When assessee has made surrenders in the previous years, then AO can not make addition by treating the cash deposited in banks as undisclosed

Mother son Jones Limited Vs ITO (ITAT Delhi)- Since the assessee has already surrendered Rs.30 lacs in the four assessment years, three of which are preceding assessment years and during relevant assessment year, the assessee has disclosed Rs. 6,30,000/-. The disclosure made by assessee in the earlier year has been accepted in toto. Thus, there was sufficient cash available to be deposited in the bank. The revenue has failed to establish that the amount disclosed in the survey was invested/ spent somewhere and the same was not available with the assessee to be deposited in the bank. Since the assessee has already disclosed more than Rs. 30 lacs which is sufficient to explain the cash deposited in bank, therefore, we find no merit in making the addition.

Mother son Jones Limited Vs Income Tax Officer

ITAT BENCH ‘E’ NEW DELHI

ITA No. 3355/Del/2010

Decided on: 24 June 2011

O R D E R

PER B.C. MEENA, ACCOUNTANT MEMBER :

This is an appeal filed by the assessee against the order of the CIT (Appeals)-VIII, New Delhi dated 23 .06.2009.

2. There is a delay in filing the appeal. The assessee has submitted an affidavit explaining the reasons for delay in filing the appeal. After hearing both the sides, we condone the delay.

3. The grounds of appeal read as under :-

“1. That the order of the Learned Commissioner of Income tax (Appeals) is against facts and law.

2. That the Learned Commissioner of Income-tax (Appeals) is not justified in passing an ex-party order.

3. That the Learned Commissioner of Income-tax (Appeals) is not justified in confirming the addition of Rs. 8,96,837/- made by the Assessing Officer.

4.  That the further grounds shall be submitted at the time of hearing.”

4. The only issue involved in the appeal is assessing the income at Rs. 8,96,837/- which was the cash deposit in the assessee’ bank account held with ABN Amro Bank, 515, Indra Prakash Building, 21, Barakhamba Road, New Delhi. The assessee is a company engaged in the trading of tissue papers, feeding bottles and ear buds. A survey under section 133A was carried out at the premises of the assessee on 19.03.2002 during the relevant financial year. During the survey, statement of Director of the company was recorded. It was submitted that during the survey, the assessee had disclosed more than Rs. 30 lacs spreading in various years including the year under consideration. For the year, assessee made disclosure of Rs. 6,30,000/-. The details are given as under :-

Assessee had also paid tax on these disclosures. For the assessment year 1999-00, 2000-01 and 2001-02, the order u/s 143(3) were passed by taking into consideration the additional income offered during the survey. The assessments have been finalised in these year u/s 143(3) on the surrendered amount by accepting the same and no further addition was made. Assessee had disclosed income in past years and also in year under consideration which had been accepted and also had business income, therefore, there was sufficient cash balance available with the assessee to explain the cash deposit of Rs. 8,96,837/- in the assessee’s bank account with ABN Amro Bank. He pleaded that Rs.6,30,000/- was disclosed by the assessee in the assessment year under consideration and balance was from disclosure made in past years. He also relied on the following decisions :-

(i) Patel Soma Bhai vs. DCIT, 58 TTJ 206 (Ahd.); and

(ii) Arun Kala vs. ACIT, 98 TTJ 1046 (JP)

5. On the other hand, the Learned DR relied on the order of the authorities below.

6. We have heard both the sides and perused the record carefully. Since the assessee has already surrendered Rs.30 lacs in the four assessment years, three of which are preceding assessment years and during relevant assessment year, the assessee has disclosed Rs. 6,30,000/-. The disclosure made by assessee in the earlier year has been accepted in toto. Thus, there was sufficient cash available to be deposited in the bank. The revenue has failed to establish that the amount disclosed in the survey was invested/spent somewhere and the same was not available with the assessee to be deposited in the bank. Since the assessee has already disclosed more than Rs. 30 lacs which is sufficient to explain the cash deposited in bank, therefore, we find no merit in making the addition. Rs. 6,30,000/- which has been surrendered by the assessee during the survey operation itself and the assessment should restrict to that extent only. The ground taken in the assessee’ s appeal is partly allowed.

7.  In the result, the appeal of the assessee is partly allowed.

Order pronounced in open court on this 24th day of June, 2011.