GANESHRAM UMANATH NAYAK,MUMBAI vs. ITO 19(2)(3), MUMBAI

The present appeal has been filed by the assessee challenging the impugned order dated 01/11/2013, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals)–18, Mumbai, [“learned CIT(A)”], for the assessment year 2009–10.

Ganeshram Umanath Nayak ITA no.301/Mum./2014 order dated 18/11/2022, passed under section 254(1) of the Act was recalled and the appeal was directed to be re-fixed for hearing.

“1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding his view that A.O. has given reasonable opportunity to the assessee to submit complete details and evidences regarding cash deposit of Rs.15,62,500/- in his bank account inspite of the fact that assessment is completed hurridly under the pressure of time barring assessment and shortly after the date evidence was called for. 2) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding his view that assessee has not fulfilled the conditions laid down in Rule 46A of the I. T. Rules. 3) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have asked for the Remand Report from the A.O. to examine the additional evidences filed by the appellant to the CIT and thus the Ld. CIT(A) has failed to accord the fundamental right given to the Appellant under Rule 46A. 4) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate the fact that A.O. could have verified the evidences on his own by issuing summons to the Third Parties. 5) The appellant prays that the order of the CIT(A) on the above grounds be reversed and that it may be restored to Assessing Officer. 6) The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.”

Ganeshram Umanath Nayak ITA no.301/Mum./2014 were issued and served on the assessee. During the assessment proceedings, upon perusal of the AIR information, it was observed that the assessee has made cash deposits in Shamrao Vithal Co-operative Bank Ltd to the tune of Rs. 15,62,500 on various dates. During the assessment proceedings, the assessee was asked to file the details of bank accounts, bank statements, narration of each entry and source of each entry in respect of credit entries therein, and detail of cash deposited in bank account aggregating to Rs. 10 lakh or more. In the meanwhile, a letter under section 133(6) of the Act was issued to the aforesaid co-operative bank requesting to send the ledger copy along with a copy of the account opening form. Shamrao Vithal Co-operative Bank Ltd submitted the requisite details along with the bank statement. On perusal of the bank statement, it was observed that during the period from 01/04/2008 to 31/03/2009, the assessee has deposited Rs. 15,62,500 in the aforesaid bank. In response to the aforesaid notice, the assessee submitted that he had done renovation of his house in April 2008 and he himself took the initiative to get the work completed by hiring carpenters, plumbers, etc. rather than appointing a contractor for the same. The assessee further submitted that his wife has an income of around Rs. 35 lakhs and she withdrew funds from her account and deposited them into his account in order to ensure liquidity of funds. The assessee further submitted that his wife has also deposited Rs. 6,60,000 through cheque. The assessee submitted that all the amounts that are deposited are withdrawn and again redeposited as and when required. It was further submitted that he has received cash of Rs. 2,35,000 as commission from Mr. Melkev, on which TDS has been deducted and paid. Further, an amount of Rs. 2 lakh was received as a gift from G.T.Pathi, i.e. for Page | 3

Ganeshram Umanath Nayak ITA no.301/Mum./2014 the end of the assessee. During the assessment proceedings, the assessee was asked to provide a confirmation from Mr. Melkev from whom cash to the tune of Rs. 2,65,000 was received. However, the assessee expressed his inability to produce the said person. It was further observed that the assessee has claimed that he has an opening cash balance of Rs. 4,83,570, however, in the return of income filed for the assessment year 2008-09, the cash balance is reflected as Nil. The Assessing Officer (“AO”) vide order dated 20/12/2011 passed under section 143(3) of the Act further held that nothing has been brought on record to show that cash deposited in assessee’s account is from the wife’s bank withdrawal and other USD encashment from Thomas Cook. In the absence of any explanation for the cash deposited in his bank account maintained with Shamrao Vithal Co-operative Bank Ltd, the AO treated the the cash deposited as unexplained investment within the meaning of section 69A of the Act and accordingly added the same to the total income of the assessee.

Ganeshram Umanath Nayak ITA no.301/Mum./2014 account maintained with Shamrao Vithal Co-operative Bank Ltd. In support of the submission, the assessee has also filed a declaration signed by his wife supported by a salary slip, acknowledgement of return of income for the assessment year 2008-09 and 2009-10 declaring income of Rs. 21,73,080 and Rs. 33,92,720 respectively, encashment vouchers of flying allowances in USD with Thomas Cook Ltd, a summary of cash withdrawals from and deposit in bank account. We find that during the appellate proceedings before the learned CIT(A), the assessee submitted some copies of bank statements and encashment of USD as additional evidence, as evident from pages 4-5 of the impugned order. However, the learned CIT(A) rejected the prayer of the assessee for admission of additional evidence under Rule 46A of the Income Tax Rules, 1962. As per the assessee, all these documents were with his wife, who was a pilot with Air India, and therefore could not be filed before the AO during the assessment proceedings. Since the dispute in the present case is regarding the cash deposited in the bank account of the assessee and it is the claim of the assessee that the source of the said cash deposit is the cash withdrawn by his wife and the evidence now furnished before us have not been examined by any of the lower authorities, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication. The assessee is directed to provide the complete cash flow statement of the cash deposited in his bank account and duly substantiate the same with necessary documents/evidence. The assessee is further directed to provide complete reconciliation that the cash withdrawn from wife’s bank account and encashment of flying allowance was deposited in his bank account in the year under consideration. With the above directions, we restore this issue to the file Page | 5

Ganeshram Umanath Nayak ITA no.301/Mum./2014 of the AO for de novo adjudication as per law after the necessary examination of all the evidence as submitted by the assessee. As a result, the impugned order passed by the learned CIT(A) on this issue is set aside and grounds raised in assessee’s appeal are allowed for statistical purposes.