Sh. Satish Kapoor, Ambala City vs Assessee

Shri Satish Kapoor, Vs. The I TO C/o M/s Sohan Lal Bharat Bhushan Ward 1 Aggarsain Chowk, Ambala Ambala City

PAN No. ACFPK1316G

(Appellant) (Respondent)

Appellant By : Shri Tej Mohan Singh Respondent By : Shri S.K. Mittal

Date of hearing : 07/07/2015 Date of Pronouncement: 09/07/2015

ORDER

PER H.L.KARWA, VP

This appeal filed by the assessee is directed against the order of CIT(A), Panchkula, dt. 02/04/2013 relating to Assessment Year 2008-09.

2. Ground No. 1 of the appeal reads as under:

1. Th at t h e L d. C o m mi ssi on er of In c o m e Ta x ( Ap p eal s ) h a s err ed i n up h ol di n g t h e addi ti on of R s. 6, 0 0, 00 0 an d Rs .

2, 50, 00 0 /- m ade on acc o un t of al l e ged un exp l ai n e d dep o si t s i n b an k acco un t s i n ut t er di sr ega rd of t h e exp l a n at i on s ren d er ed d u ri n g t h e co u rs e of b ot h a s se s sm en t an d a p p el l at e p ro ce edi n gs wh i ch i s a rb i t ra r y an d un j u st i f i ed.

3. Briefly stated the facts of the case are that the assessee is an individual and filed his return of income at Rs. 1,25,084/-. The return was processed u/s 143(1)(a) of the Income Tax Act, 1961 (in short " the Act"). Subsequently, the case was selected for scrutiny and notices u/s 143(2) and 142(1) were issued to 2

the assessee. The assessee did not maintain any books of account and his bank pass book was checked by the AO.

4. During the course of assessment proceeding, the assessee submitted copy of his bank account number 120201000048181 with the Centurion Bank of Punjab (in short "CBOP") for the financial year 2007-08. The aggregate of deposits in the said bank account was at Rs. 22,18,139/-. The AO asked the assessee to explain the source of these deposits. In this regard, the assessee submitted that a personal loan of Rs. 7.29 lacs was raised from Kotak Mahindra Prime, out of which the sum of Rs. 7,27,850/- was credited in his bank account on 29/05/2007 after deducting the sum of Rs. 1150/- there from on account of brokerage. It was also explained that deposits of Rs. 10,000/- on 13/04/2007 and 08/05/2007 are on account of transfer from M/s Sohan Sarees, Ambala City. As regards the other deposits, it was stated that these deposits are out of cash withdrawals from the said bank account itself. It was also explained that the peak amount of the deposits of Rs. 14,50,000/- in the said bank account during the year was only Rs. 7,27,850/- and the assessee intended to make investments in some property, but could not find suitable property and ultimately the loan was paid back. The AO did not agree with the explanation of the assessee and he added the sum of Rs. 6,00,000/- , observing as under:

3." The above explanation tendered by the assessee is not found to be in conformity with the trend of the entries in the assessee's bank account.

After credit of Rs. 7,27,850/- on 29.5.2007, the assessee withdrew Rs. 2,00,000/- on 30.05.2007 and Rs. 4,00,000/- on 11,06,2007. And, first cash deposit of Rs. 6,00,000/- has been made on 20.7.2007. Had the assessee some balance with him out of withdrawal of Rs. 2,00,000/- made on 30.05.2007, further withdrawal of Rs. 4,00,000/- would have hardly required. And, had the assessee some balance out of the second withdrawal of Rs. 4,00,000/- made on 11.06.2007, he would not have to make further small payments from the bank account before the deposit of Rs. 6,00,000/-. The assessee could not correlate the deposits stated to have been made from the withdrawals with any documentary or other evidence, except simply stating so. Therefore, I hold that the sum of Rs. 6,00,000/- deposited on 20.07.2007 is not from the withdrawals of Rs. 2,00,000/- & 4,00,000/- made on 30.05.2007 & 11.06.2007 respectively. Therefore, the sum of Rs. 6,00,000/- deposited on 20.072007 is added to the assessee's total income treating it to be his income from undisclosed sources.

The AO further added a sum of Rs. 2,50,000/- as per para 5 of the Assessment Order which reads as under:

" 5. Then after, the assessee has made following deposits which too are treated to be assessee's income from undisclosed source for the reason similar to those discussed in Para 3 above:

3 Date Amount(Rs) 15.10.2007 10,000 10.11.2007 50,000 24.12.2007 50,000 04.01.2008 50,000 18.02.2008 40,000 03.03.2008 50,000 Total 2,50,000

Acc o rdi n gl y, an ad di ti on of R s. 2, 50, 0 00 /- i s m ad e t o t h e a s se s see ' s t ot al i n co m e on t h i s c o un t .

5. On appeal the Ld. CIT(A) confirmed both the additions, and hence the assesee is in appeal before the Tribunal.

6. I have heard Ld. Counsel for the assessee and Ld. DR at length. At the very outset Ld. Counsel for the assessee invited my attention to the copy of bank statement ( Page 4.6 of assessee's Paper Book) of CBOP Ltd. and submitted that the deposit of Rs. 6,00,000/- on 20/07/2007 was made from the withdrawals of Rs. 2,00,000/- on 30/05/2007 and Rs. 4,00,000/- on 11/06/2007 i.e. just within one & half month before the date of deposit. The Ld. Counsel for the assessee submitted that similarly the deposit of Rs. 2.50 lacs made on different dates were out of the cash withdrawals of Rs. 5.50 lacs made as under:

Date Amount 05/09/2007 2,00,000/- 12/09/2007 2,00,000/- 28/09/2007 1,50,000/-

Cash withdrawals of Rs. 5.50 lacs were made with in few months before the date of deposits in the month of October, November, December, January, February and March 2007. The Ld. Counsel for the assessee submitted that the withdrawals from the bank account were made since the assessee intended to make investments in some property, but could not find suitable property and ultimately the personal loan taken from Kotak Mahindra Prime was returned. It is also stated that the peak amount of the deposit made with CBOP, admittedly amounts to Rs. 7,27,850/- which is only the loan amount raised from Kotak Mahindra Prime.

7. In the instant case, the AO has duly accepted the personal loan taken vide cheque from Kotak Mahindra Prime, deposited in CBOP. The AO has also 4

accepted the cash withdrawals made by the assessee from the aforesaid bank. However, the AO has not accepted the part of the deposits in the aforesaid bank without bringing any cogent evidence on record, which is not in accordance with law. The AO has not brought any material on record to show that the amounts withdrawn by the assessee were invested in any other assets. It is also relevant to observe here that there is hardly one & half month time gap between the withdrawal of the amount and the amount deposited in the bank account. I am fully in agreement with this submission of Ld. Counsel for the assessee that the AO has no evidence either oral or documentary to show that the withdrawals made were invested elsewhere and therefore, no addition could be made on suspicion. It appears that the Ld. CIT(A) has also not correctly appreciated the explanation of the assessee regarding deposits and withdrawals appearing in bank account. In my opinion the Ld. CIT(A) has confirmed the addition without assigning any cogent reasons. Thus, keeping in view the entire facts and circumstances of the present case, I am of the opinion that the addition of Rs. 6,00,000/- and Rs. 2,50,000/- made on account of alleged unexplained deposits in bank account deserves to be deleted. Accordingly, both the additions are deleted.

8. Ground No. 2 of the appeal is general in nature, and hence no findings are required to be given.

9. Ground No. 3 reads as under:

3." That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the charging of interest levied under section 234A, 234B and 234C of the Act which is not chargeable in the facts of the case while interest under section 244A has been wrongly withdrawn which is arbitrary and unjustified

At the time of hearing of the appeal, both the parties agreed that this ground of appeal is consequential in nature and I hold accordingly.

10. In the resul t, appeal of the assessee is allowed.

Order Pronounced in the Open Court on 09/07/2015

Sd/-

(H.L.KARWA) VICE PRESIDENT Dated : 09/07/2015 AG Copy to:1. The Appellant,2. The Respondent,3.The CIT, 4.The CIT(A),5. The Ld. DR