IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH `B' BENCH
BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND
SHRI RAJENDRA (ACCOUNTANT MEMBER)
ITA No.3653/Mum/2011
Assessment Year: 2006 -07
ITO 18(1)(4), Narayan G. Mandgiri,
Room No.108, 1st floor, Piramal 18/8, Shivaji Nagar CHS Ltd.,
Chaber, Lalbaug, Dr. A.B.Road, Worli,
Mumbai-12. Vs. Mumbai-18
PA No.AENPN 3298 Q
(Appellant) (Respondent)
Appellant by : Shri P.C.Maurya
Respondent by: Shri B.N.Rao
Date of hearing: 26.6.2012
Date of pronouncement: 6. 7.2012
ORDER
Per B.R.Mittal, JM:
The department has filed this appeal for assessment year 2006-07 against order
dated 17.2.2011 of ld CIT(A), Mumbai on the following grounds:
"1. On the facts and in the circumstances of the case, whether ld CIT(A)
was legally right in deleting an addition of Rs.13,68,000 made u/s.68 of
the I.T.Act on account of unexplained cash deposit, without appreciating
the fact that the assessee has failed to justify the source of cash
deposits.
2. On the facts and in the circumstances of the case, whether ld CIT(A)
was legally right in not accepting the fact that the assessee failed to
produce books of account especially cash book, though eh is liable to
maintain the same as per the provisions of section 44AA being total sales
more than rs.10 lakhs.
3. On the facts and in the circumstances of the case, whether ld CIT(A)
was legally right in deleting the addition u/s.68 of the I.T.Act by
accepting the cash flow statement without it being supported by daily
cash book."
2. We have heard ld representatives of parties and have perused the orders of
authorities below.
2 ITA No.3653/Mum/2011
Assessment Year: 2006 -07
3. The assessee is a fruit vendor and is engaged in purchase and sale of fruits and
vegetables at footpath. During the assessment year under consideration, assessee
deposited amount in cash and also made withdrawals from bank. The opening balance
in the bank account as on 1.4.2005 was Rs.1,18,834. The AO considered the cash
deposit and cash withdrawal in the month of April, 2005 and February, 2006 vide paras
4 & 5 as under:
"4. The opening balance of his bank account as on 1.4.2005 was Rs.1,18,834.
He has withdrawn cash amounting to Rs54,000 from the said account and
deposited cash worth Rs.1,00,000 during the month. As per monthly purchase
and sales details he has incurred Rs.1,84,000 on purchase of vegetable and
earned Rs.2,01,000 by way of sale. The cash deposited of Rs.1,00,000 during
the month does not have any nexus to this amount.
5. Similarly during the month of February, 2006 he has deposited Rs.2,50,000 by
way of cash and there after withdrawn Rs.2,00,000 by way of cash withdrawal.
The purchases are of Rs.2,53,000 the sales figure show Rs.2,86,000. It is clear
therefore that the figures of sales and purchases submitted by assessee are
fictitious. Assessee was asked to produce name and address of purchases
parties and sales parties which assessee failed to do. He could not produce cash
book."
4. The Assessing Officer stated that assessee neither could prove sales nor
purchases and in view of above, he considered the entire cash credit in the bank
amounting to Rs.13,68,000 as unexplained cash credit under section 68 of the I.T.Act
and added to the income of the assessee. Aggrieved, assessee filed appeal before ld
CIT(A).
5. Ld CIT(A) has stated that assessee has filed bank statement and monthly
statement of purchases and sales. Therefore, there is no room for drawing an adverse
inference that Rs.13,68,000 is unexplained income of the assessee and, accordingly,
deleted the same. Hence, department is in appeal before the Tribunal.
6. During the course of hearing, ld D.R. submitted that assessee has not produced
any documents to substantiate the purchases and sales. He submitted that the total
turnover of the assessee is more than Rs.10 lakhs and assessee, as per provisions of
section 44AA of the Act, is liable to maintain books of account. He submitted that in the
absence of any document, the AO is justified that the deposit in bank is unexplained.
However, ld D.R. conceded that there are cash deposits as well as cash withdrawals
3 ITA No.3653/Mum/2011
Assessment Year: 2006 -07
and, therefore, it will be proper to take peak credits in the bank as unexplained cash
credit u/s.68 of the Act.
7. Ld A.R. did not dispute the contention of ld D.R. that there are no books of
account maintained by the assessee though the turnover of the assessee is more than
Rs.10 lakhs. Ld A.R. conceded that peak credit should be considered for the purpose of
section 68 of the Act in the absence of any documents maintained by the assessee to
justify the deposit/withdrawal out of its sales and purchases of fruits/vegetables. Ld
A.R. submitted that the opening balance in the bank account should be reduced from
the peak credit of the year to which ld D.R. has no objection.
8. In view of above submissions of ld representatives of parties and considering the
facts of the case, we hold that neither the AO is justified to treat the total cash deposits
in the bank as unexplained income of the assessee nor ld CIT(A) is justified to delete the
entire addition in the absence of any books of account maintained by the assessee
particularly when the turnover of the assessee is more than Rs.10 lakhs in the
assessment year under consideration. Therefore, we set aside the orders of authorities
below and direct the AO to take the peak credit of the year in the bank as unexplained
income of the assessee after setting of the opening balance as on 1.4.2005.
9. In the result, appeal of department is allowed subject to above directions.
Pronounced in the open court on 6th July , 2012
Sd/- Sd/-
(RAJENDRA) (B.R. MITTAL)
Accountant Member Judicial Member
Mumbai, Dated 6th July , 2012
Parida
Copy to:
1. The appellant
2. The respondent
3. Commissioner of Income Tax (Appeals),29, Mumbai
4. Commissioner of Income Tax, 18 , Mumbai
5. Departmental Representative, Bench `B' Mumbai
//TRUE COPY// BY ORDER
ASSTT. REGISTRAR, ITAT, MUMBAI
4 ITA No.3653/Mum/2011
Assessment Year: 2006 -07
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