IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE SHRI SAKTIJIT DEY(JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA No. 4182/MUM/2014 Assessment Year: 2009-10 Deepak Madhukar Mayekar Vs. ITO 18(2)(2) 4/410 Sai Sadan Rajabhau Desai Rd, Piramal Chambers, New Prabhadevi 1st Floor Parel, Mumbai-400025 Mumbai 400012 PAN No. AAMPM7056N (Appellant) (Respondent) Assessee by : Shri. M. S. Sheth Revenue by : Shri. B. S. Bist Date of Hearing: 25/08/2016 Date of pronouncement: 30/09/2016 ORDER PER N.K. PRADHAN, A.M. This is appeal filed by assessee. relevant assessment year is 2009-10. appeal is directed against order of CIT(A)-29, Mumbai, and arises out of assessment completed u/s 143(3) of Income Tax Act 1961, ( Act ). 2. sole ground of appeal raised by assessee is that ld. CIT(A) erred in adding entire cash deposit of Rs.41,80,000/- in income without appreciating fact that entire cash deposits are sale proceeds and only net profit to be added of Rs.4,01,750/-. Without prejudice to above, it is further stated that ld. CIT(A) erred in adding entire cash deposit being sale proceeds of Rs.41,80,000/- in income ignoring appellant s claim of deduction of corresponding purchase of Rs.37,78,250/- in spite of amount of Rs.15,48,810/- confirmed in person before Assessing Officer(AO) by six suppliers and Rs.9,11,190/- are already paid in cash to other two suppliers out of said cash deposit as evident firm banks statement and remaining four suppliers for balance amount of Rs.13,18,250/- for want of confirmation due to their non-availability at relevant time. ITA No. 4182 /MUM/2014 2 3. assessee trades in fish. He filed his return income for A.Y. 2009-10 on 30.09.2009 declaring total income at Rs. 74,921/-. AO came to know from AIR information that during impugned assessment year, assessee has deposited cash of Rs.29,80,000/- in Saraswat Co-operative Bank. AO vide notice u/s 142(1) asked assessee to furnish details of all bank account statements. assessee furnished details of only one saving bank account No. 0168 maintained with Corporation Bank. AO then called information from Saraswat Co-operative Bank by issuing notice u/s 133(6) of Act. In response to it, said Bank provided copies of bank account statement for A/c No. SBPUB 7196 and also informed that assessee is maintaining joint account with his wife and opened current account since 2010. AO having gone through bank account statement of A/c No. 7196 found that assessee has deposited cash of Rs.29,80,000/- in savings bank account. On being asked by AO to furnish details of source of income of these cash deposits and details of joint accounts held with his wife and current account, assessee furnished details of above. On examination of joint account, AO found that there is cash deposit of Rs.12,00,000/- and current account is opened on 8/09/2010. AO then asked assessee to furnish source of income of cash deposits made in his individual account of Rs.29,80,000/- and in joint account of Rs.12,00,000/- with supporting documentary evidence. assessee vide his letter dated 14/11/2011 filed revised profit & loss account showing total sales at Rs.1,47,81,961/- and informed that he had deposited some cash in his savings account in Saraswat Bank which was sales in cash. AO was not convinced with above explanation of assessee as he found that assessee has not declared his individual account and joint account maintained with Saraswat Bank in original return filed. Also AO found that assessee has made investment in FDR s of Rs.30,00,000/- in Saraswat Bank (Rs.18,00,000/- from individual account and Rs.12,00,000/- from joint account). assessee had neither declared FDR in return of income filed nor shown interest of Rs.40,786/- thereof in his return of income. In view of above, AO made addition of cash deposit of Rs.29,80,000/- in A/c No. SBPUB/7196 and Rs.12,00,000/- in A/c No.SB/11108 maintained with Saraswat Bank (Total Rs.41,80,000/-) u/s 69A. AO also made addition of interest receipt of Rs.40,786/- on FDRs made from these cash deposits. ITA No. 4182 /MUM/2014 3 4. ld. CIT(A) during course of appellate proceedings admitted additional evidences filed by assessee as fresh evidence under rule 46A and sent it to AO asking him to send remand report on issue after making necessary inquiries in matter. AO sent remand report dated 19/02/2014 which has been extracted at page 5-9 of order of ld. CIT(A). In response to copy of remand report given to him by ld. CIT(A), assessee filed submission dated 28/03/2014 which has been extracted at page 9-10 of appellate order. Having gone through details and reply submitted by assessee, ld. CIT(A) observed that only contention of assessee is that these cash deposits represent cash sales which were not shown in original return of income filed. assessee contended before ld. CIT(A) that these cash deposits belong to creditors, who were paid in next year by withdrawing cash from bank account. assessee failed to file before ld. CIT(A) documentary evidence for source of cash deposits in above two bank accounts. only explanation by assessee before him was that it was part of cash sales and auction sale made by him during period and his accountant had not recorded sale entries properly at time of submitting return of income and also some of purchase vouchers remained to be included into accounts. ld. CIT(A) also found it strange that unaccounted sales of Rs.1,47,81,961/- are shown to have been made to one party i.e. M/s Vipul Impex and Infra Build Ltd. which appears to be Infrastructure Construction Company and has nothing to do with fish business of assessee. Also assessee failed to produce before ld. CIT(A) any bill / voucher in support of above sales made to M/s Vipul Impex and Infra Build Ltd. ld. CIT(A) thus came to finding that cash deposits in both bank accounts of assessee remain unexplained. ld. CIT(A) also did not accept theory provided by assessee regarding cash deposits that it represented outstanding payments to creditors which were paid off in next year in view of investigations carried out by AO during remand proceedings and findings thereof. In view of above, ld. CIT(A) confirmed addition of Rs. 41,80,000/- made by AO u/s 69A and also interest earned of Rs.40,786/- from FDRs. 5. ld. Counsel of assessee referred to remand report dated 19/02/2014 sent by AO to ld. CIT(A) and stated that ld. CIT(A) has concluded that ITA No. 4182 /MUM/2014 4 entire turnover of Rs.1,47,81,961/- made to single party i.e. M/s Vipul Impex and Infra Build Ltd. is unaccounted sales disregarding facts revealed in remand report that above turnover includes cash sales of Rs.41,80,000/- . Also it was submitted that ld. CIT(A) failed to apply his mind on confirmation of creditors stated in remand report and totally relied on views of AO as outlined in remand report. 6. ld. DR referred to A/c No. 7196 of assessee in Saraswat Co-operative Bank Ltd. Also he referred to joint account of assessee with his wife bearing No. SB-11108 in above Bank. It is stated by him that cash amounting to Rs.29,80,000/- was deposited in A/c No. SBPUB/7196 and Rs.12,00,000/- in A/c No. SB/11108 maintained with Saraswat Bank by assessee . And that assessee failed to provide before AO and also before ld. CIT(A) source of above cash deposits. As accounts of assessee are audited u/s 44AB, it is stated that ld. CIT(A) has rightly upheld addition of Rs.41,80,000/- made by AO u/s 69A of Act. 7. After considering rival submissions and perusing relevant material on record, we find that there has been cash deposits of Rs.29,80,000/- in A/c No. SBPUB/7196 and Rs.12,00,000/- in A/c No. SB/11108 maintained by assessee with Saraswat Bank. We find that ld. CIT(A) has observed that entire unaccounted sales of Rs.1,47,81,961/- are shown to have been made to one party i.e. M/s Vipul Impex and Infra Build Ltd. which appears to be infrastructure construction company and has nothing to do with fish business of assessee. above findings of ld. CIT(A) do not originate from assessment order of AO. In view of above we set aside order of ld. CIT(A) and restore it to file of AO to examine (i) whether out of total purchases of Rs.37.78 lacs, suppliers worth Rs.9.11 lacs were paid in same year from said savings account itself and balance purchases of Rs.29.67 lacs were outstanding as on 31st March 2009 which were paid off in immediate subsequent year before commencement of new season as claimed by assessee, (ii) whether entire unaccounted sales of Rs.1,47,81,961/- have been made to one party M/s Vipul Impex and Infra Build Ltd. which appears to be infrastructure construction company as observed by ld. CIT(A) and (iii) source of cash deposits of Rs.29,80,000/- in account no. SBPUB/7196 and Rs.12,00,000/- in account no. SB/11108 maintained with Saraswat Bank. ITA No. 4182 /MUM/2014 5 7.1 After due verification of above, and after giving reasonable opportunity of being heard to assessee, AO would pass order as per provisions of Act. 8. In result, appeal of assessee is allowed for statistical purposes. Order pronounced in open court on 30 /09/2016 Sd/ Sd/ (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 30 /09/2016 AKV(On Tour) Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai Deepak Madhukar Mayekar v. ITO-18(2)(2), Mumbai