Rajesh Singh A. Rajput Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad deleted the addition towards unexplained cash credit as AO failed to conduct independent inquiry and addition was made merely for the reason that there was minor difference in amount of cash deposited vis-à-vis amount of demand draft and amount of invoice.
Facts- The assessee is an individual and deriving income from salary. The assessee in the return filed u/s. 139 of the Act declared income at Rs. 1.76 lakh only which was subsequently selected for scrutiny under CASS. The AO during the assessment proceeding noticed that the saving bank account of the assessee held with Axis bank has been credited by an amount aggregating to Rs. 52,39,433/- only in the form of cash and cheque deposits. The assessee was asked to furnish the nature and sources of credit in bank account, but assessee failed to make any reply. Thus, the AO in absence of the reply from the assessee treated the entire deposit of Rs. 52,39,433/- as unexplained cash credit and added the same to the total income of the assessee.
CIT(A) confirmed the addition made by AO. Being aggrieved, the present appeal is filed.
Conclusion- The AO and the CIT(A) rejected the claim of the assessee without making any independent inquiry or bringing contrary material merely for the reason that there were minor differences in amount of cash deposited viz-a-viz amount of demand draft and the amount of invoices. Thus, held that the approach of the revenue for rejecting the explanation of the assessee merely for minor difference in the invoice amount and demand draft viz-a-viz cash deposit is not justified.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned two appeals have been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-7, Ahmedabad, arising in the matter of assessment order passed under s.144 and penalty order passed u/s. 271(1)(c) of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Year 2011-2012.
2. The assessee has raised following grounds of appeal:
1.1 The order passed u/s.250 on 10.11.2016 for A.Y. 2011-12 by CIT(A)-7, Abad upholding the addition of Rs.52,39,433/- to wares credits in bank account as unexplained is wholly illegal, unlawful and against the principles of natural justice.
1.2 The Ld.CIT(A), has grievously erred in law and on on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned addition. The Ld.CIT(A) ought to have pointed out and discussed the reasons as advanced for confirming the addition before passing the impugned order.
2.1 The Ld.CIT(A) has grievously erred in law and on facts in confirming the addition towards aggregate credits, cash or otherwise of Rs.52,39,433/-in bank account with Axis Bank as unexplained.
2.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld the the addition towards aggregate credits, cash or otherwise of Rs.52,39,433/- in bank account with Axis Bank as unexplained.
3.1 The Ld.CIT(A) has failed to appreciate that the impugned addition of Rs.52,39,433/- included explained credits such as Rs.3,18,823/- in respect of salary, Rs.1610/- interest and Rs.51,000/- being refund from Max New York Life Insurance Co. etc. so that it amounted to double addition in respect of such credits. The CIT(A) has failed to appreciate the cash deposits in said bank account was only to the extent of Rs.30,34,000/-.
3.2 The Ld.CIT(A) has failed to appreciate that the appellant had fully discharged the burden cast upon him to prove the credits in the said bank account. No cogent and convincing reasons have been advanced by CIT(A) for upholding the addition of Rs.52,39,433/-. The observations made by CIT(A) which are contrary to the evidence on record or against the appellant are not admitted.
4.1 Without prejudice to above and in alternative, the impugned addition of Rs.52,39,433/- is highly excessive and the same deserves to be reduced by explain credits and it be restricted to the peak credit.
It is, therefore, prayed that addition of Rs.52,39,433/- upheld by the CIT(A) may kindly be deleted.
3. The facts in brief are that the assessee is an individual and deriving income from salary. The assessee in the return filed under section 139 of the Act declared income at Rs. 1.76 lakh only which was subsequently selected for scrutiny under The AO during the assessment proceeding noticed that the saving bank account of the assessee held with Axis bank has been credited by an amount aggregating to Rs. 52,39,433/- only in the form of cash and cheque deposits. The assessee was asked to furnish the nature and sources of credit in bank account, but assessee failed to make any reply. Thus, the AO in absence of the reply from the assessee treated the entire deposit of Rs. 52,39,433/- as unexplained cash credit and added the same to the total income of the assessee.
4. The aggrieved assessee preferred an appeal before the learned CIT(A).
5. The assessee before the learned CIT(A) submitted the detail of total credits in the bank account made during the year which are as under:
