Shri Abhimanyu Semlani, 105, Stanley Regency, Beverly Park, Near Cinemax Theater, Mira road (E), Mumbai-401107 Vs. Income Tax Officer, 25 (1)(2), Room No.204, C-11, Pratyakashya Kar Bhavan, BKC- Bandra, Mumbai-400051
August, 27th 2015
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IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, MUMBAI
BEFORE S/SHRI B.R.BASKARAN, ACCOUNTANT MEMBER
( / Assessment Year :2009-10)
Shri Abhimanyu Semlani, / Income Tax Officer, 25 (1)(2),
105, Stanley Regency, Vs.
Room No.204, C-11,
Beverly Park, Pratyakashya Kar Bhavan,
Near Cinemax Theater, BKC- Bandra,
Mira road (E), Mumbai-400051
( /Appellant) .. ( / Respondent)
./ ./PAN/GIR No. :AW PPS3455C
/ Appellants by Shri Paresh Shaparia
/Rspondent by Shri K P R R Murty
/ Date of Hearing
: 5 .8.2015
/Date of Pronouncement: 26.8.2015
/ O R D E R
The assessee has filed this appeal challenging the order dated 11-
02-2014 passed by Ld CIT(A)-35, Mumbai for assessment year 2009-10,
wherein he has confirmed the addition of Rs.12,77,000/- relating to bank
deposits made by the assessing officer.
2. The facts relating to the issue are that the AO noticed that the
assessee had made cash deposits aggregating to Rs.12,77,000/- in his
savings bank account maintained with Axis Bank Ltd. When asked to
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explain the sources, the assessee furnished following cash flow
Cash in hand b/fd from the preceding year 5,35,914
Add:- Withdrawals from bank upto Feb 2009 6,89,800
Withdrawals from bank in March 2009 92,000
Less:- Drawings during the year 29,400
Deposits upto Feb 2009 12,77,000
Deposits in March 2009 Nil
Cash in hand c/fd 11,314
The assessee submitted that he had withdrawn cash from savings bank
account over a period of two years with an intention to acquire a flat for
himself without the knowledge of his parents. The AO noticed that the
bank account stands in the joint name of assessee and his father and
hence he rejected the explanations of the assessee. Accordingly he
assessed the entire cash deposit of Rs.12,77,000/- as income of the
assessee from undisclosed sources. The Ld CIT(A) also confirmed the
3. The Ld A.R invited our attention to the copy of income tax return
filed for AY 2008-09 and submitted that the cash balance of Rs.5,35,914/-
declared therein has been accepted by the assessing officer. He further
submitted that the assessee has used the opening cash balance available
with him along with the withdrawals for making deposits. He submitted
that there was no deficit cash balance as per cash flow statement and
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hence the Ld CIT(A) was not justified in confirming the assessment of
entire amount of Rs.12,77,000/- as income of the assessee.
4. On the contrary, the Ld D.R submitted that the claim of availability of
opening cash balance is disproportionate to the income declared by the
assessee. He further submitted that the assessee has built up the cash
balance by showing gift receipts and hence his statement of accounts is
not reliable. He further submitted that there is no correlation between the
withdrawals and deposits and hence the Ld CIT(A) was justified in
confirming the addition of Rs.12,77,000/- made by the AO.
5. I heard the parties and perused the record. I verified the copy of
return of income filed by the assessee for AY 2008-09 and notice that the
assessee has declared closing cash balance as on 31.3.2008 of
Rs.5,35,914/-. The assessee had filed the return of income for AY 2008-
09 on 11.11.2008 and the same has been accepted by the assessing
officer. Hence at this stage, in my view, it may not be proper for the
assessing officer to disbelieve the claim of availability of cash balance as
on 1.4.2009. The claim of receipt of gifts in the years relevant to AY
2008-09 and AY 2009-10 has not been suspected by the assessing officer
and hence he did not make any addition of the same u/s 68 of the Act
even in the scrutiny assessment made for assessment year 2009-10.
Hence both these contentions of Ld D.R are liable to be rejected.
6. The assessee's claim is that he has used the opening cash balance as
well as the withdrawals made from the bank on an earlier occasion to
make deposits on the subsequent dates. It was submitted by the assessee
that the amounts were withdrawn in order to purchase land in his own
name. However, as observed by the tax authorities, the assessee could
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not substantiate the said claim except by giving an affidavit. If the
assessee had given the details of land identified by him, the cost of land,
the schedule of payment planned etc., his submissions could have been
accepted. Hence I am of the view that the tax authorities have rightly
rejected the said explanations of the assessee.
7. At the same time, I am of the view that the claim of the assessee
that he had used opening cash balance as well as earlier withdrawals for
making deposits subsequently could not be altogether rejected. Another
possibility is that the assessee must have carried out some business
activity and the deposits and withdrawals may represent his business
transaction. I have attempted to analyse the cash flow statement as
Opening cash balance 5,35,914
Withdrawals from 1.4.08 to 30.11.08 2,84,800
Less:- Deposits from 1.4.08 to 30.11.08 7,53,000
Drawings from April to November 20,000
Add:- Withdrawals in Dec. 2008 3,05,000
Less:- Drawings for Dec. 2008 2,500
Cash balance as on 31.12.2008 3,50,214
Less:- Cash deposit on 10.01.2009 5,00,000
Cash deficit as on 10.01.2009 1,49,786
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Thus, I notice that there is a cash deficit of about Rs.1,50,000/- as on
10.01.2009 as per the cash flow statement prepared by the assessee. I
notice that the assessee did not consider the current year's income in the
cash flow statement.
8. If I consider the cash deposits as representing business transactions,
then the profit needs to be estimated. If I take the rate of profit at 10%,
then the profit needs to be estimated at Rs.1,27,700/-.
9. Hence, on a conspectus of the matter, I am of the view that the tax
authorities are not justified in assessing the entire amount of deposits as
income of the assessee. In my view, some income needs to be estimated
in respect of the deposits made in the bank account. In my view, the
income may be estimated between Rs.1,27,700/- and Rs.1,50,000/-.
Accordingly, in my view, this issue would meet the ends of justice, if the
income from the bank transactions is estimated at Rs.1,40,000/-. I order
accordingly. In view of the above, I set aside the order of Ld CIT(A) and
direct the assessing officer to estimate the income from bank transactions
at Rs.1,40,000/- and assess the same.
10. In the result, the appeal filed by the assessee is partly allowed.
Pronounced accordingly on 26th August 2015.
26th August, 2015
( B.R. BASKARAN)
Mumbai: 26 th Aug, 2015.
.../ SRL , Sr. PS
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/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
6. / Guard file.
/ BY ORDER,
, /ITAT, Mumbai