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2020 (10) TMI 1113 - AT - Income TaxRevision u/s 263 - unaccounted purchases - HELD THAT - It is more than clear that albeit the cash was deposited in the assessee s bank account but the source of such cash was Mr. Dilip Talekar, partner of Laxmisen Agencies. He used the assessee s bank account by purchasing demand drafts in favour of Wokhardt Limited for making purchases, which business the firm was admittedly doing outside the books of account. AO, not only examined this fact after recording the statement of Mr. Dilip Talekar as well as the assessee, but also got such transactions verified with Wokhardt Limited and the bank of the assessee. This amply proves that the AO made proper verification of the assessee s claim and reached right conclusion that such cash deposits, in fact, represented transactions carried out by Mr. Dilip Talekar for and on behalf of Shri Laxmisen Agencies. Not only that, the AO of the assessee passed on this information to the AO of Shri Laxmisen Agencies, who, in turn, made addition towards unaccounted purchases. The narration of above facts clearly demonstrates that neither the AO failed to make proper investigation nor did he reach any wrong conclusion in holding that the amount of cash deposits by the assessee in his bank account did not pertain to him. We, therefore, set-aside the impugned order doubting the correctness of the assessment order.
Issues: Time-barred appeals, CIT's order under section 263 of the Income-tax Act, 1961, assessment year 2009-10, proper verification of cash deposits, common issue in two appeals.
Analysis: 1. Time-barred Appeals - Samir N. Mehta: - The appeal in this case was time-barred by 789 days, but the assessee provided reasons for the delay in an affidavit, which the tribunal found satisfactory. The delay was condoned, and the appeal was admitted for hearing on merits. 2. CIT's Order under Section 263 - Samir N. Mehta: - The appeal was against the CIT's order under section 263 of the Income-tax Act, 1961, for the assessment year 2009-10. The CIT set aside the assessment order passed by the AO, citing lack of proper inquiry into cash deposits made by the assessee. The AO had determined the total income with a small addition after scrutiny based on cash deposits in the bank account. 3. Proper Verification of Cash Deposits - Samir N. Mehta: - The CIT noted that the AO did not adequately verify the cash deposits of ?23,60,000 made by the assessee. However, upon examination, it was found that the cash deposits were made by Mr. Dilip Talekar, partner of Shri Laxmisen Agencies, for purchasing demand drafts for Wockhardt Limited. The AO conducted inquiries and verified the transactions, concluding that Mr. Talekar used the assessee's account for business purposes, leading to a correct determination that the cash did not pertain to the assessee. 4. Common Issue in Two Appeals - Samir N. Mehta & Akshay A. Sawant: - Both appeals involved salaried employees working with Wockhardt Limited, where Mr. Dilip Talekar used their bank accounts for purchases outside the books of account for Shri Laxmisen Agencies. The AOs in both cases conducted proper investigations during the original assessment proceedings, finding no discrepancies. The CIT set aside the assessment orders for both cases, directing a de novo determination. The tribunal found the facts and circumstances similar to the first case, thus allowing both appeals. 5. Conclusion: - The tribunal allowed both appeals, emphasizing the proper verification conducted by the AOs and the correct conclusions drawn regarding the source of cash deposits. The orders under section 263 were set aside, affirming the original assessment orders.
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