SIDDAPPA BHIMAPPA KHILARI,BELGAVI vs. ITO, WARD 2(1), BELGAVI

This appeal by the assessee against the order dated 17-10-2017 passed by the Commissioner of Income Tax (Appeals), Gulbarga [‘CIT(A)’] for assessment year 2008-09.

The assessee raised four grounds of appeal amongst which the only issue emanates for our consideration is as to whether the CIT(A) justified in confirming the addition u/s. 68 of the Act in the facts and circumstances of the case.

Against the said order the assessee preferred an appeal before the CIT(A) contending that the AO erred in treating the cash deposits in Bank account as income of the assessee without appreciating the provisions of law, judgments and disregarding the fresh evidence given by the assessee. The CIT(A) adjudicated the said issue and basing on the submissions of assessee in the appeal proceedings for A.Y. 2010-11, wherein, we note that the assessee claimed that the detailed account of the circulation of money among the various groups of chits and also of the cash deposits in the bank accounts and withdrawals from the bank accounts has been prepared by the assessee and vehemently contended the filing of confirmation of loan amounts by way of farmer’s letters basing on wrong advice given by a Tax Consultant. Further, it is also claimed that the assessee had not borrowed any loans at all from the said farmers but the cash deposits as found in the Corporation Bank were out of loans raised from chits and also the consequential withdrawals. The CIT(A) held the facts and circumstances of the A.Y. 2010-11 are entirely different to the year under consideration and held that the assessee had no explanation in support of his claim regarding the source of cash deposits. We note that admittedly the addition u/s. 68 of the Act requires explanation to the satisfaction of the AO, wherein in the present case, as noted above there was no opportunity for the assessee for rendering satisfactory explanation in terms of directions of 263 proceedings. It was contended before the CIT(A) that the evidences in respect of details of account of the circulation of money among the various groups of chits and also involving the cash deposits of the bank account and withdrawals thereon are prepared on the basis of bank accounts, still, the CIT(A) held the same constitutes no proper explanation in support of grounds of appeal raised, therefore, in our opinion, the assessee had no occasion to offer satisfactory explanation before the authorities and in view of the submissions of ld. AR that the assessee is ready to produce all accounts prepared on the basis of bank account supporting the claim, we deem it proper to remand the matter to the file of AO with a direction to verify books of account as prepared by the assessee for its fresh adjudication. The assessee is liberty to file evidence, if any, in support of its claim. Thus, the ground raised by the assessee is allowed for statistical purpose.

In the result, the appeal of assessee is allowed for statistical purpose.