Santosh Jaipal Vs ITO (ITAT Bangalore)
Summary: The assessee, who operated a petrol bunk under the name Harihara Filling Station and maintained audited books of account, challenged additions made for AY 2017-18 under Section 69 read with Section 115BBE of the Income-tax Act, 1961. The AO had made additions aggregating to ₹54 lakh, comprising ₹30 lakh treated as unexplained investment in respect of a gift from the assessee’s brother and ₹24 lakh in cash deposits during the demonetisation period. The books of account had not been rejected and no specific defects were identified. In relation to the ₹30 lakh gift, the assessee explained that his brother, Sandeep Jaipal, had directly made payments aggregating to ₹30.40 lakh to IOCL towards the assessee’s fuel purchases, of which ₹40,000 was repaid and ₹30 lakh was treated as a gift; the transaction was supported by banking entries, audited financial statements, ITR, capital account and ledger records. The Tribunal held that merely because the donor’s capital account was negative, it could not prima facie be concluded that the donor lacked capacity, particularly when the payments to IOCL were made through banking channels and the transactions were recorded in the books of both parties; the ₹30 lakh addition was accordingly directed to be deleted. With respect to ₹20 lakh deposited in National Co-operative Bank Ltd., the Tribunal noted that the assessee had produced the cash book, reconciliation of bank deposits, month-wise analysis of cash sales and deposits, sales and purchase abstracts, bank statements and ledger accounts, and that the bank account was reflected in the business balance sheet and the deposit was recorded in the books; since the AO had accepted the books and had not brought adverse material on record, the ₹20 lakh addition under Section 69 was deleted. The remaining ₹4 lakh deposit in Sir M. Visvesvaraya Co-operative Bank Ltd. was claimed for the first time before the Tribunal to belong to Santosh J. (HUF), a separate taxable entity having its own PAN, with the assessee acting as Karta; as the supporting evidence was produced for the first time before the Tribunal, the issue was remitted to the AO for verification, with a direction to delete the ₹4 lakh addition from the assessee’s individual assessment if the deposit was found to have been made in the HUF’s bank account. The appeal was therefore partly allowed for statistical purposes.
