50,775/-. The assessee is aggrieved

against the sustenance of this addition.

4. We have heard the rival submissions and perused the relevant material on

record. The only dispute in this appeal is against the addition made by the

Assessing Officer towards certain deposits made in two bank accounts

maintained by the assessee, totaling Rs. 45.50 lakhs. The assessee furnished

cash flow statement before the learned CIT(A) by contending that the

withdrawals from these bank accounts constituted the source of deposits therein.

We have seen a copy of the bank account maintained by the assessee with ICICI

Bank Ltd., from which it is apparent that there are several items of deposits and

withdrawals. The Assessing Officer has simply picked up the deposit side of the

pass-book and made the addition for all the deposits made in the bank accounts,

ignoring that there are several withdrawals also. This course of action adopted

by the Assessing Officer in making the addition for all the deposit entries in the

bank accounts, has no sanction of law. If there are certain deposits and

withdrawals as well and there is nothing in the assessment order to co-relate

these withdrawals with any investments made by the assessee, the presumption 3 ITA No. 2906/Del /2013 AY: 2009-10

is that such withdrawals were utilized for making deposits. In such

circumstances, the making of addition to the extent of peak credit is a more

rational way rather than all the deposit entries. We, therefore, set aside the

impugned order on this score and send the matter to the file of Assessing Officer

for making an addition for an amount equal to peak balance in these bank

accounts. Needless to say, the assessee will be allowed a reasonable opportunity

of being heard in such fresh proceedings.

5. In the result, the appeal of the assessee is allowed for statistical purposes.

The decision is pronounced in the open court on 27th March, 2015.

Sd/- Sd/- (A.T. Varkey) (R.S. Syal ) Judicial Member Accountant Member Dated: 27th March, 2015. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi