Santhosh Devi, vs Assessee

Smt.Santosh Devi, Prop. Nilex Tex, No.5/4, 1st floor, T.N.Shetty Lane, Chickpet, Petitioner/ Bangalore-560053. ... Appellant PAN: ACLPD 5955 E

Vs.

Income-tax Officer, Ward 5(3), Bangalore. ... Respondent

Assessee by: Shri H.V.Gowthama, CA. Revenue by: Dr.K.Shankar Prasad, JCIT(DR)

Date of hearing : 09/02/2015 Date of pronouncement: 20/02/2015

Per Smt. P.MADHAVI DEVI, JM:

This is an appeal filed by the assessee against the order of

the CIT(A)-II, Bangalore, dated 10/4/2013 confirming the

addition made by the Assessing Officer (AO) u/s 69 of the SP No.118 & ITA No.946/Bang/2013 Smt. Santosh Devi.

Page 2 of 7 Income-tax Act, 1961 [hereinafter referred to as 'the Act' for

short] of a sum of Rs.55,66,900/- for the assessment year 2009-

10.

2. Brief facts of the case are that the assessee, an

individual, deals in textiles. She filed her return of income for

the assessment year 2009-10 on 29/09/2009 declaring a total

income of Rs.2,25,480/- which includes business income and also

income from other sources. During the assessment proceedings

u/s 143(3) of the Act, the AO observed that as per AIR

information, there were cash deposits into the joint bank account

of the assessee and her husband with Standard Chartered Bank,

Cunningham Road, Bangalore, to the tune of Rs.55,01,900/- and

in the Standard Chartered Bank, Main Road Branch, to the extent

of Rs.65,000/-. The assessee was furnished with a copy of the

AIR information and was asked to furnish a copy of the said bank

account and sources for cash deposits. The Authorized

Representative of the assessee filed a copy of the bank

statement of the joint account of the assessee and her husband

late Jethmal Jain in Standard Chartered Bank where total cash

deposit to the extent of Rs.55,01,900/- was made. An affidavit

of the assessee conceding that she is not aware of the

transaction through this account was also filed and it was stated

therein that her name was included by her husband for

convenience sake only and that her husband was looking after

the business and that he passed away on 9/3/2010 and therefore SP No.118 & ITA No.946/Bang/2013 Smt. Santosh Devi.

Page 3 of 7 she is not able to produce the details about the nature of the

deposit. The AO was not convinced with the contentions of the

assessee and held that the assessee has failed to avail the

opportunity afforded to offer a satisfactory explanation for the

cash deposits. He, therefore, treated the deposits as

unexplained cash deposits and brought it to tax.

3. Aggrieved, the assessee preferred an appeal before the

CIT(A) reiterating the submissions made before the AO and has

also filed detailed written submissions stating that the assessee's

husband was doing finance business mainly relating to short-

term financing to various textiles business persons located in

Chickpet, Bangalore and therefore cash given by various textile

customers was being deposited in the bank account for getting

supplies through textile mills located in Gujarat. It was stated

that the orders for textiles were being placed by assessee's

husband for various small customers in Chickpet and once

material was received from textile mills in Gujarat, the same was

being supplied to small customers who would pay cash against

delivery of materials which were being deposited by the

assessee's husband into the Standard Chartered Bank and the

same was also being transferred to various mills through the

bank clearing. A copy of the bank account was filed before the

CIT(A) in proof of transfer of cash deposits to the mills. It was

further stated that the assessee's husband was getting

commission for such transfer which was being offered by him to SP No.118 & ITA No.946/Bang/2013 Smt. Santosh Devi.

Page 4 of 7 income-tax department under PAN AAAHJ9946G and that due to

his death on 9/3/2010, the assessee was not in a position to give

any details to the AO or the CIT(A) but is in a position to file

confirmation letters that the assessee's husband was in

commission business. The CIT(A) called for a remand report

from the AO and in the remand report, the AO stated that the

present transaction through both joint account and current

account in the Standard Chartered Bank undoubtedly prove that

the assessee had carried out retail textile business through these

two accounts which has not passed through her audited

accounts. As regards the cash deposits and cheque transfers

from the joint account to the textile mills is concerned, the AO

observed that the total amount transferred to the mills is to the

tune of Rs.11,75,000/-. He observed that in further investigation,

a copy of the bank statement account for the period from

1/4/2008 to 31/3/2009 was obtained from the Standard

Chartered Bank which shows similar transactions of cash deposits

and subsequent cheques issued to a number of textile business

entities. The AO, therefore, held that the business of the

assessee through the said two bank accounts has escaped the

ambit of taxation and has to be brought to tax. The CIT(A), after

considering the assessee's submissions and the AO's remand

report, held that the assessee herself had done independent

business through her own bank account as well as through the

joint bank accounts of herself and her husband and that the SP No.118 & ITA No.946/Bang/2013 Smt. Santosh Devi.

Page 5 of 7 belated filing of return of income in the case of the assessee's

husband Shri Jetmal Lalchand in the status of HUF after

completion of the scrutiny assessment, betrays the mala fide

intention to establish independent retail textile

business/commission business carried on by the assessee.

Therefore, the CIT(A) held that though benefit has to be granted

for purchases, it cannot be denied that this account has not been

disclosed in the assessee's books of account. Therefore, she

confirmed the addition made by the AO. Aggrieved, the assessee

is in second appeal before us.

4. In addition to the written submissions filed by the

assessee, the assessee has filed additional evidence before us in

the form of confirmation letters from various parties stating that

they have paid cash to M/s.Nilesh Textiles for purchase of textiles

from the assessee. The learned counsel for the assessee, while

reiterating the submissions made before the authorities below,

stated that the assessee, being only a namesake proprietrix of

M/s.Nilesh Textiles, was not aware of transactions of business

and that it was the assessee's husband who was looking after the

entire business and on his sudden demise on 9/3/2010, the

assessee is not in a position to produce all relevant evidence in

support of her claim. He prayed that the additional evidence filed

by the assessee before the Tribunal may be admitted and

remanded to the file of the AO to enable him to make enquiries

as regards purchases made from the assessee and the cash SP No.118 & ITA No.946/Bang/2013 Smt. Santosh Devi.

Page 6 of 7 deposit into the assessee's bank account with Standard

Chartered Bank for the same.

The learned Departmental Representative, however,

opposed the admission of additional evidence and submitted that

the purchase and sales were not reflected in the assessee's books

of account and therefore the documents filed before us are not

verifiable.

5. Having regard to the rival contentions and the material

on record, we find that there were cash deposits into the joint

bank account of the assessee and her husband and also her

individual account. From the remand report of the AO, it is also

clear that subsequent to the cash deposit, there were cheque

payments to various textile mills invariably and it is to the tune

of Rs.11,50,000/-. The account being the joint account of the

assessee with her husband, it cannot be presumed that the entire

deposits are the income of the assessee alone. The assessee's

contention that the assessee's husband was doing business and

was lending money to textile business persons in Chickpet in

Bangalore also has not been verified by the authorities below.

Though no books of account are being maintained by the

assessee to enable the AO to verify the evidence filed by the

assessee before us, we find that at least credit should be given

with regard to cheque payments made to various textile mills in

Gujarat out of the very same deposits. Therefore, we refuse to

admit the additional evidence filed by the assessee and direct the SP No.118 & ITA No.946/Bang/2013 Smt. Santosh Devi.

Page 7 of 7 AO to allow the sum of Rs.11,50,000/- as the business

expenditure and to treat only the balance as undisclosed income

of the assessee.

6. In the result, the assessee's appeal is partly allowed.

7. In view of the disposal of the appeal itself, the stay

petition filed by the assessee becomes infructuous and is

accordingly dismissed.

Pronounced in the open court on 20th of February, 2015.

sd/- sd/- (Abraham P George) (Smt. P.Madhavi Devi) ACCOUNTANT MEMBER JUDICIAL MEMBER eksrinivasulu

Copy to:

1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file

By order

Assistant Registrar Income-tax Appellate Tribunal Bangalore