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TMI Blog2017 (4) TMI 1636X X X X Extracts X X X X X X X X Extracts X X X X ..... red, as well as qua the interest/ commission earned in the process, and returned only on the basis of memory . The cash deposits in the bank account/s need to be satisfactorily explained, else are liable to be added as unexplained income u/s. 69/69A of the Act. There is no explanation as to the source of the deposit/s. Merely stating that the same are a return of the loans given earlier, without in any manner substantiating the same, i.e., the loans given earlier and/or their return, would be of little consequence, both in law and in fact in-as-much as the law mandates the same to be satisfactorily explained, so that the same would require being reasonably established as a fact. As already explained that a failure to make proper enq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiated by the issue of notices u/s. 143(2) of the Act on 10.09.2012, under the computer assisted scrutiny selection (CASS) mechanism adopted by the Revenue; the same discovering cash deposits in the assessee s saving bank account/s (with Axis and ICICI bank) during the relevant year in a substantial sum. The assessment order in both the cases is passed on 30.03.2014, accepting the admitted (returned) income. The operative part of the assessment order in either case is reproduced as under: ITA No.1350/Mds/2016 The case was selected for scrutiny under CASS to examine the source of cash deposit made in SB account. The assessee has got cash deposit in SB account with Axis Bank amounting to Rs.4 cr. The source of cash deposits is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is stated to be the basis of the cash deposits in their respective bank accounts, it is stated that the source of the deposits is the closure of the previous loans, and that the assessee had not claimed any credit from any person, i.e., in explanation of the source thereof. The same is found seriously wanting by the ld. Pr. CIT. The assessee s returns are not based on any books of account, and the income returned, which has been accepted, is admittedly only on the basis of memory. There has been no examination of the assessee s replies, which are wholly unsubstantiated. Who are the persons to whom the monies stand advanced, and from whom the same is claimed to have been received back during the relevant year, again to be lent further. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order/s is incorrect in-as-much as the assessee/s is admittedly not maintaining any books of account, and that only the bank account/s was produced. This, qua a critical aspect of the case, particularly considering the volume of the cash deposits in the bank account/s, to examine the loss, if any, of revenue, for which the assessments were selected for being subject to the verification procedure under the Act, reflects the lackadaisical and casual approach of the AO, who is even otherwise in law obliged to, where the circumstances warrant, make proper enquiry, indicating a lack of application of mind in the matter. If the books of account, as stated, were produced, the same would itself explain the source of the cash deposited in bank ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the advances made and recovered, as well as qua the interest/ commission earned in the process, and returned only on the basis of memory . 4.2 The cash deposits in the bank account/s need to be satisfactorily explained, else are liable to be added as unexplained income u/s. 69/69A of the Act. There is no explanation as to the source of the deposit/s. Merely stating that the same are a return of the loans given earlier, without in any manner substantiating the same, i.e., the loans given earlier and/or their return, would be of little consequence, both in law and in fact in-as-much as the law mandates the same to be satisfactorily explained, so that the same would require being reasonably established as a fact. There is nothing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al invested in the said business is liable to be estimated and brought to tax, i.e., apart from the income by way of interest/commission from the financing business. What is this capital? What is the amount of debtors (receivable) as at the year-end, or the balance/s in the bank account/s at the beginning as well as end of the year. All this is conspicuous by its absence. Again, as stated by the ld. Pr. CIT, there is nothing to show that the disclosure of interest/commission income is true and correct. An average lending period of 7 to 10 days, as stated, would imply an annual turnover ratio in the range of 36 to 52, and provide a basis for the estimation of both the capital invested as well as the interest income. 4.3 We have already ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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